Payday Loan Britain

There is a an alarming film on this link on the moneyweek website, that suggests that the true state of Britain's indebtedness is far far worse than British politicians have publicly admitted, with debts currently at 508% of  the value of our economy - a level that puts us in a far worse position than France, Germany, Italy or even Greece (we are twice as badly off as them, whose debt is only at 276% of their economy) .... in fact the only countries worse than us in the report, are allegedly Japan and Ireland.

Our Debts Are Amongst The Worlds Worse

Essentially the report is stating that the cuts and austerity regime were far too soft, because the British public are too wedded to a NHS and welfare system, that is not in force in the rest of Europe - they point out that when the welfare state started in the UK, the funding required was tiny, as the pensions went only to men aged over 70 years (when the average male life expectancy was just 48), which meant that it was the equivalent of offering a pension to man aged 115 now!

 

But that since 1945, the welfare state has grown exponentially, and now no one knows how to stop the gravy train ... any attempts to stop its growth are attacked by economic illiterates, who claim its morally wrong, and that Government borrowing has to carry on increasing to fund it, or we cut elsewhere to fund more welfare spending ....  in short, according to the report we are headed to national bankruptcy, sooner rather later. 

We Are Going Broke

If this is true then we face an IMF enforced set of arbitrary cuts, which will not protect the 'sacred cows' of either the left or right, and Britain will emerge as a much smaller player in the world - the armed forces will be a 'self defence force' (something that's happening already), and the welfare state, both NHS and Benefit payments, will have been massively cut or wiped out, while general taxes will have risen .... all of course being the exact opposite of what 'New Labour' wanted, when the socio-economic wrecking balls of Blair and Brown embarked upon their 'New Labour project' in the 1990's.

So when did this debt cycle really start to bite Britain? Well according to this report - Blair came in to power with national debt at £150bn .... a decade later he handed over to Brown, with the figure at £250bn .... and then it was let it rip time, as possibly the worse PM in two hundred years, went on a spend spend spend bender .... all funded by cheap borrowing which can no longer be sustained.

Cheap Borrowing Sustained The Big Spend

So when the coalition took over, the national debt was up to £700bn, and spiralling out of control. When taken with all our governments 'unfunded' obligations (Public sector pensions etc), then the debts total up as 900% of our economies value. If these figures are true, then this is the biggest act of economic vandalism in our history, made only worse by the introduced spectre of a possible Scottish independence, which will dissolve the United Kingdom ... two events which if placed together, could break Britain forever.

We are now according to this report, therefore facing a runaway train crash for our economy, and no one has the honesty to admit the position, for fear of spooking the markets ..... the best the politicians can hope for is a bumpy but softish landing, but the reality is that we will probably hit the buffers full on, with a run on the pound triggering the collapse.

Of course, with hindsight, if the Coalition had been open about the true position when they got into power then (as well as pinning the tail on the blame donkey), they may have been able to sell the 'Big Freeze' approach to public borrowing (like the Irish followed) - this is the idea that a few years of real misery with no more borrowing and real cuts, could be followed by a better long term position. At least then we could have chosen as a nation where we wanted the pain to fall, but now its likely that the agony when it comes, will be inflicted at the whim of international bankers - just like Greece.

Of course the facts in the film could be wrong, but the makers challenge anyone to prove that they are factually wrong on any of the the content (which means that its only on the interpretation of those figures that’s open to debate). However if they are wrong in their conclusions, then we will probably muddle through in the British way, with just about manageable debt and staving off the breakup of the political union.

However if they are right, then we may be back to the shames of the 1970's, when we went cap in hand to the IMF ..... myself, I think it would be better if we squared up, and redrew our socio-economic model to face the realities ... we can't live beyond our means, and we can't offer a cradle to grave welfare system anymore. The denizens of 'Benefits Street' (James Turner Street, in working class Birmingham), on TV, 98% of whom don't work and have never done so, are almost being lauded in some quarters ... but I suggest that any country that finds 'heroes' amongst the work shy, is one that has a deep moral malaise. Unsurprisingly there is no reality TV show for places like 'Frimley Gardens' in the traditional working class area of Wythenshawe, Manchester, where 98% of the residents do work.  

The Welfare State Sustains Many In Britain.

There are some times when I wish I could have seen the future decades ago, and I would have strained every sinew to have emigrated to Australia, New Zealand, Canada or the US .... the future is there, if its anywhere. But 20/20 hindsight is something we all have ..... so all we can do is watch this space.