This post originally appeared at GlobalPost.Despite a year of spending cuts and modestly increasing tax revenues Britain’s government debt breached the £1 trillion mark ( $1.55 trillion) for the first time today. That is the equivalent to 64.2 per cent of GDP.
A spokesman for the British Treasury said, “”That our national debt has reached more than £1 trillion simply shows the unsustainable level of spending this country built up over the past few years, and shows why it is critical for our nation’s future that we deal decisively with the deficit.”
The government is still borrowing to meet its obligations £14 billion ($21.8 billion) last month. But that figure is lower than expected – a sliver of silver lining in an otherwise dark cloud.
Economists weren’t unduly alarmed by the figures. Daniel Solomon of the Centre for Economics and Business Research told The Guardian, “Tuesday’s data will make mixed reading for the government. They are on the right track, but are moving forward much more slowly than they had planned.”
With the current uncertainty in the global economy, moving too slow can play havoc with your economic planning. The British government’s deficit reduction plan – all austerity, all the time – was put in place before the euro zone debt crisis.
With the euro zone heading towards recession, and the government still taking money out of the economy by shrinking the public sector, the ability to pay down debt becomes increasingly difficult.