Britain’s Budget Deficit Threatens to Hit 12 Percent of GDP
April 22nd, 2009Via: Telegraph:
That is just about the worst performance of any major country at any time in history, during peacetime.
Gordon Brown’s sin as Chancellor was to run a fiscal deficit of 3pc of GDP at the top of the long boom, when other countries were prudently using their windfall tax revenues to build a storm buffer. Many ran surpluses in 2007: Finland (+5.3pc), Denmark (+4.9pc), Sweden (+3.5pc), Spain (+2.2pc), Australia (+1.6pc) and Canada (+1.4pc). Germany was near balance.
The result is that the UK national debt will jump from 44pc of GDP in 2007 to 78pc by the end of next year, according to Fitch Ratings. But at least we have the adult company of the US and Japan in our immediate debacle, and sibling allies in Europe’s Club Med and most of the ex-Soviet bloc.
The US Congressional Budget Office (CBO) expects America to run a deficit of 13pc this year following the US bank rescue and President Obama’s fiscal package. The US national debt will rise from 41pc in 2008 to 65pc next year.
What happens thereafter is the subject of fierce debate in Washington. The CBO fears the debt may ratchet up to 82pc by 2018, with trillion-dollar deficits as far as the eye can see.
