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 expectation of being a pensioner has radically changed, hasn’t it? Our society has increasingly put resources into trying to maintain a healthy retirement. The issue is that people now live longer. That’s good but also used not to be the case. People claimed a pension for a few years and died. Now some may be sick as pensioners, but the NHS sustains them. Nobody has really thought what that means, except it has to cost far more than expected a generation ago.

I take the point about disability, but the growth of claims is mostly with the young, and for less serious mental health conditions. These people need to be working.

There are no easy answers if the economy is not growing. Generous welfare needs economic growth to support it. We don’t have it and haven’t for a decade.

Nearly 2 decades

"Stopping the boats" is just a distraction technique to avoid talking about the real problems in the country and about the level of legal immigration. Why we dont let more asylum seekers work in very limited occupations is beyond me.

Farage would cut benefits and hand more money to the rich. He may genuinely believe that would produce growth but the uk is not Singapore. Ireland has lived off the taxes it receives from Amazon. Britain has been afraid to properly tax chinese imports, we've driven our own businesses to the wall. We didnt make use of being in the EU and let other countries subsidise their firms at the expense of our own. Boris handed loads of money to his mates during Covid.

Starmer has been trying to deal with the problems but his backbenchers are fantasists and he's caved in to them.

I'm not a tax specialist, dont know what the solutions are. We need more wealth tax, especially on property owned by those outside the uk and especially capital gains made on property here. https://www.the-londoner.co.uk/we-reveal-the-billionaires-who-really-own-london/

Most other countries already have a levy on tourist accommodation - this shouldnt be optional for foreign visitors.

No, it’s not. We just need a government who can get a grip on it all.

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

Probably a bailout by the IMF in return for enforced austerity, like happened under Labour in 1976.

I'm not the slightest bit surprised.

People that don't work need to accept that their lifestyle will be hugely different to those that do. Same as those that have private pensions will have a very much better retirement than those that don't. If these things stop happening, people will just not bother-working, or saving for retirement.

I don't disagree with all your post but printing money is definately not the answer. That would be one way to skyrocket inflation and devalue our currency. Not to mention the message it sends to the bond markets that we are in a desperate state and doing desperate things.

The UK will go bankrupt if it cannot pay the interest on it's debts or if it can't reborrow the money/bonds as they fall due (or repay them obviously but fat chance of that at the moment). Sounds unthinkable but we currently have to borrow to pay interest on debt. That sounds like a very slippery slope to me.

the electorate of this country want to be rich but not have to pay for it. Look at the vitriol levelled at the current government for the decisions they’ve made to try and bring in money.

It’s a shit show. This country fundamentally is a business and we have far, far more going out than we have coming in.
Massive changes need to be made. For me? I’d give up my state pension. I’ve paid in every single year but realistically? The country can’t afford to pay me.
Huge cuts need to be made and we all need to deal with that. There is no magic money tree.

I am not giving up my state pension. I've paid in for decades. I would've packed in work years ago if I thought that was going to be the case.

The ONLY thing that needs to change is affordable housing for everyone, of the right kind at the right time of life, and which doesn't incur huge stamp duty costs when people switch. eg Older people don't want to move out of their big family homes as there is nearly always nowhere decent to move to that's affordable, and the huge stamp duty and moving costs are just unfathomable.

Basically it comes down to whether people feel they have enough money to put into the economy that is over and above their basic survival needs. More money in their pockets AFTER their basic needs are taken care of and everything else would follow. More spending equals more growth. More growth equals more jobs. More jobs equals more people in work. More people in work equals more spending and so on. More children being born, as it will be affordable to do so. But you DON'T do that just by giving people unsustainable pay rises. Because house prices and rent will just go up to match. End result is the average Joe is still skint at the end of the month and we end up in a slow decline again,as we are now.

Older people don't want to move out of their big family homes as there is nearly always nowhere decent to move to that's affordable, and the huge stamp duty and moving costs are just unfathomable.

I never understand this, older people are usually the best placed to be able to afford stamp duty as they are far more likely to be downsizing and have huge equity gains.

More children being born, as it will be affordable to do so.

This won’t happen, no country has increased birth rates once below replacement rate despite financial incentives.

Would you, really? I wouldn’t. Why would I? Work pays for all the good things in my life. “Packing in” work has never been a consideration for me. And, something HAS to give. You don’t need to be an economist to know that we absolutely cannot afford to continue as we are.

