Late last year I spoke at a summit at Chartered Accountants’ Hall – ‘Economic Literacy for Everyone’ – facilitated by Economy. The audience was made up of young people with an interest in economics, and their teachers. I was asked to deliver some closing remarks and to sum up the day.
I began by confessing that when I was studying for my ACA I found economics unspeakably dull. More recently however, I have found the subject fascinating. When I speak at my firm’s annual Budget Statement breakfast, I always begin by setting out the economic background: the deficit, national debt, inflation and growth statistics are the canvas on which the Chancellor paints, and the tax and spending measures make far more sense if you understand the context.
So, at the Economy session, I again explained the terms ‘debt’ and ‘deficit’, which are often – wrongly - used interchangeably. I said that the national debt would reach £1.81 trillion in 2018/19 and that it has been growing for years and will - on the Government’s projections - continue to grow for at least another five years.
I then posed a question: when in her party conference speech in Birmingham, the Prime Minister said, 'our national debt is starting to fall for the first time in a generation', was that actually true?
Questioning the Prime Minister’s veracity is always a good way to gain the attention of an audience. After a suitable pause, I said that it was true, because even though the actual amount of the national debt in pounds sterling is still growing, it is falling as a proportion of GDP. By contrast, the deficit – the difference between what government borrows and what it spends in the year – is falling both in absolute and relative terms.
I said that what is happening with the national debt shows that in economics, something can be going up and down at the same time. And that is why I now enjoy economics. It seemed to hit a chord both with my fellow speaker Andy Haldane, the Bank of England’s Chief Economist, and with the audience.
Our support for Economy feeds directly into our vision – to help build a World of Strong Economies – where businesses are profitable and sustainable; where public institutions are effective and accountable; where developing economies have the infrastructure to thrive; and where everyone has access to decent jobs and services, with economic opportunities benefitting all.
The work that Economy does, making economics accessible and understandable to all, is important. If we do not understand the basics, we cannot challenge unsound assertions or identify misleading information. By supporting Economy, we deliver on our public interest obligation to help society understand the financial and economic framework which surrounds us. And happily, have some fun while we do so.