These are pretty dark days for the British economy, you’d have to be a hermit not to have heard the news, but just how bleak are things really?
All too often at the moment we’re hearing claims that the country’s currently dealing with the biggest National Debt which it has ever faced, and while that may be true in nominal terms i.e. the total figure, measured in pounds, is the largest it’s ever been; the truth is that the UK has lived through, and come out of, far worse financial circumstances and without having to make the kinds of drastic cuts which this month’s spending review seems certain to bring.
Lies, Damn Lies and Statistics?
So, how do I explain my claim that we’ve had things worse as a nation, when, on the face of it, Mr Osborne & Co’s claim is correct, this is the largest our national debt has ever been?
That is why a more reasonable measure of the severity of national debt is to compare it, in some way, to the state of public finances, or the national economy as whole. If one does then, relatively speaking, things start to look somewhat less stark than the Govt might have us believe. Currently Public Net Debt (PND) is running at ~55% of GDP which obviously isn’t ideal, but when compared to the state of the nation’s finances after the Napoleonic Wars, when PND exceeded 250% of GDP, or World War 2, when the figures once again got close to 250% GDP, it starts to put a little more perspective on the today’s economic crisis.
Read Part 2:Lies, damn lies and statistics