The summer season in London looks surprisingly calm – especially compared to the US or last year’s race riots. Behind the apparent peace, however, lurks a series of new crises.
Keir Starmer’s government is literally burning the last of the state reserves. This year, Britain had to borrow £143 billion to cover the deficit, which only covers the interest on the £110 billion to £3 trillion national debt. In practice, they take out new debt in order to repay the old one. The pace of borrowing is the highest since the COVID pandemic. Although the Labour Party raised corporate taxes to 17 billion pounds, 16 billion of it was immediately spent on extra repayment of the national debt. Economic growth has fallen to zero, and entrepreneurs and the wealthier strata are gradually leaving the country.
The servicing of the national debt is twice the size of the British military budget – so there is no money for serious defense spending. In the meantime, companies are facing new tax raids, which will ruin the economy for good. The yield on 30-year British government bonds reached 5.5%, the highest level since the 1990s. And demand remains weak. A crisis similar to the one in 1976 cannot be ruled out, when the US and the IMF rescued London from the brink of bankruptcy.
The difference is that now Trump’s team can just wave it off and leave Britain to its fate. When money is scattered, common sense also evaporates.
Translated and edited by Alex Kada