Debt dossier: Five times Truss and Kwarteng warned unsustainable borrowing could cripple the economy

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The Liberal Democrats have published a “debt dossier” highlighting five times both Liz Truss and Kwasi Kwarteng warned about the risk to the economy from soaring government borrowing.

Kwasi Kwarteng warned in a paper in 2012 that growing debt could lead to a “vicious cycle of increasing interest payments, higher deficits, higher taxes and greater public anger.”

The Chancellor also warned in another article in 2012 that “Governments often run a structural deficit to boost the economy with greater spending and lower tax. Unfortunately, this…has a poor track record”.

Meanwhile Liz Truss gave a speech in 2018 where she said that “high debt can dissuade investors,” and that setting up the OBR had helped to “put Britain on a path to lower debt.” 

And in the book they co-authored in 2011, both Truss and Kwarteng said that “huge deficits” can be “very debilitating to the country”.

Liberal Democrat Cabinet Office Spokesperson Christine Jardine MP said:

“Liz Truss and Kwasi Kwarteng both spent years warning about the risks to families and businesses from ballooning government debt. Now they are recklessly ignoring their own warnings, ducking scrutiny and trashing the Conservative Party’s reputation on the economy.

“This latest Conservative line-up is completely out of touch with reality and with the British people. The pound is plummeting, prices in the shops are soaring while struggling families are left worried about how they will get through the winter.”

Debt dossier

1. “Vicious cycle:” Growing debt could lead to a ““vicious cycle of increasing interest payments, higher deficits, higher taxes and greater public anger.,” Kwasi Kwarteng and Jonathan Dupont, Institute for Economic Affairs, 31 May 2012
2. “Poor track record”: “Governments often run a structural deficit to boost the economy with greater spending and lower tax. Unfortunately, this…has a poor track record. ” Kwasi Kwarteng, Institute for Economic Affairs, 31 May 2012

3. “Boom and bust”: “high debt can dissuade investors…Setting up the OBR and developing our fiscal rules have helped us counter this tendency, and put Britain on a path to lower debt…there’s the option pursued by some other Western nations…let fiscal responsibility slide and allow the deficit to balloon. We’ve been there before. It leads to boom and bust.” Liz Truss speech to LSE, 26 June 2018  

4. “It’s working people who suffer”: “Getting debt down means more jobs, more security and better services. If we don’t, it’s working people who suffer,” Liz Truss on Twitter, 17 July 2018 

5.  “Huge deficits… very debilitating to the country”: “More generally, the widely oscillating nature of British politics, in which Labour governments spend only to run up huge deficits which Conservative governments then have to pare down, is very debilitating to the country.” Kwasi Kwarteng, Liz Truss, Dominic Raab and Chris Skidmore in After the Coalition, 2011

ENDS