How Will the National Debt be Paid Off?

*MF*

Based on my sig, ok.

1: I will willingly forgo my ID card, I already have enough info to prove who I am, and for that mattter the Government also have more than enough information on who I am.

Ok, it's only £300.00 from me, but if everyone in the UK did it - and we didn't then need the infrastructure to process them all - that will total about £18bn.

Would that help?

2: Now, yes, I know there is a risk of terrorism - which is obviously why the UK thinks it needs to replace the Trident missile system - or do we have someone else to destroy in mind - nobody has told me who - have they told you?

Now not replacing it saves somewhere up to £40bn.

Would that help?

3: The UK's NET contribution to the EU Budget is set to double in a few years to about £6.5bn. Now I am not suggesting that we should or should not be in the EU - but maybe we should just politely ask !!!!!! they are doing with the money, and why it has to double?

Would that help?

Ok, ok ... I know that's only about £60bn so far, but I don't have 3000 HMT civil servants on non-contributory inflation linked 2/3rds pensions to call on - but I'll keep thinking.

Now that was stupid, doh!

4: Can we afford the current pensions for the public sector, and ooops, for all our MP's - when there is proof that the private sector just can't cope in any way?

There must be another few £bn's in there, surely?

***********************************

- OR -

5: Close all of our foreign embassies, and start using Skype - it works for me. Apart from the costs of having them in the first place, we would also save a fortune having to rebuild them every time they get bombed.

And don't simply dismiss that idea out of hand as flippant - do you know where the UK Embassy for the Antarctic is based - it is the Foreign & Commonwealth Office London - and yep, that is why we have so few penguins in the UK - it's a bl**dy long way to come for their visas.

6: Stop allowing diplomatic immunity for car parking offences etc., - start collecting the fines - and on a backdated basis!

7: Ask Martin Lewis to do a Government makeover - televise it - and sell the rights to other countries for their own version worldwide - we need the income, as well as the savings.

8: Open a Halls of Residence in London for our MPs - and charge them for staying there - it's what they decided for our students, and fairs fair, huh?

Rochdale_Pioneers

The debt won't be paid off completely - no nation is debt free. So its not a question of how to pay it off but how much. We went into this crash with relatively low debt, we're coming out with much higher debt but still less than the economies bigger than our own. So having 80% debt is not a disaster as is being portrayed.

How it will be reduced is exactly the same way that it was reduced in the late 80s and for the middle/late 90s - booming economy equals high and unforecasted tax revenues equals a surplus which pays down debt.

Ephemera

Rochdale_Pioneers wrote: »

The debt won't be paid off completely - no nation is debt free. So its not a question of how to pay it off but how much. We went into this crash with relatively low debt, we're coming out with much higher debt but still less than the economies bigger than our own. So having 80% debt is not a disaster as is being portrayed.

How it will be reduced is exactly the same way that it was reduced in the late 80s and for the middle/late 90s - booming economy equals high and unforecasted tax revenues equals a surplus which pays down debt.

Ah, but what about Gordon's 'No more boom and bust'?

baby_boomer

Why exactly would our economy boom RD? Wasn't it led be the City & deregulation in the period you give as your example ?

lostinrates

I honestly believe the biggest strength we have, and the best hope of repayment, is in our people's minds. We do produce good inventors, good businessmen. We need less hampering of start up businesses, and more fostering of new ideas, and perhaps a shake up of how we put obstacles in people's way rather than looking at ways round problems...as a nation mindset. There is an awful lot of innovation stunting by well meant..and not unimportant, legislation and risk aversion. (of a not purely financial nature).

I also believe, with my whole heart, that this is the time to look at sustainable ideas for not just the economy but for the environment and for lifestyle.

I think a large part of it is to make things simpler, more strealined: in all respects, and bring back the joy and respect in acheivment.

red_bertie

history is repeating itself - Nero fiddled while Rome buned.............and meanwhile Gordy fiddles while the UK burns.

So many generations to come will pay via taxation and depletion of public services for this - I have no kids, but what a legacy for them.

princeofpounds

There are 3 ways to pay it down

1) inflate it away through low interest rates and quantitative easing (i.e. money printing).

But then the cost of money would go up very strongly as investors demand more return to compensate. Market interest rates would go high and raising finance in the UK for any long term project would be very hard, crushing growth.

2) raise revenues

Which mostly means raise taxes, setting aside normal economic growth over time. Which would impoverish the population and make the economy uncompetitive for businesses.

3) cut spending

which would lead to mass public sector unemployment and reduced government services.

So take your pick.

In reality, most of these will be done to a greater or lesser degree. The question is who really takes the bullet. Everyone will suffer the second-order effects, but the first-order victims of each would be savers, workers and state dependents respectively.

*MF*

CLAPTON wrote: »

The debt is about 80% of GDP

<snip>

Matter of interest ...

- Total UK personal debt (mortgages, loans, credit cards) at the end of February 2009 stood at £1,458bn

- which is more than 100% of GDP

- so if we are looking for ideas

- as well to remember that has to be paid back as well.

mrposhman

Like everyone said, through a mix of devaluation, saving and taxing.

Though don't discount the banks. I've now started to assume that anyone who says that the banks won't pay back to the taxpayer as an idiot.

The figures for Lloyds on its own are as follows.

Currently just over 7bn shares purchased at £1.73 = £12.1bn
Soon to be made open offer (43%) another 4.5bn shares costing £1.7bn

So the total cost of investment in LBG (excluding bonds etc) is around £13.8bn as the pref shares will have been paid off.

Once the price is over £1.50 for more than 30 days the B shares (which effectively are free shares if there aren't mass write offs). These are converted at £1.15 so another 13.5bn shares at £15.6bn.

Should the shares reach £2 which would value the whole group at then this would result in a valuation of the HMG shares at around £50bn which would be a profit of over £36bn. Pretty good I reckon.

I don't know what figures Darling included as I assume he included some income based on getting out of the banks so I'm not sure if these figures were included in the net debt figures but to say that we can't make a profit out of banks makes people look very very stupid imo.

*MF*

mrposhman wrote: »

<snip>

I don't know what figures Darling included as I assume he included some income based on getting out of the banks so I'm not sure if these figures were included in the net debt figures but to say that we can't make a profit out of banks makes people look very very stupid imo.

Extract from the "In the Red" book:

Box 2.7: Approach to making provision for losses on financial sector interventions in the fiscal forecast

As set out above, to ensure transparency and responsible management of the public finances, the Government is setting out fiscal projections including an estimate of unrealised losses from financial sector interventions, equal to 3½ per cent of GDP.

***************

As best I know, and based on the fact that his provisions were for losses (unrealised as yet) - he made no provision for any income - and it gets complicated when some of the interests we now have in Banks are being treated as though they were in the public sector for accounting purposes.

Doesn't alter your feelings mrposhman ... but for now it's only losses that are being accounted for - I just hope you are correct and that at some time gains can be realised and accounted for.