Cameron Says U.K. Running the Risk of Debt Default (Update1) By Robert Hutton Aug. 18 (Bloomberg) -- David Cameron, the leader of the U.K.’s opposition Conservative Party, said the government’s increasing levels of borrowing were putting the country at risk of defaulting on its debt. “You run the risk of not being able to meet your obligations,” Cameron said at an event in London with Nassim Nicholas Taleb, author of “Black Swan.” “I’m not predicting that it’s going to happen, but as government borrowing goes up and up and up, you start running that risk.” In April, the Treasury said it will borrow 269 billion pounds ($437 billion) more than previously forecast as the recession cuts tax revenue. This year’s shortfall, 12.4 percent of gross domestic product, is the most in the Group of Seven. In May Standard & Poor’s warned that the U.K. may not be able to keep its AAA credit rating as its debt nears 100 percent of gross domestic product, or $2.1 trillion, changing its view to “negative” from “stable.” On Aug. 20 the Treasury will say how much it collected in tax in July, the second of the four months in the fiscal year when it receives the biggest payments. It hasn’t had a deficit in July since 1996. Excluding the costs of supporting banks now controlled by the government, including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, the government had 657 billion pounds of debt in June, or 56.6 percent of GDP. That’s the biggest debt burden since 1976, when the U.K. sought an emergency loan from the International Monetary Fund to keep up overseas payments. The U.K. hasn’t defaulted on a payment since at least World War II. To contact the reporter on this story: Robert Hutton in London atrhutton1@bloomberg.net
Wednesday, 19 August 2009
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