What caused the UK to be in so much debt?

[Anna B]

In 1997 Labour inherited a budget that was actually in balance, but you are right that historically the government no matter which party it is spends more than they receive, if they hadn't we wouldn't have enjoyed the life styles we have enjoyed, but at least the debt would be lower for future generations.

---------- Post added 03-05-2015 at 18:49 ----------

 

 

Do you think I am wrong and if so which countries should we take after?

I'm afraid the debt is now twice what it was under Labour, having doubled to £1.5 trillion, and it isn't going to get any less as it is now growing faster than GDP. Frankly, I don't know what either party can do about it, and neither do they judging by it's total absence from any party's manifesto.

 

As for which country, I don't see why we should take after any, rather take the best bits from all of them. Personally I would prefer proportional representation, and co operation rather than confrontation, and more use of polls and opinion sites to guage the public mood. I'd also like to see a lot more women in Parliament.

 

I rather like the Scandinavion countries' systems, but whether that would work here I don't know. Responsible Capitalism can work with responsible socialism if it's done right.

 

And I am sick of the elite / Public School bunch taking control of everything, which seems to be a peculiarly British state of affairs.

[ANGELFIRE1]

I think that bloke Blair, the multi millionaire champagne socialist has much to answer for. The middle east problems, almost bankrupting the Country and the mass immigration that blights us to name but three.

 

The letter left by Labour, "good luck no money left" simply says it all.

 

Nigel and his UKip buddies will do well, (they have received my postal vote anyhow) hopefully they will be able to reign in Cameron after the election. Milliband will lose all the 45 seats in Scotland, so that's him screwed, Clegg and his LibDems will be lucky not to lose their deposits. So it looks good for Nige next week.

 

I see Cameron and Nigel working together in coalition by the end of next week.

 

Angel1.

[I1L2T3]

In 1997 Labour inherited a budget that was actually in balance, but you are right that historically the government no matter which party it is spends more than they receive, if they hadn't we wouldn't have enjoyed the life styles we have enjoyed, but at least the debt would be lower for future generations.

 

Doesn't matter what state the budget was in in 1997. The fact is that not a single penny of oil and gas revenue was saved 1979-1997. Which kind of makes it unfair to beat up on Labour for not saving. Fact is they're as bad as each other.

 

---------- Post added 03-05-2015 at 20:29 ----------

 

I think that bloke Blair, the multi millionaire champagne socialist has much to answer for. The middle east problems, almost bankrupting the Country and the mass immigration that blights us to name but three.

 

The letter left by Labour, "good luck no money left" simply says it all.

 

Nigel and his UKip buddies will do well, (they have received my postal vote anyhow) hopefully they will be able to reign in Cameron after the election. Milliband will lose all the 45 seats in Scotland, so that's him screwed, Clegg and his LibDems will be lucky not to lose their deposits. So it looks good for Nige next week.

 

I see Cameron and Nigel working together in coalition by the end of next week.

 

Angel1.

 

Don't forget Mandelson. Pure poison for our country. A snake.

[Radomu]

We owe over £1 Trillion and the debt is rising by over £5,000 per second.

 

http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=0CDAQFjAD&url=http%3A%2F%2Fwww.nationaldebtclock.co.uk%2F&ei=lqFEVZi9FsvnaP3bgZgI&usg=AFQjCNFF5lCD9JNws2V6MyY47InfEuxQew&bvm=bv.92291466,d.d2s

 

Would you care to tell us at what point you consider we will actually be in 'much debt'?

 

Acquiring debt is the nature of a modern economic system. There's no evidence that the supposed 'massive' debt will negatively effect Britain to the degree that it's advertised it would, especially considering that the credit rating of UK government bonds are the highest possible: AAA.

 

The huge amount acquired in deficits was due to the recession resulting from the temporary decline in tax revenue, increasing expenditures on benefits, and the rescue packages of the financial industry. The first thing to do there is to stimulate the economy so it would recover, then regulate the financial industry from being so volatile. When the economy is growing, the value of the debts acquired will gradually go down with inflation while the government will have a greater capacity to pay it back as it has more tax revenue and less expenditures. When the economy is fully recovered, that's the point where the government should cut spending.

 

Instead, Britain, and economies across the world, did the opposite of what one ought to do by cutting spending while the recession. It's the only time where you are not supposed to do that, especially because people depend on benefits the most and you're undermining economic recovery by shrinking the public sector alongside an already shrinking private sector. This proves that the Coalition government is pursuing an ideological course to reduce the welfare state, and not that they are genuinely concerned about the debt. Under neoliberalism, it has become normal practice today for governments to use the 'deficit' caused by a recession to justify cutting essential services and welfare benefits during a time when people depend on them the most.

[El Cid]

 

The first thing to do there is to stimulate the economy so it would recover, then regulate the financial industry from being so volatile.

 

Stimulating the economy needs Government money, where does that money come from?

 

---------- Post added 04-05-2015 at 09:43 ----------

 

In 1997 Labour inherited a budget that was actually in balance,

 

By 2007 Labour had reduced public sector borrowing slightly below the level

it inherited from the Conservatives, Gordon Brown met his golden rule, that the Government will borrow only to invest and not to fund current spending.

