No, the UK doesn't need to "balance the books"

Dear all, 

In his recent budget speech, British finance minister Rishi Sunak continued to spread dangerous fiscal myths about the alleged “strains” faced by the UK's public finances and the government's need to “balance its books”.  

In this article I explain why such claims are completely unfounded. As a currency-issuing government, the UK government can, and indeed does, simply create the money it needs out of thin air (effectively self-financing itself). Hence, it can always make good on any promise to repay bondholders, without the need to raise taxes (or cut back spending, for that matter) to ‘pay back’ the public debt, as Sunak implies. 

Moreover, practically all the new bonds issued to support the economy throughout the COVID-19 pandemic were bought by the Bank of England, which is just another wing of the state. So the government effectively owes the money to... itself. What better example of how governments self-finance themselves? Why this should be a cause for concern, as Sunak claims, is baffling. Even more bizarre is the suggestion that citizens should be inflicted with painful austerity just so the state can pay back money to itself. Ultimately, It’s people’s lives that we should be concerned about, not the ones and zeros on a computer that make up the public deficit and debt. 

Thanks for your attention. 

Best regards,

Thomas Fazi 

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Website: thomasfazi.net
Twitter: @battleforeurope
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Latest book: Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (co-authored with Bill Mitchell)