# Debt death spiral **URL:** \ **Category:** Macro Economic Trends and Risks\ **Created:** [January 22, 2025, 12:39pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526 "2025-01-22T12:39:10Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [January 22, 2025, 12:39pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/1 "2025-01-22T12:39:10Z")
Stagnant GDP, highest peacetime taxes for years and a rising debt: > **[Billionaire Ray Dalio warns U.K. is at risk of entering ‘debt death spiral’](https://fortune.com/europe/2025/01/21/billionaire-investor-ray-dalio-warns-uk-risk-entering-debt-death-spiral/)** > > The Bridgewater Associates founder wants the U.K. to cut spending or raise taxes to address historically high borrowing costs. Same problem for the USA but at least they are a reserve currency ---
**Author:** ![DrBob2](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/drbob2/32/3456_2.png) [@DrBob2](https://discussion.fool.com/u/DrBob2)\ **Post date:** [January 22, 2025, 1:07pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/2 "2025-01-22T13:07:12Z")
> [@Divitias](#): > > Same problem for the USA… The difference is that GDP growth in the US is running at a bit under 3%. Not stagnant. DB2 ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [January 22, 2025, 1:47pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/3 "2025-01-22T13:47:09Z")
More figures out today > **[UK borrowing hit highest December level for four years at £17.8bn](https://www.investmentweek.co.uk/news/4399544/uk-borrowing-hits-december-level-gbp-8bn)** > > Government borrowing rose to £17.8bn in December 2024, £10.1bn more than in December 2023, as Chancellor Rachel Reeves uses her new fiscal rules to attempt to boost her growth plans. ---
**Author:** ![captainccs](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/captainccs/32/3775_2.png) [@captainccs](https://discussion.fool.com/u/captainccs)\ **Post date:** [January 22, 2025, 1:55pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/4 "2025-01-22T13:55:31Z")
> [@Divitias](#): > > highest peacetime taxes Leap says it’s good. The Captain ---
**Author:** ![steve203](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/steve203/32/3302_2.png) [@steve203](https://discussion.fool.com/u/steve203)\ **Post date:** [January 22, 2025, 3:04pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/5 "2025-01-22T15:04:20Z")
> [@Divitias](#): > > Same problem for the USA but at least they are a reserve currency The GBP used to be the reserve currency. Before WWII, the exchange rate was about 1 GBP = 5 USD. I remember when the GBP was officially devalued from 1=$2.80 US to 1=$2.40 US But then, I remember seeing British made products here. American Airlines flew BAC-111s. United flew Vickers Viscounts. MGs and Triumphs were common sights on the roads. Stereo shops sold BSR-McDonald and Garrard turntables. Now, the British auto industry has pretty much gone extinct. The few brands still in production are vanity projects by German and Indian companies. The British commercial aircraft industry is now a subcontractor for Airbus. Steve ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [January 22, 2025, 3:19pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/6 "2025-01-22T15:19:52Z")
> [@steve203](#): > > American Airlines flew BAC-111s. United flew Vickers Viscounts. MGs and Triumphs were common sights on the roads. Stereo shops sold BSR-McDonald and Garrard turntables. Now, the British auto industry has pretty much gone extinct. The few brands still in production are vanity projects by German and Indian companies. The British commercial aircraft industry is now a subcontractor for Airbus. Correct, much of our heavy industry has gone. I saw something last night that said out energy prices were six times that of the USA which hasn’t helped. We site on vast amounts of oil, gas and coal which we won’t get (net zero) while importing liquid gas from the USA. London is a prosperous part of the country but many northern cities are falling into decline where the standard of living is very low. It doesn’t look good. I’m telling younger members of my family to emigrate as I see no future for them here. I’m too old or I would be gone. Fortunately i live in a nice quiet rural area. ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [January 22, 2025, 3:20pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/7 "2025-01-22T15:20:35Z")
