Britain's Economy Faces 'Very Substantial Challenges' Amid Spiraling Debt
The Bank of England's governor has warned that Britain's economy is facing 'very, very substantial challenges' due to spiraling UK debt. Andrew Bailey made this statement after turmoil on bond markets pushed UK borrowing costs to a 28-year high.
The UK Prime Minister was also warned that unless Britain tackles its £2.9 trillion debt pile now, it risks saddling future generations with the burden while leaving little to show for it. The National Institute of Economic and Social Research (NIESR) said that without a plan for tax hikes and spending cuts of around £40 billion, they will 'inherit the mortgage without the house'.
The think-tank argued that Britain must target a primary surplus - when tax revenues are greater than spending excluding debt interest. This has not been achieved in 25 years. To achieve this, big tax hikes and spending cuts would be needed, wiping out the current primary deficit of 1.3% of GDP.