File : 1269553423.jpg-(22 KB, 460x287, darling.jpg)
Budget 2010: Interest bill on UK government debt set to soar Anonymous 03/25/10(Thu)17:43 No.449178  

>More than 10p in every pound of tax Britons pay will within four years go straight on the Government's ballooning debt interest bill, according to figures underlying the Budget calculations, it has emerged.

The scale of the "repayment shock" facing Britain as its national debt climbs to the highest level since the 1960s was laid bare as the Institute for Fiscal Studies calculated, based on Treasury figures in the Budget , that debt interest payments will climb to £73.8bn by 2014/15. At this level – 10.6pc of total tax revenues – debt interest payments would be at the highest level since the 1980s, when Nigel Lawson was still gradually reducing the scale of Britain's national debt.

The news is likely to cause consternation in the markets – as well as among households – since many of the ratings agencies regard a country as being in growing danger of a fiscal crisis, and a likely downgrade, once its debt interest payments exceed 10pc of tax revenues. The Treasury had previously forecast that debt interest payments would peak just below this threshold in four years' time. It will also be highly embarrassing for the Chancellor, Alistair Darling, who has refused to publish the Government's detailed spending forecasts – which would include its projections on debt financing costs – until after the election.

However, Carl Emmerson of the IFS said he had calculated with reasonable accuracy, using figures from Wednesday's Budget, that the bill had been lifted considerably, despite the fact that the Treasury expects to borrow less over the course of the next four years. The increase is likely to reflect an internal Treasury calculation that the interest rates charged by investors will climb higher than it previously thought in the coming years.

More at: http://www.telegraph.co.uk/finance/financetopics/budget/7523088/Budget-2010-Interest-bill-on-UK-gove
rnment-debt-set-to-soar.html