Anatole Kaletsky–Rejoice ”“ the Pound is down again

While Britain was panicking about a sterling crisis and the terrifying financial consequences of a hung parliament, I spent last week in Japan. It was a good vantage point to put Britain’s financial and political travails into perspective.

Japan’s budget deficit of 10.5 per cent of GDP is this year second to Britain’s among the G7 countries, but in every other respect the fiscal situation in Japan is far worse. Because the Japanese Government has borrowed similarly prodigious sums almost every year since 1990, it carries by far the world’s heaviest debt load, with net public debt now running at 115 per cent of GDP, about the same as in Italy and Greece. And there is not the slightest prospect of any reduction in borrowing in the foreseeable future because of the political situation in Japan. It has had four prime ministers in three years, its civil service is in more or less open warfare with the elected politicians and there has been no effective government since the resignation of Junichiro Koizumi in 2006.

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