Your correspondent BW Jervis (Letters, April 23) offers a simple truth that would have earned the admiration of Mr Micawber; that if a person’s expenditure continually exceeds his income debt and ruin will inevitably follow.
He equates this little homily to the nation’s finances warning that a similar fate awaits us if the country borrows more than it raises in revenue and incurs a debt. Sadly, it is the very simplicity of this argument that leads to its own destruction and to Mr Jervis’s delusion. Countries are not like individuals nor are they like families and the differences should be obvious even to him.
Most countries carry debt and this country is no exception. Debt itself is not a problem unless the country’s ability to service its debt becomes unsustainable but that has not happened here for very many decades and is not happening now. Sometimes the debt is forced on us such as in times of war (we finally repaid our World War Two debt to America and Canada in 2006) but more usually governments borrow money to invest as a means to grow the economy. The interest payments are offset by the greater income that accrues from taxation returns as people find jobs and from higher demand in the economy through people spending more.
Of course, governments also need money to pay the bills for the health service, welfare, defence and, significantly, pensions but that raises questions about the levels of taxation we need to pay to maintain a civilised and secure standard of living. It has been said many times before that in this country we expect to be given first-class services but without paying the taxation that would secure them.
I don’t know if Mr. Jervis’s fear of debt has never allowed him to take on a mortgage or to replace his car with a loan because it was becoming too expensive to maintain.
However, if he remains frightened by borrowing maybe he should not reflect on the fact that this current government has doubled the national debt to £1.5 trillion in five years and that Conservative governments in the past, including Mrs Thatcher’s, have run the economy with a higher debt ratio than Labour governments. His simple balance sheet understanding of economics and his obvious bias against Labour have little to teach us.