- The United Kingdom is facing a severe economic crisis due to rapidly increasing public death outpacing GDP growth.
- The government of the U.K.'s recent budget added £142 billion ($178 billion) in new debt and imposed an additional £40 billion ($50 billion) of new taxes, primarily on employers and working-class individuals.
- The new taxes and debt, coupled with harsh austerity measures, are endangering people and placing the economy on the brink of collapse.
- Over 47,000 businesses in the U.K. are also on the brink of collapse, with businesses in the property, construction and retail sectors hit the hardest by high interest rates, runaway inflation and weak consumer confidence in the economy.
Veteran market analyst and hedge fund manager Alex Krainer has sounded the alarm, declaring that the United Kingdom is the most exposed economy in the developed world and is poised to crash harder than its peers.
At the heart of the crisis is the U.K.'s ballooning public debt, which is growing faster than the country's GDP. This means the government is borrowing more money than the economy is producing, creating a dangerous imbalance.
To cover its budget deficits, the Bank of England (BoE) has resorted to monetary inflation – essentially printing money to fund government spending.
While this may provide short-term relief, it risks devaluing the pound, driving up prices and plunging the nation into stagflation, a toxic mix of stagnant economic growth and soaring inflation.
The situation is further exacerbated by the government's recent budget, which added a staggering £142 billion ($178 billion) in new debt and imposed an additional £40 billion ($50 billion) in new taxes, primarily targeting employers and working-class citizens.
This fiscal loosening, described by analysts as one of the largest in decades, has widened the gap between public spending and tax revenues, leaving the U.K. with one of the largest budget deficits in the world.
BoE repo program risks collapsing tens of thousands of British businesses
The BoE's introduction of a repo program in July 2023 is a red flag indicating that British financial institutions are in dire straits. Repos, or repurchase agreements, are essentially short-term loans where banks sell securities to raise cash, promising to buy them back later.
While repos are a normal part of financial markets, their rapid expansion suggests a liquidity crisis, with banks struggling to meet their obligations. This is eerily reminiscent of the 2007 Global Financial Crisis, when the collapse of the repo market triggered a global meltdown.
The BoE’s intervention today signals that the U.K.'s financial system is under severe stress, with fears that a full-blown crisis could be just around the corner.
Meanwhile, the government’s response to the crisis has been to impose harsh austerity measures, cutting vital support for the most vulnerable. The decision to slash winter fuel subsidies for 10 million pensioners is particularly alarming, with estimates suggesting it could lead to thousands of deaths. Krainer likens this to a “human sacrifice” to appease the gods of finance, as the government prioritizes balancing the books over protecting its citizens.
At the same time, the government continues to pour billions into ideologically driven projects, such as net-zero initiatives and foreign aid. The cost of these programs, combined with the economic fallout from sanctions against Russia and support for Ukraine, has placed an unsustainable burden on the U.K.’s finances. (Related: Green energy failure: U.K. spends over £1 billion this year to turn off wind farms and start up gas plants.)
The true extent of the damage is likely being concealed, with some estimates suggesting a “black hole” in public finances far larger than the £22 billion ($28 billion) figure touted by Prime Minister Keir Starmer.
The economic turmoil is taking a heavy toll on U.K. businesses, with over 47,000 companies on the brink of collapse. The construction, property and retail sectors are among the hardest hit, as high interest rates, rampant inflation, and weak consumer confidence create a “perfect storm” for financial distress.
The BoE's decision to raise interest rates from 0.1 percent in 2021 to 5.25 percent today has made borrowing prohibitively expensive, leaving many businesses unable to refinance their debts.
Visit EconomicRiot.com for more on the fragile state of economies.
Watch this video that talks about the U.K. going completely insane.
This video is from the TNTVNews channel on Brighteon.com.
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