Greece is not UK

To illustrate John Cole's point in yesterday's post (immediately below) that the plight UK's economy is in no way comparable to that of Greece, here are some figures from Larry Elliott's column in yesterday's Guardian.

The UK last year ran a budget deficit of about £140bn.
This pushed the national debt up to more than £900bn.
The output of the economy was just short of £1.5tn.
So the national debt is about 60% of GDP.

"For Greece," writes Elliott,, "the position is far worse. By late 2010 national debt was more than 140% of GDP"

What Elliott doesn't say is that the qualifying rate during the 1990s for joining the Euro was that the Debt to GDP ratio should be no more than 60%, so the UK is still within what are regarded as "respectable" limits. Under the early part of Gordon Brown's stewardship the Debt:GDP ratio was brought down to about 40%.

For good measure it is worth noting that very little of the UK's national debt is held abroad: most is held by UK institutions such as insurance and pension funds. They lend money to the government, which pays them interest which is used to pay our pensions - a nice cosy and perfectly respectable relationship which has been in go since the Bank of England was founded in 1694.

One similarity between Greece and the UK is, however, the reluctance, particularity of the rich, to pay taxes. The Greeks have developed this to a fine art as all visitors who have observed the "unfinished" (and therefore tax free) buildings with no proper roofs on them will appreciate. If all Greeks paid their full dues in tax the Greek government wouldn't have a problem. By comparison we in Britain are, of course, amateurs at the game, but our much publicised current deficit in the government's accounts would be much smaller if tax evasion were stopped and avoidance reduced to the level encouraged (eg on ISAs and gift aid) by the government.