The level of national debt that the UK will be in following proposals outlined in the Budget is concerning, it has been said.
Michael Baxter, an economist at Defaqto, noted that the chancellor intends to increase borrowing so that Britain’s net debt will hit 79 per cent of gross domestic product.
This is around double what it is at present, he stated, adding that the situation could be made worse if the government’s predictions for economic growth prove to be incorrect.
The chancellor’s claim that growth will reach 1.25 per cent in 2010 may be too optimistic, Mr Baxter explained, saying that the country could be in trouble if interest rates rise unexpectedly.
“What really counts is not necessarily the level of debt but the cost of repaying the debt,” he remarked.
The Budget included some measures for residential borrowers, such as the extension of the Interest for Mortgage Support scheme, aimed at helping homeowners with debt management problems.
By Jamie Price