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Wednesday, December 15, 2010

The Country's Debt Burden

As the country faces cuts in government expenditure that are, "apparently", swingeing and ruthless it is worth putting a number of issues into context:

1 The overall debt burden of the country is a staggering £4.8 Trillion.

2 The cuts are cuts in planned inflationary increases in government expenditure, not cuts in actual amounts being spent.

3 The deficit in the Local Government Pension Scheme in England has more than doubled in the past three years to £100BN (7% of the UK's annual economic output).

Despite whatever the politicians might claim, the "cuts" when taken into context are but a pin prick in the backside of the shocking level of debt burden that is crippling the country.

As regards the pension black hole, the solution that the politicians will force on us is going to be increased taxes and increased contributions from members.

Neither of the above solutions will be popular, and will be delayed thus exacerbating the problem. The correct solution should be to change the pensions provided to the public sector to that of defined contribution (as per many in the private sector).

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