BELIEVING IS SEEING the debt crisis as just another story – or why are we prey to a single narrative? 1

2 “We were on the brink of bankruptcy…” “You clearly need to make the savings, the cuts and raise taxes...”

Professor Joseph Stiglitz, Nobel Prize For Economics In 2001, Daily Telegraph "I think it is likely that the economic downturn will last far longer and human suffering will be all the greater." 3 Professor Paul Krugman, Nobel Prize for Economics in 2008, New York Times “The best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997.” THE WORLD’S LEADING ECONOMISTS DISAGREE Professor Christopher Pissarides, Nobel Prize for Economics in 2010, Daily Mirror “The Chancellor has exaggerated the sovereign risks that are threatening the country.”

“Our debt is higher than it’s ever been…” [Coalition Government] 4

You can only understand how big debt is when you compare it as a percentage of GDP 5

...The Maastricht Treaty EU limit on debt (i.e. What Margaret Thatcher signed up to)......a debt limit of % of GDP 6

OUR CURRENT DEBT – GDP RATIO 64.6% 7

 UK net debt is £952 bn  Excluding Financial sector intervention, debt is £845 bn*  Or 57.1% of GDP! Source: Office National Statistics (November 2010) *This includes £100bn+ of the banks’ debts that is now UK Government debt 8

Britain's Debt / National Income Ratio, Year Percentage ) ) LOOK!! ) Source: Mitchell (1990) and 1990: Central Statistical Office (1992) Red = period building the Welfare State 9

....or look at it another way Our current debt is historically low 10

.... our debt is low compared to the rest of the world Source: CIA World Factbook 11 USA 95% CANADA 81% GERMANY 72% FRANCE 77% SPAIN 70% PORTUGAL 87% ITALY 119% JAPAN 200% GREECE 187% UK 65% Source: CIA Factbook

“The Deficit is caused by overspending…” [Coalition government]....but is it???? 12

13 IN  Taxes  Assets  Banks OUT  Public services  Investment  Debt payments So is spending too high – or income too low? Government

14 Without the recession tax revenues should have been £100bn more than today The UK TAX take

15

16 The deficit reduces automatically as the economy grows because of an increasing tax-take Source: ONS

“Interest repayments [on the national debt] are higher than ever…” [Coalition government] 17

Conservative Government We borrowed our way out of debt under Thatcher 18 Source: Public Finances Databank, ONS

 We are told debt payments are £120m per day. The Thatcher government paid the equivalent of £174m per day. 19 Thatcher Government

Is THIS where the deficit is?? We don’t pay enough in tax to cover what we spend. Source - Eurostat newsrelease – June 22 nd

 As income tax has fallen, the gap between rich and poor HAS GROWN. the UK is now one of the MOST UNEQUAL societies in the OECD  (Source: UN Human Development Report 2010) 21

The Gini Coefficient – the most disgraceful curve of all Public sector compensates for wealth inequalities – so why are we not EXPANDING the public sector??? 22 Inequality

“What really caused the deficit?” 23

“…although the causes of the crisis may have been rooted in the financial sector, the consequences are affecting everyone, and will continue to do so for years to come. ” (Mervyn King’s Address to the TUC conference – ) What is a banker doing making political speeches???!!! 24

Increasing or reducing the supply of money into the economy through household and business lending artificially inflates or deflates our GDP – i.e. Banks manipulate the flow and quantity of money EXAMPLE: in the 2000s banks pumped between £10-14bn into the economy every year through housing equity withdrawal. Since 2009, banks are refusing to lend and have sucked £15bn out of the economy per year (Source of statistics: Bank of England) 25

26 The contribution of sectors as a % of GDP

27 NoYes

 But national debt is never paid off – its part of the dynamic of a healthy economy. YOU may pay off your mortgage – but the next owners bring another one – your house ALWAYS has debt  Why pay off 100% of our deficit in 4 years, when our debt is historically low and we have 13 years to repay our borrowing?  The UK is not broke – “there’s no money left!” is economically illiterate. We have the 6 th highest GDP in the world. What about our assets in bank holdings?  Why not explore options to meet debt payments and reduce the deficit? i.e. pay more when we have growth, reschedule loans in 10 years, increase wealth taxes, public enterprise. 28

 Debt is low compared to our history and partner nations  Growth plays a key role in reducing the deficit  If tax is lagging behind spending, why not borrow short term to encourage growth?  What would 3% per year growth for 5 years do to the deficit? 29

 National debt? NO  Current account deficit? Depends on your values - it’s political  Economic governance? YES  Employment? YES  Banking? YES  Democracy and public debate? YES 30

“The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials.” Robert Kennedy,