How To Get Out Of Debt In Ireland?

Do you think ordinary people in the UK understand the difference between debt and deficit?

• I'm an economist and am concerned that people in the UK do not understand the basics of the situation we find ourselves in. I listen to BBC Radio 5 Live a lot and like to listen to the pubic mood etc and well I think very few get it, I think this is largely the failings of politicians and the mainstream media from right across the political spectrum. I am not trying to make a political point, I just want people to understand what is happening, I think all 3 of the main parties are equally responsible and the bigger picture there is little difference between them! A budget deficit is simply the difference between tax revenues and public spending where the short fall s funded by borrowing; G>T= Deficit, T>G= Surplus. The deficit adds to the public debt, a surplus reduces it (if surplus is larger then interest payments). The public debt is the countries cumulative borrowings over time. There is currently no debate about getting the debt down, we are simply taking about reducing/eliminating the annual budget deficit, i.e. making the debt grow less and eventually stop it from growing. The debt is currently £1.05Tn and under current deficit reduction plans will be £1.5Tn by 2016 and the debt will still be growing by then as there will still be a small annual deficit (inc interest - Ir). or the debt to stop growing; T=G+Ir. I don't think most people realise what the UK faces to loose, in Greece entire ministries have had to be shut down and services scrapped completely, if we do not address this problem, we will loose our NHS, all state pensions amongst other things, it is a simple mathematical fact. I accept that our situation is quite different to Greece, were not in the Euro blah blah (not here to talk about the Euro). There are a number of countries in the world whose debt has passed the 100% level of GDP, this is the point of no return. Greece, Ireland, Spain etc and The USA have passed this level, it is mathematically impossible for them to save themselves without a collapse and bankruptcy (hence the bailouts to buy time). The USA is in a unique position because of the Dollar being the global reserve currency, this significantly delays the inevitable for them but the Dollar is already starting to die, I suspect they won't have to face the music until at least 2015, their situation makes them really unique! I just want to make a wider point about debt: after WWII, Britain had a huge debt and they had a proper plan for it, they eliminated the deficit and had a 60 year plan to pay the debt off, all WWII was finally cleared in 2006. The WWII plan was very sensible, spread the load evenly but over the last 40 years both Labour and Tory Governments decided to add to the debt thinking they would never have to pay it back. Right now, we are struggling to agree that we need to get rid of the deficit, meanwhile that 100% debt/GDP level is fast approaching, there is no plan in place to set out a plan to pay off the debt, we have not even got to a point of considering one, any plan would need to be spread over 50-100years (that debate is where it becomes ideological). Many of you are probably thinking, to hell with this, why can't we just default, it's an option but not a pretty one, I'm guessing most of you have or intend to pension? Well pension funds are the biggest creditor, if we default, your pension fund goes bust, bye bye pension! Probably think by now, that I advocate most of the Governments cuts, you could not be more wrong, they are cutting the wrong things and are indeed damaging our economy, it is counterproductive! front line public service staff should be cut (maybe a very small number in efficiencies but a negligible amount at the very most). There s n ideological debate that all of the public sector is unproductive and the private sector is the productive part of the economy. NOT True! A healthy, well protected work force is essential to productivity, that is why big business gave way and allowed the state to create them in the beginning otherwise it would not have happened (read your late 1800s, early 1900s history). The problem is the safety net became a fishing net and dependence was encouraged, in the beginning standards of living dramatically rose but over time the improvements became less and less as the budgets/debts became bigger and bigger. This is largely down to bureaucrats growing in numbers, the problem is, they have no incentive to be careful with the budget and feel a need to spend all their budget and find new things to do with it because if they don't spend it all, they might not get as much next time. It is also down to politicians making bigger and bigger promises so that people vote for them, often irresponsible and unaffordable promises! That final point I made points to a failure of democracy but I believe it can be saved if we make Economics compulsory at GCSE, so people can see both sides non ideologically! Do you understand?

• Answer:

  The difference between debt and deficit is actually easy to understand -- but during arguments , the differences do often get blurred.But that doesn't alter the arguments. The fact is that a large proportion of the UK population have a vested interest in not reducing the deficit or debt .And in the short term they are right . The Public Sector don't want to see their jobs , wages and pensions reduced . Those on benefits etc don't want to see those benefits reduced-- and the young ,simply don't want to be saddled with the debt. And so they all look around for both a scapegoat, and an easy way out . They blame the banks and look to the "rich" to bail them out . Except by "rich" , they actually mean Mr and Mrs Average ,who chose to work and not simply to take benefits : people who spent their lives , living within their means and saving for a rainy day or retirement . These are the "rich" people that the Public Sector workers, the feckless and the young want to pay the bills -- anyone but themselves.