2003: International Monetary Fund Call for Chancellor Brown Not to abandon “Prudence” Policies
Gordon Brown was warned by the International Monetary Fund that his borrowing and spending gamble on public services may be going to waste.
In a damaging blow to his recently announced Chancellor’s tax-and-spend strategy, the IMF said he was being too confident that a rebound in tax revenues will allow him to steer the nation’s finances back into the black.
Mr Brown also unveiled plans last week to borrow an extra £34 billion over five years to keep his spending plans intact.
But the IMF called on him to make early cuts in his plans to put the nation’s finances on a surer footing. It said that the sharp increases in spending on the NHS and teaching carried the “risk of inefficiencies.”
Brown ignored the warning and forged ahead believing he knew better.
The Health Service did indeed gain the benefit of loadsamoney but this was not properly invested due to the poor negotiating skills of the Health Secretary, John Reid who squandered the bulk of the new money through massive salary increases (while largely maintaining existing terms and conditions of service) in medical staff and other management fields.
New Labour, under Brown’s financial stewardship appeared to be atop the “crest of the financial wave.”
Brown’s strategy needed the economy and tax receipts to remain buoyant, they didn’t and borrowing increased further between 2003-2007 placing the UK economy at greater risk of a financial downturn for which the country’s finances were ill prepared.
Austerity-An unnecessary Hardship Imposed on Scotland By Westminster nefarious Spivs
In 2008, Northern Rock, RBS, HBOS and other UK banking institutions seemed destined to fail, largely due to criminal behavior.
80% of losses were attributed to their London and foreign based businesses.
The Westminster government intervened and bailed out the banks.
But in doing so Alistair Darling and Gordon Brown lumbered Scots with repayment of massive debt, added to with extortionate interest charges.
The UK government’s bail out had also lead to the reclassification of banks as “public sector assets.”
In consequence public sector liabilities increased from 126% of GDP to 335% of GDP between 2007 and 2009. Over 200% !!!!!!!!!!
The UK National Debt
The UK national debt is the total quantity of money borrowed by the Government of the United Kingdom through the issue of securities by the British Treasury and other government agencies.
At the beginning of 2018 UK debt amounted to £1.78 trillion, or 86.58% of total GDP, at which time the annual cost of servicing (paying the interest) amounted to around £48 billion (roughly 4% of GDP or 8% of UK government tax income).
Approximately a third of this debt is owned by the British government due to the Bank of England’s quantitative easing programme.
The debt equates to approximately £40,000 per employed person.
The knock on effect is that each household in Britain pays an average of around £2,000 per year in taxes to just to finance the interest payments.
At the start of 2018 an assessment of the UK’s assets and liabilities indicated that the UK public finances to be among the weakest in the world. Just behind Gambia, Uganda and Kenya.
It was also revealed that around £1 trillion had been wiped off the wealth of the UK’s public sector since the financial crisis, putting it in the second weakest position of the 31 nations assessed. Only Portugal’s public finances were in a worse state.
National debt increased significantly (2010-2015) under the Tory/LibDem coalition government .
The present Tory government has not reversed the trend. The national debt increased (by £46 billion in 2017) and the chancellor gave up the ghost of forecasting a time when structural debt would be eliminated.
Scots might be lumbered with it forever or until independence is gained
Quantitative Easing (QE)
The start point was with the Bank of England Governor who, (acting on instructions from the Chancellor Alistair Darling), by sleight of hand created £435bn digital new money.
This, “funny money” finance was then used by the bank to compulsory purchase bonds from controlled resources within the UK.
The real money gilts purchased were then used to bail out the banking sector preventing the failure of the banking sector.
Pension funds were subject to the asset stripping and they want their money back!!!!. but their is no indication of this from the government.
Drawbacks of Quantative Easing (QE)
The practice was first implemented, in 2008, in an attempt by the Bank of England to buy time so that new financial strategies could be put in place.
But the crisis was created through the public taking up offers of low interest payments and easy credit and excessive borrowing for mortgages.
Nothing much has changed in the banking sector since 2008 and in consequence the practice of QE may need to be retained which brings negative consequences for Scots.
