What a great resource! And wow 😳! That debt interest repayment. Fuuuuck.
Also:
An uncomfortable truth is that today’s pensioners are often better off than young working families.
That debt interest repayment. Fuuuuck.
The interest is less a issue then media indicates.
Its 8+ % of the total annual spending. And while you can’t judge nstional debt like family debt. The maths is far different.
Most families with a mortgage are paying a higher % on their income on interest to the mortgage, car loans and credit cards etc. And getting much less money in result.
When a government borrows the interest rate is fixed at the time of borrowing. And that rate promised for the lifetime of the bonds/loan. As such they are able to get much much lower rates then you or me.
The issue that is worring them no is any new loans are at our current credit rating. IE crap. And our growth rate is lower then the interest rate we would get. This means borrowing more money now is expensive. Whereas whe we borrowed our current debt it was cheap. Growth in gdp and lowering of the £ all make paying back loans(or bonds way cheaper then the value of the money when borrowed. This with the low interest. Means most of that payment is free when compared with the growth it purchased since ww2.
But we borrowed a lot during covid. And failed to use it to invest i our economy. (It went into billionaires savings atcway higher % then any past borrowing).
Inflation would actually help the gov borrow cheaper for future investment. But also likely lose them power as it screws over UK the poor and rich alike.
Punishing the poor to pay bank profits is seriously bad karma .
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There is 100 billion annual spend on debt interest.
Item 3. The 3rd largest.
It’s hard not to notice.
yep this is partly why the gov is panicking.
When the nation borrows money we have to pay interest rates. That 100bn is the money we have borrowed since ww2 (we are just about paid off that)
But it went up during covid.
The more accurate description to Ops point is. Interest is not within the government’s control. The rate we pay is agreed when we borrow the money. But post covid when we borrowed a lot. And the growth of our econ has not kept up. Means the current rate to borrow is higher than our growth rate. Meaning borrowing more is too expensive. (even though the actual intewrest rate is pretty low compared to the past.
the things that make borrowing cheap are high growth compared to interest charged to the UK. Devaluation of the currency since the time the money was borrowed. Or a very good credit rating that makes our borrowing low compared to other nations.
EDIT: This is in part why nations/government borrowing is so different to indevidual/family borrowing.
When a nation has a good credit rating. As we did untill the last several months. It means the gov can borrow money so cheaply compared to you and I. That inflation and growth make the loan pretty much free cost wise. As soon as our economy and trust drops to the point natioal banks would rather trust other with their money. The cost of borrowing starts to go above inflation or growth. How much a nation has to pay in £ is less inportant then the comparison of the borrowed £ and the £ payed back.
The fact that you and I have no ability to borrow at such long range fixed interest (often 50 to 100 years). Means indevidual borrowing can never really be this way. Mortgages are the closest an individual ever gets. But of course as safe as houses is far less safe than a trusted nation currency. The UK is only slightly less trusted than it was. But it has had a huge effect on that relative cost of borrowing. Plus, the other nations we can lend to profitably become much higher risk as our own borrowing goes up. Because when we lend money to poorer nations, it is rarely our own money. Just like a bank borrows the money to pay your mortgage.
