What might happen if Britain defaults on its debts?

At the moment, we in Britain are spending like there is no tomorrow. We have an infallible belief that things can only get better and so are busy hoovering up banks left, right and centre as well as committing ourselves huge projects such as Crossrail, the 2012 Olympics, new Nuclear Submarines and a couple of aircraft carriers to boot. Oh and there’s that new Super Train from Terminal 6 and other big things to keep the economy afloat.

Now as much as I love the Olympics coming to London (we beat Paris, that’s all) and Crossrail (finally!) the fact of the matter is that we cannot afford a single thing. Britain is bankrupt, there is nothing coming into the coffers and as jobs keep on depleting, we are heading into another tax black hole. Welcome back to the future, welcome to 1979…

Okay, it may not be that bad, and I can only gleam from the text books. But for the very first time, there is a feeling that Britain cannot keep on paying its debts. In other words, we as a nation are going to miss out on a loan payment. Default. Oh hell, we have all skipped payments. Well, maybe not all of us, but you know those red-lettered bills that come through the door. Imagine one that is for the whole country, all 60 million of us.

Ah sod it, it’s not our money and all those stupid people who were dumb enough to lend to us deserve what they get. Well, yes, but no. And for one good reason. We are not a part of the Euro.

If we defaulted and we were a part of the Euro, then it would not matter as we would not bankrupt the currency. However, we have kept our Sovereign Sterling. Minus any gold that was meant to back it up. In other words we have a lot of paper with the Queen’s head printed on it and nothing else to save us from bankruptcy. The only reason people want to accept Pound Sterling from around the world is that they believe it will get them something and not because QEII is smiling at them.

If we default on our national debt (a possibility) then the price of Sterling will plummet as investors will take their cash anywhere but here and Iceland. Now a weak currency is good for manufacturers but a currency that is too weak is next to useless, and for good reason. We, as a nation do not make a single thing.

Take tea and biscuits. A simple, traditional British snack. Well, the biscuit is made of wheat and as a nation we are not self sufficient in wheat, we import a lot of in from Europe. Sugar comes from the West Indies (for the biscuit and the tea) and going back to the Continent we also need our milk from France. Of course our Tea comes from a variety of places such as India, Kenya and Sri Lanka. And it goes much further than tea and biscuits. A lot of our food products are imported and no cut-price war amongst the supermarkets can disguise the effects of not being able to import food. There was rationing in WWII as we had the Germans bombing the food convoys into the UK. At that time the population of the UK was 10 million less than it was today. And the UK had an Empire where it could grab food from. There is no such luxury today. If the Pound drops, then we starve. Time to start uprooting those patios in the back garden…

And it will not stop at food. Oil and Gas are now imported by the UK, so expect rationing and/or blackouts to accompany the collapse in currency. And you can forget about getting that new widescreen TV made in China…

Also do not forget the value on savings that will occur as Sterling drops. Money in the banks will be worthless. Feel like a crime spree?

Essentially this country has nothing to give to the world but its taxpayer’s cash. If that can’t happen…

Well, the UK has not defaulted on a debt since the formation of the Bank of England (the original debt bundle). But with the levels we are talking about plus the fact that we are taking on not just any ordinary company’s debts but the debts of money lenders, then, we are f**ked!

Expect to be taxed to the hilt. 20% VAT, 25% basic income tax, road tax through the roof and petrol duty to rocket. Oh, and liquor is going to be an easy target in this country for any government to tax…and do not expect a job if you are in the public sector…either that, or we as a nation starve…on the bright side, corporation tax will probably come down as a final stimulus to business (should have been the first thing to happen).

I don’t often agree with the view of these guys, but he has a point…especially that last paragraph.

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