UK National Debt

[AtW]

It should be criminal offence to have budget deficit - it should always be proficit.

[BrilloPad]

We should keep borrowing. After all, we can always print more.

[BlasterBates]

Well actually I think it's straight forward. You slash expenditure and introduce business reforms. Austerity is the most painful but the quickest way out. Look at Ireland.

[Doggy Styles]

The debt is the sum of your deficits. Now when the debt level reaches about 120% that's where you've got worry.

The current debt level is around 80% of GDP ie 60% plus bank bail outs of around 20%.

Now the deficit is around 10% of GDP.

Now assuming no or low growth, this means the debt will grow accordingly.

i.e. next year the debt would grow to 90%, then 100% etc.

That's why the deficit is a worry. The deficit represents how much extra debt is required to fund the budget.

Now for example if you run a deficit of 2% GDP and your GDP is growing at 2% you will not see any increase in your debt as a percentage of GDP. Effectively you can run a deficit like that for ever. That's why governements can run deficits for years and even end up with reduced debt levels if there is high growth.

You've got it BB!

Reducing a big deficit at the same time as maintaining growth is a hellishly difficult thing to do.

[gingerjedi]

Wars are getting cheaper.

[BlasterBates]

Is the real concern the deficit rather than the debt?

Comments welcome from economics experts or anyone wishing to spout any old bollocks should those groups be distinguishable.

The debt is the sum of your deficits. Now when the debt level reaches about 120% that's where you've got worry.

The current debt level is around 80% of GDP ie 60% plus bank bail outs of around 20%.

Now the deficit is around 10% of GDP.

Now assuming no or low growth, this means the debt will grow accordingly.

i.e. next year the debt would grow to 90%, then 100% etc.

That's why the deficit is a worry. The deficit represents how much extra debt is required to fund the budget.


Now for example if you run a deficit of 2% GDP and your GDP is growing at 2% you will not see any increase in your debt as a percentage of GDP. Effectively you can run a deficit like that for ever. That's why governements can run deficits for years and even end up with reduced debt levels if there is high growth.

[Doggy Styles]

How strange its still going up during a time of supposed austerity lol

It's not strange at all. You don't seem to understand the difference between debt and deficit.

[escapeUK]

Is the real concern the deficit rather than the debt?

How strange its still going up during a time of supposed austerity lol

Instead of a gentle winding back of State borrowing to a sustainable level the Government will ensure that expenditure spirals every upwards as it desperately tries to stimulate an economy that was flooded with cash for a decade, which borrowed itself to 'prosperity' and which has lost the ability to generate real wealth. The only real challenge for the British Government in the next few years will be to find new ways to hollow out the historical wealth of the nation so that things can keep going for a bit longer.

[Doggy Styles]

Is the real concern the deficit rather than the debt?

Yes. Look after the deficit and the debt looks after itself.

[Mich the Tester]

Heavy!

[Old Hack]

I think we didn't have a pot to piss in after the war, so anything we borrowed would look terrible as a ratio to GDP. I think it's a bit of a red herring to use graphs dating back to when we were at war. I think graphs should only be seriously used from the 70's. Financially, things have changed massively since the 70's.

But that's just the view of someone who likes to talk Bollocks.

HTH

MF

[TimberWolf]

Forgot the link: UK National Debt | Economics Blog

[TimberWolf]

Is the real concern the deficit rather than the debt?

Comments welcome from economics experts or anyone wishing to spout any old bollocks should those groups be distinguishable.