The UK national debt is the total amount of money the British government owes to the private sector and other purchasers of UK gilts.
From figures published May 2010, UK public sector net debt was £903.0 billion. (or 62.2% of National GDP) – Source: Office National Statistics [1] (page updated June 18, 2010)
Excluding Financial sector intervention, public sector debt is £771 billion or (54% per cent of GDP)
The PBR (annual government borrowing) forecast for 2009/10 is for net borrowing of £178 billion or 12.6% of GDP.
Graph Showing UK National Debt
National debt UK : ONS
After a period of financial restraint, National debt at a % of GDP fell to 29% of GDP by 2002. Then, national Debt as a % of GDP increased from 30% in 2002 to 37 % in 2007. This was despite the long period of economic expansion. It was primarily due to the governments decision to increase spending on health and education. There has also been a marked rise in social security spending.
Since 2008, National Debt has increased sharply because of:
- Economics Recession (lower tax receipts, higher spending on unemployment benefits)
- Financial bailout of Northern Rock, RBS and other banks.
Although 60% of GDP is alot it is worth bearing in mind, that other countries have a much bigger problem. Japan for example have a National debt of 194%, Italy is over 100%. The US national debt is close to 71% of GDP. [See other countries Debt]. Also the UK has had much higher National Debt. e.g. after the second world war it was over 180% of GDP.
National Debt and Financial Bailout
The Nationalisation of Bradford & Bingley and Government purchase of shares in major banks like HBOS will cause even more borrowing. It is estimated National debt will could rise close to 100% of GDP by 2012
It is way above the government’s sustainable investment rule of 40% maximum. However, the debt is different in the sense that the government has a reasonable chance of getting, at least, some of its money back. It is different to say borrowing to pay pensions.
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 and private finance initiatives PFI which the government are obliged to pay.
The Centre for Policy Studies (at end of 2008) 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, and Private Finance Initiative contracts e.t.c (Northern Rock liabilities).
- However, these pension liabilities are not things the government are actually spending now. Therefore, there is no need to borrow for them yet. It is more of a guide to future public sector debt. I don’t accept the fact that future pension liabilities should be counted as public sector debt. In 2006, the Statistics Office did change calculations to include some PFI into public sector debt figures [pdf - Treasury.gov.uk]
- However, it is a sign that it will be difficult to improve finances in the future.
Another problem is that with the financial crisis, the government have added an extra £500bn of potential liabilities. Note: the Government has offered to back mortgage securities. They are unlikely to spend this money. But, in theory the government could be liable for extra debts of upto £500bn. If we include this bailout package as a contingent liability National debt would be well over 100% of GDP.
Forecast for National Debt
Source: HM Treasury – may prove to be overly optimistic
The Public Borrowing Requirement forecast for 2009/10 is net borrowing of £178 billion.
Problems of National Debt
- Interest Payments. The cost of paying interest on the government’s debt is very high. In 2008 Debt interest payments will be £31 billion a year (est 2.5% of GDP). In 2009, they will be £35 billion (similar to defence budget). Public sector debt interest payments could be be the 4th highest department after social security, health and education.
- 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. (demographic time bomb)
- Negative impact on Exchange Rate (link)
See also:
- Should We worry about National Debt?
- US National Debt
- Books on Debt at Amazon.co.uk
- What went wrong with US economy?
- Problem of Personal Debt in the UK
- How is National Debt financed?
- Public Debt at the Office of national Statistics
History of National Debt
national debt as % of GDP: Source: no 10.gov.uk
National Debt since 1900
91 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 [...]
[...] UK National Debt [...]
[...] National Debt in the UK is high at 40% of GDP £535bn. However, you could argue comparatively it is not too bad. National Debt has been much higher e.g. last recession, it reached over 45% of GDP National Debt in European countries like Italy is over 100%. See: National Debt statistics [...]
[...] also: UK National Debt [...]
