Against a backdrop of grim economic news, rising government debt, dreadful public spending projections and general hand ringing over fiscal probity, Prospect’s August cover story asks a simple question: is Britain bust? James Buchan begins his journey to find the answer in the office of Robert Stheeman, the head of Britain’s debt management office, the previously unknown body which sells the UK’s IOUs.
Stheeman is a busy man, having been asked to sell in this year more than three times as much debt than the year before, all to fund a huge gab in the Government’s finances. But, as Buchan explains, the cause of all this recent borrowing is not the banking crisis itself:
The bonds required to fund the banks taken into state administration, a mere £37bn, were issued last autumn. No, Stheeman’s headache comes from spending by government departments (without accompanying tax rises) over the last nine years and is to be traced in the policies and misfortune of a single man, Prime Minister Gordon Brown.
Buchan notes that “there have been anxious moments in recent months” especially as “Stheeman also suffered a bad quarter of an hour on 21st May when the rating agency Standard & Poor’s lowered its assessment on British sovereign debt from ‘stable’ to ‘negative. But, as he goes on to argue, the culpability of the political class for over spending is actually nothing new. Leading figures of the Scottish enlightenment like Smith and Hume worried (without good reason) that their country was soon to sink below the budget line, as did many other leading intellectual lights during the 19th and 20th century. Are the concerns in this crunch any more likely to turn out badly? Read the piece here, and find out.