Reducing the government debt by £6 bn

[rov1200]

Many people would agree with the reduction in debt.

Assuming the original debt to be £160bn

It is reduced by £6bn to make £154bn

The interest on the outstanding debt is 4%

What do we now owe at the end of the first year?

[mollykins]

if my calculations are correct, £160.16bn but ym brain is frazzled from calculations tonight so i could be wrong.

[mollykins]

154 + ((154/100)x4)

[mollykins]

whats the point, we need to cut more than 6bn.

[scotman]

The £160 bn is not the debt. It is this years additional borrowing. The actual debt is something quite astronomical now.

[Garmard]

The government debt will be cut slowly so as not to cripple us completely......We are in a mess as it is.

[olddutch]

Britain has £157billion Budget Deficit and National Debt of £890 billion.

By the end of tax year the debt interest bill will hit £42bn: higher than Britain's annual defence bill.

From figures published April 2010, UK public sector net debt was £890 billion. (or 62% of National GDP) – Source: Office National Statistics [1] (page updated May 17, 2010)

If the coalition reduces the debt by £6 billion this tax year it will equal £890 billion minus £6 billion = £884 with debt interest repayments at around 4% the annual interest repayment figure would still amount to just over £40 billion

[VHG]

Also the 6 billion has not been saved just like that. Some of the savings may take months or years.

For example BECTA is closing, down, but they cant do that overnight. Also some of the things BECTA do will have to be moved to other organizations or departments.

That may take months.

[rov1200]

You can understand by reading some of the above how Brown got away with it all these past years. One assumes that the £890 bn debt will take years and years to clear off.

The two figures that need prominence are the £6 bn repayment and the £157bn budget deficit. As was quoted above by Mollykins the deficit will not decrease at all because the interest almost matches the repayment.

So in a years time thousands of people would have been affected, the screws tightened, contracts lost, etc but we will still be in the same position financially as now.

[jake-the-peg]

Lets put this into context

Assuming that there are 30 million tax payers

£169 billion is roughly £5,000 a head

Now that's not to be taken lightly but it's nothing compared to the nation debts that we have managed in the past

Look at this chart

http://www.ukpublicsp...ional_debt_chart.html

Remember too that much of this money has gone to basically Nationalise banks.

Some of these banks are now returning to profit

We have a 41% stake in Lloyds TSB which has a market capitalsation of 37 billion
That's nearly £15 Billion worth of assets alone.

Let's not forget where all this money went - not in some mad Labour spending frenzy but in underpinning the financial system to make sure that banks didn't collapse and foreclose on everybody's houses and businesses

[jno]

Britain's debt is still rated AAA, the top rating. What matters isn't necessarily the size of the debt but whether you can repay it, and the ratings agencies (not necessarily the most efficient organisations in the world, it must be said) think we can.

[VHG]

>One assumes that the £890 bn debt will take years and years to clear off.

I dont pretend to understand world economics, but I dont think we EVER intent to pay it all off, we will just live with it (or maybe reduce it a little bit).

Most countries run with large debts (although I dont know why).

The USA, one of the "richest" countries in the world, are TRILLIONS of dollars in debt.

[VHG]

Here is the USA's debt clock (unofficial site).

Not sure how accurate it is

http://www.brillig.com/debt_clock/

[rov1200]

Getting back to the question The Tories are repaying £6bn this year to reduce the budget deficit of £157bn. This £157 bn is not a healthy figure to live with. The interest for one year on £151bn is approx £6bn almost equal to the reduction. So the figure has not moved.

Mollykins said it right. The repayment is not enough. Its like taking an interest only mortgage. Nothing comes off the capital. Anyone with credit card debts knows about this also.