A hypothetical what if in the UK

[Denny Crane!]

If the Conservatives and New Labour had continued a trend both of them embarked upon (then quickly disembarked) but more aggressively in cutting national debt and running surplus how would that have effected our current situation?



In both governments they made historically high repayments and reduced spending to the point where the national debt dropped (structural surplus).

In 1997 Public Sector Net Debt stood at £352 billion and the debt crisis began just before the beginning of 2008 with the Northern Rock crisis. Britain could have repaid 35 billion a year and had zero national debt and a budgetary surplus at the beginning of the crisis.

How would this have effected our current situation and current crisis?

NOTE: This isn't really a serious topic, I'm aware politicians need to buy themselves votes with spending promises but I'm curious.

[justicar5]

If the Conservatives and New Labour had continued a trend both of them embarked upon (then quickly disembarked) but more aggressively in cutting national debt and running surplus how would that have effected our current situation?



In both governments they made historically high repayments and reduced spending to the point where the national debt dropped (structural surplus).

In 1997 Public Sector Net Debt stood at £352 billion and the debt crisis began just before the beginning of 2008 with the Northern Rock crisis. Britain could have repaid 35 billion a year and had zero national debt and a budgetary surplus at the beginning of the crisis.

How would this have effected our current situation and current crisis?

NOTE: This isn't really a serious topic, I'm aware politicians need to buy themselves votes with spending promises but I'm curious.

Then they would have really been able to follow the Keynes plan, having actually done what they where supposed to do during the boom.

[Denny Crane!]

Then they would have really been able to follow the Keynes plan, having actually done what they where supposed to do during the boom.

Would we still be in as much danger because of Eurozone exposure? Bearing in mind banks would be in as much trouble, and just as badly exposed to the Greek and other debt issues and borrowing from 2008 would still be into probably the hundreds of billions by this point.

Of course no cuts would be necessary, stimulus would be possible in terms of infrastructure spending and no public sector workers would be getting fired and we'd be a rock of stability in a crazy financial world which would be no bad thing.

With no cuts to the army to combat the rampaging Danes.

[Guy]

Would we still be in as much danger because of Eurozone exposure? Bearing in mind banks would be in as much trouble, and just as badly exposed to the Greek and other debt issues and borrowing from 2008 would still be into probably the hundreds of billions by this point.

Of course no cuts would be necessary, stimulus would be possible in terms of infrastructure spending and no public sector workers would be getting fired and we'd be a rock of stability in a crazy financial world which would be no bad thing.

With no cuts to the army to combat the rampaging Danes.

I'm genuinely posting out of interest here, old boy.

Regarding the part I've made bold, would the stable economy and employment rate not balance out such debt in the long term?

[Denny Crane!]

I'm genuinely posting out of interest here, old boy.

Regarding the part I've made bold, would the stable economy and employment rate not balance out such debt in the long term?

Well I don't know it depends just how bad the crisis is from the European market disaster because that could potentially stall our exports and grind the economy to a halt. Of course if that happens when we're in the midst of all the debt and not this hypothetical we're really screwed.

I'm also wondering how the UK would run if a law was passed that said governments were not allowed to run more than a 1% deficit and that meant that they had no choice but to build surplus' during good times in order for there to be any funds when tax receipts get reduced.

[Their Law]

I'm also wondering how the UK would run if a law was passed that said governments were not allowed to run more than a 1% deficit and that meant that they had no choice but to build surplus' during good times in order for there to be any funds when tax receipts get reduced.

An interesting idea, though enforcing said law would be tricky, the EU has deficit rules in place but we know how well that worked.

[General Brittanicus]

Well you would need to stop the political parties (I'm looking at you Labour) from just wasting money on useless things that they think will win them votes with the public. They dont care about the long term consequences of their actions, so unless you sort that out you won't be able to solve anything - perhaps it could work if there were no elections and the dictator was a genius who didn't keep making stupid decisions all the time.

[Condottiere 40K]

Cameron gets a phone call from Papandreou, Sarkozy and Merkel, chattering about European solidarity.

[Thorn777]

Danes would raid.

[Their Law]

And what stops the government simply changing the level according to a whim? The trouble with our system is that Parliament can override any laws passed by itself at the drop of a hat.

I'm not opposed to the idea, in fact I think it's a great idea, but i can't see how it'd be enforced without challenging the 'parliament is sovereign' idea that the UK system is based on.

[Denny Crane!]

Ummm good question? Not sure.

[Caelifer_1991]

Keep in mind that just as stimulus and public expenditure dampens recessions it also creates growth in the economy at every other time generally as well. So even with no debt at the beginning of the recession we'd still be heavily in debt now anyway just not by quite as much and we'd have most likely a smaller economy to deal with it, or atleast that would be the case at the beginning of say 2008, by now, since the effects of the recession would have been dampened to a greater extent, our economy would probably be slightly larger and/ or have a slightly better growth rate (though only very slightly, since our economy is so rediculously services based).

In other words, while cutting down on the debt would probably have been beneficial overall the difference is likely only marginal simply on account of the recession being so based in banking and our economy being so tied to that and to services. As a trade off we'd also likely have worse state-funded infrastructure like hospitals, schools and such, which don't forget help our economy in the long run as well.