The UK Government like the USA and other major G8 economies, spends more than it brings in as income from taxation. This has resulted in a massive structural debt, over 80% of debt to GDP.

Even though we see unemployment beginning to fall, the public accounts show that the government is still heavily borrowing, and dependent on the bond market to bridge the gap between its income and spending commitments. So how can this be when we have falling unemployment.

The reality is that many new jobs are now low skilled and low paid or zero hour contracts. This has resulted in the actual tax collected by government to be very small, so income into government from the improving labour market is not feeding into improving public finances. Until we face thus head on, the structural debt will continue to command punishing interest repayments (today at over £30 Billion a year) and we must accept that we actually need we high skills and high wages to create wealth and tax revenue, and that only comes from investment.