Saturday, Sep 12, 2009
180% of GDP
Telegraph: European Commission sees galloping UK debt crisis
The Commission fears Britain will suffer lasting damage as result of the financial crisis and the bursting of the property bubble. Neither banking nor construction will recover quickly, relegating the country to a lower growth trajectory.
Brussels warned Britain before the onset of the crisis that public spending was out of hand, repeatedly reminding Gordon Brown that the credit boom was masking the true scale of the problem. The UK ran deficits of 3pc of GDP at the top of the cycle, while Spain was running a surplus of 2pc. Britain was the only major country to face the EU's excessive deficit procedure in 2007, even before recession played havoc with state finances.
Posted by sold out @ 08:39 AM (1062 views) Add Comment
10 Comments
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1. britishblue said...
This article demonstrates why the word, 'recession', is an outdated word.
A recession described two quarters of negative growth. A government can get a country out of recession by fiscal stimulation and the tabloids will have a rush of blood to their head. However the word recession does not give a broad enough picture in terms of a countries debt, unemployment, overvalued assets, out of control spending and the future pain it might endure.
Expect the Uk to come out of recession in the next 3-6 months and to go back in again sometime in the not to distant future with a bickering election camapaign inbetween.
2. paul said...
L shaped recovery.
3. alan said...
Oh, we have a debt crisis, have we? "....according to a confidential study by the European Commission".
Regulars to this site have been pointing that out for ages. Nice that Brussels has finally pronounced on it.
What are NuLabour going to do? Their strategy is unchanged - keep spending, That way they might not be trashed at the election.
Fabulous!
4. jack c said...
Serious question - who is going to get us out of this mess?
5. quiet guy said...
"who is going to get us out of this mess?"
From a political perspective, the 'mess' is the solution. Now that the stigma associated with extreme measures like QE has gone, expect future governments to use the printing presses as an alternative to unpopular budgetary decisions. Seriously, I think QE will be an intermittent but permanent feature of our monetary policy in the future.
6. Cynical_man said...
@5 Quiet Guy, unfortunately I think I agree with you. President Obama says "Whatever it takes" ie/ Keep printing money, I dare say Gordon and future PM's will think the same. Borrow and spend when times are good, print money when times are bad. Thus ends the boom and bust cycle. Nobody cares about inflation..."Whatever it takes"
7. nomad said...
Magic! Why have we not done this before? Keep printing, keep spending.
8. Chris said...
'Debt anywhere near 180pc of GDP today would test the UK Gilt market to destruction. While Japan is still able to fund an even higher level of debt without paying exorbitant rates, it is does not depend on foreigners to cover the bond auctions.'
To what extent with QE does the UK still depend on foreigners to buy its debt? How much of the printed money is buying government debt. Answer from the BoE please.
9. alan_540 said...
Inflation will see us out of this mess.
10. clockslinger said...
The paradigm BB refers to above sounds like Japan of the last fifteen or so years. No doubt Japanese Uncle can draw learned comparisons. The article by Ambrosia Piltchard does, however mention how Japan has managed to fund a far higher than 180% GDP defecit without a collapse in the bond market... I wondered to what extent the massive private debt level in this country made things worse and for sure nobody sees enough domestic investors to take up the slack once the government stop spending my tax and NI on their own bonds to keep the profligate afloat. Thank you Danny Blanchflower for erroding my savings and fruits of my hard work. Should have borrowed ten times my income and bought a farm in Cornwall near Krusty so you could wreck the state looking after me. Welfare for the spivs and speculators, again.