Terry Smith, chief executive of Tullett Prebon, was among those making the case this evening for bigger, deeper cuts at a fringe event. The businessman called for a Plan B: not the “Keynesian stance of Ed Balls” but something else: “Deeper cuts, or, real cuts, we haven’t really had any cuts so far.”
Clearly this would not be music to the ears of the left; but then Smith estimates that Britain’s real debt (including pension liabilities, PFI commitments, bank guarantees etc) is about £3.6 trillion – or £60,000 per capita.
He warned that the biggest areas of public employment – public sector, housing and finance – were unlikely to experience growth in the near future. Cuts were inevitable: “It’s only a question of when the markets will impose them.”
His counter-intuitive theory is that banks don’t have enough capital to lend because people will not deposit money with them when interest Read more