There’s a newish and very nasty drug out there. It’s called Devil’s Breath (or Scopolamine) and it is, according to everyone who talks or writes about it, “the scariest drug in the world”. That’s because one whiff of it turns people into zombies: they stay cogent to an outside view, but “their free will vanishes”, along with their memory.
That’s made it handy in the past for Cold War-era security services looking for confessions, but it’s also made it a dream come true for criminals.
The drug comes from Colombia, where the US State Department reckons there are 50,000 Scopolamine “incidents” a year. But I gather it has now started to be used in Tokyo, where a few cocktail-swilling foreign fund managers have come round the next morning to find their credit cards rather more well used than usual.
They’ve been taken to shops where they have been made to splurge hundreds of thousands of yen on easily resalable goods they didn’t want and aren’t going to see any benefit from anyway. They can remember nothing.
So here’s the question. Has something of this sort happened to George Osborne and David Cameron? Because they seem to have spent an awful lot of money and forgotten all about it.
The coalition took over promising a resolution to the UK’s hideous financial problems. And to listen to the Tories talk today about their “rescue” of our economy, you might think they had offered something of the sort. But look at the numbers and you will see that it just isn’t so.
Our underlying budget deficit is still 6% of GDP – an overspend of £90bn year. And our total public debt? Around 80% of GDP, up from not much more than 60% in 2009.
Add to these one other vital number – 36%. This is how much tax we currently raise in the UK as a percentage of GDP. And since the 1960s, it’s almost always been between 34% and 36%. However high or low tax rates go, that’s how much we raise. Anyone confused as to why should read Matthew Lynn on the end of London: tax people too much and they stop paying.
You’ll be wondering how much more than that the state spends. The answer is depressing: around 45%. Taken together, these simple numbers tell us that everything we have heard from politicians this week is delusional. We keep being promised the ‘good life’, but the funds aren’t there to pay for it.
We know that we can’t raise more money via the tax system without serious growth (which we can’t create in a deleveraging and ageing society – see my interview with Bruce Stout).
And we know that there is no political appetite to make any serious cuts to existing spending. A quick skim through the manifestos tells us the opposite. So Britain’s finances aren’t fixed. They are, as Albert Edwards of Société Générale puts it, “a ticking time bomb”.