That is a very poor analogy Denis. The deficit is not the mortgage, debt is the mortgage.
Thus if the UK only reduces the deficit over 4 or 5 or 6 years the amount of the debt/mortgage is increasing as are the interest payments payable to service that debt/mortgage. If the amount of the debt/mortgage increases too much and interest rates rise (a predictable result of Labour's Quantitative Easing policy) then ceteris paribus the annual deficit increases and thus the mortgage/debt. At some point the money markets lose confidence that the UK can service its debt, reduce its credit rating and thus make it harder to borrow more money (for if there is still a deficit we are still borrowing money and increasing the debt/mortgage). Now the UK is in a downward spiral of an increasing deficit and rising debt/mortgage and reducing confidence in the country - that way Sovereign debt default and penury lies.
Labour's plan to cut the deficit in half over four years was not an adequate solution, it only reduces the amount by which the country's debt is being increased year after year. Do you not understand that Denis?
He should, but large numbers of people just think that "deficit" is another word for "debt", and I suspect that he's trading on their ignorance.
ReplyDeleteI think that this is where the Tories are going wrong when they talk of the deficit coming down and not of the debt still increasing but at a slower rate.
When are they going to start talking of paying back Labour's borrowed money?