Although austerity measures and a rising GDP have reduced the deficit to a degree, the national debt is increasing.
But before we look at how much debt that is we need to work out what the debt exactly is. The amount that the government itself is in debt is relatively low, at only 29% of GDP. The concept that the Labour government overspending was a cause of the huge amount of debt is inaccurate. In 2004 government debt was just 7% of GDP rising to only 15% in 2008.
However during this period there was a huge rise is private sector debt. In 2004 it was 250% of GDP increasing to 440% in 2008. When the banks went bust, our government took on the private debt, and it is that debt that we are now saddled with.
To pay for this private debt the government has borrowed £128 billion, and austerity measures have reduced the deficit it has had little effect on the national debt. And this is the forecast for the future:
And even if the government could begin paying back the debt, ever year it increases because of the amount that we owe in interest on debts:
The truth is, that it is going to be difficult to ever pay back the debt, not just in the UK but governments worldwide. No matter how much you cut back on public spending, it will be just a drop in the ocean of debt.
Perhaps, as the Jubilee Campaign says we should just Drop the Debt.
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