Phillip Hammond
Image: © EU2017EE via Flickr

The government deficit is lower than it’s been in a long time. Is this good news?

Depends whether you think a 'deficit' is that big a deal.

UK Chancellor of the Exchequer will be celebrating this morning  that figures show the government ran a surplus in July - bringing in more than it spent.

What it means: This government is very intent on 'closing the deficit' – in other words, not spending more than it brings in.

Public spending is funded by a mixture of things, among them borrowing from pension funds, City banks, and whoever else is willing to lend. Hammond's been trying to reduce the amount the government borrows, and it looks like he's been successful: they've borrowed 40% less than they had by this point in 2017, and are expected to borrow about a quarter of what they did in 2009-2010, right after the financial crash.

The question is whether you see this as a success for the economy as a whole. Borrowed money obviously needs to be paid back, and with interest - so some say we should borrow as little as possible so as not to cut into government funds with interest payments. Others say public spending is a vital part of keeping the economy going: funding education, the NHS, police services, social care, and all the other building blocks that allow business and daily life to function - so it pays off in the end.

It's also important to note that the figures today aren't necessarily representative of the overall picture. Self-employed people file tax returns in July, and we still haven't made a payment to the EU we'd usually have made by now, but will have to pay in a few months either way: so the budget might be looking unusually high at the moment, but in part, that's just because of the timing.

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Reader Comments

  • WhereAreTheVikings

    What a terrible, terrible shame. Western Civilization nurtured capitalism, and now capitalism is destroying it. And these young people seem to welcome the invasion of their homeland. The media and schools have been very efficient in wiping out all traces of blood and soil.

    • prollawalllynotahumanoid

      Capitalism isn’t the problem. It’s corrupt politicians taking bribes and kickbacks from Globalists and the Chinese.

      • WhereAreTheVikings

        Maybe I should have said crony capitalism. Although Italians importing Chinese to make “Italian leather” shoes is not crony capitalism. It is capitalism, pure and simple.

        • prollawalllynotahumanoid

          That would be crony capitalism and globalism combined. They aren’t concerned with the affect their policies have upon their citizens, the health and welfare of their society and culture or their economy. What it isn’t is fair-free trade to further national interests.

          • WhereAreTheVikings

            I’ve always seen them as one and the same, but perhaps they need to be named individually, just to bring home the point.

      • WhereAreTheVikings

        But now that travel is so easy and borders are virtually down through H1bs and the like, theoretically you can’t blame capitalists for the pursuit of cheaper labor, although I do heartily blame them not being more patriotic than that. Perhaps the emerging nationalism will force them to voluntarily do what they should have morally been doing all along, and that is employing business practices that preserve their countries and nationalities. The government should be doing everything it can to encourage that, to the extent that small government should do anything but guard the borders and strictly, drastically, limit immigration.

      • Henry Lam

        It is China with its corrupted mindset affecting the world.

        • prollawalllynotahumanoid

          No it is not. Capitalism is the fairest and least corrupt system of all.

          Socialism and communism is based on authoritarianism, coercion and police intimidation. It has and always will be rife with criminality, bribes and kickbacks.

          Corruption can be anywhere but it is the very basis of socialism and communism.

    • Henry Lam

      The government is too weak. They do not understand the mindset of communists and how they educate their people. Those communist people are only loyal to their country and could be dangerous. The immigration law should only accept those who accepted multiculturalism and taught from a democratic education system. This virus events clearly has shown how stupid to take China as a friend.

      • WhereAreTheVikings

        The government is not too weak. Just weak-minded about some things.

  • Gabi Rodrigues

    For how many days can a country maximum close their borders to foreigners maximum? Like now, with the virus, everyone is using 30 days. Can it be more?