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Why is the budget deficit/debt so high compared to earlier years?
andersonsonson
Posts: 6,454 Forum Member
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I understand that the banks had to be bailed out in 2008 for around 1000 Billion, fair enough
And the interest payments are around 40 Billion per year on that loan
BUT why is the deficit almost 100 Billion, and has been for around the last 5 years? Shouldn't it be around 40 Billion (due to the debt interest coming into play)?
What else has changed from say 2005, to cause almost, excluding the debt interest, 50 Billion of an extra gap in the budget?
And the interest payments are around 40 Billion per year on that loan
BUT why is the deficit almost 100 Billion, and has been for around the last 5 years? Shouldn't it be around 40 Billion (due to the debt interest coming into play)?
What else has changed from say 2005, to cause almost, excluding the debt interest, 50 Billion of an extra gap in the budget?
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See here http://www.theguardian.com/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data#img-1
Rather than building council houses and giving people cheap rents we have privatised most housing and have increased the housing benefit bill.
We have allowed wages to stagnate behind inflation for far too long.
We have allowed the privatised energy companies raise their prices above inflation.
We privatised the railways, still subsidise huge parts of it and allow the prices to be raised above inflation.
Instead of lowering living costs we have paid out in-tax credits.
We have allowed market and house prices to be over-valued by allowing credit limits to be raised and raised.
Instead of creating a society where everyone can pay their way we have created a society where too many hard-working people need government handouts to survive.
Because tax revenues raised by the UK government aren't enough to cover spending on public services. So the UK government borrows the difference. At the moment, annual borrowing is around £100 billion (about £1,660 per person in the UK). Serving the debt with interest payment is costs around £55 billion per year. And it's rising.
This borrowed money is added to the UK government outstanding debt. Whenever borrowed money is due for repayment, the government repays this debt with a combination of tax receipts and further newly borrowed money.
There are three types of groups of lenders to the UK government: insurance and pension funds (23% of the total), overseas investors (30%) and the Bank of England (25%) via it's QE money printing programme.
Borrowing money year or year adds to the outstanding UK government Over the last 5 years, outstanding UK government debt has risen by £600 billion to a total of £1,360 billion.
And there was me thinking jobs are created by the private sector. Would you sooner buisnesses and companies created jobs in other countries, than create jobs in the uk. I am sure germany would love and help these companies move to their country. Close to 30 per cent of migrants moving within the EU picked Germany, compared with just seven per cent who chose the UK.
I am not sure about that
http://www.bbc.co.uk/news/business-29910497
I just don't understand why the government are spending £50Bn more/receiving £50 Bn less compared to just 10 years ago...
You are thinking of the 5 million people in Scotland ? Well, if there's a 2nd Scottish independence referendum, you might get your desired UK population reduction.
Yeah right !
http://www.dailymail.co.uk/news/article-2398796/German-population-shrinks-QUARTER-men-say-kids.html
Oh dear. Fewer births and people living longer.
What has that to do with the level of debt? - in fact some of your suggestions would make the debt level worse.
Yes, they don't have an immigration problem.
You mean because if they create jobs, they also build houses for these workers and families.
And the uk has had a big increase of people staying single http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CEAQFjAE&url=http%3A%2F%2Fwww.dailymail.co.uk%2Fnews%2Farticle-2226138%2FLonely-Britain-A-MILLION-people-live-1996.html&ei=4RpKVZCAEIH0UvqQgZAL&usg=AFQjCNFDIEO6tIIO4Fg4B-ELzL59ON3jng&sig2=tfrRFk4FPyLPTlmOeqccDg&bvm=bv.92291466,d.d24&cad=rja. Lonely UK: Number of middle-aged people living alone rises dramatically as marriage continues to decline
Almost 2.5m aged 45-64 have no spouse, partner or children living with them
Amount has grown 50% since the mid 1990s
Number of loners has pushed up demand for housing. Also what makes a differance is Britain has highest divorce rate in EU. So for every failed relationship a new home is needed
Why would anybody need to build houses for a falling population?
But EU migrants still chose germany over the uk. germany 30%, uk 7% http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=0CDcQFjAD&url=http%3A%2F%2Fwww.cityam.com%2F1417525018%2Fgermany-number-two-destination-immigrants-while-britain-takes-third&ei=MCRKVbSBNoXnUtXIgJgP&usg=AFQjCNGqZ7eSKfe-8qmn_bD62vlHJEQ1cQ&sig2=wh2VjYgjIXTMhCnhUfXFzw&bvm=bv.92291466,d.d24. In 2011 and 2010 Britain held second place for inflows of permanent immigrants. Germany has leapfrogged France, Italy, Canada, Spain and the UK in terms of its attractiveness to foreign workers.
Europe as a whole, however, experienced a fall in migration from countries outside the EU. But the number of people moving within the EU has increased significantly. In 2012, a third of immigrants coming to Germany were from the EU whereas, in 2007, it wasn't even a tenth of that number.
Close to 30 per cent of migrants moving within the EU picked Germany, compared with just seven per cent who chose the UK.
Which part of "falling population" was too difficult to understand?
Thatcher then got in, and to summarise in the simplest terms, they sold/shutdown almost all of our national assets and privatised almost all of our public services, but still managed to run a budget deficit for 16 out of the 18 years they were in power.
By the end of their term in 1997, the national debt had risen to 350bn
This meant that the following government would need to run a budget surplus of around 50bn for 11 years to be able to pay off that debt and also to cover the bank bailout and budget deficit which occurred as the result of the 2008 global financial crisis (which would've happened regardless of who was in power in the UK).
This was never going to happen (50bn surplus and paying off that debt).
After reducing the budget deficit (which was ~50bn in 1994-5 and ~35bn in 1996-7) and running a surplus during the first 4 or 5 years of being in government, Labour then borrowed/spent an extra 125-150bn (between 2002-7), claiming it was required to fix schools, hospitals (or build new ones) and infrastructure caused by 18 years of Tory neglect.
Gordon Brown claimed that boom+bust was over, therefore, I guess he wasn't planning ahead for a global financial crisis and a 155bn budget deficit in 2008-9.
Before it hit, the national debt was up from 350bn to somewhere closer to 500bn.
After it hit, the national debt went up to around 800bn as a result of the 2009-10 deficits and banks bailout.
The Tories then got in again and only managed to reduce that 155bn budget defict by 2/5 in 5 years, meaning that it was still 90bn when they left office (it's been forecast to be 75bn by the next budget, Apr 2016).
So each year they were in office, more and more was added to the national debt (something like 135, 120, 115, 105, 90 billions) and they also spent/borrowed an extra 150-200bn on top, and the national debt is now £1.5tn
So basically, the country is bankrupt thanks to the LibLabCon (and bankers etc).
But still, is there any reason, excluding the debt interest, why we are around £50Bn-£60Bn worse off than 10 years ago? Seems a huge amount, what has changed? Has pension costs went up £50bn or something?
None of those are my suggestions but what has actually happened. And you are right they have made the level of debt higher.
5 YRS of cuts and they have nearly double our National debt, yet they claim they have done a fantastic job, massive cuts, 5 yrs of austerity and
they have managed to cut this yrs deficit in half. and that's supposed to be something to be proud of is it.
If the Torys are not lying about their promises then what's going to happen in the next 5 yrs if they get in. our debt will be over 5tril.
If they go back on their word and leave things exactly the way they are now. the National debt will be over 3 trill. it's scarey
Did you notice than in 18 years of Conservative rule there were only 2 without a deficit?
We should have been allowed a vote on bailing out the bankers!