As of Q1 (the first quarter of) 2015, UK government debt amounted to £1.56 trillion, or 81.58% of total GDP, at which time the annual cost of servicing (paying the interest) the public debt amounted to around £43 billion (which is roughly 3% of GDP or 8% of UK government tax income)
I have boldfaced the two numbers, interest charges and total debt The interest charges/debt comes to about 2%, depending on whether you include seigniorage. The growth rate, real, is about 2%.
Likely what we are seeing in the UK is the same as in the USA. The growth rate and interest rate for government is about the same, the ten year rate. The central bank has piled up the government bonds while private banks pileup the deposits. Multipliers are less than one, growth less than interest charges, and the economy is waiting for government to reprice government goods.
There is this bizarre theory that government can borrow at the one year rate and do better than growth. That assumes your infrastructure accounts are isolated from all the back dated, rolled over debt and have their own accounts at the central bank. But, all the government accounts are rolled up into one, there is no such thing as a separate infrastructure account, the only accounts we have are all dominated by future entitlement obligations and past entitlement bailouts.
No comments:
Post a Comment