Why is Britain in so much debt?
Britain's tax burden is set to hit its highest since the Second World War while public debt is close to 100% of gross domestic product, up from 35% just over 15 years ago due to huge spending to support the economy during the global financial crisis, the COVID pandemic and the 2022 surge in energy prices.
The public debt increases or decreases as a result of the annual budget deficit or surplus. The British government budget deficit or surplus is the cash difference between government receipts and spending. The British government debt is rising due to a gap between revenue and expenditure.
The Aftermath of the French and Indian War
Great Britain's newly enlarged empire in North America meant a greater financial burden, and the mushrooming debt from the Seven Years' War was a major cause of concern. The war nearly doubled the British national debt, from £75 million in 1756 to £133 million in 1763.
The UK national debt is the total amount of money the British government owes to the private sector and other purchasers of UK gilts (e.g. Bank of England). This is the highest level of public sector debt since 1961.
At the top is Japan, whose national debt has remained above 100% of its GDP for two decades, reaching 255% in 2023.
But if it can't, it will cover the gap by raising taxes, cutting spending or borrowing. Higher taxes mean people have less money to spend, so businesses make less profit, which can be bad for jobs and wages. Lower profits also mean companies pay less tax.
How much does the UK owe the US? Nothing. As previously stated the UK's war debt to the US was finally paid off in 2006, every last dollar.
The last payment was made on 29 December 2006 for the sum of about $83m USD (£45.5m) to the United States, and about $23.6m USD (£12m) to Canada; the 29th was chosen as it was the last working day of the year.
There are (at least?) two instances of the UK defaulting. In 1932, in the grip of the Great Depression, Britain (and France) defaulted on First World War debt to the United States – the so-called inter-allied debt.
1) Switzerland. It is no surprise to see Switzerland on this list. Switzerland is a country that, in practically all economic and social metrics, is an example to follow. With a population of almost 9 million people, Switzerland has no natural resources of its own, no access to the sea, and virtually no public debt.
Does the United States owe England money?
What countries does the U.S. owe money to in 2021? The United States owes money to many countries, including Japan, mainland China, the U.K., Ireland, Luxembourg, Brazil, Switzerland and Belgium, among others.
[2] A report by the credit rating agency S&P Global in 2022 estimated that 79 per cent of corporate debt in China was owed by SOEs (the IMF does not break down the proportion of debt owed by SOEs).
Of course, just as with an individual or family, cutting spending and increasing revenue are smart first steps. Beyond that, the government considers things like new taxes, a higher retirement age, removing loopholes from the tax code, and more to reduce annual deficits and the national debt.
| Country/territory | US foreign-owned debt (January 2023) |
|---|---|
| Japan | $1,104,400,000,000 |
| China | $859,400,000,000 |
| United Kingdom | $668,300,000,000 |
| Belgium | $331,100,000,000 |
One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.
Tourism, manufacturing, retail, and financial services all represent significant sources of income for this world-leading economy.
UK Personal Debt
Per adult this was £34,570, around 99.1% of average earnings. This is up from the revised £34,527 a month earlier. Based on January 2024 numbers, the UK's total interest payments on personal debt over a 12-month period would have been £73.597 billion, an average of £202 million per day.
Around two-thirds of the total is 'day-to-day' spending on public services, such as the NHS, schools and prisons. Around a quarter of all spending is on social security, such as universal credit and the state pension.
The United States pays interest on approximately $850 billion in debt held by the People's Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders.
If China (or any other nation that has a trade surplus with the U.S.) stops buying U.S. Treasuries or even starts dumping its U.S. forex reserves, its trade surplus would become a trade deficit—something which no export-oriented economy would want, as they would be worse off as a result.
What is Britain's biggest industry?
- Supermarkets in the UK. $229.7B.
- Construction Contractors in the UK. $184.0B.
- Pension Funding in the UK. $133.6B.
- Banks in the UK. $123.1B.
- New Car & Light Motor Vehicle Dealers in the UK. ...
- Hospitals in the UK. ...
- Residential Building Construction in the UK. ...
- Fuel Wholesaling in the UK.
Japan owns the most at $1.1 trillion, followed by China, with $859 billion, and the United Kingdom at $668 billion. In isolation, this $7.4 trillion amount is a lot, said Scott Morris, a senior fellow at the Center for Global Development.
Jerome Kerviel, The Most Indebted Person In The World, Owes $6.3 Billion To Former Employer, Societe Generale. In a hyper-competitive world where everyone strives to be the biggest, boldest and most famous, no one covets Jerome Kerviel record-breaking achievement.
- Japan. $1,098.2. 14.52%
- China. $769.6. 10.17%
- United Kingdom. $693. 9.16%
- Luxembourg. $345.4. 4.57%
- Cayman Islands. $323.8. 4.28%
The debt was to be paid off in 50 annual repayments commencing in 1950. Some of these loans were only paid off in the early 21st century. On 31 December 2006, Britain made a final payments of about $83m (£45.5m) to the US and about $23.6m to Canada.
