The UK has borrowed too much money, has a massive debt - £105 billion goes on paying our debt interest

[cakeorwine]

A good visual guide from the Guardian

https://www.theguardian.com/uk-news/ng-interactive/2025/mar/24/visual-analysis-how-the-markets-boxed-in-rachel-reeves

But basically, the UK has had to rely on borrowing money as it spends more than it brings in.

It has borrowed money at low interest rates - but these rates have increased.

£105 billion on servicing debt interest. When you are borrowing a lot of money, even a small change in the interest level will massively increase the actual amount of money we need to pay on interest

Some context from the OBR on the budget

https://obr.uk/forecasts-in-depth/brief-guides-and-explainers/public-finances/

Income: £1149 billlion
Spending: £1276 billion
Of which £104 billion is on interest payments
Deficit: £127 billion

We need either more income, less spending and reduced interest payments.

What other bad behaviour are you going to tax?

Err yes! Most governmental debt is relatively short term and needs to be repaid at the end of the term, to be funded and replaced by new loans/debt. Lenders will only lend if the return/risk/reward works for them. Hence why it's so important that the country works WITH its lenders and the international money markets, and tries to maintain the highest credit rating possible. When our credit rating falls, the interest rate we have to pay to attract new loans/debt increases! Every government has to try to keep the international money markets on side by at least trying to persuade them that we're in control of our country's finances and can service/repay the debt. Rachel tried to satisfy the country's lenders by her self imposed fiscal rules (as did Gordon Brown), but when she has failed to meet them, just months after she created those rules, the money markets will be getting spooked, so she'll have to announce some pretty spectacular changes later this week to try to persuade them that she knows what she's doing and will start to get the nation's finances back under control in terms of cutting the deficit. Remember the deficit is the yearly shortfall, which adds to the total debt, which is currently approaching a whopping £3 trillion. That's enormous, being decades of accumulated deficits.

In the last fifty years, the country has only been in surplus for five years, the last time being 2000/2001.

We got away with it to some extent when interest rates were at historical lows, but now they're increased back to historical average levels, we're screwed. I remember loads of posters on her and other fora a few years ago saying we should borrow to invest because interest rates were so low. They've now gone quiet, because the money borrowed back then at low interest rates is now being loaned at much higher interest rates as we couldn't pay it back.

We are approaching the time when the IMF will get called in.

Then the cuts to services and benefits will really begin.

He and Sunak were trying to grow the economy by reducing tax to incentivise people to work, to start businesses, etc. There were green shoots of growth appearing.

RR killed all that with her NIC hike!

Yes. They should move.

Would you rather we went on with the current bonkers council tax and stamp duty, or do you want a fair land tax system? I want the latter (although I’d be paying 3 x more a year in land tax). Your gran having the stress of moving shouldn’t stand in the way of implementing a fair tax system. It’s laughable that you should think so.

More to do with the claim that one government can "salt the earth" for an incoming government.

This is not possible as parliament is sovereign and can undo any changes put in place by a previous government. Thus when politicians tell us stuff like "Britain will never be part of an EU superstate" they are lying, as they simply don't have the power to bind the country in that way in perpetuity.

The only situation you might argue where changes are not reversible is for situations where there is a second party that is not subject to sovereign constraints like international treaties where there are no exit clauses (very rare probably for this very reason) or the process becomes irreversible through practicality.

Lots of people talk about how no one wants to be taxed more, but I’m just not sure that’s true.

I’d be happy to pay more income tax if it means better public services as I spend quite a lot of money having to compensate for their current sorry state. Lots of my friends - ranging from NMW earners to HRT payers agree.

What we all despise is politicians (of all parties) treating us like idiots and pretending they’re cutting taxes while actually introducing a load of stealth taxes that often have a disproportionate impact on those who can least afford them.

Other countries owe us 5300 million whilst we owe 2800 so its not like we're in minus. It's just how it works, we are receiving interest on what they owe.

Maybe also a one off "bail out levy" on bank savings balances as done by Cyprus in 2012 - 6.75% for those with less than 100,000 Euros and 9.9% for those with more! We're nowhere near that kind of extreme necessity yet, but unless RR can get things under control and find sustainable ways to reduce the deficit, it's only a matter of time when something like that will have to be considered if the deficit continues to grow and our international credit rating falls meaning interest is higher (if anyone would lend!).

www.bbc.co.uk/news/world-europe-21814325

Do we as a "Government" lend money to other countries?

I thought it was pension funds etc. Not actual Governments.

So interest payments go to the people who lent the money

https://www.visualcapitalist.com/102-trillion-of-global-debt-in-2024/

Image of world debt in 2024 - for those asking.

The problem is shrinking working population - already high taxes and aging population so higher medical costs.

