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.

WTF. I can’t believe you’re suggesting the government should throw the most vulnerable under the bus. Anyone with those views should be ashamed of themselves.

“only by the grace of god” - being a care leaver/ disabled/ cognitively impaired/ down and out - all things that could have happened to any of us. We win the lottery by being raised with loving parents in a stable environment and go on to live productive lives, be grateful you haven’t had to have any of the above and rely on public funds to live life.

@FasterMichelin Problem is the 'most vulnerable' is a rapidly growing group.

So whilst it might be possible to help the 'most, most vulnerable' - the lower level 'vulnerable', who have similar issues to many other people who are working either part or full time, will have to make do with less.

I think this post illustrates the problem we face.

Absolutely it would be kinder to provide for vulnerable in society, absolutely it would be fairer to share out income from the rich to the poor.

The problem with this approach however is reality - where is the money going to come from? Of course the stock answer is always "tax the rich" which basically means tax people with more money than me but definitely not me.

Then there is the problem that taxation discourages behaviour whether it's tobacco tax, alcohol tax or even speeding fines are a form of discouraging taxation. Meanwhile subsidies and benefits encourage behaviour for example solar panels or EV cars.

So when you increase taxation on working people you discourage going to work and when you increase benefits to non working people you encourage not working.

It's very simple although harsh to many.

A link please.

Your holiday figurs are a bit utopian.

Just remember, if more people receive benefits than actually paying taxes, then there will be no money to give to anyone.

We can always say yeh but this person needs financial support for child care, that person needs more money so they can participate in society ... it's fine until the pot is empty. And at the moment the pot will be empty if we do not adress the issues.

The pot has been empty for ages.

We've just been loading debt onto our children and grandchildren, whilst giving them far fewer opportunities to work, have a family and have a secure home than those who came before them.

It is unfair and it has to change.

https://www.abta.com/news/number-holidays-taken-person-reaches-new-high-people-seek-getaway-get-together

ABTA is a trade association for travel agents, tour operators and the travel industry more generally. The figures are very much real life modern day Britain rather than coming from any fictional utopia. I see this level of holidaying all around me in my fairly middle class town.

Here's the text from the link -

People took an average of 3.94 holidays, up from 3.42 the previous year, and overtaking the previous peak of 3.91 in 2019. Travellers also took more trips abroad, with an average of 1.7 trips per person up from 1.45 last year.
This suggests a trend of ‘Habitual Holidaymakers’, with people viewing holidays as important and having a firm commitment to travel, despite a prolonged period of higher living costs.

The most prolific travellers were families and those under the age of 35, with 18-24 year olds taking an average of 5.33 trips, 25-34 year olds going on 6.43 breaks and families with children over the age of five going on holiday 5.32 times during this period.

However, it’s families with young children (aged under five) who took the most holidays, at an average of 6.49, up from 5.27 last year and much more than five years ago (3.89 in 2019)...

The full Holiday Habits 2024-25 report can be found at www.abta.com/holidayhabits2024-25.

The idea that we need to starve the poor so the average person can keep affording their 4 holidays a year, and the wealthy can take their 6 to 8 is deeply wrong. We are not a poor country and the average person is not struggling financially to the extent that some people make out. It's the 20% at the bottom who include low earners and people on benefits who are struggling and it's not them that we should be targeting for savings. We could easily raise taxes without affecting most in the country beyond having to cut down on their holidaying a little.

Your argument still isn’t compelling on why the government should target the poor and vulnerable. Your views are disputable. I only hope your family doesn’t have to suffer this now or in the future.

One cost saving would be for the government to introduce policies to ban or heavily restrict ultra processed food. The food that is leading to obesity and cardiovascular diseases that are costing the NHS and benefits system millions of pounds. Diabetes, and all that goes along with it, is expensive and prolific.

@lemonmeringuefry

Your article does not say what you think it does.

“We could easily raise taxes without affecting most in the country beyond having to cut down on their holidaying a little.”

That is a great idea. We should clearly model ourselves on a comparable country that has successfully taxed its way out of the same limited pot of money to solve:

underinvestment in infrastructure
low growth
housing shortages
an ageing population
a shrinking tax base
high levels of economic inactivity among younger / working-age people
poverty
capital and investment leaving the country,
and increasingly complex tax structures

all without weakening incentives, investment and long-term growth elsewhere in the economy.

Which country would that be?

