I don’t normally post national issues here, but since Councillor Alun Llewelyn, my opponent at the next general election, challenged us Liberal Democrats with the phrase across the council chamber yesterday, I felt I had to respond here.

Whichever party forms the government after the general election, “savage cuts” is going to be the headline this time next year, even in The Sun. (I am assuming that the recovery is clearly under way by then; we agree with Labour that a recession is no time to be cutting public expenditure. We await the Conservative approach, at their upcoming conference. So far, it looks as if they would cut regardless.)  The difference between us and the government (which Plaid supports in the Welsh Assembly) is that Nick Clegg and Vince Cable call cuts what they are; New Labour prefers to use words like “challenges”, “hard choices” and “difficult decisions”. But it comes to the same thing in the end.

Someone is going to have to pay for the bill which Gordon Brown is set to bequeath taxpayers. Twelve years of lax financial controls contributing* to  a financial crash, in turn resulting in heroic public borrowing to finance “trickle-down” through the banks, will leave us with much more national debt than inherited by Labour when it came to power in 1997.

There is also a danger that Britain’s relatively strong standing in sovereign debt markets over recent years could suffer. As the FT puts it: “The risk is that the UK will slip back to its 1970s and early 1980s pariah-status in government bond markets, leaving the next government struggling to fund huge levels of borrowing”. The gnomes of Zürich will have to be appeased by timely repayment of debt or by evidence of a serious attack on the public sector.

*Brown and Darling claim that the UK was swept along on a financial tide over which they had no control. However, in other contexts they are proud to acknowledge (rightly) the centrality of London as a financial centre. It should also be pointed out that one of the culpable banks, RBS was valued as the fourth largest in the world after its takeover of Dutch ABN-Amro before the crash. If the government had acted on the warning signs in 2005/6 by curbing irresponsible lending (and investing), the Americans, with the larger economy, might have taken notice and followed suit.

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