By Tom Winnifrith | Friday 19 May 2017
The graph below is terrifying and makes a strong case for not voting at all in the General Election. It tracks the tax burden - the amounts the State takes from its citizens as a percentage of GDP. This is horrifying.
Re-elect the Tories and on what they promise (which as with all parties will be far more prudent than what they deliver) the tax burden will, by 2022, be back to levels last seen in 1969. Under the Lib Dems we head back to 1962 and under Labour it is 1949.
As a reminder the UK budget deficit is £52 billion and the most prudent/least feckless of the main parties admits they will not eliminate it until 2025. That is the Tories and for what it is worth I do not believe the deficit will be eliminated by 2025 even under the wicked Cons. Our national debt to GDP ratio is now more than 90% (ignoring certain off balance sheet fiddles such as PFI and Student Loans that will not be repaid). Whoever wins the June 8 poll, it will head towards and over 100% within five years. That is unsustainably high.
At some stage those who fund the deficit of the UK (institutional purchasers of bonds) will demand a higher price to reflect the risk they take - i.e. interest rates will go up. Already we spend more servicing our national debt than we do on defence (c£45 billion a year). As both borrowings and rates rise that number will balloon. The idiotic triple lock on pensions means that spending on supporting the growing army of old folks will devour more and more of what the Government takes in tax.
All three parties are deficit deniers who push the UK ever closer to the trap door. All are making unaffordable manifesto commitments and not saying what spending they would slash in order to save the nation's finances.
An honest politician would not only scrap the triple lock but would increase the retirement age to 80. He or she would scrap foreign aid (money taken from poor people in rich countries to give to rich people in poor ones), leave the EU and stop contributions at once and then start to take a scythe to spending on the NHS, Welfare and education, notably the crap former polytechnics. But no politician will admit that this is needed.
The Tories are accused of nastiness and austerity but what that means is that they are just a bit less prodigal than Labour and the Lib Dems. It matters not a jot who is steering the Titanic, the iceberg is our debt and deficit and the ship is already holed beneath the water line. It is just a question of how quickly we sink.
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments are turned off for this article.
Search ShareProphets |
Stock market news |
Recent Comments |