Posted on 09/10/2009 5:38:32 PM PDT by bruinbirdman
Britain's public debt will explode to 180pc of GDP within a decade unless future governments take drastic measures to restore fiscal probity.
The projection is more than twice the level forecast by the UK Treasury, which expects the debt to peak at around 80pc before gradually falling as growth revives and tax revenues come back to life.
What is shocking is that UK risks decoupling from the other major economies in Europe, vaulting past Germany, France and even Italy into a wholly different league. Ireland is in the worst shape, with debt projected to reach 200pc of GDP.
The report is being prepared for the October meeting of EU finance ministers in Göteborg, which will focus on the exit strategy from the economic crisis and the long-term sustainability of EU public finances.
The figures are based on the assumption that the emergency fiscal support of the last year is withdrawn in an orderly way by 2011, but that there is no further retrenchment thereafter. "It is a no-policy-change scenario, not a prediction of what will happen," said one official.
The Commission fears Britain will suffer lasting damage as result of the financial crisis and the bursting of the property bubble. Neither banking nor construction will recover quickly, relegating the country to a lower growth trajectory.
Brussels warned Britain before the onset of the crisis that public spending was out of hand, repeatedly reminding Gordon Brown that the credit boom was masking the true scale of the problem. The UK ran deficits of 3pc of GDP at the top of the cycle, while Spain was running a surplus of 2pc. Britain was the only major country to face the EU's excessive deficit procedure in 2007, even before recession played havoc with state finances.
Stephen Lewis, chief strategist at Monument Securities, said
(Excerpt) Read more at telegraph.co.uk ...
tag
I just got a notice that “while US and Eu are bankrupting themselves invest in these emerging markets...”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.