There is a great deal of discussion, following the election, of relaxing or even abandoning austerity.
There is an equal amount of confusion about this, because the same word is being used to describe two quite separate concepts.
The consequences of the government changing its policy on austerity are dramatically different, depending on which one it is.
One meaning of the word is what we might call “social austerity”. From any given pot of money available to a government, its supporters believe that, in general, tax cuts should be promoted rather than public spending increased. Opponents argue that public spending as a result has become underfunded. Local councils, education, and the NHS all need more money.
Social austerity can be relieved, as even the DUP and some Conservatives argue, by increasing spending appropriately, and funding it by increases in taxation. This was an important aspect of Labour’s manifesto, and the tragedy at Grenfell Tower has intensified the discussion around it.
The main risk is purely political. Are voters really and truly willing to pay more tax, rather than just wanting someone else to pay it?
There are some potential adverse economic consequences if the policy of higher taxation is pushed too far. Former French President Francois Hollande’s 75 per cent tax rate led to several hundred thousand skilled young people leaving France, mainly for the UK. If companies are taxed too heavily, they may choose to locate to another country. Both skilled labour and capital are geographically mobile.
But, within reason, social austerity could be relaxed without perhaps too many fears in this direction.
“Economic austerity” is quite a different matter. Opponents of this want to increase the gap between government spending and tax receipts – the so-called fiscal deficit. This is funded by issuing government bonds. So the deficit in any given year goes up, and the outstanding stock of government debt also rises.
Any relaxation of social austerity is paid for by higher taxes now. Any relaxation of economic austerity is paid for by borrowing more now.
But the debt has to be repaid at some point, and the interest payments on it must be met. So taxes in the future will be higher. Either way, less austerity means more tax.
John Maynard Keynes himself made it very clear that increasing public spending at a time of full employment would simply lead to more inflation. There are areas of the country where there probably are people registered as unemployed who genuinely do want to work – the Welsh Valleys, for example. But the rest of the UK is at full employment.
The number of people in employment is at an all-time high, at 32m. This has risen by 2.8m since 2010. Meanwhile the unemployment rate has fallen from 7.9 per cent in 2010 to just 4.6 per cent today.
Any major fiscal stimulus to the economy now would simply bid up wages, leading to higher costs and higher inflation.
The public mood on social austerity may have shifted. But the case for economic austerity is stronger than it has ever been.
As published in City AM Wednesday 21st June 2017
Image: People’s assembly by Peter Damian is licensed under CC by 2.0
One of the most remarkable features of the Conservative election campaign was the dog which did not bark.
There was no systematic attempt to undermine Jeremy Corbyn’s wholly implausible economic narrative. Magic Money Tree comments aside, Labour’s economic incompetence was allowed to pass almost unchallenged.
One part of Labour’s economic offer which really did strike a chord with the electorate was the promise to nationalise industries such as rail and water. To anyone with direct experience of the old British Rail or the Post Office (which made you wait six months to get a phone installed) this almost defies belief. But only those over 55 can remember.
The fact is that for a number of years there has been strong and consistent support in surveys for taking industries such as rail into public ownership.
In 2013, for example, the moderate Labour website Labour List commissioned an analysis by the poll company Survation. In terms of rail nationalisation, 42 per cent thought fares would be cheaper, compared to only 12 per cent who thought they would go up. Those believing the quality of the services would improve easily outnumbered those who thought it would get worse, by 38 to 14 per cent. There are many similar examples.
Economists are pretty dismissive of the results of surveys about hypothetical situations or choices. A key foundation of economic theory is the concept of revealed preference, to use the jargon phrase. Individuals are assumed to have reasonably stable tastes and preferences. These preferences are revealed not through answers to hypothetical questions, but through how they actually respond to changes in the set of incentives which they face.
In the National Passenger Survey, for example, 80 per cent of respondents routinely express satisfaction with their journey, compared to fewer than 10 per cent who are dissatisfied. But how does this translate into actual decisions?
Prior to rail privatisation just after the 1992 election, the peak number of passenger journeys made each year was some 1.1bn in the mid-1950s. Faced with rapidly rising road competition, the rail industry saw journeys fall steadily, to a trough of around 750m in the mid-1990s.
After privatisation, massive investment programmes have been carried out and, in the form of the train operating companies, there is now a distinct part of the industry whose priority is the consumer. Journey numbers rose, passing the 1bn mark in 2003, to the current level of 1.7bn, a figure not seen since the early 1920s, when road competition was weak.
