The Institute of Doc Studies (IFS), a highly regarded think tank, has examined the increase in debt initiated by the British government led by Conservative Boris Johnson, and says the amount of debt is a record in peacetime. $ 2.14 trillion, more than $ 2.46 trillion, is close to 100% of the UK GDP.
Citing The Guardian newspaper, IFS economist Isabel Stockton said, “Numbers confirm that credit reached a record high in peacetime last year ending last month, with an initial credit rating of $ 303 billion, or about 15% of GDP.”
According to the economist, “The increase is unprecedented and shows the extraordinary impact of epidemics on government revenue and expenditure. We can expect this estimate to be revised upwards as it incorporates non-repayment of government-backed loans to companies. ”
With the lowest interest rates in history, the amount of debt is “perfectly manageable”, but in the context of higher rates already anticipated by some analysts, “this could create difficulties for government finance.”
Although recent budget proposals suggest a return to government debt to pay off investment costs by 2025-26, the IFS said it “depends on rapid recovery, large tax increases and very tight spending.”
It was the first ‘squeeze’ that the UK unknowingly (due to the epidemic) could not benefit from the financial mattresses created by the EU. As expected, a federation of 27 general debtors left the UK, thus having to ‘run on its own’ to finance the economic downturn, its livelihood during imprisonment and recovery.
As the IFS points out, the fact is that if very low interest rates on government debt help keep the debt problem from hurrying in terms of budget management, any rise in markets will put great pressure on the UK. In particular, only once, it is not clear to what extent investors will continue to support the country’s credit needs – on the other hand, it is more prone to speculation in the financial markets.
If this failed situation is confirmed, London will have to create a more restrictive budget and raise taxes to counter the expansionism that has plagued Boris Johnson’s posture since taking office as prime minister.