Politicians have often struggled to explain how governments borrow money to fund their spending. The implications of higher or lower borrowing are also difficult to assess when the figures run into hundreds of billions of pounds.
The temptation is to simplify the arguments by comparing the nation’s finances to a household budget or a credit card. The shadow chancellor, Rachel Reeves, has talked about the Conservatives “maxing out the credit card”, and Keir Starmer and Rishi Sunak have also used the analogy.
But is it a fair comparison? A group of senior economists think not. They have complained to the BBC about one of its political journalists, Laura Kuenssberg, giving podcast listeners the wrong impression by using the household finance analogy when comparing day-to-day government spending with longer-term capital expenditure.
This article was amended on 14 June 2024. An earlier version said that the Bank of England had created £450bn of bonds and invited investors to buy them; the government actually created the bonds, which were then bought by the Bank of England.
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