So the revealed preference of consumers seems to be that they rather like the current structure. They actively choose to use rail in massive numbers.
Rather like a good Party member in George Orwell’s book 1984, the electorate seems capable of believing two contradictory things at the same time. This reinforces the importance of narratives in politics. Trying to treat voters as rational agents often ends in tears, as both Cameron and May have discovered.
As published in City AM Wednesday 14th June 2017
Image: Jeremy Corbyn by Garry Knight is licensed under CC by 2.0
Whoever wins the election tomorrow will have to grapple with what appears to be a fundamental economic problem. Estimated productivity growth in the UK is virtually at a standstill.
The standard definition of productivity is the average output per employee across the economy as a whole, after adjusting output for inflation – or “real” output, in the jargon of economics.
The amount in 2016 was the same as it was almost a decade ago in 2007, immediately prior to the financial crisis.
Productivity is not just some abstract concept from economic theory. It has huge practical implications. Ultimately, it determines living standards.
Productivity is real output divided by employment. The Office for National Statistics (ONS) has a pretty accurate idea of how many people are employed in the economy. They get data from company tax returns to HMRC.
What about output? The ONS uses a wide range of sources to compile its estimates. But these essentially provide it with information about the total value of what the UK is producing.
The ONS has the key task of breaking this number down into increases in value which are simply due to inflation, and those which represent a rise in real output.
This problem, easy to state, is fiendishly difficult to solve in practice. To take a simple illustrative example, imagine a car firm makes exactly 10,000 vehicles of a particular kind in each of two successive years, and sells them at an identical price. It seems that real output is the same in both years.
But suppose that in the second year, the car is equipped with heated seats. The sale price has not changed. But buyers are getting a better quality model, and some would pay a bit extra for the seats. So the effective price, taking into account all the features, has fallen slightly.
Assessing the impact of quality changes is the bane of national accounts statisticians’ lives. The car example above is very simple. But how do you assess the quality change when, for example, smartphones were introduced?
The ONS and its equivalents elsewhere, such as the Bureau of Economic Analysis in America, are very much aware of this problem. But even by the early 2000s, leading econometricians such as MIT’s Jerry Hausman were arguing that the internet alone was leading inflation to be overestimated by about 1 per cent a year, and real output growth correspondingly underestimated.
Martin Feldstein is the latest top economist adding his name to this view. Feldstein is a former chairman of the President’s Council of Economic Advisers, so he is no ivory tower boffin.
In the latest Journal of Economic Perspectives, Feldstein writes:
“I have concluded that the official data understate the changes of real output and productivity. The measurement problem has become increasingly difficult with the rising share of services that has grown from about 50 per cent of private sector GDP in 1950 to about 70 per cent of private GDP now”.
The Bean report into national accounts statistics last year acknowledged these problems. It could well be that there is.
As published in City AM Wednesday 7th June 2017
The Office for National Statistics (ONS) published last week some figures which show how a successful monetary union works in practice.
It is not obvious at first sight, from the dry heading: “regional public sector finances”.
The ONS collects information on the amounts of public spending and money raised in taxes across the regions of the UK. The difference is the so-called fiscal balance of the region.
Only three regions generate a surplus. In London, the South East and the East of England, total tax receipts exceed public spending. The capital has a healthy positive balance of £3,070 per head, followed by the South East at £1,667 per head.
Essentially, these two regions subsidise the rest of the UK. Public spending in the North East, for example, is £3,827 per person above the level of taxes raised in that region. In Wales, it is even higher at £4,545. No wonder that one of the first things Carwyn Jones, leader of the Welsh Assembly, said after the Brexit vote was: “Wales must not lose a penny of subsidy”.
The region which benefits most is Northern Ireland, which gets £5,437 per head more than it generates in tax. Scotland, to complete the picture, receives around half of that, at £2,824 per person.
There is a lot of debate around Brexit and the border between the North and the Republic of Ireland. There is even talk of reunification, but on these numbers the Republic would be mad to want it.
Essentially, the regions receive these subsidies because they are running deficits on their trade balance of payments. The exports of goods and services from the North East, for example, to the rest of the UK are much less than it imports. In balance of payments jargon, the subsidy it receives is a monetary transfer from the rest of the country, principally from London and the South East.
