Britain isn't Greece. We have all sorts of advantages in running big deficits without getting into a fiscal crisis, as a long history of our governments acting relatively responsibly means we have built up a certain amount of good will and trust in international markets. The Greeks were caught misleading the markets, while the Government's attempts to hide debts like PFI deals and unfunded public sector pensions off the balance sheet were only designed to mislead voters.
But we are running an even bigger structural deficit. Here is the IMF's estimate of structural deficits across the developed world and we come second to Ireland, who are already taking robust action to get the issue under control with cuts in public spending:
So the news, reported on the front page of the FT this morning, that Greece's borrowing costs have exploded is a warning we should heed:
"Its 10-year borrowing costs touched a high of 7.161 per cent, up more than half a percentage point on the day, before closing at 6.995 per cent.
Yields on two-year Greek paper jumped more than 1.2 percentage points to a high of 6.48 per cent, an extreme single-day move for any sovereign debt."
The cost of servicing the national debt is already rising rapidly, past the public order and safety budget. It will eclipse the entire education (not just schools, everything) budget sooner rather than later if yields hit 7 per cent. Mike Denham sets out how in this video:
Do you want to see thousands of pounds of your money each year going in taxes to pay interest to the government's creditors? If not, then start pressing the parties to take action to cut public spending soon and in a big way. If they ask how or you want to know, then our new book has plenty of ideas.