Is public sector borrowing too high?

Bain, A. D. (1980) Is public sector borrowing too high? Quarterly Economic Commentary, 5 (3). pp. 30-39. ISSN 0306-7866

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In recent years the high level of government borrowing has been at the centre of economic and political debate. On the one hand the public sector borrowing requirement (PSBR) is blamed for record mortgage rates and the threat that industry may be starved of the funds it needs. On the other, proposals which are likely to cut the PSBR are denounced as deflationary and damaging to living standards. Some claim that a high PSBR is a cause of inflation, whilst others argue that if proper account is taken of inflation the PSBR is much less formidable than it seems. This article attempts to set out some facts about the sources and extent of public sector borrowing and to consider briefly some of the issues involved.