The word "deficit" sounds bad. At the individual level, it is - consistently spending more than you earn means spiraling debt, misery and likely a pretty shit outlook. But a government that issues its own currency isn't like a household. There's no external debt collector for money we create ourselves - though bond markets can still make borrowing more expensive if they lose confidence (however as we’ll see later borrowing is not what you may think it is!) In this case, a deficit is simply an accounting term describing money flow - a useful figure to know, but not a target in itself.

More importantly, a deficit on one side means a surplus on the other. This is not an opinion, it’s accounting. Every pound that the government spends into the economy and doesn’t tax back stays in private hands. The government putting more money into the economy than it takes out means that the private sector (ie you, me and everyone else) now has more money than before, money to spend, invest, save (and pay taxes with). You may feel that I’m labouring this point, but that’s because we’ve been told for decades that a deficit is automatically a bad thing. Well the maths doesn't care about political rhetoric: every pound the government spends into the economy and doesn't tax back stays in private hands. Government deficit = Private surplus. Without Government deficit the private sector as a whole cannot build up savings. That is accounting, not politics.

On the flipside, when politicians tell us we need to balance the budget, reduce spending to avoid a deficit, or even achieve a surplus, they are draining money out of the economy. Government surplus = Private deficit. Less money in people's pockets, struggling businesses, households forced into private debt to maintain spending. When you hear 'we balanced the books,' what actually happened is the government took more money out of the economy than it put in. Someone's savings went down, or someone borrowed more. The government's 'balanced budget' means unbalanced household budgets

The obsession with balanced government budgets isn't even economically necessary - it's ideological. It serves those who benefit from public scarcity: private healthcare profiting from NHS underfunding, landlords profiting from housing shortages, employers profiting from unemployment keeping wages low.

The austerity years proved this devastatingly. Politicians obsessed with "reducing the deficit" delivered:

• Explosion in foodbank use - even among working people
• Longest real-terms wage stagnation since Napoleonic times
• 40% cuts to local council budgets and collapse of services
• Homelessness more than doubled

And the result? Government debt as a proportion of GDP was higher after austerity than before. Without government investment, businesses struggled, unemployment rose, tax revenues fell. The economy stagnated, making the debt ratio worse even as spending was cut. Austerity was self-defeating. It failed even on its own terms - while inflicting misery on millions.

So what should we be looking for if not a balanced budget? How about a balanced economy? That might look like:

• Full employment (everyone who wants work can find it)
• Productive capacity focused on useful things (houses, not financial derivatives)
• Resources flowing to where they're needed (insulating homes, not speculating on property)

The private sector will rarely achieve full employment on its own. Capitalism requires the unemployed in order to suppress wages and maintain ‘flexibility’. A jobs guarantee from the public sector would achieve real full employment. Likewise the private sector will not produce all of the things a society finds useful because they are not all profitable. Therefore a government may need to run a deficit to help achieve these outcomes itself. This becomes a problem only when it hits real limits: available workers, materials, energy capacity. Not when some arbitrary ratio makes bond traders nervous (who, as we’ll see in the post on borrowing are far less necessary for Government spending than they would like you to believe).

To conclude then, the question isn't "How do we reduce the deficit?" It's "What do we use it for?" Climate action? Clean rivers? Biodiversity? Houses? That's the conversation we should be having. Framing it all as ‘we cant afford X because of the deficit’ is simply avoiding the real questions.