It all went tits up, when the financial crisis began.

[I1L2T3]

Acquiring debt is the nature of a modern economic system. There's no evidence that the supposed 'massive' debt will negatively effect Britain to the degree that it's advertised it would, especially considering that the credit rating of UK government bonds are the highest possible: AAA.

 

The huge amount acquired in deficits was due to the recession resulting from the temporary decline in tax revenue, increasing expenditures on benefits, and the rescue packages of the financial industry. The first thing to do there is to stimulate the economy so it would recover, then regulate the financial industry from being so volatile. When the economy is growing, the value of the debts acquired will gradually go down with inflation while the government will have a greater capacity to pay it back as it has more tax revenue and less expenditures. When the economy is fully recovered, that's the point where the government should cut spending.

 

Instead, Britain, and economies across the world, did the opposite of what one ought to do by cutting spending while the recession. It's the only time where you are not supposed to do that, especially because people depend on benefits the most and you're undermining economic recovery by shrinking the public sector alongside an already shrinking private sector. This proves that the Coalition government is pursuing an ideological course to reduce the welfare state, and not that they are genuinely concerned about the debt. Under neoliberalism, it has become normal practice today for governments to use the 'deficit' caused by a recession to justify cutting essential services and welfare benefits during a time when people depend on them the most.

 

Yes, it's an important point that one of the most critical things about government debt is the capability to service it. That and the way the debt is structured in terms of the term of the loans. Most UK government debt is long-term low interest and borrowed domestically. Successive governments, both Tory and Labour, deserve credit for that prudent management. We also stayed out of the Euro which means we have can kind of manage our our exchange ratrs and generation of money. For all of these reasons we are nothing like Greece and were never going to be.

 

Which, as you say, left the coaltion government free to pursue its ideological experiments without undue concern about borrowing. And while running up huge debts they still had the audacity to take pot shots at Labour despite the fact that until 2008, before the global banking crisis, Labour's borrowing was actually pretty well controlled unlike their own borrowing much of which could have been avoided.

[Radomu]

Stimulating the economy needs Government money, where does that money come from?

 

From borrowing it. That's why stimulus packages are often referred to as 'deficit spending'. But again, the point of my post is that there is nothing inherently wrong with borrowing money unless it's completely unsustainable to the degree that interest rates are skyrocketing and no one wants to lend the money. This condition does not apply to Britain.

 

---------- Post added 04-05-2015 at 16:11 ----------

 

Yes, it's an important point that one of the most critical things about government debt is the capability to service it. That and the way the debt is structured in terms of the term of the loans. Most UK government debt is long-term low interest and borrowed domestically. Successive governments, both Tory and Labour, deserve credit for that prudent management. We also stayed out of the Euro which means we have can kind of manage our our exchange ratrs and generation of money. For all of these reasons we are nothing like Greece and were never going to be.

 

Which, as you say, left the coaltion government free to pursue its ideological experiments without undue concern about borrowing. And while running up huge debts they still had the audacity to take pot shots at Labour despite the fact that until 2008, before the global banking crisis, Labour's borrowing was actually pretty well controlled unlike their own borrowing much of which could have been avoided.

 

There is, however, an important point to be made about the financial system, that Britain had one of the largest financial collapses in the world in 2008 due to it being higly unregulated. Instead of having real economic activity, the UK has pursued a course of financial volatility since the 'Big Bang' of deregulation in the 80s. New Labour has continued that path.

 

So the sudden upsurge in deficits after 2008 was obviously due to the financial economy being inherently unsustainable without the taxpayer compensating for many of the losses. The deficit, nor even the debt, is no where near being the problem of the economy. The problem of the economy is of the structure of British finance and the nation's reliance to it, not of government incomes, expenditures, and borrowing.

[psynuk]

From borrowing it. That's why stimulus packages are often referred to as 'deficit spending'. But again, the point of my post is that there is nothing inherently wrong with borrowing money unless it's completely unsustainable to the degree that interest rates are skyrocketing and no one wants to lend the money. This condition does not apply to Britain.

 

Exactly, and why all of the disingenuity regarding 'just a few months before we would fall like greece', 'not wanting our children to inherit our debts' is just fear-mongering & trying to lay blame where it's not due in order to further push an agenda.

[El Cid]

 

But again, the point of my post is that there is nothing inherently wrong with borrowing money unless it's completely unsustainable to the degree that interest rates are skyrocketing and no one wants to lend the money.

 

 

There is always interest to pay back; why not accept that we cannot have growth 365 days a year, and year after year?

[loraward]

Stimulating the economy needs Government money, where does that money come from?

 

---------- Post added 04-05-2015 at 09:43 ----------

 

 

By 2007 Labour had reduced public sector borrowing slightly below the level

it inherited from the Conservatives, Gordon Brown met his golden rule, that the Government will borrow only to invest and not to fund current spending.

It all went tits up, when the financial crisis began.

 

I love the why governments say they borrow to invest when in fact they mean they borrow to spend, and the economy was in balance when Labour took over, but it wasn't in balance at any time after 1999, it took them just two year to mess it up and then borrow to keep it going.