An argument against the so-called debt crises!
So today the GDP figures came out for the UK and its not good. The UK economy shrank by 0.7% between April and June.
The argument is that because we have a huge debt and are adding to that at a huge rate, the solution to the “debt crises” isn’t to max out another credit card.
That would be true if we were facing a debt crises. I don’t think we are.
First of all it is true that governments around the world well mainly in the western world have a lot of debt and have huge deficits. It is also true that banks gambled with money they didn’t really have, forcing governments to bail them out.
But the economic crises we face isn’t because of government debt or government deficits.
Last week saw the release of official figures showing that the Scottish economy is back in recession. The Scottish economy as an individual unit is incapable of having debt or a deficit for the period between January & March, therefore unlike George, Scotland can’t blame debt or a deficit for going back into recession.
Scotland’s economy is incredibly more complicated than if you just take the UK as a whole. Why?
Because we have the Scottish Government taking decisions as to where to spend the UK handout in areas such as education, health, law & order, apprenticeship schemes etc. that are different from the UK Government’s decisions but you also have the Chancellor deciding how much money we get, and paying out on items such as welfare and all economic decisions.
Yet, I think there is a valid argument that because the Scottish economy has only just fallen into recession again, later than the rest of the UK, that the deficit is not the number one priority to be dealing with at the moment.
That being said there are a number of questions to be asked about this such as how much the deficit and the debt of the whole UK affects the Scottish economy? Scotland relies on a handout, is that affecting positively or negatively on the Scottish economy?
How much are the Scottish Government decisions affecting the economy versus how much the UK government decisions are affecting the Scottish economy?
You could answer these questions from various different angles. I have to say, it is incredibly difficult to work out the right answer.
I do know the SNP will use this to blame Westminster and not take responsibility but we don’t know what effect if any the UK Government’s decisions are having on the economy.
P.S. If you think I’m wrong on this and that my argument is completely invalid and my logic is flawed please leave a comment. Also if you agree, please leave a comment.