The UK economy is headed for another financial crisis.
What about criminality?
The banking system including, hedge fund investors, staff and management were not subjected to any formal police or public enquiry with result that it continued operating almost completely unaffected.
No UK banker ever faced criminal behaviour charges.
Bonus schemes were retained and in many cases expanded and London’s financial hub has enjoyed many years of good living at the expense of the Scottish taxpayer.
Adding insult to injury not long after the financial crisis, the UK loaned Ireland £20 billion, (at a knock-down rate of interest) proving that bailing out banks–like reinsurance–is a risk which is global in nature and shared between countries.
In a statement, seeking understanding of his decision to, “prop up” the Irish economy George Osborne, UK Chancellor said, “Ireland is our very closest economic neighbour and we must assist.”
In the aftermath of the crisis, Bank of England officials claimed the UK Chancellor had botched the banking bailout and the Bank would never be able to recover all of the loans let alone match the performance of the US Federal Reserve which reported a $billions profit (out of the crisis). No austerity for the American public.
Sir Mervyn King, Governor of the Bank of England, said: “The sad truth is, in 2008, the idea of focusing efforts on recapitalizing the banking system was a UK idea. We got there first but, like many UK ideas, the Americans developed it much faster and much better.”
The US forced all major banks to take Federal Reserve money, purchasing substantial stakes at around “half their book value.”
The Bank of England, directed by Brown and Darling, acting against the bank governor’s advice, purchased similar financial stakes, but at “full book value.”
A Treasury source later said: “The Government judged that without a taxpayer injection the banks would have collapsed, with consequences for financial stability and people’s money, and it judged that was an unacceptable risk to take.”
But the Westminster government had bailed out banks with global operations and the former chairman of RBS, Sir Philip Hampton,(retd) in November 2012, in his evidence to the House of Lords reminded was very clear that bankers:
Had used many countries central banks as lenders of last resort for many operations in jurisdictions in which they operate.
This is a key part of what central banks do in the jurisdictions that they control.
Just because there might be an independent Scottish Government did not mean that all lender of last resort facilities would disappear. They would be continued.
This also works when a country has a banking and a fiscal union, as in the UK.
The Bank of England would provide “bank of last resort” support to Scotland, if needed.
But should difficulties arise with the foregoing arrangements the final fall-back position (assuming Scotland retained membership of the EU) would be for Scotland to seek assistance from their EU partners.
Requests simply require a majority vote in favour, but the decision is binding on all EU members.
Provision of financial support would not be breaking new ground since this is exactly what happened when Ireland, Spain, Portugal and Greece were extended “bank of last resort” backing from the EU and the Bank of England donated its £20 billion share.
In the last “face to face” with Alex Salmond, in the 2014 Independence Referendum campaign, Alistair Darling, accepted Scotland had every right to use sterling and this would not need the authority of the Bank of England.
The mendacious “mantra of fear” propaganda of “Better Together” that the Bank of England, would not provide a “lender of last resort” facility to Scotland was scurrilous myth.
10 thoughts on “An Update – Austerity – An unnecessary Hardship Imposed on Scotland By Westminster’s Nefarious Spivs”
witiness tampering galore since the parliament found Iran guilty. There is major tampering in the 2014 referendum
email and I will send documents including MI5 emails and Libya offer
funny, the UK declared Iceland a terrorist state in 2008 but Iran is not
Scotland is getting drilled by Iran, even though Scottish parliament voted Iran did Lockerbie in 2014
Do you really think they will ignore the waivers being pulled? Yes
President Rouhani is a UK citizen. He was best friends with Jack Straw since 2003.-Jack Straw blocked appeals pointing to Iran. Rouhani lived in Scotland for 5 years. He was a Scottish freemason.
Look at YouTube of Jack Straw and Rouhani. Straw got money to stop Lockerbie
This is economically illiterate. Please take it down, it is damaging and incorrect on so many levels. It is true austerity is not an economic necessity for the UK, but you need to know the real reasaon why.
