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.

I've often wondered why Ireland's success in attracting FDI is/was not replicated in the UK. An English speaking country which at the time was a leading member of the EU along with France and Germany. I realise that Ireland's tax laws on companies has hugely encouraged the US firms to locate there, but instead of us trotting that out as an easy answer and a policy often sneered at, the UK could have slashed its corporate taxes too. Why didn't it? I don't know as I am not an economist or anything like that, but I often wondered about it. Easy to kick off on the sidelines about another country's success and writing it off as "ah well they are a tax haven for companies"!

AFAIK the educational standards in Ireland are spot on also, leading to a feeder workforce for the multinationals. Education is a big factor and I don't know if the investment is enough in UK anymore (or was it ever?) to enable a workforce capable enough to compete with other fast growing economies. Lithuania is streets ahead in the tech game now, as are many other European countries. I am just musing here, and I have no facts and figures to back myself up, it is just my observation. Of course I do blame Brexit for the downward slump in the last ten years. That was criminal and definitely unpatriotic no matter what anyone says. There are only downsides. In any event given the situation in the US right now, it makes a lot of sense for the UK to align with the EU, and this is now needed more than ever before.

The only realistic solution IMO is to review the benefit system:
No benefits should be paid to 2 adults earning FT min wage - except child benefit and disability benefit.
Someone on benefits should earn just a little bit less than FT min wage - there should be an incentive to work. And that includes all the indirect advantages that you get when on benefits.
Social housing rent should match market rent once people earn more than a certain income - no justification to pay a subsidised lower rent just because you qualified for it in the past.

It will be hard short term, and then naturally prices will decrease (housing, food, etc) as otherwise businesses won’t have enough customers. And people will be motivated to work, as they will be significantly better off if they do.

NHS: do something similar to europe
where people can see certain specialists without the need to be referred by a GP. So many wasted appointments just to get a referral. Charge people for missed appointments. Stop sending paper letters.

Apparently Andy Burnham is going to coming to save us! Because the answer is this all of country's problem's is to tax individuals and property a bit more, redistribute a bit more. And et voila - growth!

yes I agree. They should bring back the YTS and get lots of tradesmen trained up. That would lower welfare plus we could all hire good tradesman when we wanted rather than the stress we currently go through. Plus give the young a career and hope. I certainly wouldn't be telling my kids to go to uni anymore. Be a builder or a plumber and you will never be out of work.

We could also hire a bunch of young people to police our shores (obviously they would need training). Then we can stop paying France to do it (badly) whilst boosting our own economy.

Which decisions?

I remember the 70's well. Trouble is there is no Maggie T coming to reform everything and be a tough government (well maybe reform is/could be.....)

Also people are so much more entitled now than they used to be. People used to be embarrassed to be on benefits and now they think it's a lifestyle to aspire to.

I remember the 70's well. Trouble is there is no Maggie T coming to reform everything and be a tough government (well maybe reform is/could be.....)

There is nothing left to sell off….

Also people are so much more entitled now than they used to be. People used to be embarrassed to be on benefits and now they think it's a lifestyle to aspire to

How are you measuring that? There was far more social housing for one

Yes I agree - a tough government could start to turn things round but are any of them capable. They all seem intent on keeping their jobs and thus just pleasing the voters with what they want to hear, not what needs to be done.

yes we need a government that does not care about being popular and can get decisions through parliament.

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.

We already have more over 65s than under 15s

yes we need a government that does not care about being popular and can get decisions through parliament.

But how does an unpopular party get into power?

There will never be an incentive to work, unless you make childcare affordable and accessible. You can't work if nearly all your salary goes on childcare or you can only do shift work (due to the lack of jobs near you), but there is no childcare available between 5:30am and 10:30pm on a ad-hoc basis as you only get your shift schedule the week before.

@Myskyscolour There is no incentive to work more hours when you lose benefits. Eg a single mum on benefits will have had free school meals and pupil premium for dc at school and brighter dc going to university are possibly going to get a bursary too. That’s often £2-3,000. Then there’s concessionary prices and you are better off by not working. This has to stop but Labour backbenchers won’t have it.

The Times has a brilliant article today in the Sunday Times about why we cannot resolve our fiscal or governance issues. I agree with every word. We are currently ungovernable and no one can solve it.

I’m an American who had been on MN for about eight years. While we have our own economic challenges, I’ve been continually surprised by how many Brits here are completely oblivious to the UK’s much more dire situation. The common sentiment seems to be that welfare spending in the UK is just barely sufficient and that the answer is higher taxes.

It’s good to see that some people here appreciate that the low growth, low productivity economic environment is what’s put the UK into this position in the first place.

