Blackholes

 The thing about blackholes is they are invisible. They are so big that light cannot escape.

In the case of Labour (and previous governments), they can't see vast swirling financial blackholes in front of them. 

In the case of Rachel Reeves she managed to find the £20Bn blackhole simply because she created it by paying £9Bn in inflation busting wage settlements but so far she hasn't found the £5 TRILLION blackholes left but the successive morons running our country.

In the case of one blackholes it is sucking £100bn per year mostly into foreign governments pockets.  Clearly £100bn is bigger than £20bn but eagle eyed Rachel hasn't spotted it. 

Let's start with the basics.  Tax income is about 33% of GDP yet the government is spending 45% of GDP - and growing. Labour, and previous successive governments, are spending more than they are earning so they have been hitting the credit card. 

This borrowing has accumulated to a massive £2.7 TRILLION bounds.  Like us mere mortals, governments also have to pay interest on money they borrow. That borrowing cost was £102 BILLION in 2023 and is expected to rise in 2024.  Governments borrow money by issuing promissory notes called gilts.  They promise to pay some interest in return for lending money for some term eg 20 years. When interest rates were at historic lows it all looked good.  Now interest rates have risen the cost of borrowing has also risen.  A large percentage of these gilts have been bought up by foreign governments like China.  It is thought the UK is paying around £45Bn in interest to China each year.

Now Labour have no plans to reign in spending.  They are planning to increase taxation but it's highly unlikely they will be able to raise taxes to 45% of GDP.  During war time taxes were 36% of GDP - that's probably the ceiling.  Beyond that people modify their behaviour as the return from work is minimal so they opt out.

The second massive black hole is public sector / civil servant pensions.  This unfunded pension liability has ballooned to £2.4 TRILLION. The government hasnt wisely invested people's pension payments and made provision to pay them. Instead, like a massive ponzi scheme they are funding pensions out of the current account - robbing Peter to pay Paul.

With 51% if the population working either directly or indirectly for the government, the size of this blackhole has ballooned. Gold plated, inflation linked civil servant pensions have created a huge unfunded liability. There are 400k more civil servants now than before the pandemic. What are they doing and can Britain afford them ?

Blackholes eventually run out of things to suck into them and they explode with massive energy - a super nova.  Expect the UK financial  blackholes to do the same.