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

Generali

adwat wrote: »

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.

If the UK defaulted the big problem would be that the Government fiscal position would have to return to flat pretty much instantly, effectively Government spending would have to fall overnight by £150,000,000,000. That would be extremely painful.

adwat wrote: »

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.

A full default ain't gonna happen because ultimately the British Government can default on pensions (as has happened already) and print money to cover the rest.

The pensions will have to be defaulted on because most of the liabilities are index linked and you can't just print money to cover an index linked liability.

sabretoothtigger

Mugabee printed money for war pensions

I think we should not expect so much the extremes. What should happen is before that conclusion the market counteracts and it never occurs.
Also I see democracy and capitalism as sometimes helping to balance each other, ideally anyway.

Supposing every situation will spiral out of control to the extremes is overly simplistic

usa is worse off then us because they can issue debt at such low rates. We have likely realised our problems long before they will. Im guessing they are the ones who will suffer a bigger swing against them for various reasons


I guess it will be worth noting if the government reinstates their index linked certificates or issues more gilts of this type in future

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.

comparative advantage. Read that briefly yesterday as well as previously, I can see how loss of international trade would really destroy efficency and wealth for the uk.
Im definitely against that idea. UK gains 2bn tax a year from foreigners just because they want to buy shares in london.
Trade is such a massive bonus to any country it seems, theres no way we want to lose any of that



I dont think anyone mentioned changes to the indexing I can remember roughly reading recently. From RPI to CPI will save 5bn in pay outs apparently. Default not so much but negative changes occurring seems certain.

The main objective is to keep the ball rolling, loss of momentum or trading position in the world is likely the number one goal and bonus the government should maintain

Generali

sabretoothtigger wrote: »

Supposing every situation will spiral out of control to the extremes is overly simplistic

I agree.

The OP asked 'What happens if the UK Goes bankrupt?' so I tried to answer that.

If the question had been, 'Is the UK bankrupt?' my answer would be probably not. If it had been, 'Will the UK Government default on some liabilities', my answer would be almost certainly on pensions.

Extreme stuff by its very nature very rarely happens. If it happened all the time it wouldn't be extreme! Generally speaking, people are very bad at estimating the probability of extreme events.

Interestingly, people are unlikely to predict with accuracy the chances of something bad happening to them (eg losing their job, getting very sick. losing their home), generally massively underestimating the chances of these things occuring. The exception is people with depression. They are on average much more likely to asses accurately the chance of something bad happening to them.

Mary_Hartnell

So the bears end up rich?
I suppose it takes a lot of bottle to go short on investments, when you are not rich already?