Financial Resource

Undoubtedly, debts have the potential to disturb anyone at any point of time. Be it ordinary human beings or larger establishments such as governments, agencies, or firms, debts can create havoc in anyones life. It is interesting to note that if loans can help especially in tough financial times, they can lead anyone to enter into a debt spiral as well. Therefore, it is good to realize loan’s potential and importance, it is vital to ponder on its cons as well.

UK Government Debt

As we say goodbye to 2009, let us analyze UK government’s current debt position. It is disappointing to note that United Kingdom’s debt in terms of overall economic output is set to hit almost 70%. This has been confirmed by the International Monetary Fund (IMF).

This has lead to a widespread concern especially among the credit rating agencies in UK. As the current rating of United Kingdom stands at AAA status, the same has come under threat in the wake of burgeoning debts.

UK Debt in Comparative Perspective

For those who think that UK debt situation is too bad to handle, there is some good news as well. As we put the current UK debt position in comparative perspective, we find that it bears the lowest level of debt compared with other major economies of the developed world.

As the UK current debt status stands at 68.7% of GDP, it is significantly lower than US, Japan, and Italy, with 84.4%, 218.6%, and 115.8% respectively.

Although, the percentage of debt is not disturbing, what is worrisome is the constant deterioration of debt. As the statistics indicate, UK debt has risen by more than a half in merely two years. Moreover, if we take into account the current projections, we find that UK debt is set to go higher with the passage of time. According to one of the credit rating agencies, Standard & Poor’s (S&P), the debt could result in almost 100% of GDP by the year 2013. This might result in robbing of AAA rating, which makes UK significant and worthwhile in the market. However, Debt Management UK can provide some relief as far as the current situation is concerned.

Need of the Hour

Before we look into the need of the hour, let us understand that although UK debt levels are extremely high, yet the situation is not that bad. As there has been considerable improvement in the market sentiment, there seems to be no problem whatsoever in tackling the current UK debt situation.

The need of the hour is clear cut thinking on government’s part and effective implementation of the plan. This is direly needed if we wish to see UK debt management problem solved in the coming times. Hence, government is expected to behave with utmost determination especially when it comes to dealing with the problems of burgeoning debts.

One of the most essential steps is the market reassurance that must be taken by the government at the earliest. Many of the problems are going to be solved if the measure is taken with utmost precision. Economic growth must be attained at any cost, if UK has to regain its lost economic glory.

Why debts are bad?

Be it an individual or large establishments, debts can create havoc in ones life. Debts can become hugely burdensome as they inhibit spending leading to lower economic growth. This is where they cast negative effect on ones image. Obviously, if one is not spending enough, it might lead to aggravating of problems in terms of growth.

One of the other disadvantages with debts is that they can force you to pay heavy interests. Therefore, very high debts to GDP can result in lower economic growth.

Conclusion

As far as the current UK financial position is concerned the UK government must be able to look beyond the spiral of debts. This means that it must address the problem of debts in time. Although the UK government is not under extreme debt burdens presently, however the problem must be handled in time. However what is needed is a thorough plan that must be implemented with utmost precision, honesty, and integration. Debt management UK can prove to be a mantra!

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