Britain is in debt to the hilt: 105% of GDP and borrowing to pay interest on debt

Every time we hear the debate about British Foreign Aid, we need to think that any amount of Foreign Aid is.... borrowing with rising interest rates. It is not about helping the poorest as much of the so call Forein Aid aid goes to Pakistan - a nuclear power - and to China. To China? How is this possible or even logical?

In the meantime British business have been becoming non competitive as rising taxes are part of the equation of runnnig costs and to this we need to add rising cost of utilities driven by energy prices.

Let put it this way. The British interest payments on public debt are higher that the Defense Budget. Not only that. Britain is borrowing to make interest payments. The economy is heading towards the rocks and devaluation might be the only option left and creditors will not like it as the monies that they are owed will be therefore devalued. Do you think that Britain owes you 1 million US Dollars by comparing the value of the Pound to the value of the US Dollar? Think again. Whatever you think that you are owed will be automatically reduced by devaluation and you will be lucky if you get your monies back. 

Rachel Reeves and the 5% for Defence expenditure

 

Having seen what we have seen until now when it comes to monies and politics, can you trust the British Prime Minister and his promises about Defence?

I asked and asked again. Can we trust statements made at the latest NATO gathering? Political speeches and posturing do not pay for massive investments and massive borrowing and massive borrowing is already an issue when Britain´s credit rating is at stake. If things become any worse and interest paid on public debt keeps going up, how long before we head for a financial crash?

Any reforms are now compromised for the duration of the present administration and strikes are just beginning. How long will Rachel Reeves be able to keep the boat afloat? There are three ways to get resources and each has a price. We can raise taxes. We can borrow. We can reduce services. For each of the three there is a political cost to pay. Raising taxes can be popular with the left of the Labour Party, but deeply unpopular for the business community and, ultimately, will lead to higher prices of utilities and goods. Borrowing will lean to higher interest paid for public debt. Cutting services will not be popular with members of the public. None of them will be a vote winner in the present environment. 

But what that means for British standing? How reliable can a country that cannot pay its debts be? If one of the core members of NATO cannot afford to deliver what it promises, what does it say about NATO itself?

While Rachel Reeves struggles to keep the boat afloat, Keir Starmer is keeping his eyes off the ball

 

The British economy is heading towards the rocks, Rachel Reeves is seeing a financial cushion evaporating, making the three bad options available as a threat.

Regardless of the what the Bank of England does or does not do, investors might have different ideas. Would you put your monies on the Titanic?

So what next? More taxes, more borrowing or more cuts of public services or a combination of the three.

This at a time when the Prime Minister might be talking about forcefully increasing expenditure in defense. Well, if the theoretical conflict is imminent, time ran out a long time ago. What is the reality of British military strength? A few nuclear bombs that Britain cannot use for fear of retaliation against all British cities. When it comes to conventional warfare, Britain is absolutely naked.  

Shoemaker makes Shoes: Something that does not apply to the present government

When you have people who have never ever been in business and don't have a clue about running a business, when you have people making decisions about farming when the closest they have been to managing a farm is standing near the shelves of a supermarket, you know that the country is in trouble.

Ideology does not replace knowledge and expertise, but we have got politicians driven by blind ideology deciding what is best for the country. So, if anything can go wrong, it will go wrong.

First thing you learn about economics is that the closest the factory is to raw materials the lower production costs will be, but then comes Ed Miliband and decides to prevent new oil and gas exploration in the North Sea.

How old was he when Britain was going over the edge because of lack of oil and gas? In the 1970s, Britain was saved by the discovery of oil and gas in the North Sea, but now the all knowledgeable Marxist politician wants to prevent any more exploration for oil and gas.

Britain buys already too much foodstuff abroad so reducing the number of farms on British soil will force Britain to buy even more foodstuff abroad as population keeps growing. What does Labour do? Implements tax measures that will put more and more farms out of business thus reducing production in the United Kingdom.

Every step of the way, Labour policies are based on ignorance, ideological hatred and misconceptions and the alternative is, as it always have been, to borrow more and to produce less. When Labour talks about growth, Labour is not talking about economic growth. Labour is talking about indebtedness growth. And then when they can borrow no more, they will propose massive cuts that will leave people ever poorer.

The consequences of economic mismanagement will be worse than the Covid Pandemic and the energy crisis combined and this could become a very long Winter of Discontent that will end up with tears, and even spilt blood.