Rather than clog up the UK election thread, I thought this might sit better in here.
I am
interested but not
educated in economics. I'm a long, long way from expert, and keen to learn more from learned sources.
Some of Nemo's comments in the other thread really got my back up. Luckily I didn't have time to bash out a quick reply.... So I'd like to take some time to unpick some of this:
As others have said, the UK is in a totally shite situation financially. Anyone pretending on the right that they can cut loads of taxes, or anyone on the left pretending that they can spend loads of money - in both cases, by government borrowing - just haven't been paying attention to the real world. Any government trying to do that is just going to be shut down by the bond markets, as Liz Truss painfully found out. People just won't lend any government money at low interest rates if they think they aren't financially credible.
I have to respectfully disagree - Lizz Truss got slammed because she hadn't consulted with bond markets and signalled what she was doing, and it caused a load of feedback loops. The amount of borrowing required to do what she wanted absolutely paled into insignificance vs the covid QE/Furlough spending, all of which made nary a dent on the bond markets.
I'm just going to shoe-horn these interesting facts about UK National Debt:
The most important facts everyone should know before discussing debt issues in the UK are:
1. Two-fifths of UK government debt is owed to the UK government itself (Page 2)
2. The UK government’s extra spending during the Covid crisis has been paid for by borrowing from
itself, through the Bank of England (Page 3)
3. Over four-fifths of UK government debt is owed to people and institutions in the UK (Page 3)
4. The UK government can currently borrow at the cheapest interest rates in its history (Page 6)
5. The UK government is paying the lowest amount of interest on its debt in recorded history, as a
proportion of GDP (Page 
6. UK government tax revenue (as a proportion of GDP) is the third lowest of G7 countries, and
well behind other European countries (Page
7. The debt of the UK’s private sector is 2-3 times bigger than that of the government (Page 9)
8. The UK economy has the second largest deficit with the rest of the world of any rich country
(Page 10)
9. The UK’s finance sector is the most exposed to a crisis of any G7 economy (Page 12)
Not the strongest reference in the world, but it all seems easily fact checkable if you so wish:
https://jubileedebt.org.uk/wp-content/uploads/2021/08/10-key-facts-on-debt-in-the-UK_Update_Jan_21.pdfIt is also now a bit out of date.
The UK has debt of 2.6 trillion pounds. That's 98% of GDP. That is not a good position to be in, and it's vastly worse than it was a decade ago, largely thanks to the stupidity of the Boris years and the (obviously popular) furlough scheme. The Tory government managed to spend more money on the pandemic than any other country in Europe, and yet far more people died (per capita obviously). Throwing money at people is popular in the short term (one of the many problems with 4 year election cycles, not that I've got a better suggestion), but it's disastrous longer term.
Actually, it doesn't really. It's been shown to be about £1Tn less than that:
https://www.taxresearch.org.uk/Blog/2023/12/24/the-good-news-this-is-christmas-is-that-trillion-of-the-uks-national-debt-does-not-exist/Good luck refuting that. And refer to you back to who owns the debt. Note that the debt interest as a % of GDP has remained fairly steady and declining since the 80s:
https://commonslibrary.parliament.uk/research-briefings/sn06167/#:~:text=In%20the%20financial%20year%202023,equivalent%20to%204.4%25%20of%20GDP.
A lot of what the left said about "austerity" in the Cameron years was nonsense. The Tories were right to try and bring down government debt. And they didn't even get started. They didn't even manage to get the deficit (ie: how much the debt goes up each year) down to zero. Let alone get started on the debt. So, that much the Tories (before Boris and the populists got to power) were traditionally right about.
Can you explain exactly what about it was nonsense? As you rightly state, the Cam/Osb Gov didn't make a dent in it because they never really intended to - it was an ideologically driven desire to reduce spending - at a time when interest rates were incredibly low. All that does is stall growth and starve services. Even bloomberg agrees it was too much, too long!
https://archive.ph/5xsUBIn short, the UK has been living well beyond it's means for way too long. And there's going to have to be a many decades long, painful wake up call. Which has been made much harder by making ourselves poorer by leaving the EU. Sure we have our own currency, so if the government chooses to, it can essentially print money. But that just makes everyone poorer by spiking inflation.
What do you actually mean by this?
I don't like GDP as a measure of "national economic health" but until we all agree on a better measure it's all
we've got, so here goes. I'm just going to play out a scenario as a thought experiment, and I'm keen for people to pick holes and point out where it's flawed, but only with solid arguments - no hand waving. (Apologies if I've done the same anywhere in my post, can't reference everything and I've already spent way more time that I wanted to...).
Let's assume annual debt is the £2.6Tn quoted, and GDP is just about that at £2.65Tn. Let's call these the 2024 numbers.
If we assume Gov Debt Interest is around 1.5% of GDP, and underlying annual growth is 2%, base case with no "green new deal" spending (and no additional "deficit spending", which I'll keep consistent in all cases):
Then we add £30Bn/year of "borrowing", but for now let's assume this doesn't stimulate any additional growth over and above it just being plain added to GDP (any Gov Spending adds directly to GDP, no?), since it will all become "economic activity":
We can see the debt to GDP ratio gets marginally worse, due to the additional borrowing. However, if we assume that Spending £30bn directly into the economy will have some level of multiplier effect, let's assume a 0.5% top up of growth to 2.5%:
Debt to GDP ratio stays roughly flat, but we get £30bn/yr spent into the green economy, funding our future energy security, a whole heap of good jobs...
Obviously this is hugely simplified but I don't think it's wildly off the mark. (I've just realised I should have used more like 3-4% interest, but it doesn't make a lot of difference the end result is similar and I can't be fucked going and re-exporting the tables)
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I was a bit sad when more people started repeating it the right way up. 
