So, a short thing about debt, and the debate here in the UK. Like in America, it's commonly bandied around by both pro-austerity parties, the Conservatives and Liberal Democrats (yes, I appreciate the irony) that the UK, thanks to the Labour party's profligacy, is the most indebted it has ever been.
It's technically true that the UK as a whole holds an astounding amount of debt; something in the order of 492% of GDP is commonly used as the headline scare figure. But what is elided here is that this is mostly private-sector debt, largely due to the financial sector's relatively large role in the economy, and the recession caused by the crash. Labour may, indeed, be partially responsible for that by looking the other way whilst the real-estate bubble continued to grow, but then, so did everyone else. Does anyone really believe that the Conservatives would have introduced and enforced the kind of regulation necessary to prevent the bubble? Then look over here, I've got a rail franchise to sell you.
The argument that's being made, though, is that Labour spent too much money and that is what has done for the United Kingdom, that is why it is doomed. Bear in mind that the current level of net public debt is something like 60-65% of GDP, a piddling amount in comparison to debt levels as a whole. This is argued to be an incredibly high level of debt which will lead to default, misery, and the ruination of everything we hold dear, especially your granny.
Except this is what debt was like from the beginning of the 20th century to the present day:
How bloody tiny does the UK's supposed "Debt Bombshell" look in comparison?
The next fallback is that it was only during wartime that we ran up so much debt, so there were special circumstances that are unrepeatable now. This is true, up to a point: part of the reason the WWII spike is so high is that the US was lending the UK shedloads of money in order to keep the UK viable during wartime. It's unlikely the same would happen today, in these austere times.
But here's debt from the interwar years, 1918 to 1939:
Debt remained well over 100% of GDP throughout the inter-war years, yet strangely enough, there was no massive debt default. Why was the debt so high? Because of a long, miserable depressed period from 1918-1936.*
You'll see that the UK never had a Roaring Twenties like the US did, just a horrible, grey 18 years of relative economic stagnation. Of course, this doesn't mean any nation can may be institutional reasons why the UK was able to run such a high debt; it was the centre of the financial world, after all, and as a highly developed nation no doubt creditors were willing to give it the benefit of the doubt. But that's not much different to today, as the UK is still a prominent financial centre and a highly developed nation, and when the markets (through historically low interest rates) are basically saying "Dear God, why aren't you spending money?! Spend money now! Today! Please!"
But, of course, that kind of market signal just isn't what we're looking for, is it?
*To see what I'm talking about on the remarkably useful Measuring Worth site, check "Real GDP", and enter 1914 in the Initial Year box, and 1940 in the Ending Year box. You'll get a series of stats; if you click "Plot Series" you'll get a chart, which is much easier to read.