The Blue Print

New Year’s resolutions these days tend to disappear more quickly than the UK’s financial credibility. How much weight loss can we achieve how many new books to read or bottles of wine to cut down on, all form part of the annual ritual of self improvement.

Perhaps the resolution for the government needs to be financial fitness. The facts are truly terrifying; in the forthcoming financial year the UK annual debt will hit £179bn with our current debt position at 12% of our GDP.

In the disastrous years at the end of the 1970s when Britain’s economic position was seriously weakened our debt was 8% of GDP. Our financial situation is dreadful and has far reaching consequences, and one which cannot be blamed on the banks alone.

For more than a decade we saw healthy economic growth and the treasury’s bank account swelled, more money was spent by the UK and Welsh Assembly Government and little was saved for a rainy day. Our current economic position might improve, albeit very slowlyand to be honest no-one seriously expects the UK economy to grow very much at all in the next few years; our financial position as a result is even more worrying.

A fragile economy realises little income to close the enormous gap between our income and expenditure so our debt is not going to reduce without significant reductions in public expenditure, we can’t spend our way out of a recession and the continuing attempt by the Government is madness. We do need to radically examine where public spending can contract as part of a planned reduction in our deficit.

The UK has been warned that its financial state of affairs threatens the viability of the country as a safe investment bet, if we don’t look to achieve financial fitness then other countries may not bother lending to us in the future.

This entry was posted on Tuesday, January 5th, 2010 at 1:10 pm and is filed under The bigger picture. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.