> The U.K.’s fragile fiscal situation is back in focus as yields on long-term government bonds surged, topping their U.S. counterparts for the first time this century.
But the chart appears to show the black line above the red line quite a few times since 2000? Am I reading it wrong?
(Edit - apparently what I can tell is not quite accurate, but it’s possible the UK is paying 8-15% of the government budget in interest each year, which is still quite a chunk)
From what I can tell from listening to a lot of UK news still, the country finds itself economically stagnating while suffering from a level of debt that makes debt repayment the second largest chunk of government expenditure after the NHS.
There’s so little room for manoeuvre that successive governments are left tweaking the edges of the budget but unable to carry out any major plans or reforms.
And on the subject of Reform… they think they’re going to axe fat from the administrative budget at every level by emulating Elon Musk, when it’s not clear there is a lot of fat. There’s only so many diversity officers to fire.
Hard to see what the future is there at the moment.
bilbo0s · 2h ago
Sometimes you can tell which politicians are serious about bringing order to budgets by seeing which ones are talking about what hard cuts they would make. Are they talking about cuts to entitlements and military? Or are they talking about cutting the park service and "diversity hires"?
It's like the family drowning in debt who decides to cut mom and dad's weekly trip for Starbuck's Latte at the Farmer's Market. Yet won't look at the two car payments, the USD500000 mortgage, or the private school tuition for the kids. Maybe in their hearts they believe it truly is the way out? But a good financial advisor would probably tell them not to worry about the fly on their toe when there are 4 or 5 elephants stacked on their chests.
And it can be hard to receive those kinds of messages. As hard for individual families as it is for nations.
OgsyedIE · 2h ago
Not to mention the ongoing spending programs of continuing the past tax cuts of Sunak, Johnson, May, Cameron, Brown, Blair, Major and Thatcher. Tax cuts are spending programs.
bilbo0s · 1h ago
Oh absolutely.
Every tax cut is a spending program in disguise.
I'm just saying that things like the Park Service are the least of the worries. To the extent that it makes people feel good, please, go ahead and make cuts to the Park Service. But that can't be the plan to restore good financial order. It takes wayyyy more than that if we're being honest.
foldr · 2h ago
> that makes debt repayment the second largest chunk of government expenditure after the NHS.
Are you sure about this? If you scroll down to the pie chart on the following page, health is not the largest chunk of expenditure (that’s social security) and interest on debt is fifth.
The fact that dozens of parasites can profit from advertising fraudulent store-of-value instruments is an indicator that there is a decent size of real store-of-value instruments and that they are unable to meet demand.
The bull case for the UK is that they have an educated, English-speaking workforce and a stable legal system for protecting property rights. As they become poorer and poorer, you will be able to hire their talent cheaply as their standard of living further erodes.
Otherwise, I really don't see a lot of growth possibilities on the horizon. It is crab-mentality of taxing their richest citizens and companies ever more, but the juice is running out of that orange. So fundamental reform will eventually occur, over the shrieks and howls of the left. Reform UK is highly likely to win the next election. This isn't to say they will actually solve anything, but the pivot to the extreme right after a huge win for the left is a symptom of larger societal problems and widespread hand-wringing.
HPsquared · 2h ago
The Left didn't really "win big" in 2024; Starmer's Labour got fewer votes than Corbyn's 2017 bid. Labour swept parliament purely due to the Right splitting between Tory and Reform, and the spoiler effect of FPTP.
Urahandystar · 2h ago
Funny thing is UK companies are offshoring like crazy right now. So hirely talent cheaply is out making things look terminal.
OgsyedIE · 2h ago
The bull case, given the US betrayal* of the notion of an order that includes Europe, is that the UK establishment will figure out their way to leverage their middle position between Europe and the US to act as a middleman for the U.S. looting the vast quantity of unsecured wealth in Europe and find a way to do this profitably enough to account for their uncompetitive resource import costs without giving cause for the U.S. to cut out the middleman. Like Hong Kong was for China in the 20th century, but with more extraction. Taxes are a red herring.
