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.

It’s impossible for the UK to go bankrupt as we have our own currency and can create/print/devalue as much of it as we want.

Things will just continue to get worse but no bankruptcy is not on the cards.

The UK has not had a government that cared about anything other than lining their own pockets for many years. We need someone fiscally responsible like John Major, not someone who simply wants to steal money from the middle earners and give it to the low-earners while ignoring the top earners.

What the UK neeeds is an end to unauthorised immigration (all boats immediately taken back to France by the Navy by force) and we need a large amount of authorised productive immigration (skilled people to do the jobs that the brits refuse to do). We need more but the correct type of immigration.

We need a move away from seeing house prices as the way to riches - so we need much higher property taxes at the top, and not the situation where people in mansions pay the same as those in semi-detached houses.

On top of that we need a much faster move to private pensions to reduce the state pension cost, we need long term vision not the usual short-term short sightedness. If the government gave every new born £10k in a pension globally diversified when they are born then it would in time eradicate the state pension requirement entirely. That £10k is a lot less than the government blew during covid, so it is realistically doable.

The biggest cost to the UK is the NHS due to ageing population, that should in-part be funded by wealth taxes for those with over £10million of assets.

Another major problem is that we continue to allow those at the top to avoid taxation by using trusts and this needs to be changed by new laws including allowing the UK to repatriate assets held overseas.

On a more local level, care costs account for around 60% of all council tax spending, this needs to be funded from central government not council tax, and then business rates could be removed entirely to help our high streets and small businesses.

Finally a sensible post @VoiceFromThePit

We don't need skilled immigration - we have enough people with the skills or potential, they are not in those jobs due to various factors. More immigration just puts more pressure on resources whilst allowing employers never to address the reasons uk people are not working or training in those jobs.

Some of those are linked to health, many others left because working conditions in the NHS /social care have worsened - and this is partly due to immigration, which meant that conditions and pay were never dealt with properly - leading to wage suppression and a downward spiral of conditions. Urgent training for skills shortage needs to be subsidised and prioritised for non working people.

We need a wealth tax and/or annual property tax, which should be higher on empty properties or overseas ownership. Far too much of our property market is held as asset wealth, time to make it less profitable and get that property back on the market. If not this, then higher inheritance tax with lower thresholds - to get back some of the money that was in overinflated housing values and was paid to older people in welfare, health and social care spending (that in the vast majority of cases was far far more than they paid in).

We have got used to things that are luxuries as though they are necessities - pets, holidays, multiple cars, cosmetic procedures, children's activities - even those who are fully state supported expect to have these things available to them - and they should not. Problem is our service economy relies on many of these luxury industries.

If you are fully state supported (and I include pensioners in this) then you should not expect a luxury lifestyle to be provided to you - but basic accommodation (and where it is cheapest to provide), basic food and limited services.

The UK balance sheet, as represented by the Whole of Governments accounts, is always a humongous deficit to be funded by future income. However it did fall by a few billion in the 2023/4 year

This is the daftest thread I have ever read. No the UK is not headed for bankruptcy and no we don’t need the navy to stop the boats as the answer to all our problems. Is it April fools day?

Everyone wants the fixes to be the things they don’t use.

@ VoiceFromThePit -
“It’s impossible for the UK to go bankrupt as we have our own currency and can create/print/devalue as much of it as we want.”

I think that’s what they thought during the Weimar Republic….
I don’t think it went too well in Zimbabwe, either, in 2008, “with an estimated monthly inflation rate of 79.6 billion percent. During this time, prices were doubling every 24 hours.” They printed a $100 trillion Zimbabwe dollar bank note.

The fixes are welfare spending. The amounts we spend on education, defence, housing, public order, transport, all of those in spending terms have been steady. For welfare, we have more pensioners and a lot more people on disability benefits. You cannot do very much about people retiring, but you can stop uprating the pension amount by a generous margin each year in excess of wage growth, and you can look at eligibility for disability. Both of those are cuts that save billions which with our tiny debt to gdp ratio is something that any Chancellor knows needs to be done.

Reform may cut benefits via nationality, though it’s not clear to me how much that saves.

Anyway it doesn’t mean you call in the IMF. A mean enough government with a large majority can do it.

The reason the Weimar Republic went bankrupt was because it owed huge amount of money in gold.

If you have debts denominated in assets you don't control (so for example in the UK that might be gold, or US dollars) then yes you can actually go bankrupt. Because you can't magic more gold or dollars up out of thin air to pay your debts.

All our debts are owed in GBP though. Which means that we can simply print more money to pay them. That is not something without consequence (if we did it to a significant degree it would trash the currency eventually in a similar way to Weimar), but is something that can be done.

The other thing people might want to take a look at at who the UK actually owes the debt to. The result might surprise you.

