UK Public Debt Soars To Historic Levels
To paraphrase Winston Churchill, never in the field of sovereign finance have so many British taxpayers been compelled by their government to assume so massive a debt to pay for the sins of so few. The UK has probably incurred the greatest collateral damage to its financial and banking system due to the subprime mortgage meltdown in the U.S. compared with any other country except for America itself.
According to the latest Treasury figures emanating from London, the United Kingdom’s national debt now stands at £804.8 billion, compared with £632.8 billion just one year ago. According to official statistics, the proportion of UK public debt to GDP now stands at more than 57%, compared with 44% in Augusts 2008. The primary driver of this massive inflation of public debt has been the costly bailout of the UK’s banking sector.
As bad as these number are, they are bound to deteriorate further. For one thing, the toxic assets still sitting on the balance sheets of British banks guarantee the need for more costly bailouts down the road. In addition, UK tax revenues are plummeting while economic stimulus packages and unemployment relief are further expanding government expenditures.
Where doe this end? A growing possibility is national insolvency.