Saturday, October 22, 2011

So much for ‘austerity’ Britain

UK Debt reaches new record

Article does not mention gold.... so perhaps it can stay. Britain heading for a 'fiscal train wreck' as Government debt increases by 16 per cent in the past year - including bail-outs, it now stands at almost 150 per cent. Total Government debt set to pass £1trillion early in the new year. Predicted 'fiscal train wreck', I suggest, will put more people out of work and further increase the speed of the downward house price spiral

Posted by stuartking @ 12:25 PM (3186 views)
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16 thoughts on “So much for ‘austerity’ Britain

  • general congreve says:

    BANISH!!!

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  • general congreve says:

    Of course you also have to include private citizens debt, which I believe also stands at around £1 Trillion, as it’s still debt that the nation needs to pay off and therefore is an equal drag on the economy. Then we also get to all the off-balance sheet stuff like PFI and the de-comissioning of nuclear power stations by 2020, building new power stations to replace the old ones, the pensions bill coming due for the retirement on baby boomers (starting now) etc. Figures for this have been put between 5 to 8 Trillion.

    Whatever the exact figure, we are easily on the hook for over 400% of GDP in the very near future. Unless we suddenly solve nuclear fusion there is no way we’re bouncing back from that.

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  • Yes, it’s only the deficit which is being tamed; the actual debt keeps on growing until we turn the deficit into surplus. Other news sources paint a more positive picture of the same story:

    Guardian: Government borrowing figures better than expected
    Office for National Statistics data suggests the chancellor is on course to hit his target of cutting the budget deficit from £137bn to £122bn this year.

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  • Drewster @3 ,

    Not even the deficit is being tamed though is it .

    Part of the problem appears to be accounting for public spending on a cash rather than accruals basis .

    To an extent any Govt inherits the previous ones spending commitments . It would not have mattered whether the last Govt were New Labour , New Conservative whatever ; they just can’t help themselves from spending every penny they can lay their hands on and when thats not enough borrowing more .

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  • and further increase the speed of the downward house price spiral

    Not sure the UK government can afford to let that happen. Most people I know with any sort of savings are thinking more and more about buying a second house. This is the effect of BOE’s low interest rate policies – which is what caused the explosion in credit, and house price bubble in the the first place.

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  • general

    UK debt was 1.3 trillion in 2007 now stands at almost 1.6 trillion pounds

    scary stuff….that in excess of our gdp!

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  • uk household debt I mean

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  • mark wadsworth says:

    UK public debt will reach a new record just about every month for month for the next few years, and has already been doing so for several years. most rapidly in the last three.

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  • Austerity has no end. That’s the whole idea of it.

    I have a cunning plan Baldrick!

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  • If it wasn’t for out ability to print money, we’d be in a worse position than Greece.

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  • general congreve says:

    @5 – Was just thinking, do you know if the private debt figure is the current outstanding figure, or includes all future interest that is ultimately payable on the loans?

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  • general congreve says:

    @8 – What difference does it make? It is either a case of direct default, or stealth default by inflation, either way, the populace end up equally robbed of their (paper) wealth.

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  • Yes, this just shows what can happen when people are duped into incorrect economic beliefs by politicians with their own agenda. It’s not that we had a debt that could be ignored but we’ve basically been led to believe that the secret to our debt problems was the austerity measures promised by the Tories: nevermind that all parties were suggesting cuts, we just wanted the party that was promising to be the nastiest almost in a case of self-flaggelation: rather than accepting responsibility for a situation where people had been taking out mortgages they shouldn’t have, obsessed with a property market “that is always going to go up” and yes, “living beyond their means”, they wanted to see a government that would remove their own personal responsibility and instead suggest that all our woes were due to a State that was too much involved in people’s lives, with too many people relying on the State to get by rather than just knowing their place in society and not complain.
    Sure we had a debt that needed to be tackled, noone was ever going to contest that but the idea that savage cuts were required just flies in the face of common sense (for economists at least). Sure, that’s what the markets requested but they do not take into account the social impact of political measures and frankly, can actually be completely wrong (funny how we bought the idea of market fundamentalism after complaining about reliance on the markets for our “economic boom)”. Just as we realise that essentially, as we’re letting a government introduce its measures to ensure that the government does not need to spend on things it would have done previously (tuition fees, welfare system…), that essentially we’ve pulled the rug from under the economy, introduced uncertainty for millions of British citizens who have no more confidence in their immediate economic future.
    And what will the markets do when they realise that debt is increasing because of no growth? Congratulate the government and the British people for having done what they asked and just ignore the fact that the economy is growing? No, like a untrustworthy friend, the markets will happily turn against the UK economy and force the yield on UK gilts up without batting an eyelid. Why wouldn’t they? They owe us nothing.

    @general congreve
    “Whatever the exact figure, we are easily on the hook for over 400% of GDP in the very near future. Unless we suddenly solve nuclear fusion there is no way we’re bouncing back from that.”

    But you need to know what you are comparing that 400% of GDP figure against. You can’t compare a figure of government debt with private citizens’ debt and those figures need to be compared independently. For example, it’s a complete fallacy that a debt/GDP ratio of 100% is some kind of “point of no return” despite what the government led the public to believe with their scare-mongering. Japan has a debt figure of 200% yet this is not so alarming as most of the debt is actually owned by Japanese citizens rather than foreign investors.

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  • I’d question an article that appears to value the total amount of bank bailouts, most of which are funds that have not been drawn down, and compare that to any form of debt. In any case, most of the money that was pledged in the various schemes such as the Asset Protection scheme was not accepted by the banks so that the total amount of money offered to the banks is a lot, lot lower, certainly not enough to push government debt to 150%. I’m sorry, but the author of the article has not interpreted the figures correctly at all.

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  • its the actual amounts…bearing in mind credit card companies are hiking up to 30%+,I dread to think what the other figure is!

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  • general congreve says:

    @11 – Oh dear.

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