There's no denying that the last few years have been very tough, for almost everyone. The cost of living spiked and it impacted almost every area of our lives. National debt went through the roof.
So why, what was done about it, where are we at now, and are things getting better?
NATIONAL DEBT
The UKs debt, as a % of our GDP started rocketing up under Labour in the early 2000s. In 2002 it was as low as 29%, by the time they left office in 2010 it had hit 64%. The debt had doubled in just 8 years.
The trend continued under the Conservatives and between 2010 and 2019 it went from 70% to 85%. Up 15%.
Not as bad as the 35% under Labour. But high.
Things went south in 2020 with a sudden 10% spike taking national debt to 96%, up 10% in a year it is now at around 97%.
So, national debt is too high. We need to look at what the government's have been doing.
2008 saw the UK hit badly by the global financial crisis, that year borrowing jumped from 35.6% to 50.6%. That was the year Labour bailed out the banks, costing the UK around £137bn.
2019 was the next spike and no-one needs reminding that happened that year. Covid-19 swept the globe hitting everything from supply chains to energy prices.
In April 2020 Rishi Sunak rolled out the furlough scheme, which paid Brits to stay at home during the pandemic. 11.7m peope were paid in this way, which cost the government a massive £70bn. A further £6bn was spent helping people with their energy bills.
During this time, Rishi also rolled out covid loans for businesses. Unfortunately, an estimated £1.4bn was lost in fraud through this scheme.. a total of £77bn was paid out in loans to businesses, so the fraud was less than 2% of the total lent out. The interest paid on these loans is 2.5%.
When we take into account those defaulting on the loans, and the fraud, the government is set to make about £9.4bn from this loan scheme. Meaning the scheme will deliver the government a profit.
The furlough scheme was, however, around half what Gordon Brown spent to bailout the banks.
There is no doubt that global crises have hit our national debt hard. Did Brown and Sunak make the right call?
INFLATION
Inflation is, in simple terms, the amount prices have gone up vs the year before. As long as inflation is above 0, prices are up. The Bank of England's target is that inflation should be 2%. So things should be 2% more expensive than last year.
Don't ask me to explain that. Something something GDP and wages.
It hits us all hard and the main way the Bank of England deals with it is by hiking up the rate of interest. This is good for savings, bad for spending. Which is the idea. If people stop spending then prices stop going up. In theory.
There are a few notable spikes in inflation.
2008, credit crisis, Labour bail out the banks.
2020-2022, Covid, spike in energy costs and furlough.
Following Covid inflation has been falling fast. Today the Bank of England announced that it has hit the 2% target. In theory, this should mean that they now start to lower interest rates again.
This will be good news for anyone with a mortgage!
Inflation is rarely in the governments control and it has been spiking around the world. But, there are some ways this can be controlled.
The UK is heavily dependent on foreign energy. This means an oil price hike hits us hard and we can't do anything about it. The solution to this is to make the UK energy independent, so we have control.
In 2020 the UK began a new nuclear reactor in Sizewell. Once complete, this single power station will provide around 7% of all UK energy. It was, initially, done in partnership with the French and Chinese governments (the French are the most nuclear powered nation, hence their cheaper bills). The UK government brought out the Chinese stake in 2022.
The UK has also seen a boom in renewables. These power sources are in the UK, controlled by the UK. They give us energy security.
Since Cameron in 2010 the UK has increased its renewables by 500%
CONCLUSION
The cost of living hits everyone hard and the biggest hits to the UK have come from global events. Such as the pandemic or the banking crisis.
It's tempting to say that we have no control over these, but that's not the whole truth.
The banking crisis was caused by greed and poor regulation. It was preventable and should have been seen coming. We were failed by those who were elected to protect us and serve in our interests.
Covid was perhaps different. It either came from wild bats or a lab leak in China (or some Martian cloud seeding alliance with Bill Gates, if you believe the internet).
The only control we had here was in our response. The UK was slow to close our borders, but it doesn't look like that made much difference. Though perhaps it would have brought us time. We also had control over preventing fraud and wasted PPE. It is tempting to suggest we could have done better in that area. However, this was totally unprecedented. The whole world was trying to purchase PPE and the covid loan scheme had to be set up rapidly to keep businesses afloat.
We saw the world's first vaccine rollout in the UK, thanks to government support of our world leading pharmaceutical industry. The government also responded with furlough.
Furlough was hugely expensive, especially when coupled with lockdown. It meant 12 million workers were producing nothing but being paid. The longer lockdown would last the more it would cost.
Many people, including Kier Starmer, wanted lockdown to last longer. If it did, it would have cost more.
Rishi Sunak spent £70bn keeping people in jobs. That's half what Gordon Brown spent bailing out the banks.
Sunak's covid loans will make the country £9.3bn. Gordon Brown's bank bailout is set to lose us £83bn.
Both Brown and Sunak were big spenders. Both forced to do so by global events.
The question is who responded best, and in the public interest
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