If you want to know how money really works and why this article is so problematic, please see
It works for me at my illiterate level. Brown, Darling, Osborne the the crooked bankers made a pigs ear of managing the finances of the nation and the taxpayers (the many) were punished for the criminal actions of mega rich twats. Iceland locked them up and banned them from working in finance, at any level.
I’ve no objection to your sentiment, but the facts are there was no World Bank (or IMF) loan. Leading with a statement like that I feel the rest of the article will also be littered with inaccuracies and un referenced opinion, which it is. Please take it down, this sort of information does the cause more harm than good. It frames the debate in a manner that helps unionists. Taxpayers do not fund UK govt spending, QE did not cost teh taxpayer anything, government sovereign debt is not a burden, and the Bank of England will not be a lender of last resort to an independent Scotland, neither wil the ECB. Until the true nature of money and currency sovereignty is understood the debate will continue to be framed in teh neoliberal paradigm, and the unionist neoliberals will always win.
If you can please check out the facebook page I linked to in my previous comment, or have a look at this website: https://www.mmtscotland.com/.
I expected a speedy response to my answer and was not disappointed.
The post stands unchanged. I made no claim to be an expert in finance, but the content of your commentary indicates the level of your knowledge is perhaps a wee bit less than my own.
Your comment, ” QE did not cost the taxpayer anything” does not make any sense at all.
12 plus years of austerity disproves your view.
Bailing out the banking sector imposed a massive financial burden on the taxpayers of the UK.
Your “bank of last resort” statement is also nonsense.
I am better guided by expert witness submissions to the House of Lords enquiry.
You have done no research, You have zero credibility, you are doing immense damage by publishing economic false information.
The pro-Indy blogs, facebook posts and websites pushing this sort of dis-information is appalling. It does nothing to help the cause, and everything to support unionists as it is entirely framed in their language and ideology.
the World Bank lends to developing countries. It never made any loans to eth UK – I see you have removed that inaccuracy at least.
The only statement in this article that is true is that austerity is unnecessary.
Taxes do not fund government spending.
A monetary sovereign state first spends money into existence. It then removes some of that money from circulation by taxing, making fiscal space for continuing government spending.
QE was carried out by the BoE using their money creation powers.
If you knew anything about currency sovereignty you would understand that a country issue its own currency and have its own central bank to act as the lender of last resort. Nothing else makes sense, nothing else will work.
An independent Scotland using sterling or the Euro would be at the mercy of the other country’s central bank, have no power over fiscal or monetary policy, and be subject to the financial markets and business cycles of the currency issuer. The ECB would not step in to assist as a state owned central bank would. The EU is set up on neoliberal basis which, as you should see from the Greek experience, the Greek government was forced by the ECB and EU comission to take on Euro debt and impose austerity measures. Greece was powerless to do anything about this as it did not issue its own currency nor have it’s own LOLR.
I’m afraid everything about your article is thoroughly ill-informed opinion and mis-information of the grossest order. By publishing this without doing any research you are doing more harm than good.
If you are on facebook, please check out:
Have a look at this website as well. We have information and educational matter there to help people understand economics
And our colleagues at the Gower:
And if nothing else, please have a look at these short videos;
Sorry, but this is an appalling article with hardly a single accuracy in its content. As Malcolm suggests, take it down. You could always write something more appropriate to your title – “Austerity, an unnecessary hardship”. You could look at the UN Rapporteur’s recent statement in which he says, among a great deal else criticising the Tory Government, that Austerity was simply a political choice and unnecessary, as a starting point. And if you read some of the links from Malcolm you might discover the Tories’ lie: that austerity was necessary because of Labour’s profligate public spending; while the real reason for their decision to reduce spending was to enable tax cuts to the wealthy and at the same time punishing the “undeserving” poor by reducing their benefits and making them jump through hoops and imposing draconian sanctions when they failed to jump properly. It was part of their plan to shrink the State and privatise anything that moved.
I accepted criticism and amended the blog
Good point – the UN report is available here: https://undocs.org/A/HRC/41/39/Add.1
I accept the inaccuracies and have amended the blog