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 agree.
I think the electorate would be more acceptable of necessary changes if the true scale of the financial problems were laid out.
There isn’t a chance that the triple lock stopping will be acceptable whilst immigration costing billions and affecting jobs and housing is not strongly dealt with and be seen to be dealt with.

I agree @IsEveryUserNameBloodyTaken
Also, any pain needs to spread evenly, they can't keep chipping away at the middle earners. Enough is enough.

OMG. You think Maggie had the right answers? 🤣🤣🤣🤣🤣🤣🤣🤣

She was all about short term profits for the fat cats with no consideration to the future. Pretty much the standard position of every subsequent Tory govt. And exactly how Reform will operate too.

She single-handedly caused the start of the housing crisis by allowing council tenants to buy their homes, stopped councils building new homes, closed the coal mines so we had to buy fuel from Eastern Europe and helped to end our manufacturing base so we now rely on Asia for all our manufactured goods.

Utter shit show.

Err i thought we were heading for bankruptcy?

& Welfare is totally unaffordable?

In which case we need to cut all aspects, inc Childcare freebies for the better off & all the SENDs help given... there is no reason why the UK has 2x as many SENDs as say France or Germany or why we have so many people on disability benefits.

Whether you like it or not, Welfare was designed as a safety net NOT as a means to help people who are on 2 or 3 times the average salary, Free childcare is costing over 10 billion per year.

Sounds like you want Universal Benefits for all?

The middle earners are the only people they can go to to get more money though.

The rich just either move or pay an army of accountants to avoid tax.

The poor have no money so taxing them is pointless.

I don't think they necessarily have to tax the "working middle" but they have to tax the middle. The older middle class cohort for example has huge amounts of wealth in this country that has largely been accumulated at the expense of inadequate taxation and really should be taxed more heavily.

If it isn't resolved, there will be no reason to aspire to a middle wage if you just end up losing half of it in tax and student loans.

The older middle class cohort for example has huge amounts of wealth in this country that has largely been accumulated at the expense of inadequate taxation and really should be taxed more heavily.

Please can you clarify who you mean.

Thanks

IMF has upgraded UK economic forecast... must be gutting for the OP.

I believe in taxing people with money.

Because trying to tax people who haven't got any is pointless.

There are ways to make energy cheaper. Stop linking wholesale electricity prices to gas prices and put solar panels everywhere, schools, hospitals, houses, warehouses and the acres of agricultural buildings that are all over the countryside. Either as grants or cheap loans. On a really sunny day now we can produce a third of out electricity via solar. So all of daylight power for 4-6 months a year is possible.
Holiday cottages or airbinbs. Currently if you let a property out for holiday use its classes as business use and then they get small business exemption so don’t actually pay anything. Surely they should pay either council tax or business Rates.
Social care, an unpopular opinion here but families will have to look after their oldies that would reduce the burden on councils and hopefully council tax.
The issue is everyone wants cuts in spending but not where it will affect themselves.
People have got used to many non essentials, frequent new clothing, holidays, new cars, haircuts etc, fancy food maybe everyone will have to just be satisfied with less.

Rather than increasing taxes we should look at encouraging people to spend their money in this country. Investment and growth is what is needed. We won't get it if we keep increasing taxes indefinitely.

Agree with that apart from Social Care, though i do believe de linking electricity prices, means gas prices would need to go up... not popular.

People live so much longer now, with complex healthcare needs, things the family or an individual, even if available and not working, cannot do, providing care 24/7 requires several members of the family.

This idea that families used to do the care is incorrect, we had large and very impersonal Geriatric wards, awful places, care homes not worthy of the name and where families did help, the workload was unbearable.

People died in their 70s or earlier as an average.

Social care, an unpopular opinion here but families will have to look after their oldies that would reduce the burden on councils and hopefully council tax.

My MIL's health is declining and she really needs someone to live with her, cook and clean and help with several daily tasks.

All her children live hours away apart from BIL. He is the lower earner - a technical, professional job requiring a STEM degree, it just doesn't pay very well. SIL is the higher earner.

