Merryn Somerset Webb

I think we are taxed out as a nation.

We are maxed out when it comes to borrowing.

So the knife must fall on public spending if we are to chisel out some more room for defense spending, which surely we must, which surely we must in these insecure times.

There is.

Let me kind of interrupt you before we move on to the but, which I'm really looking forward to.

Really looking forward to the but.

But historically, when you look at UK tax and GDP numbers, all countries, and it's one of the odd things about countries and tax, all countries seem to have their own limit when it comes to the percentage of GDP they're prepared to stump up in tax.

And historically for the UK, it's knocked around 36%, 37%.

And we're now heading for over 40%, which seems unsustainable anyway.

Yes, yes.

And I think we are.

I mean, even the Office for Budget Responsibility in its report around the spring statement a few weeks ago, pretty much said as much, albeit in slightly closeted terms, that we are reaching the point where any further rise in the tax rate...

risks shrinking revenues by disincentivizing whether it's working or selling a business or whatever it might be.

We may even be there already.

We don't know.

We'll only be able to see over the next couple of years whether we've already raised rates to the point in the left of curve where everyone goes, well, do you know what I want to do?

Exactly.

Exactly.

So, you know, wherever precisely we are, we're certainly near to that point.

So the name of the game, if we are to cut ourselves some fiscal slack, will be about spending cuts.