Almost as startling are the IMF’s reasons for why Britain is in such a state: one way or another they all come back to neoliberalism. Thatcher loosed finance from its shackles and used our North Sea oil money to pay for swingeing tax cuts. The result is an overfinancialised economy and a government that is £1tn worse off since the banking crash. Norway has similar North Sea wealth and a far smaller population, but also a sovereign wealth fund. Its net worth has soared over the past decade.
The other big reason for the UK’s financial precarity is its privatisation programme, described by the IMF as no less than a “fiscal illusion”. British governments have flogged nearly everything in the cupboard, from airports to the Royal Mail – often at giveaway prices – to friends in the City. Such privatisations, judge the fund, “increase revenues and lower deficits but also reduce the government’s asset holdings”.
Comment