Sometimes you wonder what’s the point of trying to keep it together, while all around you sinks into the mire.
No, I’m not talking about a quick scan of the ITV listings, but a depressing article on the Motley Fool about Western Government debt. It’s based on a new report from the Bank of International Settlements called ‘The future of public debt’.
Here’s a highlight of the Motley Fool’s reading of it:
Even in the best and unbelievably painful case, where age related spending is frozen as a proportion of national output, they see Britain’s debt at 150% in 2020 and over 300% by 2040. Only Japan, starting from almost 200%, fares worse.
In the baseline case Britain will be spending over a quarter of national output on interest payments by 2040. We would be bankrupt.
The following graph shows how this crept up on us over the past four decades (in other words, it’s only partly to do with the recent financial crisis):
Get your money for nothing and your kids for free
Now, I’m a generally optimistic person and someone told me many years ago that ‘timebombs don’t explode’. I’ve found it’s usually true.
The phrase observes that if everyone knows something bad is going to happen, it won’t. (Think of the Y2K bug, for instance).
But this is truly depressing summary of why we’d better hope it’s right again.
You can download and read the full BIS report as a PDF here.
(Source: Motley Fool / BIS)
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