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Uk Government Debt: Almost 9p Of Each £1 In Tax Will Be Needed To Pay The Interest

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http://www.telegraph.co.uk/finance/economi...e-interest.html

The cash eaten up by interest payments on Government debt will more than double in the next four years as investors take fright at Britain's ballooning budget deficit, the country's leading independent forecaster has warned.

Within four years, almost 9p in every pound of tax paid by British individuals and companies will be spent directly on servicing the Government's debt, rather than on services such as hospitals and police, or the costs of running defence or the welfare state, according to new calculations. At present, the debt interest costs an average of around 5p for every pound in tax.

The National Institute of Economic and Social Research said that costs of servicing government debt will rise from £25.6bn this fiscal year to £50.7bn in 2013/14, due to a combination of higher interest rates and a far greater debt burden. The warning underlines the cost facing taxpayers as the Government debt rises at the fastest rate in peacetime history.

Families will have to endure a stinging combination of public spending cuts and tax increases over the coming years as a result, NIESR said. It came as newly-released official figures showed that the black hole in the Government's accounts is growing at the fastest rate in history.

The figures, published today in NIESR's latest assessment of the British economy, underline the fiscal crisis facing Britain as a direct result of the financial and economic crisis. The Treasury has had to contend with a sudden collapse in tax revenues from City firms and struggling businesses, alongside a sharp increase in the cost of benefits for the rising ranks of the unemployed.

NIESR also pointed out that the fall in Gross Domestic Product during the first quarter was likely to have been the sharpest since the General Strike of 1926. And although it predicted that the economy would be growing again before the end of the year, it cautioned that GDP figures for the second quarter, out on Friday, would show another sharp fall in Britain's economic output.

By NIESR's calculation, annual Government borrowing will still be above the £120bn mark in 2013-14, perhaps as much as £160bn if the Budget assumptions for spending were upheld.

A phalanx of forecasters, including the International Monetary Fund and the Organisation for Economic Co-operation and Development, have warned that unless the UK brings spending under control, it may struggle to raise cash on capital markets. In practice, this means the Government will be forced to pay higher interest rates on its bonds, potentially pushing up debt interest costs even higher than forecast by NIESR.

Robert Stheeman, chief executive officer of the Debt Management Office admitted yesterday that a possible downgrade in Britain's credit rating would push up these costs, though he denied that it would threaten Britain's ability to sell bonds.

So the cost of debt to the UK taxpayer is going to double, nice and we get nothing in return for this.

So on these figures 9% of total tax revenue will be going to service debt. Excellent value for money for the taxpayer.

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It's easily-digestible nuggets of info like this that should be on every newspapers front page, on every logoed T-shirt and shouted at passers-by by every HPC-er who is still allowed out of their secure unit.

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...Which in the end means, "9p of your taxes are paying money printed to bail out private banks" with no benefit whatsoever for you or your community or the country itself.

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"With regard to this latest shocking statistic (9p to service debt), the next government will not just be inheriting a poisoned chalice courtesy of the Brown decade of imprudence, but a toxic financial timebomb that could well relegate this country to the bottom of the league and vastly worse off than even Portugal or Greece."

I think this may prove to be correct.

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Taxpayer lumped with the interest only loan with sod all chance of paying off the capital. Still they should be used to operating like this.

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"Cash will be eaten up by interest payments."

This for me is the next and biggest step of the credit crunch. Countries, businesses and individuals will be paying higher amounts in terms of a percentage of their income just to meet the minimum payments until eventually the minimum payment becomes too much. Interest on debt will compound exponentially.

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"Cash will be eaten up by interest payments."

This for me is the next and biggest step of the credit crunch. Countries, businesses and individuals will be paying higher amounts in terms of a percentage of their income just to meet the minimum payments until eventually the minimum payment becomes too much. Interest on debt will compound exponentially.

Welcome to the third world.

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"Cash will be eaten up by interest payments."

This for me is the next and biggest step of the credit crunch. Countries, businesses and individuals will be paying higher amounts in terms of a percentage of their income just to meet the minimum payments until eventually the minimum payment becomes too much. Interest on debt will compound exponentially.

until default

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"Cash will be eaten up by interest payments."

This for me is the next and biggest step of the credit crunch. Countries, businesses and individuals will be paying higher amounts in terms of a percentage of their income just to meet the minimum payments until eventually the minimum payment becomes too much. Interest on debt will compound exponentially.

Stop moaning and be a good little slave.

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Stop moaning and be a good little slave.

But I don't want a BMW 3-series and a new build lifestyle home. What's wrong with me??

NuLabour will be giving renegades frontal lobotomies next. :rolleyes:

"YOU MUST BORROW LOADS OF CASH TO BUY CHEAP TAT WITH."

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Guest X-QUORK

Dear oh dear, even the Telegraph has dumbed down. 9p in the £1?

Don't people understand 9% FFS?

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Dear oh dear, even the Telegraph has dumbed down. 9p in the £1?

Don't people understand 9% FFS?

12 years of a labour government will do that to people.

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