The Uk National Debt Crisis

2774 Words Apr 28th, 2015 12 Pages
As of Q1 2015, the UK national debt has an estimated value of around £1.5 trillion(National debt clock, 2015). A value that has vastly increased since 2006 when the UK had a national debt of around £500 billion (UK Public Spending, 2014). Fundamentally this increase is fuelled by government spending greater than the value of governmental income, such as taxes. The shortfall between spending and income is filled by borrowing. This increases debt. Clearly, as will nearly all finance, the borrowing, or debt, is not free. The interest payable on the debt only serves to fuel further spending, increasing the potential for the requirement of further borrowing.

Firstly, we will explore the makeup of UK governmental spending as this, ultimately, accounts for the requirement for borrowing. The 2015 UK Government Budget provides the estimates for 2015-16 level of public spending. It values the total level of public spending to be around £743 billion over this period. This is around a £11 billion increase over the same period minus one year (For reference the respective levels of government income were £667 billion and £648 billion for 2014-15 and 2015-16). Clearly, the largest area for public spending is social protection which has a value of around £232 billion (2015-16 forecast). The second largest area of public spending was for health, or the NHS, and this accounted for around 19% of all public spending (£141 billion). The third largest level of public spending was education at…
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