Former Prime Minister, Sir John Major, today laid out, in simple language, the scale of the problem with the nation’s finances in BBC interview

I may change the order somewhat but this is a summary of what he said.

– The scale of the government deficit is unprecendented in Sir John’s lifetime.

– If it is not tackled there will be a severe crisis when our national credit rating collapses, leading to a sterling collapse, leading to soaring interest rates.

Why are we in such a mess? Sir John Major blames it on the government running a deficit in the good times, so the total debt increased when it should have been reducing.

There are 3 ways that will bring the current £180bn  deficit down.

1. Increase Taxes – but even a 5% increase in the basic rate of income tax and 20% VAT rate will do very little.

2. Cut expenditure.

3. Economic Growth

It is expenditure cuts that Sir John advocates

UPDATE 7th July – Adam Smith Institute blog has an alternative report of Sir John’s Comments.