Not always. Debt certainly spiked after WW1 and WW2 particularly. However by 2000 (the time of Tony Blair) it was less than 50% of GDP. Known as a goldilocks economy he did increase borrowing but that was to spend on the NHS and education.

Our debt to GDP is now 100% and our NHS is failing. Education I hear is struggling to but I have no personal experience of that.

The trouble is we spent a fortune in 2008 bailing out the banks and then again in 2020 during furlough.

We now have rising unemployment, inflation on the up, huge waiting lists at the NHS, high welfare and yes high state pension. We've sold everything off so we are definately in a tricky position. Growth appears to have stalled and this weekend some traders have started to sell off bonds with rumours of Andy B running for PM (more left wing means more spending not to mention what he said about the bond markets having to get in line???)

no but it might be soon and the joke will be on all of us

Older people have had a lifetime to accrue assets including a pension. They are also likely to have property, and have more disposable income than working people in the UK.

Morally, pensioners have had a lifetime to earn and set aside for a long retirement. State pensions should stop being uprated each year. The whole political class knows this is a huge problem and will not face it.

The trouble is we spent a fortune in 2008 bailing out the banks and then again in 2020 during furlough

We spent all that money bailing out the banks & then had years of cheap borrowing but neither business or government invested into anything.

Sixth richest country on Earth somehow very poor. Must be disabled kids fault.

Presumably she's the lower earner who returned to work full time even when her wages were equivalent to childcare plus other costs associated with working, primarily to ensure a full state pension. This is often a reason women (primarily) who've had a spell as SAHMs are encouraged to go back full time.

I know it's a significant reason I went back full instead of part time. As I get older I will reconsider and cut my hours if the pension age is raised or the state pension changed to a means tested benefit, but that's because although my job is worthwhile and rewarding it's also incredibly stressful and physically somewhat demanding and I doubt I'll see retirement at all if I work full time until I'm 68+

It grates that my mother retired on a professional pension at 55 (that scheme no longer exists in the same form) and it grates more that my children will probably never have an age related pension at all - I'm sure it'll be reduced to pension only for being too ill/ frail to work in 40 years time.

On an individual level it disincentivises full time work, though it doesn't disincentivise working at all. We'll have to pace ourselves!

The thing is, you don’t ‘pay in’ to a state pension; it’s not a pot that you put money into that pays out when you retire. Your state pension contributions simply fund the pensions of those who are already retired. The expectation has always been that there will be enough younger people in work to do the same to continue to fund the system - but that was predicated on a growing population and is looking increasingly less likely as time goes on. At some point, I would expect state pensions will be means-tested, as we can’t afford to continue with the expectation that the state will provide for everyone when we retire.

Btw this is not a UK specific problem at all. It's an ageing population problem.

There's no obvious solution, but that doesn't change the fact it's shit - old age pension not linked to average life expectancy and the associated belief in an entitlement to decades of free time to travel or potter in good health was a huge, self indulgent, unaffordable luxury only enjoyed for a tiny blip in history.

The problem is really that a couple of generations have been led to expect the same luxury their parents and grandparents enjoyed, and they paid for, but are now realising it isn't going to happen.

You are correct a hardline government who is willing to slash welfare, increase growth and the economy, get rid of the triple lock etc might have a chance of turning things around. It would have to be severe and prolonged and it would likely involve reforming the NHS as well to be insurance based.

Do we have a government that can do that? It looks like Starmer is going to be replaced by someone more left than him so increase spending. Will reform do it. Perhaps but they need to get in first.

I actually think they would prefer the IMF to sort it and that way they don't need to be the bad guys.

End of last week RR was warbling on about providing more help for cost of living. The exact opposite to what they should be doing.

If Trumps war keeps going food prices are going to skyrocket due to lack of fertiliser among other things. The UK is particularly vunerable as we import so much food and so much energy. Now add in someone like Andy B as PM who says the bond market will just have to get in line!

My understanding is that printing money increases inflation which we can't afford to do. It would also devalue our currency. It also signals to the bond market (who we depend on) that we are not coping.

Like Greece did in 2010 you mean?

Those types of measures only work where the global economy is strong to buy exports, and where an economy is recovering from a specific crisis in isolation from the rest of the world.

yes, but also we need to get growth going and start investing. We also need to get our debt down.