The workforce and legible but only occasionally officially perverted legal system are valuable, sure, but it's the 2020s. Plenty of places can offer that. As for the pivot to the right, it's a net gain for all UK citizens who don't outwardly present as a minority or can hide it, since they can suck up to one of the few big petroleum and food exporters at a discount.
.
* footnote: It should go without saying, but Trumpism is just an expression of pre-existing vast sociocultural forces.
oblique · 2h ago
Labour is no longer a leftist party, it is better described a corporatist party. When capitalism is in decay like it is now, a corporatist (liberal, right, whatever) party won't push back against exploitative companies. The people notice the ineffectiveness of the incumbents and vote for whatever the 2nd most popular party is. We'll see if "Your Party" can break the cycle
foldr · 2h ago
The UK has a lot of problems, but taxing the rich too much isn’t one of them. This is a shallow analysis.
If I had to pick one obvious economic problem with the UK it would be the vast economic disparity between London and most of the rest of the country and the unwillingness of successive governments to invest any significant amount of money in tackling it.
There is no cheap solution. Cutting taxes on the rich won’t magically grow the economy. That requires actual investment. However, as Liz Truss showed while trying to do something different, it’s very hard for the government to invest when any increase in borrowing leads to panic and a crash in the markets.
exasperaited · 2h ago
> Reform UK is highly likely to win the next election.
No it is not highly likely at all.
People who say this simply do not understand the depth of the structural challenge involved in getting from four MPs to 326 (or 325 or so if you delete the odd non-active MP).
Even if they get close but no cigar and secure a coalition it would be with the Conservatives, whose failures will not be forgotten soon.
I think it is wholly possible, alas, that Reform will see a hundred or so MPs and be the official opposition. But it should not be overstated that the Liberal Democrats will sooner offer to be in a coalition with Labour, and the country tolerate that again from them, than allow Reform the chance to undo Labour's work.
And that is before you consider that, ahem, the shine is off Reform's chums in the USA already and that situation is not going to get better soon. Reform would need a massive amount of money -- Musk money and sketchy crypto money, basically -- to get anywhere, and Trump's orange thumb on the scale with US social media firms. And we don't like that stuff. I cannot stress enough how badly that kind of intervention would go for them.
There are not many people in the UK who would say that Starmer's win was a "huge win for the left". Especially Labour voters. The "left" doesn't have much to do with it. Centrism, sanity, and the hope for an end to grift and stupidity and cruelty do. The failings of the right -- of idiots like Liz Truss and Brexit -- have more.
Reform fielded a candidate in essentially every constituency in 2024 and got five elected. One of them is sitting as an independent already because he's under investigation for corruption.
Yes, Reform got a huge swing in the local (council) elections, and some people think that is predictive. But historically it's nowhere near as predictive as Reform voters would like.
But the chart appears to show the black line above the red line quite a few times since 2000? Am I reading it wrong?
No. You're exposing poor reportage and sloppy editing. CoinDesk isn't exactly Bloomberg.
(for context, review the leave vs stay votes by age cohort: https://yougov.co.uk/politics/articles/15796-how-britain-vot... ; roughly ~500k voters 65+ die every year in the UK: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsde...)
From what I can tell from listening to a lot of UK news still, the country finds itself economically stagnating while suffering from a level of debt that makes debt repayment the second largest chunk of government expenditure after the NHS.
There’s so little room for manoeuvre that successive governments are left tweaking the edges of the budget but unable to carry out any major plans or reforms.
And on the subject of Reform… they think they’re going to axe fat from the administrative budget at every level by emulating Elon Musk, when it’s not clear there is a lot of fat. There’s only so many diversity officers to fire.
Hard to see what the future is there at the moment.
It's like the family drowning in debt who decides to cut mom and dad's weekly trip for Starbuck's Latte at the Farmer's Market. Yet won't look at the two car payments, the USD500000 mortgage, or the private school tuition for the kids. Maybe in their hearts they believe it truly is the way out? But a good financial advisor would probably tell them not to worry about the fly on their toe when there are 4 or 5 elephants stacked on their chests.
And it can be hard to receive those kinds of messages. As hard for individual families as it is for nations.
Every tax cut is a spending program in disguise.