I'll also take the opportunity to dispel the other great myth that seems to be put around at the moment, that is that the UK economic performance has been much worse since Brexit. In fact if you compare the UK performance to similar G7 nations since 2019 you'll see it is pretty much similar (some would argue better) than similar G7 countries like France, Germany and Italy.

Even if you believe the reports (I don't) that the UK is 100 billion worse off per year than it would have been (note they always say the figure, not the %, because as a % it is less than 3% and 100 billion sounds much worse than 3%) it's hardly the catastrophe that Project Fear made it out to be. And certainly not resolvable within the context of other huge events that have had significant economic impacts like Covid, th Ukraine war and the Iranian War.

Yep, some of us have been here before!

We need cross party consensus because it will take years.

Scrap triple lock
Scale back certain benefits or link them to what you have paid in.
Means test state pension now
Housing value needs to be included in care in the home costs like Teresa May tried
Scrap NI & roll into income tax
Change the NHS model to a European system.

People don’t want to hear it though & prefer to blame the boats 🤷🏻‍♀️

As others have said complete overhaul on property taxes, making ever increasing house prices our economic has fucked things.

We have to slash benefits, remove the triple lock, move to an insurance model of healthcare and look at the viability of public sector pensions

I think public sector pensions are a bit of a red herring. The most generous schemes closed to newer entrants years ago, it’s today’s pensioners that had the best pension schemes private & public. That’s why means testing the state pension makes sense.

People point out that the UK state pension is one of the lowest but that’s because other European countries don’t have a flat model and private pensions are far less common.

If we want actual growth we need to start investing in young people

Unfortunately no party will do what needs to be done because they are only ever focused on short term wins.

In some ways we'd be better off with a benign dictatorship that could make decisions without all the political angst.

No party is going to touch the triple lock. Even though it's unaffordable. That would be political suicide.

The idea a PP mentioned about giving every newborn £10k to invest as a pension is an interesting one, but again, would never happen because the benefits would be decades from now and both the public and whoever is in power want easy, instant wins.

https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3544114

That doesn't look like imminent bankruptcy, to be fair.

both the public and whoever is in power want easy, instant wins.

Yep, that’s the problem. Take labours recent governance, now obviously some has been a shit show but many really did think productivity was going to booming under them in a matter of months which is illogical.

Things will just get progressively shitter for each generation.

We know that there’s a problem, but nobody wants to deal with it, and people will fight tooth and nail against any cuts that affect them, so our overspending will be our grandchildren’s problem.

There’s been a lack of investment in basic infrastructure for years and this is now coming home to roost. We’ve got shit in our rivers, a grid that can’t take the renewable energy installations we need, potholed roads that have been patched rather than properly surfaced for too long, inadequate public transport and a educational curriculum that needs an overhaul to make it relevant to the 21st century.

We’ve also got a public that loves to moan and then does exactly the same things rather than acting on what they are moaning about. And a public that votes for parties who will make the problems worse. A public who thinks that their only duty is to vote, who doesn’t hold their politicians to account and dig into the nuance of the issues of the day.

I think we need to overhaul the education system. We have a skills shortage in this country, while universities churn out thousands of useless degrees, which result in thousands of unemployed, or underemployed, graduates. Young peoples are being conned.

This is a problem in most wealthier countries now, combined with the aging population.

Unemployed "academics" and the critical lack of workers with vocational and trades qualifications is a huge issue in Germany as everyone now wants their children to go to university despite there being very few jobs for graduates with non vocational degrees. In the UK it's worse of course because the unemployed graduates also have huge debts incurred doing their marketing or media or psychology or anything else not directly qualifying them to start work, degree...

We know that there’s a problem, but nobody wants to deal with it, and people will fight tooth and nail against any cuts that affect them, so our overspending will be our grandchildren’s problem.

I don’t think that’s true but I do think people want to feel the burden is spread. I would accept a means tested state pension & paying more for a new healthcare model but current pensioners cannot be excluded from cuts & or paying more.

In my opinion, there is only one way out of this and it tallies with the bit where you say "borrowing only to grow the economy".
We need to return UK to a manufacturing country. Buying cars, tshirts, forks and everything else, abroad will never ever make us any money.
Making it here will. More jobs, more taxes, so we can pay. We need to keep the money made with our hard work in UK. And once we have products that are wanted abroad, then we will make enough to pay the debt.
Globalisation had its moment. This is now long past and we are standing on the spot, doing nothing.

For welfare, we have more pensioners and a lot more people on disability benefits.

What’s overlooked is that increasing the state pension age means more people who would have been classed as pensioners before fall into the worker category but many are still suffering ill health & disability. Healthy life expectancy hasn’t increased.