The country is paying one billion, that’s £ 1 000 000 000 in interest every 3 days on the debt already owed, a figure which will increase if the bond market increases rates further.
As you say what future for our children and grandchildren.

I'm indifferent as to where the Government makes its cost savings. Alternatives include defence or education, but again in reality well over 50% of Government spending is on welfare and healthcare. So if you are going to make meaningful cuts it has to start with the biggest spending areas.

Again I see your point that this is not nice or fair but the money has to come from somewhere and increasing debt or taxation is not the answer.

You see, it's all about choice of words.

You say "poor and vulnerable". Significant proportion of these could also be classified as lazy and lacking any drive or ambition. There are many threads even here on MN discussing how to get benefits whilst perfectly capable of working. And this is given MN tends to attract better educated, professional, wealthier demographics.

No one, ever, suggested cutting benefits for truly disabled and their carers. But UK definition of disabilities became so wide that it now includes majority of population.

I don’t want to discuss this further. Unkindness won’t prevail long term. A stable and moral economy needs to consider the needs of all its people, including those most vulnerable. People aren’t born equal, nor are they raised equal or given the same opportunities.

Chinas economy might be thriving for example, but when you see its built off exploitation and the prolific undervaluing of lifestyle, happiness and freedom, it’s not an economy I’d like to buy into.

Kindness means so much more on a deeper level. Over and out.

You don’t have to cut. You can invest.

Invest in future generations by eradicating the very things that are making us unhealthy. UPF, social media, AI. These serve us no benefits in terms of lifestyle and happiness. They are parasites that ruin us all and cost society heavily both financially and in lifestyle.

We don’t need more services cut. We don’t need to make the unfortunate communities suffer even more. We need to reject the “developments” that only serve the rich. We need to get back into physical exercise, education, exploration and tolerance. Expand our worldview and embrace nature. Make life simpler again.

I think you should run for PM job.

It says exactly what I think it says - no more and no less than that the majority of the population are going on at least 4 holidays a year, 2 of them foreign, and just under half go on between 5 and 8. This is fairly strong evidence that we are not a poor country with everyone struggling to afford the basics even if the cost of living has risen substantially.

And I have added my own opinion which is that we could raise taxes higher - Scandinavian countries have higher taxes for those on lower incomes and they are generally considered to have better public services and provide their citizens with a better standard of living.

No, it won't solve all of our problems (I think we really need to work out how to tax the super rich for that) but it is a more ethical and likely more effective option than trying to make savings by targeting those who cannot wash below the waist (as the previously proposed PIP reforms would have done) when so many disabled people aren't even getting a minimum wage equivalent income to begin with in spite of their increased costs.

A few things to unpack here:
Ultra processed food is definitely unhealthy but it's cheaper. By banning it you will be accused of punishing the poor.
Social media- I agree has had a massive detrimental especially on younger people, but given that the Government couldn't implement a ban on under 16s then there is no chance that they could ban it entirely.
AI - is having a massive economic benefit in terms of productivity. Trying to ban it is like trying to ban computers, and would have a massive negative economic impact.

also completely agree that cutting services to unfortunate sections of society is not nice, but that doesn't answer the question of where is the money coming from?

Your last points involve a complete change in outlook for the population, how could you achieve this - by re education courses / camps and what about people that refuse?

If I can unpack your points; AI will make short term savings, mainly for large corporations and successful business owners (who avoid tax at all costs).

It will soon be responsible for mass redundancies - people will have to forfeit their mortgages and won’t be paying tax or buying anything. In the long term, AI is disastrous for most people and for the general economy.

UPF isn’t cheaper. It’s more convenient but it isn’t cheaper. That’s a myth.

Your figures about holidays are not very accurate or representative of the whole UK population. From your link:
This report is based on research with a nationally representative sample of 2,000 UK adults and was carried out from 24 July to 2 August 2024 by The Nursery Research and Planning. It looks at people’s holiday habits in the 12 months prior to then and what their travel plans are for the year ahead

Not only paying people not to work during covid, but also the huge numbers of businesses that didn't get the support they needed who went under during covid or limped on and have gone under in the years since. 3 million self employed/freelancers were excluded by Sunak - that's partly why he lost the GE as Tory self employed/business owners are likely to be mostly Tory voters and those 3 million would never vote for Sunak after what he did to them.