The ONS does not actually produce regional balance of payments statistics. But the fact that most regions receive these large transfers implies that they are just not productive enough to sustain their living standards by their own efforts.
All the regions are in the sterling monetary union. Those running trade deficits cannot devalue to try to improve their position. They must instead rely on subsidy.
Exactly the same principles apply in the Eurozone. The massive difference of course is that there is no central Eurozone government to make sure the weaker performing regions receive the necessary funding.
This is why President Macron and Chancellor Merkel announced they will examine changes to treaties to allow for further Eurozone integration. Even the hardline German finance minister, Wolfgang Schauble, said: “a community cannot exist without the strong vouching for the weaker ones”.
To be sustainable, a monetary union needs large transfers between its regions. London and the South East already put their hands deep into their pockets for the rest of the UK. Gordon Brown did get one thing spectacularly right. He kept us out of the Euro.
As published in City AM Wednesday 31th May 2017
Image: Euro sign by Alex Guibord is licensed under CC by 2.0
The two main manifestos have been published. Initially at least, the Labour one seems the more popular. Many people are susceptible to being bribed with other people’s money.
Labour claims that their plans to spend an additional £49 billion have been fully costed. At one level, this is true. A set of tax changes and estimates of the additional revenue they will bring is presented. These numbers do add up to the same sum as the extra spending.
It would be pure nit picking to ask where the money is to come from to pay for the nationalisation of the rail, water and mail industries. Labour says the shareholders would receive government bonds in exchange for their equity. This extra borrowing would foot the bill.
Perhaps it would be even more trivial and tendentious to draw attention to the proposed National Transformation Plan, which will spend an extra £250 billion over ten years on infrastructure. This, too, would be financed by additional government borrowing.
After all, Labour says: “we will take advantage of near-record low interest rates”. Indeed, longer term UK government bonds are currently trading at a yield of around 1 to 1.5 per cent.
But this is the essence of the problem. In economics-speak, the bond yield may not be invariant to the size of the deficit. In English, if borrowing rises sharply, interest rates might also go up.
Keynes is often regarded as the intellectual inspiration of those who want to see government borrowing increased. He himself was far more cautious. True, in his magnum opus the General Theory, he did advocate higher government spending to try and solve the depression of the 1930s. But he was very careful to point out that the potential benefits of a bigger deficit could be cancelled out if, as a result, interest rates rose sharply.
This is not a mere theoretical abstraction. In the Mediterranean economies in recent years, interest rates have regularly risen to 6 or 7 per cent, and sometimes higher still, in one of the many crises in confidence in government prudence which have taken place. The idea that Labour could borrow hundreds of billions of pounds with no consequence for interest rates is stretching credibility to breaking point.
More generally, the whole of Labour’s manifesto is costed on the naive assumption that tax and spending changes would not lead to any changes in how individuals and companies behave.
An additional £23 billion is planned from the corporate sector. It is possible that the tax will be passed onto consumers and this amount will be raised. But it may well be that companies will be deterred from operating in the UK at all, and corporation tax receipts will fall rather than rise.
Ex-President Hollande in France raised the top tax rate to 75 per cent. As a result, large numbers of highly skilled young French people moved to London.
The Left is very good at drawing up well intentioned detailed plans. But they usually fail because people change their behaviour in response to them.
As published in City AM Wednesday 24th May 2017
Image: Labour Party General Election Launch 2017 by Sophie Brown is licensed under CC by 2.0
Diane Abbott’s car crash of an interview on LBC radio last week hit the headlines. Asked politely but firmly for the numbers and costings of Labour’s plans on the police, her answers varied wildly from sentence to sentence.
Of course, being charitable, it was always open to Labour’s shadow home secretary to spend a few minutes actually bothering to read her brief before going on the programme. But the whole of Labour’s leadership give the impression of finding numbers difficult.
They are by no means alone in their apparently low level grasp of even basic mathematics. At the end of last year, the OECD released the detailed results of its global Programme for International Student Assessment (Pisa) tests. Pisa assesses the extent to which 15 year olds have acquired the skills which are essential in modern societies.
Over half a million students from 72 countries took the tests. These are in reading, science and maths. Pisa does not just ascertain whether students can reproduce knowledge. It also examines how well they can extrapolate from what they have learned and can apply that knowledge in unfamiliar settings.
