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 am still now following who the "non working middle" who have money.

Which taxes and who exactly? Do you mean those that are in the middle but have retired early or those that live expensive homes? or both?

Genuinely not following.

Thanks

Not a bad idea, it would stop them holding everyone to hostage.

This is spot on. I will add that one of the serious issues we have is that for years schools have been exam factories, with all the emphasis on churning out higher and higher grades to feed into the further education industry. Huge profits to be made there, despite the recent downturns (just google the average Vice Chancellor salary, and you'll see what I mean). English children that jump through all the acadmic hoops and work hard end up £53,000 in debt, when the graduate job market is rapidly shrinking. Children that can't jump through the hoops are not supported adequately and leave school similarly unprepared for the workplace, due to a lack of focus on functional skills and vocational training.

Education in British schools needs a radical overhaul.

US has much better growth than UK plus it has it's own natural resources that we don't have ie Oil

The Saudi pipe line comes out on the Red Sea, that & tankers could be vulnerable to attack from the Houthis.

Then there is LNG and Fertilizers among other exports that would normally go via Hormuz.

Many countries (Asia) simply cannot afford to wait much longer, already crops need planting, fertilizers aren't available or very expensive.

So long as Iran wasn't stupid (not a given) paying a fee could become the norm?

And have you costed up the consequences of your brilliant policy ideas?

I do think the triple lock has to go, to be replaced by an average of inflation and average wage increases. Likewise uprating of welfare benefits, and restrictions on entitlement to disability benefits, and we need to rein in the expansion of SEND spending. It's a nonsense that the incidence in the UK is double that of France or Germany.

Be prepared for the howls of outrage here: there's a very active contingent of benefit lobbyists who can be relied upon to turn up and claim that everyone wants to reintroduce workhouses.

We also probably have to revisit Theresa May's social care proposals, aka the dementia tax. And ask for a copay on health treatments for all elective surgery.

We also probably have to revisit Theresa May's social care proposals, aka the dementia tax. And ask for a copay on health treatments for all elective surgery

I really don’t understand why her proposal was so hated.

Oh goodness I never realised Ireland doesn't have an NHS. What happens if you get sick there?

Why not scrap the blanket free prescriptions for the over 60s?

@binliner yup, do that too. The frequent flyer pre-payment certificate DH bought every year until he was 60 costs about £110 per year.

Ireland has also get a well educated younger population which helped attract investment. But that investment has meant very high house prices

I worry about this generation passing on all these dents to the next generation. The government needs to cut back on spending but if Burnham gets in spending will go up. He wants to nationalise everything from the trains to water companies. I know COVID was astronomically expensive but when other countries paid 60 percent of salaries the UK paid 80 percent. The benefits cap doesn't apply to any family with a disabled person in it. The government have just taken the 2 child cap off. Nice to do but the UK needs to learn to live to it's means. Benefits are too generous except for single people. The triple lock is nice for pensioners to have but it needs to be amended to a double cap of inflation and average earnings.

I guess new IMF report has been mentioned on this thread?

I'd recommend to read it:

United Kingdom: Staff Concluding Statement of the 2026 Article IV Mission

"Over the coming two decades, rising pressures from ageing, defense, and the climate transition will require difficult choices to contain spending growth in a context of constrained revenue-raising capacity. These pressures could raise public spending by about 6 percent of GDP by 2050. Beyond the planned tax ratio increase until 2030, staff analysis suggests that the long-term scope for further revenue increases is becoming limited unless more fundamental tax reforms are envisaged. Thus, the scale of rising spending pressures and limited tax space imply that a growing share of the adjustment will likely need to come from expenditure restraint in the longer term."

In plain English - there is nothing more to give (or rather to take in terms of tax). We need to reduce spending. And dramatically.

In addition this, about oh so wealthy pensioners:
Average income of British retirees revealed | Money blog | Money News | Sky News

"The average tax-paying pensioner doesn't have enough income to live a moderate lifestyle, new analysis of government figures shows.

The government figures only count those with enough income to pay tax, so anyone earning below the personal allowance is excluded from the average."

"The average tax-paying pensioner doesn't have enough income to live a moderate lifestyle, new analysis of government figures shows.

Plenty of workers won’t either

No one wants to hear we are cutting benefits and increasing taxation, virtually no one would vote for that, so no party will admit to that.

I suppose you are right and that the markets might react with uncertainty at first if Reform got in. Assuming they followed their manifesto I'm assuming the markets would settle down and react favourably but I guess we won't know unless it happens.

I think Starmer is centre but as he is unable to get decisions through his backbenchers I'd say the party is leaning left under him. Lots of payrises for public sector workers, increase in welfare etc

The markets certainly did not like Liz Truss but the rest of them.......the markets seemed okay. Perhaps a reform/tory joint effort would be the best way forward unless Starmer has a personality transplant and can stand firm against his backbenchers.

