Another Cameron myth: the coalition hasn't reduced the deficit by "a quarter"

The most recent figures show that current borrowing has fallen by just 6.4 per cent since 2010, while net borrowing has fallen by 18.3 per cent.

David Cameron was caught out last week when he falsely claimed in a Conservative Party political broadcast that the coalition was "paying down Britain's debts" (the national debt has risen from £811.3bn to £1.11trn since he entered office). But what of his even more frequent boast to have reduced the deficit by "a quarter"? The Conservatives' website states

Dealing with our debts means we have had to take tough decisions. But we are making progress: in the two years since we came to office, we’ve already cleared one quarter of the deficit left by Labour.

The Tories' claim is based on the fact that public sector net borrowing fell from £159bn in 2009/10 to £121.6bn in 2011/12, a reduction of 24 per cent.  But since the net borrowing figure includes investment spending, which even Nick Clegg now concedes was cut too fast (capital spending fell from £48.5bn in 09/10 to £28bn in 11/12, a 42.3 per cent reduction), a better test of the coalition's fiscal rectitude is current borrowing, which reflects the difference between revenue and day-to-day (non-investment) spending. On this measure, borrowing has fallen from £110.5bn in 09/10 to £93.6bn in 11/12, a notably smaller reduction of 15.3 per cent. The shortfall in revenues caused by the near-absence of growth since the Spending Review in 2010 and the higher welfare bills caused by the rise in long-term unemployment have left Osborne unable to meet his deficit targets.

The coalition's boast to have reduced borrowing by a quarter also depends on ignoring all the figures since April 2012, when the last financial year (11/12) ended. If we take into account the figures since then (see table PSF1 on p.36) , the picture is even worse. Over the last 12 months (January 2012-December 2012), the government's net borrowing stands at £128.9bn (excluding the one-off transfer of Royal Mail pension assets to the public sector), an increase of 5.8 per cent since 2011, when borrowing was £121.4bn, and a fall of only 18.3 per cent since 09/10. As for current borrowing, that stands at £103.4bn over the last year, a reduction of just 6.4 per cent since 09/10 (when current borrowing was £110.5bn). 

So, to summarise, the coalition reduced net borrowing by 24 per cent between 09/10 and 11/12 but only by slashing infrastructure spending by 42 per cent and tipping the UK into a double-dip recession and, perhaps, a triple-dip. Current borrowing has fallen by a smaller 15.3 per cent over that period. 

If, unlike Cameron, we take into account the borrowing figures since April 2012 , net borrowing has fallen by 18.3 per cent since 09/10, while current borrowing has fallen by just 6.4 per cent.

For a government whose raison d'etre is deficit reduction ("The deficit reduction programme takes precedence over any of the other measures in this agreement," states the Coalition Agreement), the coalition really isn't very good at it. 

David Cameron addresses a session of the annual World Economic Forum (WEF) meeting in the Swiss resort of Davos. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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A global marketplace: the internet represents exporting’s biggest opportunity

The advent of the internet age has made the whole world a single marketplace. Selling goods online through digital means offers British businesses huge opportunities for international growth. The UK was one of the earliest adopters of online retail platforms, and UK online sales revenues are growing at around 20 per cent each year, not just driving wider economic growth, but promoting the British brand to an enthusiastic audience.

Global e-commerce turnover grew at a similar rate in 2014-15 to over $2.2trln. The Asia-Pacific region, for example, is embracing e-marketplaces with 28 per cent growth in 2015 to over $1trln of sales. This demonstrates the massive opportunities for UK exporters to sell their goods more easily to the world’s largest consumer markets. My department, the Department for International Trade, is committed to being a leader in promoting these opportunities. We are supporting UK businesses in identifying these markets, and are providing access to services and support to exploit this dramatic growth in digital commerce.

With the UK leading innovation, it is one of the responsibilities of government to demonstrate just what can be done. My department is investing more in digital services to reach and support many more businesses, and last November we launched our new digital trade hub: www.great.gov.uk. Working with partners such as Lloyds Banking Group, the new site will make it easier for UK businesses to access overseas business opportunities and to take those first steps to exporting.

The ‘Selling Online Overseas Tool’ within the hub was launched in collaboration with 37 e-marketplaces including Amazon and Rakuten, who collectively represent over 2bn online consumers across the globe. The first government service of its kind, the tool allows UK exporters to apply to some of the world’s leading overseas e-marketplaces in order to sell their products to customers they otherwise would not have reached. Companies can also access thousands of pounds’ worth of discounts, including waived commission and special marketing packages, created exclusively for Department for International Trade clients and the e-exporting programme team plans to deliver additional online promotions with some of the world’s leading e-marketplaces across priority markets.

We are also working with over 50 private sector partners to promote our Exporting is GREAT campaign, and to support the development and launch of our digital trade platform. The government’s Exporting is GREAT campaign is targeting potential partners across the world as our export trade hub launches in key international markets to open direct export opportunities for UK businesses. Overseas buyers will now be able to access our new ‘Find a Supplier’ service on the website which will match them with exporters across the UK who have created profiles and will be able to meet their needs.

With Lloyds in particular we are pleased that our partnership last year helped over 6,000 UK businesses to start trading overseas, and are proud of our association with the International Trade Portal. Digital marketplaces have revolutionised retail in the UK, and are now connecting consumers across the world. UK businesses need to seize this opportunity to offer their products to potentially billions of buyers and we, along with partners like Lloyds, will do all we can to help them do just that.

Taken from the New Statesman roundtable supplement Going Digital, Going Global: How digital skills can help any business trade internationally

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