BUSTING THE SINGLE NARRATIVE 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.”

You can only understand how big debt is when you compare it as a percentage of GDP 4

 GDP = Consumer spending + Business Investment + Government Spending + International Trade income  The GDP for 2010 is…… £1.435 trillion 5

“Our debt is higher than it’s ever been…” 6 (Coalition Government)

...The Maastricht Treaty EU limit on debt 60% of GDP 7

OUR CURRENT DEBT – GDP RATIO 64.6% 8

 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 9

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.... 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…” 12 (Coalition Government)

13 INCOME  Mainly taxes SPENDING  Public services  Investment  Debt payments Is spending too high or income too low? Government

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

16 £165bn 1.5% Growth Deficit Oct 2009 to March 2010 £145bn £22bn

“Interest repayments are higher than ever…” 17 (Coalition Government)

Conservative Government 18 Source: Public Finances Databank, ONS

Our Borrowing is cheap, mainly from the UK and can be repaid over years 19

 The Thatcher government paid the equivalent of £174m per day 20 Debt Interest Payments Payments(£bn) As % of GDP Thatcher Government

“We have to make cuts…” 21 (Coalition Government)

Tax as a proportion of GDP ( %) EU UK36.6 Is THIS where the deficit is?? We don’t pay enough in tax to cover what we spend. Source - Eurostat newsrelease – June 22 nd

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The UK is now one of the MOST UNEQUAL societies in the OECD 24 Inequality THE GINI CO-EFFICIENT – UN MEASURE OF INEQUALITY

“What really caused the deficit?” 25

“…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 – ) 26

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) 27

28 The contribution of sectors as a % of GDP

29 Public Private Finance Manufacturing NoYes

 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? 30

 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 31

“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,

Barry Saville 33