Thursday, 16 April 2009

Can the B of E print enough to finance the UK government's borrowing requirement?

As predicted here on previous occasions the shocking magnitude of the public sector borrowing requirement in the UK is finally emerging as Alistair Darling prepares his budget for delivery next week.

According to this piece in the Guardian the government will require £175 billion in each of the next two years.

Just to indicate the mind-numbing needs of Her Majesty's government the article points out that

....because generous departmental budgets are fixed until April 2011, public spending will reach a staggering 48% of national income in the next financial year.

Just as well Mr. Darling put the Quantitative Easing policy in place a few weeks ago.

But will even that "very flexible policy response " be enough to finance all of the borrowing required? I'm sure Mr. Brown will think of something.

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