Thread by @uk_domain_names

The bailout of the banks in the UK during the global financial crisis is hugely misunderstood (partly because people keep misrepresenting it, as Jeremy Hunt did today).

The UK Government didn't simply gift the banks money, it provided loan guarantees, and bought failing banks.

You can think of those loan guarantees like a family member or friend stepping in to guarantee your mortgage so that your house doesn't get repossessed. Doesn't mean they will pay all the mortgage, but they're liable to pay if you can't.

And of course when the government took over RBS and Lloyds, that wasn't a gift either. It got the banks in return. And since the crisis it has sold its shares, and got much of the money back.

So yes, the financial crisis was expensive. But not nearly as much some would have us believe.

Over £1 trillion was made available in loan guarantees, liquidity and to take over the banks.

But most of that money was never used. And the Government got all but £33 billion back.

So why was austerity so bad? Because the economic shock reduced company revenues and therefore profits, and so less tax was raised. And people earned less and spent less, so less VAT was collected. And so on. The lost revenue hurt significantly more than the actual bailout money.

History is about to repeat itself. The two Tory leadership candidates are making spending pledges of £30-50 billion (including help for affected industries). But Brexit will also lower economic growth, meaning less taxes collected and less money to spend. Double whammy!