> [@captainccs](#): > > > [@Divitias](#): > > > > highest peacetime taxes > > Leap says it’s good. > > The Captain It’s always good when you are not the one paying it 🙂 ---
**Author:** ![steve203](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/steve203/32/3302_2.png) [@steve203](https://discussion.fool.com/u/steve203)\ **Post date:** [January 22, 2025, 4:17pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/8 "2025-01-22T16:17:12Z")
> [@Divitias](#): > > I’m telling younger members of my family to emigrate as I see no future for them here. A British ex-pat, working for the US administration, a few years ago, became well known, due to her testimony in impeachment hearings. She is from somewhere in the north, in the UK. A few years ago, she wrote a book. In an interview, she said the title is from advice her father gave her. It sounds very much like what you just said. ![Screenshot 2025-01-22 at 11-15-53 There Is Nothing for You Here Finding Opportunity in the Twenty-First Century Hill Fiona 9780063269088 Amazon.com Books](https://us1.discourse-cdn.com/motleyfoolfree/original/3X/c/2/c2f88ec34c347dcd8d62f062fab487f39660d947.png) ---
**Author:** ![pauleckler](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/pauleckler/32/2906_2.png) [@pauleckler](https://discussion.fool.com/u/pauleckler)\ **Post date:** [January 22, 2025, 4:25pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/9 "2025-01-22T16:25:18Z")
As to heavy industry, British steel must still be around. Can they compete with imports? Who buys their steel? ---
**Author:** ![inparadise](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/inparadise/32/3249_2.png) [@inparadise](https://discussion.fool.com/u/inparadise)\ **Post date:** [January 22, 2025, 4:57pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/10 "2025-01-22T16:57:02Z")
> [@Divitias](#): > > Stagnant GDP, highest peacetime taxes for years and a rising debt Easy fix: re-open the Golden Visa program. Have been looking at Malta and its impressive the cash flow that country gets from their Golden Visa program. ---
**Author:** ![btresist](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/btresist/32/1678_2.png) [@btresist](https://discussion.fool.com/u/btresist)\ **Post date:** [January 22, 2025, 5:28pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/11 "2025-01-22T17:28:44Z")
> [@Divitias](#): > > Stagnant GDP, highest peacetime taxes for years and a rising debt: The obvious cause and one that was predicted by many is Brexit. > **[New report reveals UK economy is almost £140billion smaller because of Brexit](https://www.london.gov.uk/new-report-reveals-uk-economy-almost-ps140billion-smaller-because-brexit)** > > Mayor reveals London’s economy alone has shrunk by more than £30billion > The UK is the only major rich economy that remains smaller - poorer - than prior to the pandemic and Brexit may be a factor…Overall, the government’s independent watchdog, the Office for Budget Responsibility, thinks the UK will ultimately be 4% worse off, than it would have been if we had voted no to Brexit. [What impact has Brexit had on the UK economy?](https://www.bbc.com/news/business-64450882) Seems to me that the UK shot its own economic foot. ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [January 22, 2025, 5:33pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/12 "2025-01-22T17:33:08Z")
> [@pauleckler](#): > > As to heavy industry, British steel must still be around. Can they compete with imports? Who buys their steel? UK steel production has been declining steadily and is being replace by imports which now account for 60% of the UK’s use. We still have industries but they are in decline and shrinking: > **[UK Steel Key Statistics Guide 2024 report](https://www.uksteel.org/steel-news-2024/key-stats-2024)** > > UK Steel's Key Statistics Guide 2024 provides up to date, at-a-glance information illustrating the scale of the economic contribution of the steel sector to the UK's economy. ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [January 22, 2025, 5:46pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/13 "2025-01-22T17:46:38Z")
> [@btresist](#): > > Seems to me that the UK shot its own economic foot. I’ve just noticed that the report was commissioned by London’s mayor, Sadiq Khan. he’s part of the problem. This will give you an idea of what he is like: > **[Minister slaps down Sadiq Khan over 'resurgent fascism' jibe at Trump](https://www.dailymail.co.uk/news/article-14301631/Sadiq-Khan-feud-Donald-Trump-inauguration-Labour-ministers-power.html)** > > Sadiq Khan fuelled his long-running feud with the returning president by urging Labour and the Left to 'confront' the forces of 'reactionary populism'. He’s part of the woke, lefty, open borders class that now rules us. I’m not taking the report too seriously. ---
