National Debt at £1 trillion, is there any way back?
Discussion
According to the ONS, the national debt on 18th February was £848.5 bn, with the public sector borrowing requirement predicted at £178 bn for 2009/10.
Given those numbers, how the hell are we going to even begin to tackle the debt crisis - all the pre-election spending cuts and tax rises were talking about cuts and tax rises that would barely put a dent in the rate at which the national debt is growing, let alone reducing the amount itself.
Does anyone have an idea of how it will be tackled with rough numbers to show what we're in for?
For example, how much will a VAT increase of 2.5% raise per year, I'm betting it's not even going to scratch the surface?
Source for figures:
http://www.economicshelp.org/blog/uk-economy/uk-na...
Given those numbers, how the hell are we going to even begin to tackle the debt crisis - all the pre-election spending cuts and tax rises were talking about cuts and tax rises that would barely put a dent in the rate at which the national debt is growing, let alone reducing the amount itself.
Does anyone have an idea of how it will be tackled with rough numbers to show what we're in for?
For example, how much will a VAT increase of 2.5% raise per year, I'm betting it's not even going to scratch the surface?
Source for figures:
http://www.economicshelp.org/blog/uk-economy/uk-na...
Here we go, an increase in VAT of 2.5% to 20% will raise around £13bn per year, so only another £165 bn to find per year to even stop the national debt increasing!
http://blogs.findlaw.com/solicitor/2010/02/vat-rat...
To equate it to figures that we can more easily understand, the national debt level is equivalent to a family with an income of £40K per year being £24K in debt and currently spending £5K per year more than they earn.
Anyone in their right mind would say that that family is f
cked, no?
To put it in those terms, an increase in VAT of 2.5% would save the family £600 per year, which, as I suspected, barely scratches the surface of their defecit.
http://blogs.findlaw.com/solicitor/2010/02/vat-rat...
To equate it to figures that we can more easily understand, the national debt level is equivalent to a family with an income of £40K per year being £24K in debt and currently spending £5K per year more than they earn.
Anyone in their right mind would say that that family is f
cked, no?To put it in those terms, an increase in VAT of 2.5% would save the family £600 per year, which, as I suspected, barely scratches the surface of their defecit.
youngsyr said:
...To equate it to figures that we can more easily understand, the national debt level is equivalent to a family with an income of £40K per year being £24K in debt and currently spending £5K per year more than they earn....
my impression of joe blogs is that they see the above and think woohoo ive got 16k to blow before i need to worry about my finances.One way or another you have to make people poorer, at least in the short term.
The last Irish budget supposedly shaved £3.6bn off government spending. If you multiply this by 15 to account for relative population size, a similar approach applied to the UK budget would save £50bn a year.
Total tax take is about £500bn.
So a 10% increase in taxation plus two years of £50bn budget savings would get us more or less to the point where things were not getting any worse.
Also, I assume that the cost of servicing debt will drop at the point where is becomes clear that the debt can be serviced, so there is something of a virtuous circle. Against that are deflationary risks, but I don't really understand those in anything but vague terms
The last Irish budget supposedly shaved £3.6bn off government spending. If you multiply this by 15 to account for relative population size, a similar approach applied to the UK budget would save £50bn a year.
Total tax take is about £500bn.
So a 10% increase in taxation plus two years of £50bn budget savings would get us more or less to the point where things were not getting any worse.
Also, I assume that the cost of servicing debt will drop at the point where is becomes clear that the debt can be serviced, so there is something of a virtuous circle. Against that are deflationary risks, but I don't really understand those in anything but vague terms
HundredthIdiot said:
One way or another you have to make people poorer, at least in the short term.
The last Irish budget supposedly shaved £3.6bn off government spending. If you multiply this by 15 to account for relative population size, a similar approach applied to the UK budget would save £50bn a year.
Total tax take is about £500bn.
So a 10% increase in taxation plus two years of £50bn budget savings would get us more or less to the point where things were not getting any worse.
Also, I assume that the cost of servicing debt will drop at the point where is becomes clear that the debt can be serviced, so there is something of a virtuous circle. Against that are deflationary risks, but I don't really understand those in anything but vague terms
That's two years of pretty austere measures just to get to the point that we aren't getting even more in debt.The last Irish budget supposedly shaved £3.6bn off government spending. If you multiply this by 15 to account for relative population size, a similar approach applied to the UK budget would save £50bn a year.
Total tax take is about £500bn.
So a 10% increase in taxation plus two years of £50bn budget savings would get us more or less to the point where things were not getting any worse.
Also, I assume that the cost of servicing debt will drop at the point where is becomes clear that the debt can be serviced, so there is something of a virtuous circle. Against that are deflationary risks, but I don't really understand those in anything but vague terms
How the hell do we start tackling the actual debt itself, which by that point would be well over £1 trillion (or to make it more understandable, £1 million millions), what would the interest on that debt be?
Assuming a "stick a finger in the air" estimate of 3%, that's still £30 billion per year, or to put it another way, the 2.5% increase in VAT won't even cover half of our (notional) interest bill.
Bibbs said:
youngsyr said:
well over £1 trillion (or to make it more understandable, £1 million millions)
It's only a thousand millions.Like it really matters .. we'll not pay it off anyhow.
A thousand millions is a billion.
Bibbs said:
youngsyr said:
well over £1 trillion (or to make it more understandable, £1 million millions)
It's only a thousand millions.Like it really matters .. we'll not pay it off anyhow.
Back when I was at school, a billion was 1 million millions, but since then we seem to have Americanised things.
1,000 x 1,000,000 = 1 billion
1,000,000 x 1,000,000 = 1 trillion
Inflation.
We will soon have to accept that we will have to inflate our way out of recession, combined with savings of 40bn from fraud/waste/over-exuberance and 25bn tax take, it will take 10 years max.
The savings will be year on year for 5 years. 200bn in one term!
We will soon have to accept that we will have to inflate our way out of recession, combined with savings of 40bn from fraud/waste/over-exuberance and 25bn tax take, it will take 10 years max.
The savings will be year on year for 5 years. 200bn in one term!
Edited by Political Pain on Wednesday 12th May 12:29
youngsyr said:
That's two years of pretty austere measures just to get to the point that we aren't getting even more in debt.
How the hell do we start tackling the actual debt itself, which by that point would be well over £1 trillion (or to make it more understandable, £1 million millions), what would the interest on that debt be?
Assuming a "stick a finger in the air" estimate of 3%, that's still £30 billion per year, or to put it another way, the 2.5% increase in VAT won't even cover half of our (notional) interest bill.
Stabilising the debt is sufficient in this political term. There isn't much point in planning past that point, as the government will be too busy dealing with unintended consequences, besides which some other disaster will have come along in the mean time.How the hell do we start tackling the actual debt itself, which by that point would be well over £1 trillion (or to make it more understandable, £1 million millions), what would the interest on that debt be?
Assuming a "stick a finger in the air" estimate of 3%, that's still £30 billion per year, or to put it another way, the 2.5% increase in VAT won't even cover half of our (notional) interest bill.
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