[...] Official national debt is £512bn. The Centre for Policy Studies says that if Northern Rock liabilities and state pension liabilities (they’re taking money to pay into the state pension, it should be reasonable to expect it to be paid out) are added to the official figure then it’s more like £1.3 trillion or 103.5% of GDP. Add this half a trillion on top and national debt is more like £1.8 trillion. Count the zeroes – 1,800,000,000,000. That’s 180% of GDP, 22% higher than Japan at the height of recession when banks were failing every few days and they were knocking zeroes off the Yen every couple of months. [...]
[...] UK National Debt continues to grow. Next year, many are now forecasting a public sector net cash requirement of [...]
[...] UK National Debt 43% of GDP (UK) [...]
I understand that the UK national debt is 1.6 trillion maybe to rise to 2 trillion. Is this correct? and to whom do we owe all of this
[...] UK national Debt is currently just over 610 billion. See (UK National debt) (This figures includes the recent cost of the Northern Rock [...]
why is our currancy falling due to the fact that we owe 700 billion in national debt ??, the USA has accumilated over 59 trillion dollars of goverment liabilities (thats 500,000 + per every single household) and yet the US dollar is stable ??????????????????
The top civilized governments of this world are ALL in
big DEBT problems. The G8 should meet to revise the
old system using john maynard keynes and britton woods agreement or post WWII to rebuild the govs of
Europe and devote 50% of the World Bank and Internatl
Monetary Funds Projects to G8 gov needs currently or
stop giving it ALL away to fourth and fifth world govs.
Projects undone by USA,UK,France,Russia,Germany,Japan,China,Canada,Spain,Italy,Iraq,Mexico,Poland and probably six more majors
should now be invested into by offshore bank trading regimes with Billion Dollar Tranches to aid NOW developing countrys as well. Their treasurys can’t fund
their negleted hospitals,welfare issues,roads,school
buildings,new sources of energy,new hybrid autos,global warming filters for coal and fossel fuels
power plants etc. THEN OUR GOVS can concentrate on
paying off our debts EARLIER and the dollar should soar
as the ORIGINAL BENCHMARK as intended by Britton
Woods and top 25 Bank Trading Programs. Please check
boulat.com for more specific info on these programs and
how they work. Thanks very much. Also…concerning our
G8 taxes which is a thorny issue of course…our govs should invest in tranches to the Worldwide Bank Trading
Programs run by the US Fed Reserve and major world
banks and the IMF and World Bank so that the original
one dollar of revenue in our treasury would summate
at the end of one year to 10 up to 15 dollars return on
TAX INVESTED FUNDS to help pay off Treasury Issues
of our mutual World Govs. Make your money on the
ten year advancing dollar against lesser currencys while
your “tax man” is at it HUH? Keep doing that until we
ALL RISE ABOVE THIS DEBT DEBACLE…HURRAH! Thanks
from J Johnston…PS The Isle of Man, Gibraltar and the
Isle of Curacao have banks to help us do this today!
the usa in answer to your question are stable as it is due to the trade of oil being in dollars. as soon as new technology for energy or the change in the currency used for oil happens, the usa will crumble unless they sort out the debt.
and john thats interesting but i for certain would not trust the US feds with my money, let alone the worlds
[...] would be interesting if the BBC added a chart for the UK national debt. There is some information here and here but I would like to see a long term table [...]
Re comment #2 by Simon Lomax: “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.” – Simon raises an important question which nobody seems to clarify. Is it true that citizens are paying huge interest payments to private bankers on “loaned money” which has been created out of nothing? If so, why don’t we nationalise the national debt, and pay it off with the amounts that apparently are being paid to private bankers?
[...] Current Public sector net Debt [...]
If we get interest rates to stay at zero percent, this will greatly enhance the servicing of national debt. For instance we woudl completely avoid £30b+ in interest for 2009
It can be done as Japan has had zero interest adn USA is close to it already. Everybody benefits excepts savers ( and they can find smarter ways of investing ).
Can you explain the difference between gross and net national debt?
We should go to 0% interest as the country in the long run will only benefit and we will become a stronger and better financial force in the long run.
[...] I wonder what the yearly interest on that is. Think i’ve found the answer to my question UK National Debt | Economics Blog [...]
