UK Government Debt Hitting All Time Highs as Public Calls for Debt Management Plan
The International Monetary Fund has come out with new statistics showing that the government debt in the UK is going to hit nearly 70% of its entire economical output this year. This has made it to see why so many agencies and credit lenders have been pointing out the need for a debt management plan for the nation, as bankruptcy looms for many people and companies.
This rise in debt means that the UK’s AAA rating, which is only available for the safest borrowers in the world, is in grave danger. If the government loses their AAA rating it is undeniable proof that the nation’s debt and bankruptcy issues are spiraling out of control.
While headlines and statistics such as this have made many citizens scared of the future repercussions, the good news is that things really are not as bad as they seem. When compared to other leading, developed nations, the UK’s 68.7% GDP debt percentage is much better than countries such as the US, Italy, and Japan just to name a few. The US is dealing with a percentage of 84.8%, Italy is seeing its percentage rise to over 115% and Japan is running away with a percentage of 218%.
When looking at it this way, it is unfair to always through around words such as bankruptcy, debt burden, or beg for a stricter debt management plan.
However, it isn’t all positive for the UK as lenders are pointing out the way in which the nation’s debt has been compiled. While other countries have a worse percentage, the UK’s number was just 44.1% as little as two years ago which could be quite a bad sign for the years to come.
Standard and Poor’s credit rating agency has noted that if the government continues to support banks and the financial sector they way they are doing, then their debt levels could reach up to 100% of their GDP in the next two years. The problem is that if that debt level does come to fruition then there is likely no way that the UK can keep their AAA rating. To take it even further S and P have already taken action against the government and has begun to view the nation as AAA negative for the first time since it began analyzing debt in 1978.
The UK is the only country to get downgraded in this fashion this year and last year and another agency, Moody’s, has said they will cut back their AAA rating if things do not change soon.
Thus, in the long run the major concern in terms of a debt management plan, bankruptcy, and debt, is all targeted towards the future and not the present. While other nations are in the same boat, that is hardly the relief that citizens are hoping to see soon. It remains to be seen what the government will do but there are a number of plans in the works and potential bills that need to be discussed in parliament very soon.
