Britain is set to face a debt interest bill of £70billion. This was the forecast of financial hard times outlined by new Prime Minister David Cameron. To put it another way, 10 pence in every pound of tax paid in the UK will go directly to paying off the interest on our national debt. That’s more than is spent on public transport, combating climate change and the English schools system. These harsh financials are in spite of the various debt solutions that the new government is proposing.
The serious debt problem that Britain is currently facing is not on the same level as that which is being faced by Greece and at the moment, our national credit rating would still be respectable. However, even with the detailed and severe cuts that have been drawn up by the Conservative and Liberal Democrat coalition government, the UK could still struggle to solve this difficult debt problem.
Of course, these substantial cuts are the country’s best chance to avoid a national credit meltdown on a level with that suffered by Greece. Last year, Britain’s deficit was over 11% of Gross Domestic Product (GDP). The government has stated that its debt solution revolves around cutting this GDP to just over 4% by 2014. Sadly though, many financial analysts still view this projection as insufficient.
So, it might be the case that we see even more severe cuts to public spending in order to meet these targets than the government is currently projecting. Here at Harrington Brooks, we know that a frank assessment of your financial situation and a keen understanding of the extent of your debt problem are essential to finding a suitable solution. We also know that everyone’s circumstances are different, so the solution that works for someone may not necessarily work for someone else. This is an important point to consider when drawing a comparison between our situation in the UK and that which exists elsewhere in Europe; Greece, for example.
With any deep rooted, long-term debt solution, the inherent danger is that the initial fervour and good intentions give way to impatience as the debt solution fails to be a quick fix to your debt problem. There is no quick fix to your debt problem and it is important that you employ the right debt solution for you, and you are committed to making repayments and becoming debt free.
As for the UK, cutting the deficit will take years. Britain’s national debt was at about 40% of GDP before the credit crunch and it will be a long time until it’s at that level again. It can be though. All it takes is dedication to the right debt solution and the problem will be solved. The same can be said for you.