Looking through the HM Treasury website, I found these forecasts for UK public sector debt. [HM Treasury]
- Gross government debt includes the current financial sector intervention (bank bailout)
- Public sector debt excludes the financial sector intervention.
- The good news is that with the improvement in the banking sector, the governments financial intervention looks reasonable secure and there is a good chance of regaining this bailout.
This shows that the current government have placed a high priority on controlling public finances. The paradox could be that austerity measures harm growth prospects and damage the debt to GDP ratio.
This is not all a success story. Targeting government debt is only one aspect of the economy. As an economist, I would have preferred the government to show as much enthusiasm for reducing unemployment. We still have a marked rise in unemployment rates causing higher welfare payments. Reducing unemployment and boosting long term growth prospects is still the best way to improve long term public finances without the pain inflicted by the current round of spending cuts and tax rises.