The tests divide the results into six levels. At the top level, in the OECD’s words, students “are capable of advanced mathematical thinking and reasoning… they can apply this understanding to develop new approaches and strategies for attacking novel situations”. The UK comes out almost exactly in line with the OECD average in terms of high performers, with 10.6 per cent of students achieving levels five or six in maths, compared to the average of 10.8 per cent across the 72 countries as a whole.
In contrast, in mainland China, Hong Kong, Taiwan and Singapore, more than 25 per cent of students had scores which put them in these top levels.
Perhaps even more worryingly, no less than 21.9 per cent of those taking the tests in the UK scored “below level two”, as the OECD tactfully puts it. In plain English, they were in level one, the bottom set.
In 2016 the Joseph Rowntree Foundation (JRF) carried out a major study on literacy, numeracy and ICT skills just within England. Both its age groupings and its definitions of the ability levels differ somewhat from those of the Pisa report, but the results are the same. No less than 29 per cent of 16 to 18 year olds are at level one or below. Below level one, people are not able to understand price labels in shops.
But it gets even worse. People over 55 have better literacy and numeracy skills than those under 25. So what?, you might say, my everyday experience shows me this very clearly. But the JRF points out than in all other developed countries, the exact opposite is true. Only here are the young less well educated than the old.
This whole body of evidence is a devastating indictment of the educational establishment and the teachers’ unions who enthusiastically support the likes of Dianne Abbott. Time for a real shake up!
As published in City AM Wednesday 17th May 2017
Thomas Schelling is probably best known in economics for his contributions to game theory. Indeed the citation for his 2005 Nobel Prize states it was for “having enhanced our understanding of conflict and cooperation through game theory analysis”.
In the early, tense years of the Cold War between America and the Soviet Union in the late 1940s and 1950s, the US government invested heavily in the then new science of game theory. Schelling’s ideas were enormously influential in preventing nuclear conflict from breaking out. The opening lines of his Nobel Prize lecture point out the real danger that existed: “The most spectacular event of the past half century is one that did not occur. We have enjoyed sixty years without nuclear weapons exploded in anger”.
How do you handle a weapon which is so devastating you do not want to use it, whilst at the same time you must convince the other side that you might? Schelling was instrumental in creating the strategy of credible threats.
His Nobel lecture focused exclusively on game theory, the area par excellence of rational agent behaviour. This was a rather curious decision on his part. For his mind ranged powerfully over a wide range of issues.
Schelling made seminal contributions both to complex systems theory and to the rigorous analysis of agent behaviour on networks. It took time for scholars to appreciate the importance of this work. But these two themes are now at the forefront of science in the 21st century.
His 1971 paper in the Journal of Mathematical Sociology, entitled “Dynamic Models of Segregation”, was a brilliant illustration of the principle of emergence in complex systems. Schelling postulated a giant chessboard populated by an equal number of two types of agent located at random, and a few vacant squares. Each agent has a very weak preference for being in a majority in its local neighbourhood. This latter concept can be defined in a number of ways, but the simplest is the eight immediately adjacent squares plus the square the agent is on. If only four of its neighbours are of its own type, and four are not, the agent is happy. But if it is a minority, it moves at random to an empty square.
Although the individual preferences for location are weak, the board segments rapidly into a highly segregated pattern, with blocks of agents all of the same type. As Schelling puts it: “The systemic effects are overwhelming: there is no simple correspondence of individual incentive to collective results”. In other words, the properties of the system emerge from the interactions of the individual agents.
Schelling described the “analytics of neighbourhood tipping”, and stated that “a general theory of tipping begins to emerge”. Nowadays, of course, the phrase “tipping point” is in common parlance, not least because of Malcolm Gladwell’s popular book on the topic, written thirty years after Schelling’s paper.
Our understanding of crime, obesity, smoking, binge drinking – a whole host of social problems – has been improved substantially by Schelling’s work. He saw that there are underlying similarities in how they develop.
His most important work in this area was published in 1973, in a paper in the Journal of Conflict Resolution with the wonderful title “Hockey Helmets, Concealed Weapons and Daylight Saving”. Schelling’s inspiration was a piece in the sports section of a newspaper about ice hockey, a game even more brutal than Rugby League.
A star player had suffered serious head injuries from the flying puck whilst not wearing a helmet. The reporter interviewed other leading players, none of whom wore helmets. It was clear that they understood the very real dangers involved. A rational economic person, weighing up the costs and benefits, would always wear a helmet. But when asked why not, a top boy answered “I don’t because the other guys don’t”.
