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

Mary_Hartnell

There will be shortages of things. When a cargo in a container is heading for Rotterdam and a German & a Brit both want it - guess who is going to get it?

I remember the 1970's - shortages of things because prudent people would rather have a full store cupboard that "bog" paper currency in the bank.
Not to mention the fall in investment as a make do and mend attitude spread through rust belt unprofitable Britain.

adwat

If the UK defaulted on it's debts surely all that would happen would be that no-one would do business with us, i.e. Sterling would become worthless.

In that scenario we would be forced to produce all our goods and services domestically, which would lead to full employment.

Hmmm.... I don't see any downside! Anyone care to comment?

harryhound

Like Cuba & North Korea & Rhodesia(did)?

Argentina is a more realistic example of a post default economy.

Masomnia

adwat wrote: »

If the UK defaulted on it's debts surely all that would happen would be that no-one would do business with us, i.e. Sterling would become worthless.

In that scenario we would be forced to produce all our goods and services domestically, which would lead to full employment.

Hmmm.... I don't see any downside! Anyone care to comment?

We can't make Bordeaux or unpasteurized Camembert.

...Or cars.

Generali

adwat wrote: »

If the UK defaulted on it's debts surely all that would happen would be that no-one would do business with us, i.e. Sterling would become worthless.

In that scenario we would be forced to produce all our goods and services domestically, which would lead to full employment.

Hmmm.... I don't see any downside! Anyone care to comment?

The problem with that is the UK is excellent at producing some things (eg cars, financial services, pharmacuticals, industrial chemicals) and lousy at producing others (eg wine, food, cheap clothing, electronics).

If the UK goes self sufficient then you have to stop using resources that are being employed to make stuff the UK is good at doing and shift them to making things the UK is bad at.

Better to make the things the UK is good at making, sell them and use the money to buy the things other people are good at making.

adwat

I agree with that, and that is the real world we live in.

The question asked is what would happen if the UK defaulted and my thinking is basically "So what?" i.e. it's no big deal. Life would go on mostly as normal, and in fact could it be beneficial in terms of employment, domestic production, services etc.

Default aint gonna happen cos the people owed the debts won't allow it, so we can expect more tax rises and spending cuts to allow repayment of the interest owed.

nobby24

Masomnia wrote: »

We can't make Bordeaux or unpasteurized Camembert.

...Or cars.

Actually the UK is the 4th largest car manufacturer in Europe.

harryhound

but they are mostly Japanese car manufacturers that had to be subsidised to build their factories here?

marklv

adwat wrote: »

If the UK defaulted on it's debts surely all that would happen would be that no-one would do business with us, i.e. Sterling would become worthless.

In that scenario we would be forced to produce all our goods and services domestically, which would lead to full employment.

Hmmm.... I don't see any downside! Anyone care to comment?

If sterling became worthless, a new currency could be developed, hopefully based on something tangible like gold or silver. What people here don't understand is that the current economic system relies on debt, that's why there is so much of it. Trying to cut it by reducing spending will only make the recession into a depression and lead to more unemployment.

Thrugelmir

nobby24 wrote: »

Actually the UK is the 4th largest car manufacturer in Europe.

Where are the majority of parts manufactured?

Assembly is not manufacture.