The UK Debt & Deficit
Posted on March 14, 2019
I was speaking to someone today who said, correctly, that the ‘deficit’ was coming down. He was wondering what affect Brexit would have on it. It gets a bit confusing as whilst the deficit is coming down, debt is still around 85% of GDP.
In the terms of a Layman, the deficit is the annual amount the government has to borrow to meet the shortfall between current receipts (tax) and government spending. National debt or public sector net debt is the total amount the government owes, accumulated over many years of borrowing.
Graphs and Numbers
What these graphs show, is how much damage the banking crash did to the UK economy. It also shows that despite their alleged expertise in economic stability, the Conservatives have struggled to control the debt of GDP. This is despite austerity measures that have affected UK public services so much.
I wouldn’t mind so much if the people who fund the Conservatives were in prison for fraudulent banking and tax avoidance. However, they seem to be richer than ever. In the name of impartiality, Tony Blair and Gordon Brown also loved a bit of RBS due to the tax revenue they were bringing in. It’s a total piss take that Fred Goodwin got away with busting the economy. In hindsight, deregulation of lending was not very clever.
Can We Survive Another Recession?
In answer to the question on how Brexit will have on a fragile economic situation, I am not qualified to say. However, if I was a betting man, I’d say it won’t be positive. I am not confident the UK will be able to sustain another economic crash. What happens if we reach point where national debt becomes higher than GDP? The equivalent to a business spending more on overheads than it generates in income. This is known as ‘trading insolvent’.
With that in mind, I think Brexit is a very, very, bad idea. I do not think we are a robust enough nation to risk to another economic collapse. That is why those in parliament who are sensible are battling against Brexit. It also why those who who are corrupt and have taken money from the last crisis and hid it offshore and battling for it. They need control more than ever.
Still, as that chap on Radio 5 said yesterday, “there’s always rabbits and potatoes”.
*the yellow lines on the graph are reference points as to what is acceptable in ‘strong & stable’ economy.