[...] UK National debt [...]
[...] 3 http://www.economicshelp.org/blog/uk-economy/uk-national-debt/ [...]
In my opinion, irresponsible lending, combined with over materialistic spending has contributed to this huge problem we see right now. Those graphs are very telling of the state of public excess.
Luckily the FSA are going to start heavily regulating the lenders to help get the economy out of this hole.
[...] National debt in the UK [...]
[...] National debt as a percentage of GDP, including the cost of stabilising the banking system, will increase from [...]
[...] indebtedness is not the worst in Europe, and is actually not the worst we’ve ever endured. It’s quite a lot smaller than the debt we ran up during the second world war – and somehow we recovered from [...]
@Yusuf Husein – I completely agree, interest rates should be reduced, it may help to stabilise some of our more volatile industries.
@Debt Management Tips – It is funny you should bring up this point, I had a conversation with a friend today about the whole Irresponsible Lending vs Consumer Overspend debate and in the end we both agreed that on the whole it was the lenders responsibility to ensure that credit and credit limits were appropriate.
I’m glad the FSA are going to step in and place some restrictions on lenders. There are so many rogue firms out there being irresponsible in their approach to lending.
The company “Brighthouse” in the news right now is a perfect example of a company that should not be allowed to operate.
Interesting article, just shows what a mess our current financial situation really is.
All very interesting. Although I’m not sure what bonds, gilts and treasury bills actually represent. Are they the UK’s potential GDP that will be earned in the future? – i.e. the potential to pay back the debt. Is there some sort of guarantee, or do lenders just give over their money with an element of risk? Also, how by selling bonds, gilts etc and increasing money supply, and further increasing it by then applying fractional-reserve banking on this new money, is inflation unavoidable, and that an increase in National Output is the only realistic factor (in the equation MV=PY) that will limit inflation and more importantly pay the original loan and the interest? How is the interest paid without borrowing more money? How did the UK decrease debt in the past?
I read recently (Money Matters, Alastair Sawday publishing 2009) that we are still paying for the ransom of Richard the Lionheart (1157-1199). Can anyone here refute this allegation?
The national debt is going beyond a joke even worse google is owned by someone in america and its the biggest shopping window i the world and they are putting all the .coms above uk businesses, why google why?
[...] Question: I would like to know more on the issue of who exactly benefits from the UK national debt that my great grandchildren are going to be [...]
[...] on June 2009, UK public sector debt stood at £798.8 billion (or 56.6% of GDP) – UK National Debt [...]
In answer to the questions answering who the government pays interest to…
The government issues government bonds or guilt edged stock which normally pays a fixed percentage of the value of the bond each year to the bond owner. The person who buys the bond gives the government the face value of the bond and in return the government gives the bondholder the fixed percentage of the face value each year until it buys the bond back which normally only occurs with fixed term bonds (eg. 5, 10, 25, 50, 100 etc year bonds although I don’t know if we still issue them).
I hope this helps….
people have to know that what is the yearly condition for debt of national sector and private sector. Here i am thankful for sharing helpful information.
[...] UK ‘Public Debt’ is now approximately £798 billion (June 2009 – http://www.economicshelp.org/blog/uk-economy/uk-national-debt/), and according to the media because of this all the main parties agree that the public sector (our [...]
The email you sent out on 15/16th Sept 2009 on the subject of government borrowing says “The irony is that many people in the UK who have private pensions indirectly have lent money to the government”. Too right. I would go a lot further: I suggest that behind this “irony” there is hornets’ nest, as follows.
Governments borrow to a large extent because the politicians in charge think they can make themselves popular by sparing voters the pain of additional tax. But as you rightly point out, this policy simply results in voters lending instead of paying taxes. The reduced personal consumption by voters is pretty much the same in each case.
Incidentally, this is a classic example of one of the most common mistakes in economics: the mistake of assuming that micro economic laws work at the macroeconomic level. To illustrate, if I PERSONALLY borrow to buy a new car, I can delay the pain of working and saving in order to get the cash to buy the car. But this does not work at the macro economic level.
