John Jappy: Scotland's Oil

Nothing has been learned from the damage caused by the Credit Crunch

On 6 December 2013, a heading in the Daily Express caught my eye "Thanks to Osborne, Great Britain plc is back in business", and in the Press & Journal some days earlier, with not quite such a dramatic statement, but still pushing the great myth "Improving economy swells tax coffers" followed by a photo of a beaming Osborne, with the caption "Chancellor George Osborne can take comfort from rising tax receipts".

This had been pedalled to a gullible public to make them feel that the recession was over and that they could spend, spend, spend, in the period up to Christmas 2013 (and so swell the Chancellor's VAT receipts).    And, of course, it is now the time for the propaganda to be whipped up as the Scottish Independence Vote and the UK elections draw nearer.

But let us look at the facts.

In recent years, for every £5 the Chancellor has spent, he had to borrow £1 from the International Debt Markets.   Now that he has higher tax receipts than expected, all that means is that, instead of having to borrow £120 billion each year to balance his budget, he may now only have to borrow £105 billion every year.  How wonderful!

This of course only refers to the part of the Chancellor’s budget for each year known as ‘The Deficit.’  What is not being mentioned is the far more important issue of the ‘National Debt’ which is what the UK as a nation owes to the rest of the world and, and as each year the Chancellor has to borrow to balance his budget, the ‘National Debt’ continues to soar. The recent figure of ‘National Debt’ as recently released by the Treasury is a staggering £1.23 trillion (£1,230,000,000,000 or £1.23 million million), which is 91% of GDP. In the UK today our national debt exceeds £20,000 for every man, woman and child! 

Nor do we ever hear how this massive debt is being serviced and, the since the loss of the UK’s AAA borrowing rating, the interest to be paid by the UK’s taxpayers is so much greater. Surely, all Osborne's shouting about the ‘The Deficit’ coming down is to obscure the real issue, namely, how much longer will the UK survive before the word ‘bankruptcy’ rears its ugly head.  Ten years perhaps?

To return to balancing the budget, where did the Chancellor get the extra cash to help balance his budget?  It came from the same source that caused the Credit Crunch in the first place – The Bankers! The average total receipts, which includes salaries, pensions and bonuses for London’s top Bankers has soared by 35% (on which tax has had to be paid).  The European Banking Union has said that the UK has now 2,714 bankers with earnings (including bonuses) exceeding one million euros (£833,000).   Contrast that with Germany’s 212, France’s 117, Italy’s 109, and Spain’s 100.  

It is not surprising therefore that many UK bankers will fall foul of the new EU rules which will cap bonuses to one year's salary (or to a maximum of two if shareholders approve). Chancellor George Osborne has filed a complaint against the EU about this (you can see whose side he is on) and last September the Treasury went a step further by lodging legal action on the grounds that the EU had gone beyond its remit.  There seems to be no way that we can win against the bankers who are already drawing up plans to side step the rules, by handing out increased monthly salary payments to staff affected.  (Barclays, it is said, have already briefed staff).

Nothing has been learned from the Credit Crunch, the bankers have fired the starting gun on the race to Credit Crunch Mk II.

For once, I agree with Ed Balls that the so-called recovery is all smoke and mirrors.  His attempts to convey this to the House was met with continued shouting of abuse by 300 Conservative MPs, with the result that not a word of what he said could be heard.   It was not surprising that he got completely rattled.

For those of us living in Scotland, a country that has only one Tory MP at Westminster, the chance to become free of Tory rule will occur by voting ‘Yes’ in the forthcoming Referendum.

See also:  More blogs by John Jappy