£1,873

Here are some facts.  Always a good place to start.  Last year, the UK government spent £90bn more than it received in tax.  That left a budget deficit worth 5% of national income.  It’s a fact that the economy is growing.  It’s a fact that more people are employed and unemployment is falling.  So far, so good.

But let’s now we move to the assumptions, not facts.  If the economy is growing there is an assumption that tax revenues should increase and welfare payments will come down.  This assumption continues to suggest some of the deficit will be whittled away naturally.  But perceived wisdom of experts in the City, academia, the Office for Budget Responsibility and the Institute for Fiscal Studies (IFS) suggest that part of it will remain.

So if no one is quite sure how big the residual deficit will be, how reasonable is it that your assumptions are good enough to help formulate a coherent economic policy?  Reading today's SNP Manifesto there seems to be a great deal of assumption in its calculations.  But what if the SNP gets it wrong?   Can the assumption made by the SNP, where it hopes that more of the deficit can be tackled through the stronger growth that will result from abandoning spending cuts, really stand up?  It's a really fragile assumption that deserves a great deal of scrutiny.  What if it doesn’t happen that way?  

It’s a massive risk changing path given the Conservative Lib Dem route has at least started to get the economy back on some sort of sensible road.

As Larry Elliot economics editor at the Guardian points out, there are a lot more if’s and but's than the SNP care to admit.  First, the economy will have to grow faster than most analysts are expecting for the next five years and do so without creating inflationary pressure. That’s a very big if.

And second, the Bank of England and the financial markets will have to be relaxed about the abandonment of austerity.  (For whatever austerity actually means, see earlier blogs.)   If they take fright, interest rates will go up and any positive impact on growth from saying no to further spending cuts will be offset by the negative impact of higher borrowing costs.

And that could leave us where?  A perfect storm.  Quite possibly in a worse place than we were when Liam Byrnes’ infamous note was left on the incoming Chief Secretary to the Treasuries desk.  And we will be continue paying out of tax payers pockets the interest payments.  That accounts to £45bn a year or 3% of GDP.  Or putting it another way, every household will pay £1,873 this year, just to cover this interest.  I’m not sure I read in the SNP manifesto any real logic to back their assumptions they can deal with this drain on people pockets.  And every pound the people have taken out their pocket, there is one less pound people can spend in the productive sector that funds all the spending desires of political parties.

So I guess a question to ask any candidate who happens on your doorstep tonight could be, “why do you think that taking £1,873 out of my families pocket this year that I could have spent on helping create employment in businesses and shops will help the economy?”.