Quick fact: The UK debt as of today is almost £3 trillion.
Politicians love to set one country against others. It breeds patriotism and nationalism and ensures that many choose to be blind to reality. However, in the shadows, they carry on regardless. Lies in public. Reality in private. China and many others have been set up as folk devils for no other reason but to tighten the blindfolds. While we maintain the current corrupt hierarchies, little will change.
Since Margaret Thatcher turned the UK into the UK PLC in the 1980’s, selling off bit by bit has become the new reality. First, the USA showed interest (and continues to own substantial UK debt), but their own debt now stands at just under $35 trillion. The Chinese moved in on the USA following the Reagan era and between them and Japan, they now own roughly 10% of the US economic debt.
Given that the Treasury’s Debt Management Office (DMO) refuses to say who buys the government’s bonds and gilts, we can only surmise what is occurring or about to occur.
Following yet more catastrophic data released the day before a Tory Chancellor attempts, yet again, to suck up to his paymasters, the omens that Chinese, Saudi Arabian, Japanese or even Russian investors are waiting to pounce are becoming more pronounced.
According to World Bank data analysed by Statista, countries heavily in debt to China are so far mostly located in Africa, but can also be found in Central Asia, Southeast Asia and the Pacific. As the new preferred lender to low-income countries, China held 37 percent of these nations’ debt in 2020. Just 24 percent of the countries’ bilateral debt came from the rest of the world that year. As the UK economy crumbles, it is now becoming more and more attractive to buy on the cheap.
The same business model is adopted by Saudi Arabia and Japan, to name but two.
The UK debt
Official data indicates that public sector borrowing hit its second-highest October level since records began, raising concerns about the prime minister’s commitment to reducing debt and the chancellor’s ability to implement tax cuts.
In October, public sector net borrowing stood at £14.9 billion, marking a £4.4 billion increase from the previous year and ranking as the second-highest borrowing figure since monthly records began in 1993, as reported by the Office for National Statistics (ONS). The only instance of a higher borrowing amount for October was in 2020, during the pandemic.
The surge in borrowing costs can be attributed in part to soaring interest rates and near 15-year highs in bond yields. Interest payments in October reached a record high of £7.5 billion, exceeding last year’s figure by £1.1 billion and surpassing the Office of Budget Responsibility’s forecast of £4.9 billion.
Prime Minister Rishi Sunak’s pledge to reduce government debt, which occurs when state expenditure exceeds tax revenues, faces challenges. While debt rose by £21.9 billion over the first seven months of 2023 compared to the same period in 2022, the sum was £16.9 billion lower than the OBR’s forecast of £115.2 billion in March.
Chancellor Jeremy Hunt is set to deliver an autumn statement following the latest ONS data, signaling a shift from his earlier stance of avoiding immediate giveaways despite pressure from fellow Conservative MPs (who are scared they will lose their seats at the next general election). Recent statements from Downing Street suggest a change in direction, with Sunak indicating a focus on tax cuts to stimulate growth and aid working families grappling with living costs. In reality, any tax cuts benefit the very rich much more than any other group.
The Chancellor’s initiatives to cut benefit expenses and transition 1.1 million economically inactive individuals into employment, outlined in the Back to Work Plan, were revealed as a precursor to the upcoming fiscal event. However, demands for additional support, particularly from charities concerned about households enduring a challenging winter due to inflated energy costs and rising essentials, persist.
The forthcoming autumn statement is anticipated to address crucial matters such as the pension triple lock and potential increases in working age benefits in line with September’s inflation figures. Among potential announcements, business aid, possibly in the form of tax relief, is expected, with appeals from sectors like hospitality urging a freeze on business rates and extended reliefs to prevent closures amidst increased tax burdens.
In response to the recent figures, Chancellor Hunt emphasised the need for responsible financial management to combat inflation and outlined intentions to focus on business investment and employment growth in the upcoming autumn statement.
None of this will put potential foreign investors off, as the UK debt mountain is growing year on year and plays right into the hands of extremely wealthy states and investors.
How long until the UK is just another asset on a spreadsheet?
Jason Cridland
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