In view of the ever worsening economic climate, an explanation of public debt
What is GDP and why is it significant?
Gross domestic product is, in effect, the income a country generates. As with individuals, you have to consider what is a sensible level of borrowing you can take out against the income you produce. The numbers now, in terms of borrowing levels, are increasing significantly – and in a relatively short period.
What is meant by net public debt and how will Britain’s change?
Net public debt is the amount a country has built up during years of borrowing. The chancellor is now forecasting that public debt will rise to close to 80 per cent of GDP by 2013-2014 – that’s roughly £1.4 trillion or £23,000 a person.
And how will we all be affected?
Ultimately, that debt has to be borrowed from international sources and will need to be paid back. As individuals, we will all pay for the borrowing in one way or another, through higher taxes or reduced spending.
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