I’ve actually set up a blog, which claims that government borrowing is largely a farce. I dont think there should be NO government borrowing, because if governments and/or central banks can alter interest rates and the total amount they borrow, this is a useful regulatory tool. See: http://govtdebt.blogspot.com/
What appears tragic from this is that Britain’s cultural history can be read off from the 1900 – 2000 PSBR debt burden chart from the Bank of England above.
The chart’s peaks of PSBR above 100% of GDP mirror exactly the historical periods of social misery which George Orwell documented during the 1920s, 1930s and 1940s, with Britain characterised as a land of rootless tramps and unemployed all reliant on piecemeal charity, low paid jobs and money-lenders, a nation which even Orwell himself could not envisage having a universal welfare state.
Our collective memories of this poverty finally begin to lift around 1965 and Beatlemania, a time exactly co-inciding with PSBR finally falling below 100% of GDP.
It looks like our nation’s all too brief summer of credit looks set to end and the Orwellian social conditions and dismantled welfare state look set to return.
[...] Readers Comment: From National Debt: What appears tragic from this is that Britain’s cultural history can be read off from the 1900 – 2000 PSBR debt burden chart from the Bank of England above. [...]
I’d like to querie the above first para: “The UK national debt is the total amount of money the British government owes to the private sector.”
According to a “City Wire” site, nearly all the increased so called “national debt” in recent months is debt owed by the government to the Bank Of England (on account of the latter’s generous decision to print loads of money and give it to government). This so called “debt” (owed effectively by one government entity to another) is not a debt in any normal meaning of the word.
See the following City Wire site, second graph or “bar chart” and the para just above it: http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=352818
thanks Ralph, Yes, in recent months things have been changing quite significantly. I will update post
What an insight into the nation debt. Great article, so informative and thanks for covering this.
[...] a writer on the blog ‘Economics help’ points out; From National Debt: What appears tragic from this is that Britain’s cultural history can be read off from the 1900 [...]
Thank you for this article, it is are to find this kind of info in such an easy to read format.
I have one question however, who is all this money owed to? Who is so rich that they can lend countries so much money?
It the Banking system that has failed because of very loose lending system. Instead of excessive borrowing and provide the stimulus. The government should directly control most of the Bank and public sector unit , create more employment. The government should also put a cap on the exposure on all public fund i.e, the safeguard the pension fund. Instead of talking of liberalisation, its time to talk about protectionism.
too late for protectionism, we are now in a world of globalisation, most of our labour workforce has shifted to India and China, its fine showing debt as a percentage of GDP, look at the GDP after the war and look at it now, huge difference.here in the UK we have had 10 years of plenty, why didnt we save for the lean times ?only today it was revealed the bank of England lent 61 billion to HSBOS and RBS (behind closed doors). i tend to go with conspiry theorists when it comes to money, google
zeitgeist addendum
[...] an important economic and political question is when and how to tackle the government’s public sector debt. It is currently over £800bn (56%) but growing very [...]
I agree with Martyn above,… massive debt is bad enough but when quantified against GDP it is even more horrific! What do we produce??? Some oil, about to run out, aviation,..given away to EU and the world (Frank Whittle), some military,…. Most money is generated by the city looking after global finance, and what happens when the bubble bursts on global markets (Japan about to pop)? Game over, thats what! Build that wind turbine and get diggin the veggies baby, Mad Max here we come!!
Blah it’s ok – just blame the disabled and unemployed – scroungers!!!
All those loverly houses and smart cars and fashionable attire and 2 foreign holidays you all supposedly ‘worked hard for’ in jobs that actually only cost the nation money as opposed to earning it any and at a rate of anything from 5 times as much to 1000′s of times as much as the unemployed are scrounging in order to exist in this looney system we all call capitalism? Millions of pounds bonuses for running our monetary system into the ground?? Millions of pounds for politicians that have never sucessfully resolved any issue and if you look have actually caused more international resentment and competetive rivalry than all the fascists put together.
