September 25th, 2016

Debt ‘will be reduced’

Debt ‘will be reduced’ Debt ‘will be reduced’
Updated: 10:03 am, May 07, 2015

I NOTICE that you often state that the national debt is going down.

Please could you explain why you think getting the National Debt down is a good thing when this only reflects that the people of the UK have no spare money to spend on things they want to buy whilst the people of other countries have.

Surely, the important debt is the Government debt, which requires us all to pay more taxes in return for less services to pay the interest on the government’s borrowing.

I see from The Telegraph that this has increased from £811 billion in 2009 to £1451 billion in 2014. When are you going to deal with this extremely urgent issue?

Margot Bish

via email

WHEN we talk of national debt, this is the same as Government or Public Sector debt. They are the same thing.

The national debt simply refers to the amount of money owed by the UK Government. This is the debt that has been built up over many years by many governments – the running total if you like. The latest forecasts show that debt is forecast to peak at 81.1 per cent of GDP in 2015-16, before falling each year and reaching 72.8 per cent of GDP in 2019-20.

The budget deficit, or surplus, is the difference between the government’s everyday expenses and its revenues; in other words, between what it spends and what it receives.

There was a surplus every year between 1947 and 1974, but since 2001 the Government has spent significantly more than it receives.

The simple fact of the matter is the only way to deal with the debt is to reduce the deficit, debt cannot be reduced until the deficit is brought down and we start to run a surplus again.

While there is still more to do and many difficult decisions lie ahead, the Government is sticking to its plan and the deficit is forecast to have fallen by a half by the end of 2014-15.

It is set to continue falling until moving into a surplus of 0.2 per cent of GDP in 2018-19.

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