If Labour remains in power, will the UK go bankrupt like Greece?

[Rupert_Baehr]

The so must be Canada, the USA, Japan, France, Germany, Italy and Singapore.

 

http://www.economicshelp.org/blog/economics/list-of-national-debt-by-country/

 

Funny how some people seem to imagine this crisis is only happening in Britain.

 

 

Not quite. If you add the PFI debt and Pension debt to the UK's national debt, that pushes the country up to No 10 in that chart - better than the Sudan but worse than Iceland.

 

How much a country owes is immaterial if it can afford to pay the interest on the debt and if it can live within its means. If the UK had no budget deficit then the size of the National Debt wouldn't be very important.

 

Unfortunately, not only does the UK have a huge annual budget deficit but it has no plans to eliminate that deficit, let alone to pay off any of the debt.

 

If you look at Budget Deficits of Countries as a percentage of GDP the UK has the 8th highest. - Far worse than Canada (No 134), the USA (No 14), Japan (No 39), France (No 33), Germany(No 85), Italy (No 70) or Singapore (No 119).

 

Even worse than Greece (No 21).

 

It's also worth considering who the country owes the money to. Japan has a large budget deficit, but the Japanese government borrowed most of that money from the Japanese people. The British government doesn't borrow money from the British people - It can't. The British people owe more (private debt) than does the British government.

 

If you were lending money, would you rather lend it to somebody who wasn't very wealthy, but who managed to live within his means; somebody who was aware that the money would need to be repaid and who had a plan to repay the money or would you prefer to lend it to somebody who spent rather more than he earned and had no intention of doing otherwise?

 

As somebody pointed out, most British government bonds are long-term debt. They won't have to be repaid in the near future.

 

BUT:

 

1. The government has no plans to stop borrowing, let alone to put aside money to repay the debt.

 

2. The British government may print money. If it does, nobody is going to want to be repaid in Pounds Sterling - because they will be worth far less.

 

3. If there is a period of high inflation then interest rates will rise. If that happens, then the price of gilts on the secondary market will fall. The fear of that will either (a) Induce the buyers to demand that the government insures the bonds [already started to happen] or (b) reduce demand for the bonds considerably.

[Longcol]

I always found it a little ironic when Labour have critiscised pay of private sector "fat cats" which is after all from privately derived revenue whilst at the same time continuing to feed their own "fat cats" with taxpayers money.

 

Only the odd few million pounds a year and, say, a twentyfold difference between a private sector "fat cat" and a public sector one.

 

Taxation and spending by governments is usually a very efficient way of providing public goods (health, education, defence, law and order etc) that the private sector would find it very difficult to provide- read about the Keynes multiplier.

 

Seems like the economy is picking up anyway.........

 

http://business.timesonline.co.uk/tol/business/economics/article7115456.ece

[Longcol]

 

Unfortunately, not only does the UK have a huge annual budget deficit but it has no plans to eliminate that deficit, let alone to pay off any of the debt.

 

 

I take it that means none of the parties have any plans.

[Rupert_Baehr]

None of them has published a plan.

[Rupert_Baehr]

...

 

Seems like the economy is picking up anyway.........

 

That's one bit of good news

 

But making things (generating wealth) is a mere 14% of the National economy. The other 86% is taking in other people's washing. (Service industries.)

[Longcol]

That's one bit of good news

 

But making things (generating wealth) is a mere 14% of the National economy. The other 86% is taking in other people's washing. (Service industries.)

 

Yes we need serious investment in manafacturing. Trouble is that it rarely turns a quick buck like financial services (screwing other peoples money).

[Vague_Boy]

It may already be too late to avoid that sort of disaster no matter who is in power after Thursday.

 

I fear you may be right.

 

 

One thing we can be sure of, though, is that just as in 1979, whoever takes over and goes on to sort out the mess will be blamed for the results, and millions of people will forget why it needed sorting out to begin with.

 

And correct again.

[Rupert_Baehr]

Is the economy picking up?

 

We were told - just a few weeks ago - that the country 'is now out of the recession.'

 

Alan Johnson (ex home secretary) said on the news this morning: "The country is not out of the recession yet."

 

Was somebody telling porkies? - Or does the Labour spokesman not know what's going on?