The UK national debt is the total amount of money the British government owes the private sector.
At the end of January 2008, UK National debt was £512.4 billion. (or 35% of National GDP)
National Debt as a % of GDP has increased from 30% in 2002 to 35%; this is worrying given the long period of economic expansion. It is primarily due to the governments decision to increase spending on health and education. There has also been a marked rise in social security spending.
Although 35% of GDP is alot it is worth bearing in mind, that other countries have a much bigger problem. Japan for example had a National debt of 158% at the height of their recession. [1]. The US national debt is close to 65% of GDP.
What is the Real Level of UK National Debt.
However, it is argued that UK’s national debt is actually a lot higher. This is because national debt should include pension contributions which the government are obliged to pay.
The Centre for Policy Studies argues that the real national debt is actually £1,340 billion, which is 103.5 per cent of GDP. This figure includes all the public sector pension liabilities such as pensions, Private Finance Initiative contracts e.t.c (Northern Rock liabilities)
Problems of National Debt
- Interest Payments. The cost of paying interest on the government’s debt is very high, at least £30billion a year.
- Higher Taxes in the future.
- Crowding out of private sector investment / spending
- The debt problem will only get worse as an ageing population places greater strain on the UK’s pension liabilities.
See also:
5 comments ↓
I would like to say thank you for the revision guide they have been a great help in simplifying economics.. i have been looking for something like this for two years and finally found it a month before my exam.. life saver.
The interest is paid i presume, to the bank of england that lends the money to our government. If this is correct and i’m sure that it is, why have successive governments(this is a rhetorical question by the way) allowed our currency to be controlled by private banking elites without as much as admitting this to the public and asking for the support to fight and win back control over the currency. Much like the american presidents andrew jackson and abraham lincoln did.Forget the big brother control grid, at least for now because the banking system IS the biggest tyranny we face today.
[...] to a comment on UK National Debt, “The interest is paid i presume, to the bank of england that lends the money to our [...]
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