30 SECOND GUIDE TO ... DEBT AND DEFICIT

Is it to do with the Budget?

YES. George Osborne today delivers his fourth Budget since becoming Chancellor of the Exchequer in May 2010. There will be plenty of talk of debts and deficits.

Are they the same?

Absolutely not. Although listening to politicians talk about them you might think they are.

The UK debt is the total amount the country owes and has been building for hundreds of years. The deficit is what is added to the debt each year.

How does it look?

Not good!

The national debt was little more than £300bn at the turn of the century but now stands at £1.16trillion and is on course to top £1.5trillion in 2017.

The Coalition – for all the talk of austerity and cuts – is according to its own forecasts adding more than £500bn to the national debt in this Parliament.

How?

Because the country is living beyond its means.

The deficit – the annual shortfall between what the Government spends and what it receives in tax – hit a record £159bn under Labour in 2009-10. It fell to £141bn in 2010-11 and £121bn in 2011-12.

But borrowing looks set to rise again this year as Osborne’s deficit-reduction plan stalls, adding yet more to the national debt.