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cashinmattress

Bankrupt Britain Trades On Goodwill

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Bankrupt Britain trades on goodwill

Britain is slipping ever deeper into the red. Government borrowing hit £13.5bn in June, the highest figure on record for that month. In the first three months of the fiscal year, borrowing doubled year-on-year to £41bn (£700 for every citizen) as tax revenues crumbled by 10% – faster than the Budget anticipated – and social security spending rose. Government debt is now a record £799bn – 56.6% of GDP.

What the commentators said

At this rate, borrowing is broadly on course to meet the Chancellor's full-year target of £175bn, said Capital Economics. But with "the full hit from the recession" yet to feed through, an even bigger total of £200bn looks likely. And we can't count on a rapid improvement over the next few years, said Gary Duncan in The Times. Think tank, the National Institute of Economic and Social Research, warns that with a lacklustre recovery in the offing, by 2013-14 the deficit could still be around £120bn, a fifth higher than the government expects. And that’s only if future public spending is tightened more than currently envisaged.

With public debt "vaulting" towards 100% of GDP and no clear plan on how public finances will be brought back under control, "Britain is lucky" that foreign investors have not imposed higher interest rates on gilts, as Ambrose Evans-Pritchard pointed out in The Sunday Telegraph. The International Monetary Fund (IMF) warned last week that "this benefit of the doubt is not going to last forever".

Higher long-term interest rates would raise the cost of state borrowing and interest payments and undermine growth. There could even be a "strike by gilt buyers", followed by a sterling crisis, said Alex Brummer in the Daily Mail. When investors decided in the 1970s that they would no longer fund Britain's deficits because fiscal policy remained too loose for too long, the IMF had to step in, added Mansoor Mohi-uddin of UBS.

The "danger signals are flashing", said Liam Halligan in The Sunday Telegraph. Since March, when quantitative easing began, gilt yields have climbed (as prices have fallen) even although the Bank of England has snapped up almost half the gilts the government has issued.

And the vast global supply of debt hardly helps; the UK is set to borrow three times as much as Italy, and twice as much as Germany and France this year. "If Britain can escape with a gentle rise in gilt yields," rather than a "steep and sudden" jump, said Nils Pratley in The Guardian, "we'll be doing well".

How is having Gordo in charge in any way encouraging for those looking to buy up our debt?

In time, and it will happen, foreign investment will drop us; or, the IMF will step in and force government to take the radical cost cutting and tax gathering measures we require.

Until then expect much more debt to be placed on your kids backs.

EDIT: Whose whose whose

Edited by cashinmattress

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Bankrupt Britain trades on goodwill

How is having Gordo in charge in any way encouraging for those looking to buy up our debt?

In time, and it will happen, foreign investment will drop us; or, the IMF will step in and force government to take the radical cost cutting and tax gathering measures we require.

Until then expect much more debt to be placed on your kids backs.

were all being kept afloat with central bank currency swaps from freshly printed currency

cant carry on for much longer

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Bankrupt Britain trades on goodwill

How is having Gordo in charge in any way encouraging for those looking to buy up our debt?

In time, and it will happen, foreign investment will drop us; or, the IMF will step in and force government to take the radical cost cutting and tax gathering measures we require.

Until then expect much more debt to be placed on your kids backs.

Whose WHOSE WHOSE

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I would also suggest the good will could be down to the fear of the losses if the UK fails, considering the size of some of our banks, I doubt the US would stay afloat if we went under.

I suspect that there are some very good games of pass the parcel going on between our central bankers all in secret to keep the ponzi global economy afloat.

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no, we are trading on the fact that taxpayers can pay up for the next 10 years at least.

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