Note to Coalition government: The deficit is as it is due to the need to protect the collapse of the retail banking industry. This collapse was caused by the falling apart of lehman bros, an American investment house. The problems were caused by 'sub-prime' mortgages, where the property was not valuable enough to sustain the debt. Therefore, banks were unable to make good the monies they loaned between themselves. Lehman's collapse destroyed the banks' confidence to lend between themselves (what was referred to as the 'credit crunch'), and so there was a real risk that all lines of national credit would stop. This would have literally caused the holes in the wall to stop handing out cash. Yes, greater regulation of the banks was needed, but that started in the 80s. However, this was started over the pond, and due to our position as an entrenched global financial hub it spread to us.