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  1. #1
    Fresh Seaman CaptainNemo's Avatar
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    18-02-2018 @ 04:17 AM
    in t' naughty lass

    Budget 2010: Interest bill on UK government debt set to soar

    Budget 2010: Interest bill on UK government debt set to soar

    More than 10p in every pound of tax Britons pay will within four years go straight on the Government's ballooning debt interest bill, according to figures underlying the Budget calculations, it has emerged.

    By Edmund Conway, Economics Editor
    Published: 9:15PM GMT 25 Mar 2010

    The scale of the "repayment shock" facing Britain as its national debt climbs to the highest level since the 1960s was laid bare as the Institute for Fiscal Studies calculated, based on Treasury figures in the Budget , that debt interest payments will climb to 73.8bn by 2014/15. At this level 10.6pc of total tax revenues debt interest payments would be at the highest level since the 1980s, when Nigel Lawson was still gradually reducing the scale of Britain's national debt.

    The news is likely to cause consternation in the markets as well as among households since many of the ratings agencies regard a country as being in growing danger of a fiscal crisis, and a likely downgrade, once its debt interest payments exceed 10pc of tax revenues. The Treasury had previously forecast that debt interest payments would peak just below this threshold in four years' time. It will also be highly embarrassing for the Chancellor, Alistair Darling, who has refused to publish the Government's detailed spending forecasts which would include its projections on debt financing costs until after the election.

    However, Carl Emmerson of the IFS said he had calculated with reasonable accuracy, using figures from Wednesday's Budget, that the bill had been lifted considerably, despite the fact that the Treasury expects to borrow less over the course of the next four years. The increase is likely to reflect an internal Treasury calculation that the interest rates charged by investors will climb higher than it previously thought in the coming years.

    Despite Mr Darling's achievement in resisting political pressure to use the lower deficits in coming years to fund a pre-election giveaway, the interest rates on gilts UK Government debt have increased steadily since Wednesday's announcements. Last night, the yield on the benchmark 10-year gilt was up at 4.035pc, compared with a level of just above 3.9pc just before Mr Darling stood up in the House of Commons. Market insiders say the deterioration reflects worries surrounding Labour's long-term economic plans rather than any specifically unattractive proposals in the Budget.

    As Chancellor, Gordon Brown significantly reduced the size of the national debt, in large part thanks to the 22.5bn windfall from an auction of 3G licences in 2000. However, in the wake of the financial crisis, UK net debt is set to soar from around 40pc of gross domestic product to just shy of 90pc 1.6 trillion.

    The sharp rise in the cost of financing this debt, which will be sold at increasingly high interest rates particularly once the Bank of England ends its quantitative easing programme is likely to become a key issue in the next decade. Next year the debt interest bill will hit 42bn: higher than Britain's annual defence bill. At 73.8bn, it is likely to be equivalent to both the defence and transport bills combined.

    Budget 2010: Interest bill on UK government debt set to soar - Telegraph

  2. #2
    Thailand Expat

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    17-02-2012 @ 04:10 PM
    Yeh and eyebrows budget is a farce,

    It was like a ship sinking and the Captain says "let,s paint the foredeck'

    It,s election time so no bastard will tell the truth,

    If Labour get in again they will say in 3 weeks "Ah a sudden problem has arisen, we need to raise taxes by 25 % , we never saw this coming , really honest '

  3. #3
    ted is offline
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    12-08-2013 @ 10:58 AM
    Most western countries are in the same boat,just get VAT up to 21%,then the pound will start going up.

  4. #4
    Thailand Expat
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    17-06-2019 @ 06:40 PM
    South coast UK
    I will suffer the tax hikes,its not so bad while interest rates are so low,
    I just dont want the unemployment queues again. I remember them before, i still see guys who lost their jobs when they were in their 40's 50's, never recovered.

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