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.

It was on the news today that MPs have got a wage increase Ninety odd thousand then they have expenses how does paying them such a ridiculous amount help the national debt or anything apart from the MPs cozy lives

I've heard a few eccomists on this, and rich countries having debt is normal.

When does servicing the debt interest become an issue?
At what percentage of tax revenue going on debt interest does it become an issue?

Debts have to be compared to assets. We can say some of the richest people in the world are really far in debt based on loans they have, but that would paint an incomplete and very distorted picture

There have been on-going conversations around how the very wealthy get around taxes by holding assets that are only taxed on selling them and borrowing money against their value at a very low interest rate. That's similar to what governments do - making loans with each other against their assets, but between their interest rates have been slowly going up and political desires to use debts as a rallying cry, questions have arisen on debts.

Many alternatives have been given to cutting benefits for disabled people, including from some of the ways income has been raised in generations past (with the recent conversation in increasing defence spending, some people have brought up what Keynes proposed back in 1941...). The proposals I'm most fond of tend to be those of less tax benefits, like the government having one rate of pension tax relief, rather than paying wealthier people more.

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

Yes, governments lend money to other countries, among other places. Loan to be paid are a form of assets that governments have been using to make money for centuries. There are a lot of complaints around some of the loans that've going on for that long...

You can look at UK lending to other governments here: https://www.gov.uk/government/collections/uk-lending-to-national-governments

It has trillions in assets and treasure. Why not sell some of these?

I think they're likely wary of that after what happened with the gold reserves and the controversy still around that so many years on.

Be careful @ sosolong, you'll be accused of being anecdotal like I was when I said all my friends did this.

First half 2024 was better than now.

It becomes an issue when the country can no longer borrow enough money to finance its deficit as a whole without very steep increases in its borrowing costs. There is no evidence that we are nearing that point.

The comparisons to Venezuela etc are off base, as generally most countries which have gone bust have done so because they borrowed in foreign currencies.

In theory the UK government could print enough sterling tomorrow to repay the national debt in full. That is not realistic because it would cause hyperinflation, but a country which borrows in its own currency always has the choice to permit higher levels of inflation to reduce its real interest burden (since most government borrowing is at fixed rates, rather than being inflation-linked).

Comparisons to credit card spending etc are also incorrect. A natural person has a finite lifespan and therefore at some point needs to be able to repay its debt to avoid insolvency. Government spending is much more like a company, which can keep debt outstanding forever so long as the company exists and continues to produce enough cash to pay the interest.

One of the better measures of debt sustainability is the debt to GDP ratio. That takes into account the GDP impact of borrowing, such that borrowing to fund high value-add projects can actually reduce that ratio.

One problem that is often overlooked when proposing cuts to address debt is the “fiscal multiplier”. £1 of government spending creates more than £1 of economic activity. The reverse is also true, i.e. cutting £1 of government spending leads to a greater than £1 reduction in GDP. So cuts can actually make the debt to GDP ratio worse, if they are poorly targeted. There is reasonable evidence that this was the effect of the Cameron / Osbourne austerity, i.e. all the suffering was for nothing.

Yes, I have houses but some of them will just get sold as I don't own them as only paying interest only mortgage on some of them. Others are in a limited company.

another example of not understanding how the economy works. Council housing is also subsidized housing.

MN is a good indicator of how little people actually understand the basics and why the economy is in mess.

Interest and debt repayments are academic, debt isn't necessary bad, it only becomes bad when you can't afford to pay it.

The UK has quite a lot of money that is simply wasted. We give away 8 billion a year on Foreign Aid, most of which can't be accounted for. We just write a cheque because it's mandated in law to do it.

We have a military which is living of old stories of derring-do and tally-ho, pip-pip, may I introduce Lord Flash Heart the saviour of the Western Front. In reality we can only afford a small coastal defence force. We are NOT the US, we simply can't afford the armed forces we have, and our Government should admit this publicly.

The NHS is a great idea, but again, is so badly mismanaged that it's tearing itself apart. It needs to be stripped back to basic emergency care, it's not possible to provide free medical care for everyone, we need to accept this.

We also need to grow up and stop getting twitchy everytime the Police do something. Our Police have no powers, no equipment, no staff and no training. But everytime they arrest some 14 year old with a knife the only thing people are interested in is what colour the kid was!

This insistence on ineffective Policing is costing us Billions, it's why our court system is falling apart, our prisons are full and Probation Services are reduced to box ticking.

We have wasted 150 billion on a big train set which serves nobody and at best, when there are no strikes, no leaves on the line, no engineering works, no flooding, will cut 15 minutes of a train journey. All while we are being told to WFH and not use any transport in order to save the planet. WTF!

We don't have a budget issue, we have a waste issue. Actually, even worse, we have a voting public who are delusional about the real issues.

A change of Government will so nothing without a change of attitude.

We are not a rich country.

We can't afford a huge military.

We need to wake the fuck up and grow the fuck up.

we don’t have a huge military - 70,000 is smaller than most other eu countries. And if Trump cosying up to Putin hasn’t made you realise we do need to invest in defence…

fullfact.org/news/size-of-armed-forces-pre-election-briefing/

@Annajones101 but you haven't explained how cities work with only rich people living in them?

Council housing is also subsidized housing.

No shit

@Annajones101 many countries have subsidised housing, why can an economy not work with some subsidised housing?

With rich people paying the going rate for their consumption. Rather than low wages for people who need to be subsidized.

d’uh.

Which country is a model of rich people paying the going rate for their consumption?

Council housing is also subsidized housing.

No it isn’t. Councils have to keep the housing account separate from the general account and the housing account has to wash its own face. As you say, MN is indicative of a high level of fiscal ignorance.

Do you pay market value rent in your council house?

If not, then someone is covering the difference for you.

You can play with semantics, but your rent is cheaper.

Nail on the head. Cheaper rent is the very definition of it being subsidised!

The going rate for housing keeps going up and up though. Saying someone paying a lower rate is being subsidized is ridiculous. Just cause you dont pay the going ridicules rate to some greedy landlord. Council housing is only subsidised, if the council aren't covering their costs through the rent they get for the houses.

Let's face it our country messed up. When interest rates are very low that's when a country should borrow money and make great investments on things such as social housing. However in our case you had the Tories going on about austerity and cuts cuts cuts. Now interest rates are higher, it'll cost a lot more to borrow the same amount. They are very unlikely to go that low again either.

No, but the council could rent out at market value and use the money for services instead of increasing CT. Which many council housing tenants are exempt from or they have reduced rates.

So you can call it anything that makes you feel better, but it’s in fact subsided.

Currently the government pays housing benefit which gets paid to landlords. Surely building council housing and therefore being able to cut housing benefit is a better idea?

You don’t know how council rents work if you think they are not subsidized.

Agree on this re the basics