Schelling crystallised this into a mathematical concept he called “binary choice with externalities”. The choice facing an individual is binary. Either you wear a helmet or you don’t. Either you smoke, or you don’t. But your choice may affect how other people in your peer group make their choices. If no one else wears a helmet, you look soft by wearing one. If all your friends smoke, you may do so just to fit in. So the decision of an individual can have effects which are “external” to the decision itself. Understanding this is crucial to policy makers trying to influence the outcome. Rational choice theory may not always apply.
Schelling’s segregation paper was all the more remarkable because, nearly five decades ago, he essentially had to work out its properties by hand. In the same way, the concept of binary choice with externalities was set out with diagrams.
Advances in computer technology enabled the mathematical sociologist Duncan Watts to develop the idea dramatically in a 2002 paper entitled “A Simple Model of Global Cascades on Random Networks”. Agents in the Watts model, as in the original Schelling piece, take no account of the attributes of the alternatives facing them. Instead, they select using a variety of rules, all based on the principle of the choices made by agents to which they are connected. At the start, all agents are in the same state of the world. A small number is selected to switch the other. Watts analyses and simulates the cascade properties – how many will eventually switch – when agents are connected on different types of network.
Schelling made strikingly powerful and original contributions in a range of disparate areas. Much of his work was decades ahead of its time. Overall, he was a true polymath of genius.
As published in the Royal Economic Society newsletter April 2017
Image: Thomas C. Schelling by New America is licensed under CC by 2.0
Michael Gove famously said during the Brexit campaign that people “have had enough of experts”. Certainly, the outcome suggests that many were sceptical of the doom-laden economic projections of Project Fear.
But what do the public think about economists themselves? An intriguing survey released last week by ING bank and the Bristol University Economics Network sheds light on how this particular group of experts is viewed. The findings were presented at a seminar held in the Treasury last week.
Some key results were reassuringly as expected. For example, an overwhelming majority of respondents, in the poll conducted by You Gov, think that economics is important.
There is a widespread misconception of what economists actually do. A great deal of media focus on economics is about macro economic forecasts, what will happen to GDP, inflation, interest rates and the like. In fact, very few academic economists work on forecasting problems, and even within the Treasury and the Bank of England, the teams directly involved with this are small.
Most economists work on micro problems, trying to figure out, for example, the impact of changing tax rates on incentives, or trying to assess the costs and benefits of an infrastructure problem.
In principle this is useful work. But, regrettably, the survey did not disclose to the respondents just how many economists are employed in the public sector. In 1964, the incoming Labour government of Harold Wilson doubled the number of economists in the civil service from six to twelve.
Now there are 1,400, not counting those working in the Bank of England and the numerous regulatory authorities. Much of the expansion took place under Gordon Brown. It is hard to believe that diminishing marginal returns, to use a jargon economics phrase, have not set in. In plain English, there are far too many of them.
An important feature of the survey is that there is a big problem of trust in the opinions of economists. This is particularly the case with older people and with Leave voters. Many believe that economists express views based on personal and apolitical opinion than on verifiable data and analysis.
A striking illustration of this is of course Brexit itself. It cannot be said too often that the Treasury forecasts of the consequences of a Leave vote predicted a massive rise in unemployment of 500,000 by the end of 2016. It has of course fallen.
At least 90 per cent of professional economists in the UK supported the Remain campaign. Some brave souls in university departments who favoured Leave found themselves virtually ostracised. The shameful attacks on Leave voters, accusing them of being dupes and incapable of understanding the arguments, are based on the misplaced intellectual certainty of the economics mainstream on this topic.
Economics is far from being an empty box, and it can usefully illuminate many practical problems. But the profession needs to be more honest with the public. Some parts of the discipline do have strong empirical backing. Others seem based more on groupthink than on objective science.
As published in City AM Wednesday 10th May 2017
Ten years ago, the financial crisis began to grip the Western economies. During the course of 2007, GDP growth slowed markedly everywhere. By the end of 2008, output was in free fall.
A key theme in economic commentary is the sluggishness of the subsequent recovery of the developed economies.
