Cryptiryn

Billionaire hedge fund manager @RayDalio has said the UK is in a debt doom loop. The government has 101% of debt to GDP ratio. It spends 45% of GDP. It borrows to pay interest payments. This is wildly unsustainable and irresponsible. The doom loop bit happens when the government raises taxes to fund debt, higher taxes reduce growth, reduced growth reduces investment, reduced investment causes wealth creators to leave and the 1% who pay 30% of the taxes pull away from the system. When they leave, the government needs to raise even more taxes. This dangerous scenario is what I warned about when debating @garyseconomics earlier this year. The doom loop could end but the government would have to cap spending at 35% of GDP. Then create special economic zones or tax breaks for wealth creators to come in and invest and grow new companies. It would have to take the medicine of fiscal responsibility- no more printing money or borrowing more in debt. It would be painful short term but would set things right. Will they do it though?