I'm just saying that things like the Park Service are the least of the worries. To the extent that it makes people feel good, please, go ahead and make cuts to the Park Service. But that can't be the plan to restore good financial order. It takes wayyyy more than that if we're being honest.
Are you sure about this? If you scroll down to the pie chart on the following page, health is not the largest chunk of expenditure (that’s social security) and interest on debt is fifth.
https://ifs.org.uk/taxlab/taxlab-key-questions/what-does-gov...
But I can also find articles that seem to say the government spent 16.4 billion just in June - https://www.bbc.com/news/articles/c4g2rky498wo
Either way, listening the Today program a few times a week from overseas has possibly warped my view!
Perhaps the constraint is more to do with currency fluctuations and gilt yield rises when it looks like they’re wanting to borrow more.
(Edit - the OBR! Not “The Orb”, though frankly if the orb would like to hold forth on the economy I’d probably listen to them over most commentators…)
> The amount of interest the government pays on national debt also varies from month to month
So your figure for June is not obviously inconsistent with a total of 111 billion per year.
Yes, please invest in the SPAC set up by the sons of Howard Lutnick at Cantor Fitzgerald that buys 30,000 bitcoin from Adam Back:
https://www.ft.com/content/a4a362a6-cc8b-4188-8658-75183a3d6...
Or buy world liberty tokens from Trump:
https://www.reuters.com/business/finance/uae-fund-buys-100-m...
The bull case for the UK is that they have an educated, English-speaking workforce and a stable legal system for protecting property rights. As they become poorer and poorer, you will be able to hire their talent cheaply as their standard of living further erodes.
Otherwise, I really don't see a lot of growth possibilities on the horizon. It is crab-mentality of taxing their richest citizens and companies ever more, but the juice is running out of that orange. So fundamental reform will eventually occur, over the shrieks and howls of the left. Reform UK is highly likely to win the next election. This isn't to say they will actually solve anything, but the pivot to the extreme right after a huge win for the left is a symptom of larger societal problems and widespread hand-wringing.
The workforce and legible but only occasionally officially perverted legal system are valuable, sure, but it's the 2020s. Plenty of places can offer that. As for the pivot to the right, it's a net gain for all UK citizens who don't outwardly present as a minority or can hide it, since they can suck up to one of the few big petroleum and food exporters at a discount.
.
* footnote: It should go without saying, but Trumpism is just an expression of pre-existing vast sociocultural forces.
If I had to pick one obvious economic problem with the UK it would be the vast economic disparity between London and most of the rest of the country and the unwillingness of successive governments to invest any significant amount of money in tackling it.
There is no cheap solution. Cutting taxes on the rich won’t magically grow the economy. That requires actual investment. However, as Liz Truss showed while trying to do something different, it’s very hard for the government to invest when any increase in borrowing leads to panic and a crash in the markets.
No it is not highly likely at all.
People who say this simply do not understand the depth of the structural challenge involved in getting from four MPs to 326 (or 325 or so if you delete the odd non-active MP).
Even if they get close but no cigar and secure a coalition it would be with the Conservatives, whose failures will not be forgotten soon.
I think it is wholly possible, alas, that Reform will see a hundred or so MPs and be the official opposition. But it should not be overstated that the Liberal Democrats will sooner offer to be in a coalition with Labour, and the country tolerate that again from them, than allow Reform the chance to undo Labour's work.
And that is before you consider that, ahem, the shine is off Reform's chums in the USA already and that situation is not going to get better soon. Reform would need a massive amount of money -- Musk money and sketchy crypto money, basically -- to get anywhere, and Trump's orange thumb on the scale with US social media firms. And we don't like that stuff. I cannot stress enough how badly that kind of intervention would go for them.
There are not many people in the UK who would say that Starmer's win was a "huge win for the left". Especially Labour voters. The "left" doesn't have much to do with it. Centrism, sanity, and the hope for an end to grift and stupidity and cruelty do. The failings of the right -- of idiots like Liz Truss and Brexit -- have more.
Reform fielded a candidate in essentially every constituency in 2024 and got five elected. One of them is sitting as an independent already because he's under investigation for corruption.
Yes, Reform got a huge swing in the local (council) elections, and some people think that is predictive. But historically it's nowhere near as predictive as Reform voters would like.