The picture is not quite as bad as it is usually painted. True, last week the Office for National Statistics announced a dip in UK growth in the first quarter of this year. But from 2009, the trough of the recession, to 2016, GDP growth averaged 2.0 per cent a year. Not exactly a stellar performance. But from 1973, the year prior to the major oil price shock, to 2007, the British economy expanded by just 2.3 per cent a year on average. The contrast between the two periods in the US is slightly greater. From 1973 to 2007, growth averaged 3.0 per cent a year, and since 2009 it has been 2.1 per cent.
There is a very stark contrast with the experience of the 1930s, the last time there was a global financial crisis. This time is different, things have only got better. The recovery may be slower than desirable, but it has been much more widespread than in the years following the Great Depression of the 1930s.
A decisive indicator is the length of time it took not just for growth to resume, but for the previous peak level of GDP to be regained. So in the UK, for example, the economy started to grow again in 2010. But it was not until 2013 that there had been enough growth for the economy to get back to its 2007 size.
Looking at a group of 18 developed economies, which includes all the main and medium sized ones, GDP had regained its previous peak within 3 years in no fewer than 8 of them. By 2016, everyone in the group except Finland, Italy and Spain had a GDP which exceeded its previous peak.
Three years after output began to fall in 1930, not a single economy had managed to regain its 1929 level of output. Even by 1938, output was below its 1929 level in Austria, Canada, France, the Netherlands, Switzerland and Spain.
Perhaps Keynes’ most powerful insight was why the slump was so prolonged. He developed the concept of “animal spirits”, which are not a mathematically based prediction of the future, but the sentiment of the narratives which companies form about the future. He wrote: “the essence of the situation is to be found in the collapse of animal spirits…. this may be so complete that no practicable reduction in the rate of interest will be enough.”
Zero interest rates and low growth! Keynes got there before us.
Still, capitalism has performed much better in the aftermath of the financial crisis of the late 2000s than it did in the crisis of the early 1930s. Animal spirits may not be buoyant, but they are in much better shape than in the 1930s.
As published in City AM Wednesday 2nd May 2017
Image: Day 20 Occupy Wall Street by David Shankbone is licensed under CC by 2.0
Elections create uncertainty. But we can be sure of one thing. Regardless of the result, during the course of the next Parliament, stealth taxes will rise. This week, we have a sharp rise in speeding fines. Even doing between 31 and 40mph in a 30mph zone can now land you with a penalty of 50 per cent of your weekly income.
Governments across the West are running out of ways to pay for the spending levels which the electorates appear to demand.
A key way in which public spending has been financed over the past 40 years has been through debt. Almost everywhere, the level of public sector debt relative to GDP has risen sharply.
A few years ago, the International Monetary Fund (IMF) published long runs of historical data on the public debt to GDP ratio for countries across the globe. The Bank of International Settlements (BIS) updates the ratio regularly.
In 1977, gross public debt in the United States was 39 per cent of GDP. In 2016, it was 98 per cent. Over the same period, the UK, using the IMF and BIS definitions, the rise was from 49 to 115 per cent of GDP. In France, the ratio went up from 15 to 115 per cent. Even in debt-wary Germany, there was an increase from 27 per cent in 1977, to 78 per cent in 2016.
There are different ways of defining public debt, and no two measures are the same. But regardless of how we put the figures together, the conclusion is clear.
Public sector debt has risen massively. The simple fact is that most governments in most years now routinely spend more than they dare raise in taxes. The resulting deficit has to be financed by issuing debt. But the limits are now being reached, a lesson the Greeks have learned so harshly in recent years.
Over the course of history, public sector debt, relative to the size of the economy, has been at much higher levels than it is now, with no apparent serious consequences. In 1946, for example, UK public debt was 270 per cent of GDP.
But in the past, governments with high debt levels typically did one of two things. They either defaulted, or they tried to pay it off. The left wing Labour government of Clement Attlee ran huge budget surpluses in the late 1940s, peaking at around £100bn a year in today’s terms.
Most debt used to be incurred as a result of war. In 1861, US public debt was less than 2 per cent of GDP. The Civil War bumped this up to 30 per cent. In the late 1810s, as a result of the Napoleonic Wars, the first truly global conflict, British debt was 260 per cent of GDP. It took decades to get it down to sustainable levels, but governments did succeed and pay it off.
In stark contrast, debt has been built up in the late twentieth and early twenty-first century to finance the services provided to voters. It is simply unsustainable.
As published in City AM Wednesday 26th April 2017