On Friday, Channel 4 News’ FactCheck tweeted a link to an article headlined “John McDonnell doesn’t seem to understand how government debt works“. The article claimed that McDonnell had failed to demonstrate an understanding of the way in which the ‘multiplier effect’ and ensuing tax revenues work when he was asked questions about it during an interview with the BBC’s Andrew Neil.
Tories on social media crowed.
The very next day, the programme was forced to tweet a corrected version of the article with a dramatically watered-down title:
“John McDonnell doesn’t tell the whole story on Labour’s borrowing plans“
Quite a difference – and an assertion so weak that it would not really merit an article, since McDonnell never at any point claimed he was telling the ‘whole story’, merely answering the specific questions that were put to him.
On Sunday, twenty-three renowned economists responded to Neil’s attempted challenge on the national debt and Labour’s plans to borrow (only) to invest – and their verdict was emphatic:
The economists point out that a large part of the debt repayments are paid by the government to itself, meaning that it is not genuinely an outgoing – and that what remains is ‘remarkably low’ in adverse economic circumstances – while pointing out that it would be much lower if the Tories had not created the slowest economic recovery on record.
Channel 4’s error – later replaced with an article so watered down as to be meaningless – was so gratefully seized on and spread by Tories desperate to divert attention from their government’s incompetence that it became firmly established as fake news. The Labour Party agreed, with a spokesperson telling FactCheck:
As this article clearly states, John McDonnell was asked about the costs of servicing the debt on Labour’s borrowing for investment.
The accusation that John McDonnell was not telling the ‘whole story’ is entirely unfounded and inaccurate because he was not asked and did not discuss repaying the debt – a totally different question. It is clear that John McDonnell answered the question which he was asked truthfully and factually.
The repayment of principal is accounted for within Labour’s Fiscal Credibility Rule which mandates the next Labour government to reduce debt over the course of a Parliament.
It is ironic and deeply disappointing that a self-styled fact check blog is factually inaccurate and seems to have misunderstood the distinction between the costs of servicing government borrowing as opposed to the repayment of the principal.
The real story needs to be even more widely spread to counteract the damage and false perception created by the fake news.
The full economists’ statement can be downloaded here.
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