Despite increasing government debt, the Eurozone crisis and the looming threat of a recession, Britain, along with Canada and Germany are the only three countries of the top seven industrialised developed countries to keep its stellar AAA rating from the major credits rating agencies.
The numbers are looking good. The Office for National Statistics reported that since December, public spending excluding the bailout fell to 13.708bn well below the forecast of 14.9bn making the total fiscal year's borrowing 103.289bn, which is 11bn than the previous year.
Following the banking crisis, Ireland had asked for and received a bailout loan the previous year amounting to 85bn. Working in Ireland's favour, the European Union leaders recently decided to reduce the interest rate on the bailout from 6% to between 3.5% and 4% and the length of repayment time has been extended from seven and a half years to fifteen years. This would save them up to 500-700mn a year, which the government can spend elsewhere. This comes at a time when Ireland has slumped back into a recession again with GDP falling by 0.2% at the end of the previous quarter.
Portugal, similarly has already received a bailout loan of 78bn in April 2011, but domestic banks continue to depend heavily on the European Central Bank for funding. The use has risen to a staggering 56.3bn as of March, well beyond the previous record of 49.1bn in August 2010 and up from 47.5bn this February.
The current biggest problem is the fourth largest economy in the Eurozone- Spain. The Spanish government have announced plans for cuts to the tune of 37bn (10bn to be saved per year in education and health and 27bn as part of the deficit reduction plans announced in March) in an attempt to close the 15bn gap to fulfil their deficit target of 1.5% in 2012.
There is of course, the Euro crisis, which could further push back the government's plans to achieve financial stability. A recession resulting from the crisis could also damage Britain's AAA rating, not because of a drop in output but because of the overall rise in borrowings and loans. And this could bring the country under scrutiny. Data reports in January showed that the public sector debt has gone up to 1.004 trillion in December, the highest since the records began in 1993.
The numbers are looking good. The Office for National Statistics reported that since December, public spending excluding the bailout fell to 13.708bn well below the forecast of 14.9bn making the total fiscal year's borrowing 103.289bn, which is 11bn than the previous year.
Following the banking crisis, Ireland had asked for and received a bailout loan the previous year amounting to 85bn. Working in Ireland's favour, the European Union leaders recently decided to reduce the interest rate on the bailout from 6% to between 3.5% and 4% and the length of repayment time has been extended from seven and a half years to fifteen years. This would save them up to 500-700mn a year, which the government can spend elsewhere. This comes at a time when Ireland has slumped back into a recession again with GDP falling by 0.2% at the end of the previous quarter.
Portugal, similarly has already received a bailout loan of 78bn in April 2011, but domestic banks continue to depend heavily on the European Central Bank for funding. The use has risen to a staggering 56.3bn as of March, well beyond the previous record of 49.1bn in August 2010 and up from 47.5bn this February.
The current biggest problem is the fourth largest economy in the Eurozone- Spain. The Spanish government have announced plans for cuts to the tune of 37bn (10bn to be saved per year in education and health and 27bn as part of the deficit reduction plans announced in March) in an attempt to close the 15bn gap to fulfil their deficit target of 1.5% in 2012.
There is of course, the Euro crisis, which could further push back the government's plans to achieve financial stability. A recession resulting from the crisis could also damage Britain's AAA rating, not because of a drop in output but because of the overall rise in borrowings and loans. And this could bring the country under scrutiny. Data reports in January showed that the public sector debt has gone up to 1.004 trillion in December, the highest since the records began in 1993.
About the Author:
Priyanka Zaveri is a freelance writer, online marketer and SEO consultant. Priyanka writes for many online publications, as well as developing content and articles for a variety of well-established websites. Her latest project is writing informative articles on the subject of fast cash loans and instant payday loans for the reputable online agency Ferratum UK.
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