Is bankruptcy inevitable now for the UK

[BringOnTheHandyMan]

In the most layman of terms the UK is actually broke.

Every month we cannot pay the interest on our outstanding debt and thus have to borrow more. (Note this is not repaying the capital, just the interest)

The rate we pay to borrow used to be quite low and that is not the case anymore.
The bond markets have lost faith in the UK and charge us a rate that reflects it.

We have systems we can no longer afford (welfare, NHS etc)
We have little to no growth
We have inflation issues (so printing money is out)
Raising or cutting interest rates is problematic due to having both growth and inflation issues together
Our politicians are scrapping like rats in a barrel and even prior to that they seem incapable of making hard decisions or even facing up to the mess we are in.

We do actually need a PM that stands up and says okay folks we are in deep shit. We are broke. Actually worse than that. In debt and unable to pay even the interest.
So any borrowing we do must be for investing/growing the economy only. All spare money must be used for paying down debt or investing/growing the economy. That means for the foreseeable future all state funding is scrapped. We would enter a period of being very much a 'poor country' and acting like it. If we worked really hard we might be able to turn it around but it would take years, hard decisions and many, many sacrifices.

Since I can't see any party being able to actually do that. Then I honestly don't see how we can go anywhere except an IMF bailout. Then they will play the tough guys and cut the lot anyway.

I try to plan for my retirement but honestly it's sort of impossible.

For those with public sector pensions I wouldn't be sure you will get it paid
For those with private defined contribution pensions, the stock market is vastly overpriced just now and your pension is likely to fall once the AI bubble bursts.
State pension - yip not convinced we'll be getting that
Costs to be budgeted for - healthcare but how much?
Downsize my house - perhaps but will house prices tumble making this impossible.

Does anyone think that any government (regardless of party) can fix the country. If not what happens. The UK used to have no NHS or welfare so do we just go back to that. How long will it be until the wheels come off?

Lots of threads about which benefits should be cut etc but nobody seems to be shouting that actually it ALL needs to be cut regardless of what hardship it causes.

The electorate don't realise, and certainly won't vote to do anything about it, and certainly not the current government.

Any attempt to reduce spending is smeared as "austerity", and spending more on benefits is "the right thing to do".

This is the problem of course. Nobody wants to be the bad guy because it will probably get them voted out. Somebody has to do something though because this situation really can't go on forever. I feel like we are in a payday loan situation.
We borrow then have to borrow more to repay the first borrowings interest and the hole just gets deeper and deeper.

It feels a little bit surreal watching it happen and nobody in government is talking about it when they should be talking about nothing else.

What is your best guess then as to how it all ends?

Best guess, doesn't end well. High cost of living, high crime and little to no public service. Hopefully before life savings are needed to buy bread.

What is your best guess then as to how it all ends?

Like 1976

I've mentioned it before on here and been told it's a right wing conspiracy theory

Meantime, I want to know what the plan is for cutting spending. I feel like we need to know this before the IMF get involved?

I think the last time we were in surplus was the early 2000s.

My son works in Westminster and he was shocked that a party with such a huge majority didn't make hard decisions early (Thatcher and Blair did). The purposed 2p in the pound tax hike would have gone a long way to funding health and schools.
Our housing market is 80% down and British people don't feel wealthy unless they can access the equity in their houses to move up or downsize. Both are being hampered by interest rates and stamp duty.
We are in a recession but no one wants to admit it.

Labour did want to cut spending and look where that got them. A series of u turns due to backbencher revolt in a matter of months. We still have Covid debt of course.

The debt repayments are around £110 bn a year at the moment. The NHs costs double that. Then we have our tax take. It’s only paying for state pensions and benefits. We simply cannot afford what we want and taxing the “rich” even more won’t touch the sides of this.

The Institute for Government is doing a webinar on “Is the uk governable?” It’s all linked to our unrealistic requirements and lack of solutions because they are unpalatable. In the meantime the debt is racking up for our dc and this shower simply don’t care. They don’t care about borrowing costs when votes are ebbing away. They had the chance to start sorting this out but backbenchers are in charge and economically illiterate constituents. So of course we will be bankrupt.

How did other countries do it? The IMF was brought into Ireland after the crash. That country is thriving now. It has huge debt, but so has every country, it is the norm. I don't know the answer but we might need to talk to our European neighbours to get a handle on how it's done.

We are nowhere near 1976 and calling in the IMF.

What does seem likely because Labour couldn’t make hard cuts to public spending is that the UK will get a government that does in the next election. That looks like Reform, except probably quite a lot of their vote gets pensions and other benefits. Welfare dominates the spending, and it will have to be less generous. Other public spending is totally dwarfed by it.

