You are Not Alone in Debt: UK Economy Dealing with Untamable Debt

Earlier this month Alistair Darling, the Chancellor of the Exchequer in the UK, stated that the entire United Kingdom will be facing incredible, economical challenges over the coming years thanks to national debt. The statement came during an argument in parliament over the newly proposed Treasury’s Fiscal Responsibility Bill.

Darling has stated numerous times that the bill itself will go a long way in terms of strengthening the nation’s fiscal responsibility and should be seen as a necessity if the U.K. wants to continue to allow sustainable borrowing as the down-trot ten economy starts to work its way out of a funk.

While the statement from Darling isn’t necessarily good news for U.K. citizens, it definitely does feel good to know that we are not alone in terms of dealing with and trying to find ways out of substantial debt.

At the moment the U.K. is trying to find ways to deal with the all time high deficit of 12.6% GDP, which is in fact the largest deficit among all of the developed nations in the world. Every political party in the U.K. agrees that this deficit is something that cannot continue to be sustained, but everyone seems to be divided on how to resolve the matter. What may in fact be even worse is the fact that the nation’s budget deficit is expected to double over the next few years.

In terms of the Fiscal Responsibility Bill itself, it was originally proposed to the parliament on December 9th and states that the government must decrease their borrowing every year from 2011 all the way to 2016. This will be measured based on the U.K’s GDP each year. The key to this bill in the eyes of Darling is the reduction in bankruptcy in the nation while still ensuring that the government does not interfere with the upturn of the economy and end of the recession. While the opposition seems poised to support a plan that includes tight fiscal tightening, Darling feels that that type of action would be more detrimental in terms of the recession coming to an end and the use of debt management plans.

When the bill was discussed in parliament, opposition treasury chief George Osborne called the bill a “feeble stunt” and complete nonsense, and believes that the parliament needs to take much hastier actions.

However, there is more good news for people dealing with debt management and bankruptcy. Darling and other parliament members noted that it appears as if the U.K. will work its way out of the recession by the fourth quarter of this year. While the statistical office has not confirmed these stats yet, there are a lot of positives coming this way. Whether the bill continues to see support or whether or not the government cuts back on borrowing remains to be seen, but at least there is now a light at the end of the tunnel.