If he leaves his job for 5 years +, what will happen to his career? His savings? His pension?

https://www.bbc.com/news/articles/cm2p72mmddyo

The growth estimate has been upgraded to 1% from 0.8% for 2026 by the influential body, which said last month that the UK would be hit hardest by the Iran war among the world's advanced economies.

I'd hold off on opening the champagne. 1% is still rubbish.

Well, thats down to your lot, growth was predicted to be much higher pre Iran.

.....& whilst it might be rubbish, its still an upgrade and better than many other countries.

The USA is screwing the world and more importantly Europe

it’s got strong growth but Spain is very much the exception in the EU rather than the rule. Also has very high unemployment at around 10%. Almost every other country in the EU has growth rates similar to the UK, I’m pro EU, I love the freedom, the opportunities for travel etc that the EU offers but as an economic project and the EU is primarily an economic project, it’s a failure

You should read the article before drawing conclusions about what it says.

The International Monetary Fund (IMF) has upgraded its forecast for the UK's growth this year, but warned the Iran war and "domestic uncertainty" could hit the economy.

The use of "could" indicates that the war's effect isn't factored into the 1% growth prediction. They'll revise it again if they observe an actual effect.

And the old forecast was lower (0.8%), not higher.

Err i did read it and i know how "forecasts" work...

Iran (caused by the USA going in with no plan, no exit strat and little regard for the consequences) has had a huge negative on the worlds economy, it may become far worse, as is Labour turmoil but thats relatively short term.

At best, we'll end up with a deal far worse than Obama's but with Iran controlling Hormuz in a way it never did before & earning huge amounts of money from it all.

Maybe you have a more optimistic view of UK voters than I do but I actually do think that the majority of voters are indeed that daft.

Secondly if you raise taxes then you slow the economy and if you cut taxes then you grow the economy. However the question is where to get the money from for cutting taxes.

If you cut spending this is massively electorally unpopular ( as Rachel Reeves found out) and if you fund it with debt then yes you might get more growth but this is way more countered with higher interest rates (as Liz Truss found out).

Liz Truss thought she was bigger than the financial markets. She’s an idiot as were the people who voted for her as leader, because she didn’t hide what she was going to do.

Remains to be seen if Starmer is replaced with someone with similar chops, albeit from the left.

What's really depressing about Liz Truss is not only the idiocy of thinking that she was bigger than the financial markets, but the arrogance where she still doesn't think she did anything wrong and that it was all a conspiracy against her.

That said Zac Polanski's economic plan of increasing Government spending by just printing more money takes that idiocy to a whole new level.

I don't think it's likely that Iran will earn lots of money from blockading the Straight of Hormuz in the future.

What's far more likely is that the exporters/importers who want to use the straight will simply find other ways of doing business.

For example the Saudis already have a pipeline that allows a significant amount of oil to be exported via the Red Sea. They will up the capacity. Or find other means to export.

All of the overland pipelines are easy targets for Iran though, plus the investment cost of building more is huge. The most cost effective way forward is to simply pay Iran what they want

Except that the gulf oil exporters don’t want to depend on the good will of the Iranian regime. Like railways, pipelines are easy to attack but also easy to repair.

The UAE has a similar pipeline they are accelerating work on to be completed next year, and the Saudis are using thousands of tanker trucks to move crude oil to their other ports.

Any advantage to the Iranians won’t last forever.

I doubt very much the Saudis will let the Iranians hold them to ransom. There is a lot of history there.

They already have a pipeline in place which is working at 7mbpd. And for the Saudis it is not that much money to construct another one, at least not in the context of the oil revenue. If the can afford to spend 50 billion the line then a few pipelines are trivial by comparison. Time is more of an enemy than cost.

UAE could build a canal that bypasses the SoH. Expensive ? Yes. Impossible, No.

There have been projects proposed to bypass the Strait for years. It's just no country has really got round to doing it, but the latest events may provide the motivation. If you do a web search there are a huge amount of projects proposed to allow alternative exports.

For the UK gas is probably a bigger concern than oil at the moment. But it is doable in time. The Langeled pipeline cost about a billion, which is a pittance compared to the 100 billion odd dollars Qatar makes per year from gas exports.