@fantam EU money pump primed Ireland. Got shedloads of money and dropped business profit tax very low to attract big hitters. They wooed business. We taxed them and have been anti business and employment. They have no NHS. They don’t have the welfare bill. They didn’t do Brexit!

There doesn't seem to be any leader able to speak to the electorate and explain this clearly, with reasons and a plan, in a way that makes it comprehensible. Even the 'SEND reforms' which boil down to 'we can't afford these kids' is being dressed up as some lovely positive progress - which of course it isn't - and causing anger because all that's being stated is very obviously blatant lies and refusal to look at reality. Instead of 'we're broke, we cannot afford this, we HAVE to make very major cuts to what you've been used to thinking of as normal entitlement, now lets discuss how we do this with the least possible damage'.

I heard a clip not long ago of Thatcher giving a speech on the Steelworks, and what struck me was the straight forwardness of what was being said. No burble, no word salad, no blatantly obvious bullshit, plain and clear speaking. There seems to be a massive lack of effort to get the public informed and onside with a clear plan in mind, as opposed to just alienating them ever further.

To be honest if none of the politicians are up to it I wish the IMF would just take over and start fixing it. It feels like watching a car crash in slow motion.

All these threads arguing about which benefits should be cut or who will be PM and they all seem a little bit irrelevant to the grand scheme of things. It's like most people in the UK don't really understand how bad things are getting.

Soon after the bailout of the seventies we got Maggie T and she was a tough old bird. Not always popular but knew how to make a decision and stick to it.

The trouble is I feel like the last 30 years have been about keeping the UK going by inflating house prices, selling off our industries and council houses etc. Now it feels like there is nothing left to sell and it's all about to tumble down.

It's actually just basic economics isn't it.

The trouble is there is no plan to cut spending. RR is banging on about helping with the cost of living now. That's the last thing she should be doing. Stop people pleasing and do your job.

If the IMF were called in it would almost certainly go for the costs of welfare. There are not enough people working, and paying off UK debt requires a greater tax take.

TBH COVID was a disaster, you cannot and should not pay people to be off work in such vast numbers. We have crippled ourselves financially for decades.

You are right. They had quite an opportunity at the start but totally wasted it.

I think the priority though should be to grow the economy/growth not provide better public services. Although of course you can argue that people off sick would be fixed by a better health service etc thus helping growth. So it's a bit chicken and egg.

I know - they did try to make cuts at the start and their own backbenchers wouldn't co-operate. The public however was up in arms as well about cuts to benefits.

It's like nobody really understands how bad the whole picture is.

Yes I can't see any way out of this except bankruptcy. I'm just not sure what that actually looks like in reality. Does the NHS just vanish. Do all welfare benefits just stop.

So perhaps hoping for the IMF is the best solution. They will make the hard decisions and the government can hide behind them. So how far does it go before they step in? I feel the longer it goes on, the worse it is going to be.

I don’t think it’s difficult to work out what could be done, it’s actually doing it.

Welfare benefits being uprated with inflation has to end
The triple lock has to end
Distability eligibility benefit has to be cut, radically
SEN provision also cut
Social care is another

Any government that did this would be hideously unpopular but no other government would ever reverse them either

I'm not sure. I think we are rapidly heading towards things being just as bad as the seventies. We seem to have a perfect storm of rising unemployment, low growth, rising inflation, high debt and rising interest rates. Now that it looks like there is going to be a fight for the PM job the markets are pricing in a move to the left and an increase in spending. Interest rates have gone up in the last few days (bond market I mean)

In 1976 I think inflation was running well into double figures at 26 percent! The conditions were much more extreme.

The UK is nowhere near that level of problem yet.

Yes Maggie made tough decisions and it didn't make her popular with lots of people but she didn't give a stuff.
This lot seem more concerned with being liked and popular than actually doing a good job.
There was lots of unrest of course as she made decisions (minor strikes etc) and I fear we are going to see civil unrest and demonstrations again if they ever actually start cutting welfare. Frontline police are so few in numbers as well I wonder just how out of hand it is going to get.

You are right we are nowhere near that level of inflation yet but food prices are going to rise as the effects of the Trump war goes on. Fuel will go up as well. Thus inflation will rise.

My guess is we have stagflation.

But there will be earlier indicators in an economy imo if the UK has intractable problems. Some of those are likely to look like the measures in the 1970s when there was the Barber budget. If a government has to put in price caps in certain economic sectors, while maintaining increasing welfare spending, then you have the start of an intractable problem.

We are not there yet. But a government that does not look at welfare spending, with our debt as it is, is a failing government. We have a defence budget that needs attention.