subject: National Debt Must Go [print this page] National Debt Must Go National Debt Must Go
The IMF has echoed its traditional view which is that failure to look after the national debt of an economy will damage its ability to grow properly.
Governments have a code of conduct' under which they justify their national borrowing which has been blatantly undermined over recent years. According to this Code for Fiscal Stability' it is set out that government's must not get to the point where they are borrowing to cover their transfer costs (day-to-day running of the economy, etc.) and must only borrow to pay for capital growth which will in the medium-long term pay for itself. With national debt across Europe which is considerably higher than the 40% acceptable level, this is clearly not the case.
Arguably, the national debt is a result of huge amounts of public spending which will one day pay for itself, however this has been disproved by many an economist who show how government expenditure has been irresponsible and short-sighted.
National debt costs the country billions of pounds worth of interest. The crux of the issue for me is the amount of government revenue which is wasted by paying for old loans: the quicker we pay off the national debt, the quicker we can start spending our own money on actual things instead of the privilege of spending other people's money.
The IMF said ""As economies gradually recover, it is now urgent to start putting in place measures to ensure that the increase in deficits and debts resulting from the crisis... does not lead to fiscal sustainability problems If public debt is not lowered to pre-crisis levels, potential growth in advanced economies could decline by over half a per cent annually, a very sizable effect when cumulated over several years." (BBC News)
Of course, however bad the UK's economic situation is, more attention must be paid to the actions of government's abroad who are threatening to bring down the Euro even further than it has already dropped countries like Greece who are really struggling to bring the economic situation under control. Reassuringly for the UK, countries like Greece are suffering from intrinsic economic problems much greater than simply having too-great a national debt.
Simply, economists seem like their in agreement for once: get rid of national debt as quickly as possible, it's more trouble than it's worth. How quickly this will happen and when it will happen are cause for a great deal of speculation, of course.
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