Sunday, 28 June 2009

S&P thinks that Britain's national debt will quadruple.

There was a time when I thought I had a monopoly on scary pessimistic forecasts about the UK economy. Not now. It is a consensus view to think that the UK has an unsustainable fiscal deficit, with rising debt levels that threaten our prosperity for generations.

Take for example Standard and Poor's, who think the UK's national debt will quadruple. Personally, I don't think that will happen. The Bond market will act as a constraint. Interest rates will rise, forcing the government to cut expenditures and increase taxes.

From today's Telegraph.....

Britain's national debt will quadruple to peaks only ever seen in the wake of the Second World War unless the Government takes drastic steps to address the pensions and ageing crisis, Standard & Poor's has warned.

The ratings agency has calculated privately that the UK's public sector debt could quadruple from its current level of just over 50pc of economic output to 200pc or above within the next four decades as the cost of servicing public sector pensions, ballooning social security costs and healthcare burdens becomes overwhelming, The Sunday Telegraph has learned.

The warning is doubly sobering since S&P last month placed Britain's debt on to "negative outlook" – an explicit signal that it could soon be downgraded.


Randeg said...

I can only say welcome to the club as everyone it seems is in financial trouble with debt skyrocketing to the stratosphere. We can only learn from this and that is to try to tighten our belt and learn to live within our means. We should really make some sacrifices in order to get out of this mess.

Evelyn Guzman (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)

AntiCitizenOne said...

Who will be making a load of easy money on the interest?

Mick said...

I think they've underestimated it, because those of us with a good old-fashioned work ethic will have no option but to leave.