The British economy is not as solid as we are led to believe.
The advent of a Tory administration after five years of a coalition government was a welcome change in the right direction. However, if we analyse the National Debt, the prospect for the future does not look encouraging.
Britain’s National Debt has escalated to a point where it’s become a heavy burden that will ultimately negate the benefits of any growth in the economy, essential for the avoidance of a recurring financial stagnation that crippled the nation in 2008.
For the first time, the Debt has topped £1.5 trillion or £23,400 for every man, woman and child in the realm.
We now owe so much that taxpayers will have to cough up to the tune of £46 billion for interest payments this year alone – equivalent to one billion more than the entire defence budget – a state of affairs that will bring shivers to an economy deemed to be on the right path to a healthy recovery.
The Office for National Statistics said government debt hit £1,500, ‘200,000,000’ at the end of May or a record 80.8% of national income. Interest payments are expected to approach £60 billion a year by the end of the decade.
The bleak figures underline the task facing George Osborne, ahead of next month’s budget. Andy Sylvester of the TaxPayers’ Alliance said: ‘This is a landmark moment and should finally wake up politicians to the fact that our current level of spending is simply unsustainable. It is a sign of how broken our public finances are that we are already spending more on debt interest payments than we spend on defence and continuing to add to the debt will put even more pressure on other essential services. The only answer is significant spending reductions and beginning to pay back some of the debt.’
The group estimates the true size of the debt, with the cost of public sector pensions and private financial initiatives included, is £8.6 trillion or £320,000 per household.
Unless the government stops harping on about the strength of the economy, which is not the case, and takes strong measures to stop the escalation of the National Debt – and marginally reducing spending to conceal the real problems that threaten to derail their promises of a stable economy – then we are in for a monetary earthquake waiting to happen.