The UK has racked up too much debt, regardless of whose point of view you want to take on the matter. Media reports generally tend to focus on the high amount of government debt, considering that 80% of national income accounts are being used for bailing out the banks, this statistic is not too great.
However, there is even more debt to account for as well such as business debt; mortgage and consumer debts are also significant, and in order to find out just how much the UK is really in debt you have to add in all of these figures as well.
When you add up all of these figures what you will find is that the UK is actually about 500% of the GDP in debt which means that for every pound a Briton makes, someone else owes about five pounds on it. That puts the total UK debt somewhere at about eight trillion pounds worth of debt which is not encouraging as a figure.
If this number is too scary to contemplate all at once you can back away a bit and take a look at just the national debt, but since this makes up about 160% of the GDP the outlook is not looking much better. It does not take too much of an economics background to figure out that this is not a great place for the UK to be, and to notice that the recession is still pretty much in full swing. While the banks may have kicked off the great recession, everyone is now in it together and there is no clear cut sign of when it will be over either.
Unfortunately, it is not just Britain that is suffering from the depression, as Europe is also in a great depression and although the US may have positive reports in the media, the economy overseas is very fragile and could tip over the edge at any time. In other words, the current situation has been classed by some as a second Great Depression, only according to the stats this time it is much worst as the output has been decimated and recovery has not even yet begun.
The plan by the Bank of England head Mervyn King and George Osborne to get the nation out of the depression is to make cheap loans available to banks so that they can lend out more money to businesses. The problem with this plan of course is that it is impossible to solve debt with more debt, but it seems that they have not yet talked to a credit counsellor because they are making a beginner’s mistake with the global economy.
The good news is that businesses at least do not appear stupid enough take the bait, as the real problem with investments in this economy is not actually the availability of credit as the government and FSB would have you believe, but it is instead the fact that businesses are hesitant to want to invest anything in this economy.
Most businesses are looking at the economy and wisely waiting before they attempt any serious growth manoeuvres, and so long as they continue to keep their wits about them then there may just be a light at the end of the tunnel even if it does take a few years to get there.