You either found the latest election tedious or absolutely fascinating. I have to admit that I go along with the latter. This election was certainly made for the media. Television debates and a hung parliament led to analysis upon analysis. So what are we left with?

My view is it doesn’t really matter because whichever party was elected there is a huge problem which dwarfs any policy initiatives which may have been promised. The National Debt!

By now you will be familiar with terms such as deficit, gross domestic product, quantitative easing, fiscal deficit……, but what do they mean?

Well at the fear of making this explanation to simplistic I like to look at the finances of the country as those of an everyday household.

In the household we have money coming in as income (in government terms tax revenue and borrowing). We have money going out, our expenses (for the government public sector funding on the NHS, Education etc). This household also has a large credit card bill (National Debt) which it has run up over the good years when jobs were paying well and money was easy to borrow. Unfortunately nothing was put aside in the good years.

Now in the recession (oh I am sorry we are out of recession), I mean in the slowdown government revenue has reduced and we are not sure that we can borrow as much because markets are not certain we can pay it back. We still have the same expenses (more infact) and we have to pay the interest on the huge amount we borrowed in the first case. What a mess!

So what do we do? We follow this equation. Increase tax and cut public sector services = bad for the stock market

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