More crass Cleggisms

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More crassness from Nick Clegg’s LibDem conference speech:

We could have decided to go more slowly but it would have worsened not eased the pain. Because every day you ignore a deficit, it gets harder to fix. The debts mount up and you have to pay interest on them. Already we are spending £44bn a year on interest alone. Under Labour’s plans, that would have risen to nearly £70bn. A criminal waste of money that shouldn’t be lining the pockets of bond traders. It should be paying for police, care workers, hospitals and schools.

The man really should not be let near his own pension, let alone the state’s finances because if he knew anything at all he’d know that most of UK gilts are owned in this country. The profile looks like this:

Most think that overseas bit overstated: a lot think 90% of UK debt is domestically owned.

But the reality is that the biggest holders are pension funds. Gilts underpin private sector pensions, repay them and the pension system will collapse. And banks must hold gilts as part of their required capital funding. Repay them and the banking system will collapse. And so on, and on. And the demand for gilts is rising. Because banks need more capital. That’s what new regulations are saying. But Clegg wants to deny them the assets they need.

And the real rate of interest on government gilts right now? Under 1%. A lot of it being taxed on receipt in the UK (not all, I admit — but a lot).

So this is not money paid to bond traders. this is interest paid at incredibly low cost to institutions that underpin our economy and pensions. And Clegg does not understand that. Heaven help us.

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