Someone upthread said that non-welfare spending, including on defense, has been steady. I don’t know about the other categories, but your defense spending in real terms has declined dramatically since the end of the cold war and left your military hanging on by its fingernails. I’m ex-military and regularly see people here assuming that you have defense capabilities that were cut decades ago or never existed.

I don’t see any easy way out of this, but am greatly heartened that you are having an honest discussion about it.

That's really misleading. We have a few with a huge fortune but the rest of us are average or skint.

GDP per capita is a good measurement to look at.

We won’t be going to the IMF like we did in the 70s. Our hand was forced then because of our foreign currency liabilities. U.K. govt gilts are in sterling now so there won’t be that hard stop. That’s not a good thing in my opinion it could lead to even more crazy decisions.

If it was means tested then I expect that a lot of people would draw private pensions early, go travelling and enjoy themselves in their 60s, and then draw the state pension when they get into their 70s. People won’t be incentivised to save if they lose out.

@MissConductUS You are correct. I read once that around 5% of voters understand the economy. So when they vote, most people are comically illiterate. So all you get is tax and spend and borrow and spend and most citizens want more and more and more government expenditure - it’s like an addiction. No one is ever prepared to say this cannot go on (David Cameron tried) but look at the anger over austerity! No one in government understands business or who actually delivers growth! It’s not people on benefits or those who have retired. Yet these people get priority whilst business get hammered.

With the latest political in fighting, our borrowing costs have gone up again. The Chancellor has less money than ever but still people want their pet projects and their benefits. There needs to be a very big overhaul but that’s a vote loser, so it won’t happen. It’s always rhetoric over an intelligent plan.

you are right. Maggie did sell off lots of industries and council houses which gave the country a cash boost in the short term. I suppose I was referring to her ability to make tough decisions that were unpopular and stick to them despite riots, protests etc although the polltax kind of got her in the end didn't it.

Very simplistic view. There are not enough suitable homes for older people to downsize into, whether they have the money or not.

You also may not have noticed that some of the larger, more expensive properties are already languishing on the market. Higher transaction costs, rising ongoing property costs and wider economic uncertainty have all reduced sales at the top of the market in many areas. And even if older owners did move out, many of those larger properties are not realistically suitable or affordable for the majority of younger buyers anyway. Large detached homes in expensive areas are not the reason most people cannot buy a starter home or their second one.

There is also the issue that moving to a completely new area may not be feasible for many older people because their family support, friends and wider local support network are tied to a particular area. That network matters. Every older person who is supported to remain living independently in their own home by friends and family potentially frees up care capacity for someone who for reason of ill health needs it more or does not have external support. It can also place less strain on an already overstretched state. I am not saying that means remaining in a house that is far too large, but location and proximity to support networks matter a great deal when downsizing.

These are worrying times, many people do not want to take on the financial risk, stress and disruption that comes with moving house, particularly later in life. Smaller properties are also often far more expensive than many people assume, particularly in desirable areas close to existing support networks. Older people downsizing are also competing for exactly the same types of property that are already in short supply for younger buyers and families, such as ground floor flats, bungalows and two or three bedroom houses.

The housing crisis is essentially a supply issue, not simply older people refusing to downsize. We do not have enough homes full stop, let alone the right type of houses in the right locations for the right price.

I’ve been moaning about this on here, anyone who mentions bond markets is accused of being an evil blood sucking servant of capitalism.

Theres an unwillingness to believe that you can’t just borrow willy nilly with no consequences. I think it’s the electorate just do not understand how we fund everything and how it can come crashing down and it won’t be little cuts, it would be drastic, genuinely painful cuts, some of our own MP’s thought that we could just ignore the bond markets.

Yes there was. I grew up in one. I believe someone in the household had to be working to get a council house. The people that lived in them had real pride in keeping them nice and mostly paid their way via their working husbands.

There is nothing wrong with council houses but as someone said once people earn above a certain amount they should pay market rate else the tax payer is subsidising them.

Quite. I’m not 50 yet but I’ve paid in for decades. I have zero expectation of ever receiving a state pension. Today, almost 1 million 16-24 yr olds are NEET. There are literally not enough people working left to pay my pension. The money I have paid in is gone and no one is coming up behind me to keep paying. Those are the unpalatable facts.

They can (solve it) but it will take time and alot of very tough decisions. The politicians need to stand together and not back down as there will be protests/riots much like the 80's when the mines where closed.

However they do only have a limited window to start turning it round. Sooner or later it will be unfixable. Meanwhile do we have a government with enough balls to do it. Probably not. Thus why I think we will end up with the IMF.