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.
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.