No party is prepared or able to do what is necessary, explain this clearly to the electorate, show a clear plan of where this is going, why, for how long, and what the signs of progress and recovery would be, and do the necessary hard stuff together.

Labour just pontificate and lie while saying they're wonderful and the cuts are 'progress' - the bollocks coming out about 'SEND reform' could have been designed purely to piss everyone off and trigger the most possible resistance.

Instead of framing it in a lot of corporate jargon bollocks, insincerity and deceit, where's someone with the guts to say, bluntly, 'we cannot afford to give these kids what we'd like, and what we always have. Money is not there, too many kids (reasons not unpacked yet), and now things have to change. And yes it won't be great, it will be what can be afforded and not what is needed, but let's talk about what we CAN afford, what we CAN do, and how we get through this difficult time together as gently as possible. With no one pretending it's so much better than the previous system and all for everyone's good, and nooo there's no cuts'.

But to do this and make it work, you'd also have to have a party that wasn't slamming doors shut on parents such as trying to make it nearly impossible to home educate when things at school become untenable, (which is going to cause absolute bloody nightmares for families and schools), you'd have to accept that kids will go onto reduced timetables and parents will come out of work - and this sucks even if there's no money to do anything more than sympathise - and also permit and support free lance and independent teachers, groups, centres, etc etc, rising up to help and support, fill the gaps, drive initiatives and respond to needs. Labour hate anything they don't own, control, micromanage and hold centrally, and don't really like self employment, and strangle it out of viability or growth.

Much talk on this thread about how much pensioners have and how little younger people have.

If you have worked for 50 years, how likely are you to have accrued more than someone working full or part time for 10-15 years?

The fact is today’s pensioners have taken more out than they paid in. Thats fine when the demographics are a pyramid.

Plenty of today’s pensioners haven’t worked for 50 years & plenty of younger people will work for 50 years but be less likely to own a home and have a less generous work pension.

it’s not an attack to recognise facts and acknowledge government policy hasn’t favoured the young

We certainly need growth and investment but I don't think rejoining the EU is the way to go. They are having their own problems and will impose all sorts of conditions on us.

You say we can't impoverish a large part of society and still survive. I would disagree with that. It might be unpleasant to think about but the strong/healthy/young/rich would survive and the rest would die off. That is exactly how the UK operated 80 years ago prior to the NHS/welfare. I guess it's called survival of the fittest and a country that is in serious decline is going to have to make tough choices. People will likely adapt and generations of families will likely live together again and take care of their own old/sick. You might even argue that society would emerge stronger and healthier having allowed a natural selection process to occur. The last workhouse in the UK closed in 1948. That's only a few years before some of us here on mumsnet were born. They certainty still had them when my mum was a child.

In fact I would double down on that and say you can't survive as a society if you allow the poor, the sick and the old and the non contributing to drown everyone else which is what is currently happening.

Raising taxes is slowing down growth so that is definately not the way to go especially in light of how high they are already. We certainly need to change the NHS but a small contribution is not going to cut it. We are too many, too sick and living too long. It's going to have to be changed to an insurance based system the same way as dentists have gone.

No sane politician really believes you can simply tax your way out of structural problems like this. No country has ever taxed its way into prosperity, let alone sustainable prosperity. Growth, productivity and supply matter more. Labour know that, but they seem to care more about optics and hypocritical virtue signalling than fixing the underlying issues

I agree - the government needs to lay out in very laymans terms just how things are in the UK financially and economically.
Then they need to show what will happen with tough choices being made and what will happen if they are not made.
It needs to be clear, concise and no sugar coating.

I agree we can't expect our pensioners to play their part and have cuts if we are letting foreign men languish in hotels at our expense. That would be insulting to the old. So top of the list of tough choices should be removing these people and policing our borders. Then we can look at welfare/pension cuts.

Politics has always been about being popular. Telling people the truth in the UK historically is not really a great way for a political party to make themselves popular, which is why politicians rarely do it.

The only way they can really force people to accept unpopular decisions and survive them is to be able to demonstrate that they have no choice but to do them.

So in some ways, it has to get really really bad before there is any hope of it getting significantly better. Reform (small r) can only really be pushed through on the back of some sort of chaos - precipitated by world events.

I think we've got a good way down to go yet before we hit a place where the public are willing to make the reforms necessary in order to take the country forwards, and that process of reform when it finally occurs is going to be painful for everyone, but as usual will hit the middle class worst (you can only lose something if you have something to lose).

I suspect the new Labour leader will attempt to tread the same political tightrope Starmer has done, with the same dismal outcome and try to kick the inevitable reckoning a few years down the road. Move along, nothing to see here.