What happens if the UK goes bankrupt (if it isn't already)?

drc

What happens if the UK goes bankrupt if it isn't already? If a company goes bankrupt there are legal proceedings for closing it down and sorting out debtors and so forth. If the UK as a whole has more debts than income, what does that mean for the country?

LisbonLaura

You cannot eat, & anything you have already eaten is extracted with a stomach pump; at your own expense.
Welcome to poverty, Caledonian mafia style

lethal0r

Good question! Im really interested in stuff like this, I hope someone knowledgeable will answer.

My guess it that we will owe other countries favours big time & the pound will be dead. Im sure you cant just print money off & then thats it sorted, everybody is paid off. That would create inflation in our country, but how would it affect our relationship with other countries?

I hope you don't mind my auxiliary question I think its on-topic

ad44downey

drc wrote: »

What happens if the UK goes bankrupt if it isn't already? If a company goes bankrupt there are legal proceedings for closing it down and sorting out debtors and so forth. If the UK as a whole has more debts than income, what does that mean for the country?

Easy question. All we have to do is lower interest rates even more and borrow some more money. :rotfl:

Queen_of_NO_MATTER_WHAT

GB will join the euro on he's knees before that happens. The Country won't go bankrupt.

pararct

If UK PLC defaults on it's overseas debt then it means no more imports. This would apply to goods from Plasma televisions to basic everyday foodstuffs.

If the UK was self sufficient and able to feed itself from its own resource then it would be tough but we could probably just about ride it out. All we really need to survive is shelter and food.

As we cannot sustain ourselves either in energy or food indendantly expect major civil unrest, a two tier society with the have's and have nots. The haves will be the ones with the guns tasked to keep order.
Expect starvation, disease and wide scale death from starvation through the population.

Look at Zimbabwe as a prime example of what happens to a Country when it defaults.

BlondeHeadOn

I dropped in on this board during a quick break from working, and wished I hadn't now! What a thoroughly depressing thread!

John_Pierpoint

Russia & Argentina have both defaulted fairly recently, so you don't need to look to Zimbabwe to understand.
Expect the government to rob its people before things get really bad.
(EG reintroduce laws to make holding gold bars illegal, reintroduce "sterling" exchange controls, the law has only been suspended, make it illegal to leave the country with more than (say) 150 GBP in your wallet, put a limit on foreign currency available to "tourists". Increase the VAT/duty payable on foreign imports. Invent new "safety" standards to outlaw popular foreign imports etc. etc. - I m old enough to remember all these not long ago.)

http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2079&Itemid=2

Of course you could watch Channel 4's historical investigation of the previous bout of global warming and realise that the methane hydride could kill off 90% of life on eath. That will make you really cheerful for Xmas.

http://www.channel4.com/science/microsites/C/catastrophe/programmes/planet-fire.html

Generali

pararct wrote: »

If UK PLC defaults on it's overseas debt then it means no more imports. This would apply to goods from Plasma televisions to basic everyday foodstuffs.

If the UK was self sufficient and able to feed itself from its own resource then it would be tough but we could probably just about ride it out. All we really need to survive is shelter and food.

As we cannot sustain ourselves either in energy or food indendantly expect major civil unrest, a two tier society with the have's and have nots. The haves will be the ones with the guns tasked to keep order.
Expect starvation, disease and wide scale death from starvation through the population.

Look at Zimbabwe as a prime example of what happens to a Country when it defaults.

That's not true as the current account deficit (that is the deficit when you take the value of imported goods and subtract the value of exported goods) isn't covered solely by selling Gilts (UK government bonds) abroad. It is also covered by the sale of real assets.

The sale of goods abroad by private companies would remain largely unaffected by the Government being 'bankrupt'. Those sales (and most years a record is set for sales of goods and services abroad by UK companies) would easily pay for the non-UK produced food, medicines and energy products required to keep life going at a fundamental level.

I can't remember the precise figure I calculated but the average household would have to cut imports by a couple of thousand quids worth each year to reduce the current account deficit to GBP0. That would mean (for example) beer instead of wine, no new mobile phone and making the PC run for another year or two. Or perhaps no foreign holiday and no home cinema.

To say that the Government being unable to borrow would mean class war and people starving is somewhere between claptrap and twaddle.

Kez100

We'd call in the IMF. As we did under Labour in the 1970's (I think)

They would impose conditions and I bet our public service pension committments would fall right in the middle of their radar.

Generali

Kez100 wrote: »

We'd call in the IMF. As we did under Labour in the 1970's (I think)

They would impose conditions and I bet our public service pension committments would fall right in the middle of their radar.

The IMF has finite funds. Better to go bust early (Iceland) than later.