According to latest reports, government debt has overtaken the entire budget allocated for health services and interest alone on servicing the debt will rise from £25.6 billion to £50.7bn in 2013-14 exceeding the budget allocated for Defence.
In the 2009 pre-budget report it was announced that the interest payments on government debt were on course to reach the same value as the entire budget for schools in England. However, according to Treasury figures, debt interest payments will soon exceed the budgets of every Whitehall department but three, overtaking even spending on the Ministry of Defence.
The National Institute of Economic and Social Research (NIESR) has warned of a fiscal crisis facing Britain as a direct result of the financial and economic crisis.
An array of financial commentators have warned that unless the UK brings spending under control, it may struggle to raise cash on capital markets – meaning that the government could be forced to pay even higher interest on its bonds, and potentially push debt costs higher than predicted.
David Cameron has voiced his concerns this week by warning that the current leadership is running the risk of being unable to pay back the vast amount money that is being borrowed from international investors.
Speaking at the Royal Society of Arts, Mr Cameron said that Labour’s plan to borrow an extra £700bn over five years and take the national debt to £1.4 trillion was a “disgrace” that exposes the UK to serious economic risks. He said that Labour should not have borrowed so much while the economy was growing, “the risk you shouldn’t run is that you have difficulties in funding your debt.”
Michael Blaxter, blogging on financial website Defaqto.com, said that this is only the start of bad news on public debt as it stands at its highest level since 1974. He commented: “The real fear is that we end up having to call on the IMF (International Monetary Fund) for support. Rates will then be increased to a crippling level.”
However, Blaxter does think the worst case scenario could be avoidable: “Japan has operated with much bigger debts than that [the UK’s] for years. You need to bear in mind that one of the reasons why we had this recession is that there has been a flight from risk.”
In the 2009 pre-budget report it was announced that the interest payments on government debt were on course to reach the same value as the entire budget for schools in England. However, according to Treasury figures, debt interest payments will soon exceed the budgets of every Whitehall department but three, overtaking even spending on the Ministry of Defence.
The National Institute of Economic and Social Research (NIESR) has warned of a fiscal crisis facing Britain as a direct result of the financial and economic crisis.
An array of financial commentators have warned that unless the UK brings spending under control, it may struggle to raise cash on capital markets – meaning that the government could be forced to pay even higher interest on its bonds, and potentially push debt costs higher than predicted.
David Cameron has voiced his concerns this week by warning that the current leadership is running the risk of being unable to pay back the vast amount money that is being borrowed from international investors.
Speaking at the Royal Society of Arts, Mr Cameron said that Labour’s plan to borrow an extra £700bn over five years and take the national debt to £1.4 trillion was a “disgrace” that exposes the UK to serious economic risks. He said that Labour should not have borrowed so much while the economy was growing, “the risk you shouldn’t run is that you have difficulties in funding your debt.”
Michael Blaxter, blogging on financial website Defaqto.com, said that this is only the start of bad news on public debt as it stands at its highest level since 1974. He commented: “The real fear is that we end up having to call on the IMF (International Monetary Fund) for support. Rates will then be increased to a crippling level.”
However, Blaxter does think the worst case scenario could be avoidable: “Japan has operated with much bigger debts than that [the UK’s] for years. You need to bear in mind that one of the reasons why we had this recession is that there has been a flight from risk.”
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