Stephen King's new book, When the Money Runs Out, is a sobering read
After a sunny weekend, I’m loathe to write to something depressing. But the Telegraph’s review of Stephen King’s new book, When the Money Runs Out, is nothing less.
According to HSBC’s chief economist, the green shoots of recovery in the UK — Q1 GDP growth of 0.3% and flickers of a manufacturing revival — are, in fact, bumps along the bottom.
The UK’s primary problem, King says, is that it cannot deliver the welfare promises that it has made its citizens.
The future therefore looks glum. ‘Promises will have to be broken and expectations lowered,’ summarises the Telegraph. ‘Weak growth will mean less prosperity to go round. People will be stripped of their “entitlements”. An introverted politics of envy will stir, resulting in pressure for greater equality and an attack on the rich. Society may fray as protectionism replaces globalisation and an ugly xenophobia rears up again.’
Wow. Happy Monday!
Yet many reading this will have seen the seeds of destruction sown long ago. After all, the UK’s liabilities are so big that they are hard to miss: the NHS employer is the largest employer in Europe, the military is the fourth most expensive in the world and no fewer than 20.3 million UK families receive benefits.
Yet amid the eye-watering outlays, the Coalition is not so much cutting the deficit as scratching it. In the year to March, public sector net borrowing was down a mere £300 million to £120 billion, with the IFS calculating that 75% of the cuts have come from spending cuts and the rest from tax increases.
Whoever wins the 2015 election may just wish they’d lost it.
Perhaps more ominously, the UK currently has worse debt-to-GDP and deficit-to-GDP ratios than Cyprus. And if more economists hop on Stephen King’s bandwagon then we’ll see interest rates on gilts leap, as investors demand higher returns for taking on higher risk, thereby forcing our day of reckoning sooner than expected.