Debt Management and the National Debt

ArticleSoft.com » Finance » Debt Management and the National Debt

Debt Management and the National Debt

Author: Hollie Wilcox | Total views: 1 | Word Count: 329 | Category: Finance | Date: Jul 13th 2009

There seems to be no end to the record breaking levels of national debt we are currently seeing. In late May 2009 it was reported that there was a huge increase in the amount of money the government borrowed in April. In fact it went up to £8.46 billion. To illustrate how big that figure is, just consider that just one year ago in April 2008 it was £1.84 billion. That is an increase of 460% in just one year.

So big is the national debt that the credit rating for the whole country has been revised downwards. The Standard & Poor's, the international credit rating agency, changed the credit rating for the UK, which used to be ranked as stable, to negative. The reason for this is that they think that the level of borrowing could become equivalent to 100% of the Gross Domestic Product (GDP) and stick at that level for some considerable time into the future. Although the UK still has an AAA rating this is now under risk.

Even though government borrowing is at record breaking levels currently it is only at 53% of GDP, so Standard and Poor's clearly think that debts will soar and the economy will decline. One of the factors in this is that the effects of the recession are causing an increase in the amount of money the government has to pay out in benefits along with a reduction in its income from taxation.

It is similar to an individual who is currently earning £30,000 with unsecured debts of £15,000 going along to the bank, telling them you are getting a pay cut, but you would still like to borrow another £15,000; and incidentally you won't be able to repay it in the foreseeable future. Your chances of receiving the loan are not likely to be high. You would be better off talking to a debt management organisation about reducing your debt rather than borrowing more.

Article Source: ArticleSoft.com

About the Author

For help and information on reducing your debt and expert debt advice, why not visit www.debt-free.org.uk today!

Copy and Paste Article Code.

Remember: The article body, title, author bio and links may not be changed or removed. By publishing this article, you agree to all the terms in our Terms of Service.

There seems to be no end to the record breaking levels of national debt we are currently seeing. In late May 2009 it was reported that there was a huge increase in the amount of money the government borrowed in April. In fact it went up to £8.46 billion. To illustrate how big that figure is, just consider that just one year ago in April 2008 it was £1.84 billion. That is an increase of 460% in just one year. 
 
So big is the national debt that the credit rating for the whole country has been revised downwards. The Standard & Poor's, the international credit rating agency, changed the credit rating for the UK, which used to be ranked as stable, to negative. The reason for this is that they think that the level of borrowing could become equivalent to 100% of the Gross Domestic Product (GDP) and stick at that level for some considerable time into the future. Although the UK still has an AAA rating this is now under risk. 
 
Even though government borrowing is at record breaking levels currently it is only at 53% of GDP, so <a href="http://en.wikipedia.org/wiki/Standard_&_Poor%27s">Standard and Poor's</a> clearly think that debts will soar and the economy will decline. One of the factors in this is that the effects of the recession are causing an increase in the amount of money the government has to pay out in benefits along with a reduction in its income from taxation. 
 
It is similar to an individual who is currently earning £30,000 with unsecured debts of £15,000 going along to the bank, telling them you are getting a pay cut, but you would still like to borrow another £15,000; and incidentally you won't be able to repay it in the foreseeable future. Your chances of receiving the loan are not likely to be high. You would be better off talking to a <a href="http://www.debt-free.org.uk">debt management</a> organisation about reducing your debt rather than borrowing more. 
 Article Source: <a href="http://www.articlesoft.com" target="_blank">ArticleSoft.com</a> About the Author: For help and information on reducing your debt and expert <a href="http://www.debt-free.org.uk">debt advice</a>, why not visit <a href="http://www.debt-free.org.uk">www.debt-free.org.uk</a> today!