ON WEDNESDAY 21st October the UK’s debt officially breached the £3 trillion milestone equivalent to £107,000 for every family in the land. Like it or not, YOU have a second mortgage, but the asset is intangible.
The detail is even more pernicious. Spending was up 5.6 per cent year-on-year – well ahead of the lamentable inflation number today of 3.5 per cent for the same period.
Government managed to spend a staggering £111.3bn, or well over £3,000 for every household in one month alone. £30.6bn went on welfare and approximately half of that on in-work benefits to feather the nine million plus of working age that for one reason or other have opted out.
The millstone of £10.9bn, around 10 per cent of all spending simply went to meet the debt bill. So far in six months His Majesty’s Government has spent as much on debt interest as it will on defence for the entire year.
This year the UK will borrow an additional £130bn. The interest cost on that additional debt alone will be around £7bn, then around £200bn of existing debt needs refinanced almost certainly at a higher rate than the current level. That might cost another £4-5bn, that’s an additional £12bn per annum compound without corrective action.
There are no extra bridges, no schools or hospitals, no police on the beat or nurses in the wards to show for it. It is the interest on benefits and spending – state consumption – already taken.
It will likely be the same next year and the year after. The £120bn of annual interest cost was just £40bn in 2020. Assuming the 10 year bond continues to yield 5.4 per cent within 5 years that £120bn could easily be £160-80bn per annum, more if the yield curve continues to go the wrong way. This is the death spiral Rogoff and Rogoff famously described in their work ‘growth in a time of debt.’ It is a millstone on our children.
The £130bn of new borrowing is broadly as bad as it was last year and that is as bad as it was three years ago but Sunak, Hunt and Reeves all increased tax markedly to the point the burden is the highest proportionately since 1948. Every tax rise disappears into the vortex of ever higher public spending for the nation’s Praetorian Guard, the public sector worker and venerated welfare recipient. The pit is never-ending and the results ever more woeful.
The state is becoming the economy. It is nominally 44 per cent of GDP, up from around a third just 20 years ago but this underestimates the reality. Barely an industry is free of state control from energy and ‘climate change’, finance and banking, ever greater workers’ rights, planning, environment – you name it. In every area state control has increased manifestly over the last generation and infringed on every area of the private citizens rights and legitimate choice.
And does it work better than even ten years ago?
Much was made recently of the hapless Jonathan Brash, Labour MP for Hartlepool, who was mocked on X for stating that ‘public sector workers use their income to pay for the private sector and that the state is one of its biggest procurers’, asserting that the private sector wouldn’t exist without taxpayers. It is of course economically illiterate as there would be no state without private enterprise.
Then again it is sort of true. In this land today, rather than the free people I thought and wish we were, by stealth and slow boiling agents in favour of the government, the state now dominates.
This has gone far, far too far. No longer can we simply tinker and hope it will be alright on the night. Hayek saw the future when he published ‘The Road to Serfdom’ in 1944. We are almost there today. The State is the master and we must beg for crumbs as it decides your future.
Recovery from this disastrous state will not be easy. It has gone far too far to undo painlessly what the leviathan state’s adherents have built – but if we do not we will cease to be free in any sense. It is essential we assert our individual rights over the state. It is there to serve us and take our direction – not the other way around.
We the people are sovereign and the state is there to serve us in a proportionate and effective way. The choice is simple, submit to the leviathan, or break free.
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AI image of man with a millstone on his back provided by Adobe Firefly.