Then you spend millions to send our soldiers to go force this nightmare on other unsuspecting countries saying how great and fair it is?? Its a free for all grab a wad to any who have acquired the means to do come and ‘have some!!’ imigrants with dosh acquired in the same manner from even more impoverished populations welcomed too – We been a good cash cow for generations, come get some and then do it to your indigenous population just like we do!! When it gets a bit unruly we can start another world war and duck the conscription like last time.
Bring lots of problematic refugees from all over the world and flood the stable society – gives them at the bottom something else to worry about instead of watching us mugging the national income with ever complicated – but legal – systems and techniques – oh and whilst we send some of them terrrible unemployed people who worked on the side trying to calve out of this ‘overfull’ system, an income for themselves and their family – we will dip into the expenses system for a mortgage we dont have and havent had for nearly 2 yrs at a tune of £40,000.
All this we never would have known about if someone hadnt spilled the beans in protest at our lack of ability to supply our soldiers in harms way with proper and adequate life saving equipment. This isnt Grt Britain or England the land of angels – this is a land of foreigners and cash grabers who have no interest to work for it’s preservation cos they never knew it as what it was,
We’ve been Hijacked!!
[...] create will also be a nice little contribution to the estimated total UK debt of around £800bn ( As of July 2009 Source), though why now, could this not have been done 2/3 years ago at [...]
what are the security for these guilts or bonds that the government exchange for the currency?
[...] National Debt is currently £830bn or just under 60% of GDP. But, with a budget deficit of approx £180bn forecast for 2010, this will rise rapidly. UK Borrowing [...]
Isn’t the problem that the younger generation have had their future wealth largely taken by the older generation? It may have happend by mistake but in any event longer life expectancies and high pension entitlements are a time bomb for the futre, aren’t they? There is an article discussing the subject at http://www.recession.vo.uk.
Red you are spot on, The Goverment should print the money then we would have no interest to pay on the debt. The goverment should abolish fractional banking. Let the Banks that have Lost money go bankrupt. Banks are Just leaches keeping us all as slaves. Get ready for hyper inflation, higher taxes. No doubt they will do something to are currency, join the Euro so that they can make it even more worthless . After all that to keep the majority of people in the dark ,we as a nation will go to war. This is all been engineered by the Banks. Dont forget wealth is not lost, just transfered.
[...] It seems clear that both Tory and Labour seem to want to lock us into an authoritarian statist and high tax agenda for another 5 years at [...]
US Government debt is approaching 100% and will breach 100% of GDP by 2010 or 2011 adding over 1 trillion dollars of debt yearly. Interest payments alone are 500 billion yearly and rising.
America has not invested in each infrustructure, educating it’s workforce, Environmental Standards and Sustainable developement,etc. It has spent huge sums of money on Military adventures, Police-Prison Industrial Complex, Homeland Security, CIA, NSA, FBI, ATF, etc,etc which are basically aimed at controlling US Citizens under a Dictatorship.
While it has given trillions of Dollars to banks and other Corporations and most of all the Federal Reserve.
On Top of this most of the debt or a good portion is owed to Europe and Asia while Countries like Japan have invested in INfrastructure, education, etc and owe the money to themselves! A big difference!!!!!
Japan and Germany for Example are large Creditor Nations because they have large Export Industries and Services which Create Great wealth for these countries, the average Citizen Saves money or invests it while keeping a 15% savings rate which allows Japan or Germany to Borrow Money from their own people because the People along with the Country and Corporations based in these countries have huge sums of wealth which is not the case for a country like the USA who has a huge current account deficit, it’s citizens do not save and are deep in debt, the Companies are deep in debt so when it comes time for the US Government to borrow they increasingly borrow from other countries with the profits going overseas and giving these countries political leverage and economic leverage over the USA or any other country that is in this same game like the UK.
This is not mentioned but Japan has a large Government debt and Germany has a lessor Government debt but they are huge Current Account Nations with high savings rates and most the their Corporations have large pools of cash on hand. These countries also invest back into their country unlike the USA.
Why does the press not pick up on these facts?
