Could a £200 Billion Deficit Bring Down the UK Government?
On Merryn Talks Money, Cavendish’s Roger Lee says Britain’s borrowing binge risks a bigger crisis.
Keir Starmer, UK prime minister, speaks on the opening day of the Labour Party annual conference in Liverpool on Sept. 28.
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Could a fiscal crisis bring down the UK government? Perhaps, says Roger Lee, head of equity strategy at Cavendish, who joins this week’s Merryn Talks Money podcast. He tells host Merryn Somerset Webb that he believes the numbers tell a troubling story. Based on the most recent borrowing figures, the UK is on track to run a deficit of nearly £200 billion ($268 billion) this year—about 7% of GDP. That is far above what most economists consider sustainable.
Demand for UK gilts is already weaker than policymakers would like, and Britain pays more to borrow than any other G7 nation. Unless tax revenues rise sharply or government spending falls dramatically—neither of which appears likely—the pressure will only intensify, he warns.