Andrew Neil: The pandemic has blown up the public finances
The pandemic has blown up the public finances. After a decade trying to get the books close to balance, the government last year borrowed a staggering £300bn, over 14% of our GDP and a modern peace time record. That’s almost £5,000 for every person in the land.
Nearly 30% of public spending is now paid for with borrowed money. This year the government will borrow another £234bn. It will be mid-decade before borrowing returns to anything like pre-pandemic levels. Our total national debt now stands at over £2 trillion. That comes to £32,000 per person. We’ll pay £40bn this year in interest payments just to service this debt.
Of course interest rates are at rock bottom which makes borrowing relatively cheap, especially if you’re the government. But they only have to tick up to 1% and debt service would double to £80bn.
That’s roughly what we spent every year in the NHS before the pandemic, and double what we currently spend on the defence of the realm.