Could the Press also be owned by the Germany and Japanese-Oh I forgot in America the Newsprint and Books are mostly owned by German Multinational Companies! And a large chuck of American Assets overall are owned by a few Creditor Nations so try to report on the truth-If your not already bought up !!!
[...] claims that “Public debt soars to record at 61.7% of GDP” It was last at this level as recently as the 1960s. The Wall Street Journal reports that there was solid demand for the latest gilt [...]
a £100 economy is made it borrows this £100 at say 5% interest or £5.00
value of economy = £100 = peoples wages/goods bought and sold etc .. its activity
who and how is the interest of £5 payed
Hiya basicly this recession is far from over there far more to come alot more. In 2011 the debt has to start to be paid back which has been put to one side for 2 years with full on borrowing and spending by the goverment labour. People dont relise in 2011 where going to be in for a rough time with the debt needing to start paying it back.
Meaning higher taxes, Spending cuts, Cuts on services and far more things. Which will result in people having less money. Life will get harder and things will not run as they should be and things will be let go in to a state out of control making things go worse.
I’ve watched this recession when it started to now wats happening. I dont trust anything you hear were coming out of recession its complete rubbish. All the jobs lost have not been replaced at all so this shows its alot of rubbish. If you cant replace those jobs lost with new ones it wont get any better.
All the signs are clear to see and hear were in for a rought time and its time people woke up and relised this. You cant keep spending debt when you havn’t payed it back or saved a penny. Because there all in a bubble world and its going to hit them all.
Best thing you can do stay clear of any debt and any borrowing after 2011 if you can avoid it. Because those are the people who are going to feel it big time and people on low incomes as well suffer to which is wrong.
Amazing that some people advocate the lowering interest rates to 0%. This did not help Japan at all with their banking crisis and one can even argue that hyper credit is the cause of the crisis we’re currently facing. You simply cannot lend and spend your way out of the crisis.
which one the the taxes we pay
is used to pay off the uk’s national debt??
[...] Another graph on the same page demonstrates that current national debt is at around 60% of GDP, which I don’t think is too bad given that the current global economic crisis is considered to be at around the same order of magnitude as the 1930s great depression, and back then national debt hovered between 150 – 200%. I know we live in a very different, more competitive world, but I doubt it’s anywhere near as catastrophic as the papers and the politicians would have us believe. [...]
[...] Definition of National Debt and National debt in the UK – National debt is essentially the total amount the government has borrowed from the private sector [...]
How do people who are in debt, now expected to help pay for the national debt, and people not in debt help pay for national debt, I think we are going to be indebted to the Government to getting us all more in debt.
The worlds REAL terrorists are the big corps and bankers. The banks own YOU. They install our leaders, they shape foriegn policy !! If anyone thinks we are “civilised” think again. This is so much more important than economics alone !!! Someone asked above what is the security on gilts ? well is it not the fact that the goverment has 75 million people to tax in a multitude of different ways therefore giving 99% certainty they will honour the debt ? If the two party system looked like it was about to be overthrown by radical changes in the country do you think the Bank Of England would still be as keen to buy gilts ?
It seems we are forced to borrow since the top 1% have 17 times as much wealth as the other 99%. The wealth of our nation is created by the vast majority doing a good job, but being paid very little for it, we build roads, hospitals, schools, teach, nurse, deliver goods, still make stuff, cook food… But a few manage to put themselves in a position where they can cream off far more than they can consume, we can’t tax that excess profiteering because the rich will throw their toys out of the cot and go abroad, so government has to borrow the excess income of the top few and lend it back to all the public sector workers to keep providing the wealth they create. Borrowing is unsustainable, so now we are left with the grotesque problem of cutting public spending whilst there is an excess of skilled labour lying idle. Less people working means less wealth being created within the nation, that is not a rational outcome, but is an inevitable consequence of allowing a few to walk away with more than a reasonable share of the wealth we all help create.
