UK Debt Clock
UK National Debt - how Britain owes over £900 billion
It's a truly frightening figure. Why is the world's sixth richest country so deeply in debt?
Every year the UK runs a large budget deficit. The Government spends more money than it can tax, so we plug the gap by selling bonds to investors at home and abroad. These bonds - known as gilts - have to be repaid in full, with interest. Added together, our unpaid loans make up the UK's national debt.
Right now, that debt is growing violently. The Government forecasts it will soar to an eye-watering £1.1 trillion by 2011. To put that in perspective, the UK went bust in 1976 running a budget deficit of 6% of GDP. In 2010 that deficit is going to top 11%.
Historically, our debt burden was heavier after World War II. But like any loan, if the money isn't invested wisely we end up borrowing even more. When the Government runs up huge debts and produces nothing to show for it, we're the ones that shoulder the burden. This year that burden will grow by £167.9 billion.
The state has been wasting our money for decades. Weak politicians have bribed voters with endless amounts of borrowed cash. As a result, in 2010 the interest on the national debt will cost £42.9 billion a year. That's more than we spend on defence, and not much less than the entire education budget.
Future generations won't thank us for mortgaging their future. At best, national debt will be a millstone round our children's necks. But if lenders lose faith in Britain there could be profound consequences for our currency, our country and our lives.