The UK has a perilous national debt problem – over £1.6 trillion and rising. Government expenditure continuously exceeds income despite the years that have passed since the global financial crisis of 2007-08. Even with low interest rates, the interest payments are nearly £1 billion per week, an average of £700 per year for every person in the UK. The interest is equivalent to 2.5% of GDP – more is spent on servicing debt than on defence (1.85%).
Despite years of deep cuts to services and the selling of state assets, the deficit is still very high, adding more and more to the debt mountain, which currently stands at 80.8% of GDP. As tax revenue is 28.5% of GDP, the debt would require the entire government income for over three years to clear it. The UK owes an average of £33,000 per person and has lost the top credit rating from two of the three main agencies.
In trying to recover the situation, services and welfare budgets have to be slashed even more, hidden taxes abound and more public services are now chargeable or more expensive to access. As some departments budgets are ‘ring-fenced’ – NHS, foreign aid, EU budget (legally required) and education (not truly ring-fenced) – the remaining areas get disproportionally hit by the cuts. To further add to the difficulties, these cuts are happening in a time of record immigration, so the reduced spending has to be spread thinner still to cover the larger UK population.
Inevitably questions have to be asked about the policies of successive governments that have led to such a poor financial situation. Why, as a country, can the UK not maintain the same level of public services that it could in the past? George Osborne’s rhetoric about fixing the roof whilst the sun is shining is simply a falsehood whilst missing financial target after financial target.
Also, why is the UK’s membership of the EU seemingly bringing us no advantage at all?
Below are links to some articles from the press that highlight the dire state of the UK’s finances.