In his paper, "Britain at the crossroads‟, Dr Tim Morgan, head of research at Tullett Prebon, explains why the true indebtedness of the British state is well in excess of £2 trillion, vastly higher than the £760bn narrow definition of national debt. “Unless resolute action is taken”, the report says, “we cannot rule out the possibility of a ‘perfect storm’ for the UK economy”, comprising “higher interest rates, rising unemployment, falling property prices, an even weaker currency, rising inflation (caused in part by higher import costs), and escalating public debt”.Ding dong, kemosabe, and maximum house points to Dr Morgan. Respect!
As a result of the rise of the quangocracy, Britain's government is now more wasteful than those of Ethiopia or Albania, and the regulatory burden is greater in the UK than in Nigeria or China. “It is possible”, Dr Morgan warns, “to envisage a future in which the British population is subjected to ever-increasing taxation and charging to sustain an administrative superstructure which is increasingly coercive as well as unaffordably costly”.
If most of Britain's political leaders are to be believed, drastic cuts in public spending would reverse the country's anaemic economic recovery and inflict irreparable damage to essential public services. “Bunkum”, Tim argues, pointing out that a £100bn cut in public spending would still leave government expenditure higher in real terms than it was in 2006, when public services were hardly starved of cash.
Rather, Tim advocates requiring the state to live within the implications of a maximum revenue share of 35% of national income, and a maximum deficit of 3%. Only through such an approach can both fiscal stability and economic competitiveness be restored.
Friday, May 07, 2010
Britain at the crossroads
Check out this press release from Dr Tim Morgan at Tullett Prebon, the largest bond inter-dealer broker in London: