A number of public spending cuts have been announced today. What is absolutely certain is that the UK Government has to cut the deficit reasonably quickly.
Germany is paying around 2.633% on its government debt. The UK is paying 3.516 on government bonds and Greece 7.8%.
This is all based upon how risky investors perceive the debt. If we don't show a commitment to bringing the deficit really under control then the interest rate we have to pay goes up.
This year's forecast deficit is over £150,000,000,000. Just for that borrowing interest of £5,274,000,000 will be due to be paid each year. At the Greek interest rate this would be £11,700,000,000.
This has a massive long term effect.
Germany is paying around 2.633% on its government debt. The UK is paying 3.516 on government bonds and Greece 7.8%.
This is all based upon how risky investors perceive the debt. If we don't show a commitment to bringing the deficit really under control then the interest rate we have to pay goes up.
This year's forecast deficit is over £150,000,000,000. Just for that borrowing interest of £5,274,000,000 will be due to be paid each year. At the Greek interest rate this would be £11,700,000,000.
This has a massive long term effect.
Comments
Just who do "we" borrow this money from, what collateral would be needed for a 150 billion quid loan.
If we Defaulted on the repayments would that mean that the UK would have a County Court Judgment against it and the bailiffs would be sent around, I'm sure this has actually happened at some point in the mid 80's
It's obviously not banks "we" borrowed from, Santander, them people wouldn't even allow me a lousy overdraft a few months ago.
To whom do 'we' owe the money?
What if the UK (or another country) defaulted and said: hey we have an army: bring it?