Friday, 9 April 2010

UK debt – the worst since the 1960s

In the 20th century the UK government has increased the National Debt to fight wars and to mitigate economic troubles.

At the beginning of the 20th century in 1900 the National Debt stood at a very manageable 30 percent of GDP and dipped to 25 percent of GDP by 1914 despite the intervening Boer War.

But World War I caused an explosion in the National Debt up to 135 percent of GDP in 1919. Then, in the economic troubles of the 1920s it rose to 181 percent in 1923 and stayed above 150 percent of GDP until 1937.

The National Debt dipped to 110 percent of GDP in 1940 before soaring to 238 percent of GDP after the close of World War II in 1947.

After World War II the National Debt was slowly reduced down as low as 25 percent of GDP in 1992. Thereafter it fluctuated in the 30s and 40s until the financial crisis of 2008.

In the calendar year 2009 the UK recorded a general government deficit of £159.2 billion, which was equivalent to 11.4 per cent of gross domestic product (GDP). At the end of December 2009 general government debt was £950.4 billion, equivalent to 68.1 per cent of GDP.

The National Debt is expected to exceed 100 percent of GDP in the aftermath of the crisis.

The Maastricht Treaty's Excessive Deficit Procedure sets deficit and debt targets of 3 per cent and 60 per cent respectively for all EU countries.

Our deficit and debt are now at seriously high levels and getting even higher.

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