Friday, 26 February 2010

Who owns the UK's debt?

"The amount the economy grew in the last three months of 2009 has been revised up from 0.1% to 0.3%.Even the first estimate, that it had grown a miserly 0.1%, was enough to take the country out of recession.So why does this 0.2 percentage point change matter? In large part, because of two key effects on the country's debt position.Firstly, if the economy is not growing, the amount of tax paid to the government will not grow, which means that the amount it has to borrow to fund its spending programmes will increase. Figures released last week showed that the government borrowed £4.3bn in January, which is usually a month when bumper corporate tax receipts mean that it does not have to borrow any money.Secondly, the UK does not want to get a reputation as a weak economy, because that would increase the interest rate it has to pay to borrow money...."

No comments: