Bankrupt Britain - urgent need for slashing of public expenditure

 The state of UK government finances is definitely cause-for-concern.

Sadly Labour was elected.  They are making the gaps wider whereas what we need like a Milei like character with a chainsaw to undo decades of damage done by moronic politicians.

The numbers speak for themselves.

GDP is £2.8 TRILLION

Tax income is 35% of GDP (although some data suggests it's as little as 31%).

Government expenditure is 45% of GDP

So there's a shortfall of  £260 BILLION each year.

So successive governments have been hitting the credit card and racked up a colossal £2.7 TRILLION in debt. That's around 103% of GDP.

The interest rate on this debt is 5.5% so we are currently spending £148 BILLION in interest payments each year servicing the debt.  That's 16% of tax receipts are spent on servicing the debt. The wasteful and inefficient NHS costs £189 BILLION so that's nearly as much as the NHS costs.

So let's look into the future.  Let's ignore inflation, ageing population, increased Labour expenditure, rich fleeing the country etc and assume tax income, growth and expenditure are static.

So by 2029 at the end of Labour's term in office, the debt will have ballooned from £2.7 TRILLION to £3.8 TRILLION. That will be 147% of GDP. 

Assuming our creditors don't get nervous and increase the interest rates on our borrowing, the cost of servicing the debt will increase from £148 BILLION to £210 BILLION. That's now 23% of tax receipts will be spent on servicing the debt and not producing useful economic output (at least for us).

By 2035 - just 10 years time - the debt will have increased to £6 TRILLION and be 232% of GDP !

Debt interest will be £332 BILLION and 36% of tax receipts (nearly twice the cost of the NHS).

China will be happy as a major buyer of British debt - that's huge income stream for them. 

Fast forward to 2050 and the debt will have ballooned to £15 TRILLION and virtually all tax receipts will now be used just to service the debt leaving virtually no money for other things unless we borrow yet more.

We are very close to a debt spiral.

It's no wonder Rachel was crying. She knows the true state of the economy yet her moronic colleagues insist on spending more of other people's money  that they don't have and digging a deeper-and-deeper hole.  I'd be crying too.

How do we get out of this mess?

First option is grow the economy. Well that's easier said than done - there's been virtually zero growth for the last 20 years.  In fact if you factor in inflation the UK economy has contracted.  Rachel said economic growth was her priority. Yet the economy is getting weaker as businesses shut-up shop or fire employees as a result of Rachel's job tax.

It's pretty clear raising taxes will not grow the economy.  When the size of government is bigger than the economy - ie 51% of the working population work for the government and government is not a product we sell or export, it's hard to see how the 49% of workers are going to grow the economy. We also have at least 20 Million adults (excluding pensioners) that are adding zero value to the economy.

The few workers we have can't carry this much dead weight.

OK so growth is unlikely. What else can be we do? Well cut the cost of government. That means we need to start sacking government employees on a massive scale and force those remaining to start adding value to the economy rather than a burden. We can start with the 400k more people who work for government since the pandemic.

Although we need a Milei brutal cut, if it's done too quickly the cost of borrowing and servicing the debt will rise as rising unemployment will make the numbers look bad.  It worked in Argentina since their economy was where the UK will be in about 15 years time. Thankfully we have a few years before it get's that bad - assuming someone has the balls to take action.

Nobody said this would be easy?

Too difficult to stomach? Well the other options are worse.  We carry on splashing the cash until the country doesnt have the money to service the debt - that would be a collapse and cause turmoil - anarchy. We would end up trading government assets with the Chinese in return for debt forgiveness. That's a bit like selling the family silver - once it's gone - it's gone. It will only be a matter of time before we have to sell something else.

Maybe we allow inflation to go wild and inflate away the debt.  Sadly that wont work unless someone renegotiates many of the government bonds.  We have issued bonds which are inflation linked - as inflation rises that increases the money we have to give to Chinese bond holders. We've already seen the pain of this with Rachel's tears causing debt interest rates to spike.

Possibly the least painful option would be to devalue the currency if no-one has the balls to downsize government. That would make imports massively more expensive and our exports significantly cheaper.  Oh hang on - we don't make anything or export things. Scrap that idea. No-one wants to buy our government product we are making.

Maybe it's time for everyone to abandon the country and emigrate and hand the keys over to Starmer and allow Britain to be repossessed just like defaulting on your mortgage!

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It hasnt taken long for people to wake up to the books not balancing albeit it's more to highlight the £50 BILLION gap in Rachel's  "fiscal rules" rather than the additional £260 BILLION of additional debt that's being racked up - it's all just semantics on whether something is considered investment - for example the £10Bn NHS training is considered investment but there's no tangible asset as a result. Rachel's £50B black hole is reported in the Independent.  Still that's a start to recognise how dire the situation is becoming.

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3rd Sept 2025

Just 1 month on from writing this article, 30 year gilt prices have reached a 27 year high.  Was it really 27 years ago that we had Liz Truss's "crashed the economy budget"?

So gilt interest rates have risen to nearly 5.7%. When I wrote the article it was 5.5%. So the cost of servicing our colossal debt has risen 4% in just 1 month.   Serious cause for concern.  That's an additional £10 BILLION per year in interest payments.  Isn't that a blackhole according to Rachel......

The bond markets are clearly betting against the UK government.  Why wouldnt they?  Growth is at best stagnant.  Rising inflation. Government spend is increasing. Tax revenues are falling.  Unemployment is rising.  The rich have been forced out or are fleeing the sinking ship.  Basically the bond market thinks the UK is a bad bet.

Who are the bond vigilantes going to target?  The US dollar - could backfire.   The Euro?  They have the European central bank and are 8x the size of the UK.  What has the UK got?  The bank of England.  The bank of England has  cut interest rates when inflation is rising.  Go figure......

The definition of insanity is doing the same thing and expecting a different outcome. Does that mean Rachel and Kier are insane?

I can just see the discussions now.  Well the economy is crashing? What should we do?  I know!  Let's raise taxes further and create more inflation ! That will will fix it.....