I think people will only accept higher taxes if they see an immediate improvement in public services, but they won't accept them if as has happened recently, the money funds increases in public sector pay and various benefits (inc state pension). Taxpayers want to see improved front line services, better High Streets, less obvious signs of dereliction and deprivation, better access to GPs and NHS dentists, fewer potholes, better refuse collection, better policing, etc. The average Taxpayer doesn't see the "benefit" of higher taxes when it goes to a sub-section of the population (public sector and benefit claimants) and they see no benefit of it to themselves.

It's not so much a question of public acceptance of higher taxes but the fact that it a) means that there is less money in people's pockets to spend and b) it disincentives work and investment.

Both of which reduce economic growth.

There is so much mission creep in public policy making, and the concept of good enough has vanished. Someone has a policy idea, and everyone weighs in to embellish it. The original notion was worthwhile, but by the time it's enacted and enforced, it's triple the size and weighs fives times more.

I am glad you mentioned Scandinavia, lets just unpack this just a little, because those systems don’t just mean “higher taxes and more benefits” like people often imply.

Scandinavian countries generally have middle and lower earners contributing more through taxation as you noted, but they also have:

• much stronger expectations around working where possible
• lower long-term worklessness
• tighter sickness/disability assessments- and welfare systems that are often more tied to work history and contribution than many people realise.

People there generally expect:

• if you can work, you work
• if you earn more, you get more back out.
• and long-term support is still accompanied by pretty strong expectations around participation where possible.

They are high-trust, high-participation societies. People always skip that part when using them as examples. And That's a huge frustration for many here. The UK's ever-increasing, blunt and often opportunistic taxes increasingly feel like they are funding ever-growing welfare and direct benefit spending, with relatively little scrutiny, rather than balancing it with long-term infrastructure, productivity or meaningful improvements in public services.

Where is the transformational improvement people were promised from things like VAT on private schools supposedly being redirected into education? Pretty sure most parents, teachers and schools are not currently praising the new SEND provision or teacher attrition, or talking as though the system feels meaningfully “invested in”.

Trust matters. Nobody loves paying tax, but people are far more willing to pay higher taxes when they feel:

• the country is actually becoming more productive and functional
• people/children in poverty/ out out of work are actually being invested in to improve their lot, not just given money
• services improve
• infrastructure improves
• their contribution matters
• people doing the “right thing” and building modest assets or pensions are not simply treated as future targets
• and there is reciprocity.

And honestly, this is where the Scandinavia comparison becomes a wee bit awkward for your argument. Those countries also tend to have lower levels of long-term economic inactivity among people considered capable of some participation in the workforce.

Britain is not some biologically unique country with a completely different human population. So if comparable countries with high taxes and generous welfare systems still manage to maintain higher workforce participation and lower long-term worklessness, it is reasonable to ask whether culture, incentives, expectations and welfare policy might play at least some role here too.

Is it really just a coincidence that Scandinavia's generous welfare goes hand in hand with:

• stronger pressure on people to engage with work or training where possible
• tighter monitoring
• quicker intervention
• and clearer expectations around trying to return to work.
• value for money for tax payers

Here even pretty modest proposals around DWP oversight or checking bank account data for fraud/error detection send civil liberties groups and campaigners rushing for banners and petitions. That would suggest the UK does not necessarily have the same attitudes toward reciprocity, scrutiny and participation that are much more culturally embedded in those systems. Do you think they even had to take high end. Do you think their system would allow top up payments for luxury brand cars for those with disabilities?

Funny how people want the Scandinavian tax-and-spending model, but suddenly become rights crusaders the minute you mention the scrutiny, data-sharing and reciprocity, rules that actually help those systems function better..
People always want to import the “high tax and generous welfare” bit, but are strangely far less enthusiastic about the stronger expectations, tighter systems and lower tolerance for long-term worklessness that sit alongside it.

Two thousand people is actually perfectly adequate and is associated with a margin of error of less than 3% so long as the survey was carried out by professionals who know what they're doing. Obviously this survey was - the company that carried it out has a solid reputation and has worked with a great many well known and highly respected clients. The number 2000 is actually fairly ubiquitous in the world of surveys - hence how there are quite a lot of articles written about it and why it's generally considered enough to provide an accurate result.

Rightly or wrongly, you may very well be right on that. I personally think we need to end austerity for the disabled (not just say we have) but front line services undoubtedly need to improve too. The right wing press is doing a great job of misleading everyone about how much the average disabled person actually gets so of course people think there's this big pool of money that can be taken from them to solve all of these other problems and there just isn't. It's all incredibly depressing but I totally understand why everyone is fed up with frontline services.