Tuesday, 15 June 2010

Increasing Debt in the UK. and U.S.A.

Though I consider myself relatively uninformed with regards to financial news, I do know that the debt crisis in Greece has dominated American press headlines recently. However I was unaware, and thus suprised, to learn of the growing debt crisis in the UK and the drastic spending cuts the British government is planning. On February 19, 2010, Sean O'Grady of The Independent claimed that the British deficit was on pace to reach 12.8% of the country's GDP. This is higher than the estimated 12.7% trade deficit-to-GDP ratio for Greece. Britain's large trade deficit is magnified by the fact that the Office for budget Responsibility expects the UK national debt to double from £700 billion to £1.4 trillion by 2015. Significant government spending cuts, slow economic growth, and the threat of the UK losing its AAA creditrating status are very alarming issues that, as David Cameron said, "[will disrupt] Britain's whole way of life for years to come".

These alarming facts probed me to investigate the growing public debt in the United States, which as of June 14 stands over $13 trillion: nearly $42,000 for every American ( I can't help but wonder how the United States will pay off this debt given its trade deficit, massive amount of bailout spending, the War on Terror; all while experiencing decreasing domestic manufacturing. Though the United States and the United Kingdom have been at the center of the international financial community for the last two-hundred years, many of their citizens are living beyond their means. I'm interested to see how everyday life will change for American and British citizens as their countries attempt to address their debt issues in the coming years.

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