Auserty - drastically cutting services did economic harm. Governments can and do spend their ways of our rescessions - so cuts will hurt the economy.

https://www.theguardian.com/business/2016/may/27/austerity-policies-do-more-harm-than-good-imf-study-concludes

It turns out, however, that the cost could be large – much larger than the benefit. The reason is that, to get to a lower debt level, taxes that distort economic behaviour need to be raised temporarily or productive spending needs to be cut – or both. The costs of the tax increases or expenditure cuts required to bring down the debt may be much larger than the reduced crisis risk engendered by the lower debt.”
The economists rejected the notion that austerity could be good for growth by boosting the confidence of the private sector to invest. It said that in practice, “episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1% of GDP increases the long-term unemployment rate by 0.6 percentage points.”
McDonnell said: “The International Monetary Fund has summarised what a growing consensus among economists across the globe now think, that Osborne-style austerity economics increases inequality and instability, and undermines growth.

I don't think there are any easy answers to be had - we are in too much debt - we don't seem able to get growth ( I've seen lack of investment and high energy costs cited for that).

The tax burden needs to be spread more. You can't keep increasing taxes on workers (NIC, student loans, workplace pensions) but leave "unearned" income unchanged for decades, i.e. pensions, rents, interest, etc.

If we are to have any tax rises, they need to be across the board as the base line, i.e. an extra percent or two on income tax or VAT, so that the burden is spread as wide as possible.

Though I'd prefer to see more targeted on unearned income, i.e. reducing the tax free interest allowance, reducing/scrapping the personal savings allowance, reducing ISA allowances/exemptions, a new, higher income tax rate on rental income, (or bring rental income into the scope of NIC), etc.

Are going to make council tenants move?

Do we as a "Government" lend money to other countries?

Explination.

They pay a bedroom tax I believe if they have more rooms than they need.

The short explanation is you can borrow in two ways. One is repayment in assets you don't have an unlimited supply of. For example gold. Countries generally don't do this.

A country which borrows in its own currency can never go bankrupt as it can print as much as it wants. However what it can do is trash the value of the currency through overborrowing and overprinting, and stop any new borrowing taking place.

If a country trashes its currency then there are generally serious consequences, especially in countries like the UK which is very globalised. All imports would suddenly become hugely expensive and no one would be able to buy anything that was produced abroad. Which is a lot of stuff.

Who owns the debt is kind of interesting. In the US and the UK it is largely ourselves, that is pension funds for example.

What this means is that borrowing is effectively a transfer of wealth/productivity from the young to the old. So taxing our children in order to pay for lavish retirement lifestyles. There is a limit to how much this can continue, and we are reaching that limit. Fortunately for the old at the moment the young haven't quite joined up the dots. Maybe one day they will.

That’s a very short sighted view. Foreign aid gives the UK soft power and in these times soft power is essential in my opinion. Help improve the lives in other countries through schemes etc people are less likely to look to leave and search for a better way of life. It’s not just a case of protect our own, yes I think some schemes are probably not needed and take the piss and there should be a review but cutting foreign aid is bad in my opinion

It’s clearly not high enough if people prefer to pay it instead of moving.

Google the debt levels of other countries internationally. We are somewhere in the middle.

No they don't pay a bedroom tax. It's misunderstood, people who claim benefits to help pay rent are penalized if the property is larger than they need. However people of state pension age are exempt.

Other countries, particularly in northern Europe, manage to have similar levels of debt whilst maintaining high levels of investment in infrastructure and key public services (education, police, health). This makes our government's contention that it simply isn't possible to spend adequately on these things - that in fact we should be spending even less - rather questionable.

Because then the question of "ownership" comes to the fore.

At the moment we have a notional value of these "assets", once we try to actually sell them everyone will want them back.

Nobody will pay the tax on social housing, it would apply only to individually owned property. It could be deferred for asset rich, cash poor pensioners so it was collected from their estate after they die.

Hunt was a complete disaster as Health Secretary and as Chancellor.

He failed to invest in the NHS. He imposed an unworkable pay and conditions deal on the junior doctors that resulted in them leaving the UK in droves to go and work in Australia, Canada and elsewhere. He did nothing at all about social care other than let it deteriorate. All of his "savings" are coming back to bite the country now in the form of lost production, lost export income and lost taxes. Getting people off waiting lists would have brought benefits equivalent to £73 billion between 2023 and 2027, according to research from IPPR and LCP Health Analytics, but insted waiting lists contiued to grow and Hunt (now as Chancellor) told NHS managers that balancing the books was more important than treating patients.

That’s not fair.

Why should someone who has paid all their life need to pay more, but someone who has had the benefit of lower rent be exempt?