When will UK government finances be back on an even keel?
Even if the UK economy has technically exited the recession it will be many years before UK national finances are back on an even keel. It is estimated that government debt is now around £1 trillion and consumers in the UK owe upwards of £1.5 trillion. As a consequence, in the short to medium term we will see a significant reduction in public sector investment as well as a significant increase in taxation for consumers and businesses alike.
Many people believe it will take literally decades before the UK finances are back on an even keel and this will cause a drag on the UK economic recovery in the short to medium term. It is difficult to comprehend the damage caused by the credit crunch and resulting recession which is the worst on record since the 1930s. The very fact that we see figures in the billions of pounds mentioned by the government on a regular basis without taxpayers giving it a second thought shows how absurd these numbers are and so far from reality for most people.
There are some who believe that the economic strength of the UK in the medium to longer term is at risk as the UK economy continues to slip down various league tables regarding debt, economic activity and budget deficits. While it is unfair to blame everything on Gordon Brown's government there is no doubt that while "the sun was shining" and the UK economy was booming very little was put aside for a "rainy day".
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