Britain’s Fiscal Cliff


Britain’s Fiscal Cliff

Britain’s economy is heading for disaster, and 94 percent of the country knows nothing about it.

Most people in Britain think their government is doing a great job of handling its debt. A poll published earlier this month found that 49 percent thought the government was planning to slash the national debt by £600 billion (us$1 trillion) between 2010 and 2015. Another 14 percent said the government planned to keep it the same. Thirty-one percent weren’t sure.

More people believe that Elvis is alive than understand what is happening to the national debt.
City A.M.
Only 6 percent said the government was planning to increase the debt by £600 billion. But the 6 percent are right!

Britain’s debt is exploding—and 94 percent of the country is ignorant of it. As one newspaper put it, “More people believe that Elvis is alive than understand what is happening to the national debt.”

There’s little wonder. Newspaper headlines, government ministers and opposition leaders alike all talk about “the cuts.” Deputy Prime Minister Nick Clegg has talked on several occasions of “wiping the slate clean.”

But that’s not what is happening. At best, Britain’s leaders and journalists are refusing to sound the alarm while the nation lurches toward economic oblivion. At worse, they’re deceiving the public.

According to the government’s forecasts, Britain’s national debt is set to rise from £770 billion (us$1.25 trillion) in 2010, shortly before this government took office, to £1.36 trillion when Parliament stands down for elections in 2015.

That’s an increase of roughly £600 billion. The UK’s current population is 62.6 million. The increase in debt is nearly £10,000 (us$16,000) for every man, woman and child in the country. And remember, this is only government debt, not personal or mortgage debt.

Back in 2010, the government owed the equivalent of 53 percent of Britain’s entire economy. By the end of this Parliament in 2015, this figure is forecast to hit 79 percent.

However you look at it, Britain’s debt is rising—fast.

So why all the talk of cuts? Why do so many think it is falling? It all gets back to confusion between two words: debt and deficit.

Debt is the total amount of money the government owes. Deficit is the amount of money the government borrows each year. It is the rate at which the debt grows.

For example, in fiscal year 2010-2011, the government borrowed £136.7 billion—this is its deficit. The next year it borrowed £121.4 billion. It cut the deficit—it borrowed less in 2011 than it did in 2010. But it didn’t cut the debt, which still grew by well over £100 billion. All the cutting just meant that the debt didn’t grow quite as much as it did the year before.

This graph, from the Guardian, gives a good idea of how much the debt is growing each year. It may be growing by less than the year before, but it’s growing by more than at any time before 2009.

But politicians still talk as if they’re tackling Britain’s debt problem. The government wants people to think it’s taking the tough action necessary to solve Britain’s problems. The opposition wants people to think the government is being excessively cruel, cutting the budget too quickly at the expense of the poor. Unions want people to think that cruel government cuts are robbing their members of their livelihoods.

What no one wants to say is that Britain is spending wildly beyond its means. The government is like a helmsman on a ship heading for the rocks who is making only a few minor course corrections. The ship needs a complete change in direction.

The press is just as much to blame, if not more so. It routinely misuses “debt” and “deficit,” giving readers the impression that the government is solving Britain’s economic problems. How much easier would it be for the government to make the tough decisions necessary if the press was honest about how bad the problem is?

Britain’s debt is part of a failure that cuts across all its institutions. It’s a failure of government, of education, of communication and of morals.

But there is hope for Britain. There is a sure path to prosperity. Over the last 200 years, Britain has been given great blessings—including financial blessings—as gifts from God. At one time, the country was more responsible with its finances. God has a plan to turn Britain to Him so He can pour out those blessings in even greater abundance. This will start with providing proper leadership.

Before this can happen, Britain must turn to God in genuine repentance. This will require a lot of pain; it will mean economic collapse in the near future. But out of total collapse will emerge a nation whose prosperity will be a blessing for the whole world.

For more information on this hope, read our free book by Herbert W. Armstrong, The United States and Britain in Prophecy.