'The Government’s true debt is the present value of all the commitments it has entered into, on the expectation that these commitments will be paid for by future taxpayers. Some prominent examples are the commitments implied by the public sector pension system, the state pension system, the health system and PFI. The costs of these commitments are staggering.
One recent Institute of Economic Affairs study by Nick Silver put this figure at 333% of GDP. Another, by Christian Hagist and his colleagues at Freiburg University, put the figure at 530% of GDP. Two different methodologies by reputable researchers, both painting a very bleak picture. The latter study also carries out an international comparison – and, relative to other countries, the UK comes out as a basket case along with the US: the US is bankrupt too.'
Thursday, 23 September 2010
'Make no mistake about it: the country is bankrupt.'
Professor Kevin Dowd, a Senior Fellow with the Cobden Centre explains why and it is not a pretty picture that he paints. Here's an extract:
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2 comments:
I did a similar analysis a couple of years ago and came up with a figure of just over 300% of GDP. GDP is a bit lower now and we have borrowed a bit more so I would probably agree with those numbers.
The big flaw is the fact the government doesn't actually owe you a state pension, it just happens to agree to pay it from year to year, but you have no written contract, so it isn't an obligation.
When the proverbial really hits the fan, expect the state pension to be the first thing to go. Mandelson would have done so if he had the opportunity, arguing that it would also save a fortune ine NHS costs.
Big story for the BBC.....
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