COMMENT Scare stories about British public debt are not new. Contemporaries fretted about the unsustainability of the national debt in the 18th century, long before the era of credit rating agencies and sovereign debt downgrades. Yet somehow bondholders have been paid interest, and government debt has been redeemed and renewed, without interruption since the Stop of the Exchequer in 1672.
The last two periods of intense anxiety about Britain’s public debt were in the mid-1970s (which culminated in a visit from the International Monetary Fund in late 1976) and the early 1990s (met by large tax increases in 1993 and 1994, and several years of expenditure restraint). They saw budget deficits in the 7-11 per cent band of gross domestic product, with the precise number depending partly on the definition adopted.
