For fiscal year 2009-10, the Treasury wants to borrow up to 8 percent of GDP. Historically, this is an unprecedented deficit. On its website, the Treasury provides deficit data since 1964. Next year's deficit will be larger than for any year in over 44 years. In fact, we probably need to go back to the second world war to find a larger government deficit.
The previous record was in 1994, when the deficit was 7.7 percent of GDP. However, the Major government managed to cover part of this huge gap by privatization sales. Flogging off government assets helped keep the public sector indebtedness down to a little over 40 percent of GDP.
Even during the chaotic 1970s, governments managed to keep their deficits to 7 percent or less. Those deficits finally came down after north sea oil revenues started to flow into the treasury coffers.
Darling is planning several years of bloated deficits. In 2010-11, he is projecting the deficit to be close to 7 percent of GDP. But will he get away with it?
In previous periods of high government spending and a rapid build up in debt, the UK managed to buy some time with one-off windfalls. However, Darling can not count on any oil or privatization revenues to bail him out.
Without a magical windfall, there are only two things that will resolve deficits of these magnitudes; lower expenditure or higher taxes. No prizes for what New Labour will choose.