The UK government is paying virtually the lowest amount of interest on its debt in recorded history, as a proportion of GDP. Of the payments it is making, most are to people and institutions in the UK, with just 25% of UK government debt owed outside the country. In contrast, 24% of the UK government’s debt is owed to the UK government itself, via the Bank of England.
These facts are part of a new briefing, released by the Jubilee Debt Campaign ahead of the budget on 22 November, which aims to tackle the widespread myths about the scale and risks of UK government debt Government debt The total outstanding debt of the State, local authorities, publicly owned companies and organs of social security. and highlight the more significant debt-related risks facing the UK economy.
UK government debt presents relatively low risk because the majority is owed in pounds, a currency the government controls, to institutions and actors in the UK. However, the briefing points to major concerns over rising unsecured personal debt levels, the UK’s economic deficit with the rest of the world, and economy’s exposure to external financial shocks.
The UK economy as a whole – the private and public sector – has the largest deficit with the rest of the world of any of the IMF
IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.
When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.
As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).
The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
http://imf.org
’s list of 36 rich countries. The latest IMF figures show the UK’s current account deficit as 4.4% of GDP
GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
, compared to 2.6% for the US, and 1.1% for France. Japan and Germany have surpluses of 3.9% and 8.5% of GDP.
Tim Jones, economist at the Jubilee Debt Campaign said:
“Debt crises around the world, from Ghana to Greece, have been caused by debts owed outside a country. Yet UK government debts are primarily owed to people in the UK, with a quarter owed to the government itself through the Bank of England. The overall amount the government spends on interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. payments is also at virtually the lowest level since records began.
“Of much bigger concern is the fact that the UK is by far the most exposed to a global financial crisis of any major economy. Furthermore, despite the fall in the pound following the Brexit vote, the UK still has the largest deficit with the rest of the world of any rich country. Our 10 key facts tackle the widespread myths about the scale and risks of government debt, and show the real risks facing the UK economy are from high and rising private indebtedness.”
The UK’s finance sector is the most exposed to a global financial crisis of any G7 economy. The ONS recently revised its estimate of assets and liabilities Liabilities The part of the balance-sheet that comprises the resources available to a company (equity provided by the partners, provisions for risks and charges, debts). , which led to a change from a surplus of £470 billion (24% of GDP) to a deficit of £22 billion (1% of GDP). This re-estimate led to headlines of “Britain’s missing £490 billion.” However, the real problem is not whether there is a small deficit or surplus, but the huge scale of the UK’s external assets and liabilities (564% and 565% of GDP respectively). The next highest is France (286% and 301% of GDP). A 20% fall in the value of external assets held by the UK would leave the country with net liabilities of 114% of GDP.
The ten key facts in the briefing are:
14 October 2021, by Jubilee Debt Campaign
17 January 2020, by Jubilee Debt Campaign
9 April 2019, by Jubilee Debt Campaign
22 March 2019, by Jubilee Debt Campaign
1 March 2019, by Jubilee Debt Campaign
27 November 2018, by Jubilee Debt Campaign
8 October 2018, by Jubilee Debt Campaign
22 March 2018, by Jubilee Debt Campaign
7 March 2018, by Jubilee Debt Campaign , Sarah-Jayne Clifton , Damon Gibbons
18 October 2017, by Jubilee Debt Campaign
19 May, by Tim Jones
29 October 2021, by Tim Jones
3 November 2020, by Tim Jones
23 January 2019, by Tim Jones
11 December 2018, by Tim Jones
8 November 2018, by Tim Jones
19 December 2017, by Tim Jones , Mark Perera
20 October 2017, by Tim Jones
14 October 2017, by Tim Jones
6 June 2017, by Mark Curtis , Tim Jones