One way to regain some of the wealth that has been expropriated is to allow inflation to run ahead of interest rates by printing money. Whilst this would erode the value of cash held by savers, it would encourage holders of cash to find productive ways to protect their cash by buying investing in businesses whose value would be unaffected by inflation. For too long we have been dazzled in the headlights of right wing opposition to inflation, we must understand that low inflation (high real interest rates) serves the interests of the rich, whilst modest inflation with low real interest rates serves the interests of the rest of us trying to earn a reasonable living doing a worthwhile job.
“Negative impact on exchange rate”
I presume you mean our currency will fall, to a lower more competetive level…. is the word “negative” the most appropriate to use as it implies this is a bad thing. Every economy has a natural equilibrium exchange rate, trying to manipulate this so as to enjoy the short term benefits of an overvalued currency, will in the long run be counter productive as jobs in internationally tradable occupations are lost.
WhAT IS THE NATIONAL UK DEBT PER PERSON?
If it is the Bank of England we owe our debt to, then who owns the Bank of England?
http://www.whatdotheyknow.com/request/bank_of_england_nominees_ltd
http://forumnews.wordpress.com/about/bank-of-england-nominees/
According to this other website our debt is spread amongst national and foreign institutions.
http://www.debtbombshell.com/bond-market.htm
[...] One of the most common questions is, who owns UK National Debt? [...]
[...] levels of UK national debt and forecasts for rises in government debt, what are the prospects for a UK debt [...]
It may be contrary to the zeitgeist to say so but the government got itself into trouble as much by lowering headline taxes as in actual increasing of spending (though it did plenty of that, mainly on capital projects however which are not recurrent costs – other than the PFI ones of course).
Public spending as a %age of GDP in the 2000s was about the same as it was in the 60s, that is, in the 35-40% range – but in the 60s we had high taxes and thus were able to reduce the debt as a %age of GDP – with the assistance of a high inflation rate. In those days the top rate of tax was over 90% – in the US and the UK – and the standard rate was around 40%. Between 1960 and 1970 we were able to reduce our debt from 107% of GDP to 64%.
The conventional wisdom has been – keep inflation and interest rates low and everything will be fine. Hmmm.
The proposed Responsibility office is an interesting idea – but what will be its terms of reference? Will it be like Philip Snowden and go for a balanced budget even it that means all economic activity ceases? Or will it have targets for unemployment, inflation and so on?
[...] keep note of my sources! Google it innit!…Anyway, yeah I read that, wait…got this from Economicshelp.org that: The Centre for Policy Studies (at end of 2008) argues that the real national debt is [...]
[...] UK National Debt [...]
National debt is normally expressed as a percentage of GDP. Surely it would also be useful to express it as a percentage of public sector income?
“The interest is paid i presume, to the bank of england that lends the money to our government”
Alas wrong – it is paid to the banks that lent us the money via the international gilt market.
The Bank of England has no money to lend to anyone, it merely uses the bond market to create “banking credit”, for which we pay interest to the bond holder/s for the privilege.
The scary part is this money doesn’t actually exist, it is fabricated into existance on the back of our government’s “promise to pay”. So we effectively pay interest on money that doesn’t exist and was “printed” by a bank!
I would suggest starting with video here:
http://video.google.co.uk/videoplay?docid=-2550156453790090544#
i dont know where you get the idea we have low taxation in the UK, just because we pay a lesser percentage under paye than we did in the 60′s doesnt mean we now pay less, vat wasnt around then for a start, cigarettes,spirits,road tax,petrol etc were all less taxed than they are now,
we didnt have taxes on taxes like landfil tax back then neither, the labour gov spent money it didnt have like it was going out of fashion , because taxpayers werent being made to pay for it they didnt bother to question,
now its time to pay back for the squander and people might start to realise you shouldnt buy lots of things on credit (especially PFI credit).
