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Why the confusion between debt and deficit?

20 March 2013

10:15 AM

20 March 2013

10:15 AM

Polls show that, depending on how you ask the question, just between 8pc and 12pc of us realize that debt is rising. It’s not hard to work out why: first, politicians – even the Prime Minister – says that debt is falling. They say they get it confused with ‘deficit’. But this morning, I tweeted that blame lies with the BBC and its failure to mention this basic point when reporting on the public finance. Its narrative tends to be one of fast, deep cuts. It tends to use language that no one understands, and not just conflating ‘debt/gdp ratio’ with ‘debt’.

Most normal people don’t know what ‘deficit’ means, for example, and nor should they. It’s a Westminster wonk word, not even used in business. As Gordon Brown knew, when he said he’d ‘half the deficit in four years’ voters heard ‘half the debt’. This, I suspect, is what has led to the scandalous situation where the people who are liable for the debt – the voters – don’t know what is going on. Jeff Randall once started his Sky News budget day coverage by announcing the difference between the two. Sky runs a debt clock now and again, to make the point to its viewers. There is a distinct difference in approaches between the two broadcasters and I’d say Sky performs the greater public service.

You can see why the Labour narrative of harsh, deep cuts would resonate in the BBC which is state funded and taking a massive cut to its own budget. I have never, ever heard any BBC reporter quantify the total cuts (less than 3pc so far) but I was wrong to say that the BBC “never” mentions rising debt. It does, now and again. Nick Robinson, the BBC’s political editor, replied that he mentioned it on the News at Ten last week.

But I was also pointed to the brilliant report below by Steph McGovern, a presenter for BBC Breakfast, which absolutely nails it. It’s the clearest description I have ever seen on network television. She juxtaposes what’s happening in the public finances with Osborne’s grandiloquent rhetoric. She ends her report by saying that, in the time she has been talking national debt has risen by £100,000. It’s such a good report that I thought Coffee Housers may like to see it:

Note the directness of her language, and how she clearly and vividly talks about the deficit: “

“That’s like the people in your house spending £5,000 more than they’re actually making.”

Precisely right. This is economics reporting at its best, translating gobbledegook into terms everyone can understand, the definition of public service broadcasting. I hope we see a lot more of Ms McGovern on the BBC.

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