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South Shields premier political blog

£1 trillion debt….or more

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Apparently £1 trillion doesn’t cover half of it.

Nick Silver at the Institute of Economic Affairs argues that national debt is actually over £4 trillion and stands at 276% of GDP (Gross Domestic Product)

The debt the government carries represents the level of transfer to future generations – the debt will have to be paid off out of the government’s future tax revenue. The population has effectively promised itself a pension without setting aside a capital fund in the hope that, in the future, there will be enough taxpayers. But we are at serious risk as the demographics deteriorate further as there will be fewer tax payers to pay for an increasingly large burden.

If the government acknowledges its true debt level, it will have to behave like a highly indebted person – with extreme prudence and the introduction of austerity measures. It will be forced to cut spending, increase taxes, possibly print money to pay off its debts, and almost certainly look to break its pension promises.

So don’t hope that your pension will be looked after, particularly if you are one of the 10% of school leavers likely to get a job next year.

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Written by curly

November 27, 2008 at 8:31 am

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