Up to a dozen years or so ago refunds of pension fund surpluses were made to businesses and the Government was happy to collect tax of initially 10%, later increasing to 20%. This, I believe, was due to, 1) a higher proportion of employees paying in compared to pensioners, 2) the value of shares being higher. The businesses, (I have used, businesses as some were in the private other public and ex-public sector) had the excuse that, ‘they had to reduce the surplus, due to Inland Revenue rules.’ They could have paid higher benefits to the pensioners, or given the employees a contributions holiday. To me it was obvious that as many of the schemes had not been around for more than 40 years, there was going to be a time when the current employees were to be due the full pension, which they will now not receive. You never hear about the Government retuning the 10% or 20% tax or the businesses the balance, back to pension funds. All they say is that, ‘employees with have lower pension than they would expect ‘. I wonder why people do not save as much for pension as the Government would like.
Why is ratio of government debt to GDP commonly used as a measure? The general public is much more familiar with the ratio of debt to income – a ratio of 3-4 has commonly been used as a guideline for mortgage borrowing. What is the ratio of current government debt to total tax/NI receipts?
[...] For example, in the UK the Public sector net debt is the total amount of outstanding debt. In the UK the national debt is currently £890bn or 61% of total [...]
anyone knows where i could get datas for UK public sector net debt ?
trying to find but can’t get anything ;(
The country is in debt and most of the UK people are in debt – the country is facing spending cuts and every British Citizen faces extra tax on wages etc etc! Every where is doom and gloom!
People need to look at what is really important in life!.. I owe £55,000 of unsecured debt and I’ve just entered into a Debt Management Plan – But I’m still the richest person I know as I have a loving wife and two fantastic kids. I’m in love and I’m happy – that makes me rich.
My debt has come from buying materialist objects, and love and happiness is something money can not buy. This lesson in life cost me £55,000!
So forget about debt and the control it has on the country and the people! Live for today!
If the interest on the National Debt is only 2.5% of GDP, why isn’t it being carried until better days rather than imposing cuts that will cause real human suffering e.g. freezing NHS budgets and taking money out of the economy thus helping put people out of work and onto welfare!
Where can one see exactly to whom our National Debt is owed and what interest rates are payable?
Its quite shocking how much the UK owe’s the tories have screwed this country badly, the cuts will keep getting harder as times move on.
Some people do not realise that Brown Labour borrowed madly and left us paying about £50 BN a year interest. Labour government spent 1/3 more than it collected. They borrowed extra money to try to make whole regions depend on the State for jobs and welfare.
That was all to make people vote Labour. The last thing Labour wants is prosperous thinking voters who run their own independent businesses, who want less tax and less State interference. Labour want more tax and more State interference, so they need the stupidest State officials who follow orders from Labour HQ.
Keynes aimed to create surplus in tax during booms when Govt collects more than it spends, then use the surplus during recession. Mad Brown repeated ‘I ended boom and bust’. Probably the stupidest statement ever made. He loaded everyone with debts. He put each UK person into about £100,000 of debt!!
He spent billions more than he collected during boom and hid £3.5 Trillion of borrowing and pension liability. So when bust came he borrowed even more.
Now in reality the UK has near £5 Trillion of debts and pension liabilities. Brown and Labour cowards were too afraid, or too incompetent, or too venally corrupt to run UK the finances properly.
They have left the UK in huge debt, interest paments more than almost all State services.
Brown, Bliar, Mandy, Campbell, Beckett, Straw, Balls, Cooper, Milipede and co should all be tried for fraud and corruption. Then banned from public service and being a Director, fined and jailed for at least 20 years. They have left the UK in debt prison for far longer.
So if the way the banking system works means most money is created by private banks(by ways of Fractional Reserve Banking), rather than by the state, this obviously has a wide range of destructive effects, include the high level of public, private and corporate debt, Third World debt, rising costs of living and falling living standards, and the recent financial crisis. Also the fact that Government borrows money at interest (by way of gilt edged securities etc).
My question is this… Why does Government allow private banks to create money by way of loans, mortgages etc ie Fractional reserve Banking? Why does Government not create its own money, interest free (saving roughly 30 billion of tax payers money per year)? and why doesn’t Government just get rid of Fractional Reserve Banking all together?
Surely it is possible for newly created money to enter the economy as a debt-free stimulus, rather than as debt.
Wow the figures are utterly overwhelming
you wonder the way back from all this . . .
Leave a Comment