Risks of austerity

Bill Jamieson (comment, 9 Nov-ember) is worried that the UK is paying £60 billion in interest costs on debt of £1.3 trillion.

That’s a rate of about 4.65 per cent, yet, as he points out, the yield on our ten-year sovereign bonds is only 2.3 per cent, or half as much.

Mr Jamieson likes to frighten us with large numbers, but perspective is needed.

He refers to the country’s debts as “dead weights on the underlying economy”, but the underlying economy requires credit, which is provided by willing lenders.

Banks in the UK and the US got far too large in recent years, dwarfing the underlying economy, which, pace Mr Jamieson, is why it’s a good thing that financial products and services will be relatively smaller in future.

However, the regressive austerity which Mr Jamieson favours will damage the economy, or rather make life worse for most people.

The austerity advocates have a Puritanical enthusiasm for their proposals, but that’s a poor basis for policy-making. Nor is history on their side: it wasn’t hyper-inflation which created the climate which brought Hitler to power, but austerity and depression.

Andrew Anderson

Granton Road,

Edinburgh