**Author:** ![Goofyhoofy](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/goofyhoofy/32/4721_2.png) [@Goofyhoofy](https://discussion.fool.com/u/Goofyhoofy)\ **Post date:** [January 22, 2025, 6:19pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/14 "2025-01-22T18:19:12Z")
> [@btresist](#): > > Seems to me that the UK shot its own economic foot. No, the reactionaries took the pistol, aimed it straight at their head, and pulled the trigger. Same folks complaining about wokies, nationalism, immigrants and such now. ---
**Author:** ![btresist](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/btresist/32/1678_2.png) [@btresist](https://discussion.fool.com/u/btresist)\ **Post date:** [January 22, 2025, 6:21pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/15 "2025-01-22T18:21:15Z")
> [@Divitias](#): > > I’ve just noticed that the report was commissioned by London’s mayor, Sadiq Khan. he’s part of the problem. Fine. In 2018 the Institute for Government summarized 14 independent reports/predictions of the economic consequences of Brexit by many different groups. [https://www.instituteforgovernment.org.uk/sites/default/files/Economic%20impact%20of%20Brexit%20summary.pdf](https://www.instituteforgovernment.org.uk/sites/default/files/Economic%20impact%20of%20Brexit%20summary.pdf) > The report – of which this paper is a summary – surveys 14 studies, from a range of organisations including the UK Government, Dutch Government, academic researchers and City institutions. The results: > The vast majority of the Brexit impact studies suggest the UK economy will grow more slowly after Brexit than it would do as a member of the EU, with those predictions ranging from a negligible cost to an 18% reduction in output in 2030 compared to a world in which the UK remained a member of the EU. There was only one outlier predicting improved economics. A 2019 Stanford study (pre-pandemic) showed a significant decline in investment and UK productivity in the three years after the referendum. [The Impact of Brexit on UK Firms | Stanford Institute for Economic Policy Research (SIEPR)](https://siepr.stanford.edu/publications/working-paper/impact-brexit-uk-firms) A Bloomberg 2024 article notes that since 2016 (the referendum) the UK has significantly underperformed compared to the EU it left, _“the EU economy is growing 2.3 percentage points faster than the UK’s on an annual basis, with GDP advancing 24% since 2016, compared with the 6% for the UK.”_ In comparison, _“During the 10 years before the Brexit referendum, EU GDP lagged behind the UK annually by 12 basis points,”_[Brexit’s Lasting Economic and Financial Damage Looks Inescapable - Bloomberg](https://www.bloomberg.com/opinion/articles/2024-03-19/brexit-s-lasting-economic-and-financial-damage-looks-inescapable) That liberal rag the Wall Street Journal notes UK buyers’ remorse: _“As the U.K. heads to the polls next week, a majority thinks that leaving the EU was a mistake and has delivered few benefits—and new problems.”_ [https://www.wsj.com/world/uk/brexit-british-regret-uk-election-837cbf4c](https://www.wsj.com/world/uk/brexit-british-regret-uk-election-837cbf4c) Sometimes the obvious cause is the actual cause. I’ll say again that it sure looks like the UK shot its own economic foot. I have a strong suspicion something analogous will happen with America in the near future. ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [January 22, 2025, 6:25pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/16 "2025-01-22T18:25:54Z")
> [@btresist](#): > > Sometimes the obvious cause is the actual cause. I’ll say again that it sure looks like the UK shot its own economic foot. Compared with the rest of the Eurozone we have held our own and are streets ahead of Germany whose economy is shrinking: [https://commonslibrary.parliament.uk/research-briefings/sn02784/](https://commonslibrary.parliament.uk/research-briefings/sn02784/) This, of course, doesn’t disprove that we would be £140 billion better off had we stayed in Europe, but I doubt it somehow. ---
**Author:** ![Hawkwin](https://g.foolcdn.com/misc-assets/discourse-member-avatar_120px_green600.png) [@Hawkwin](https://discussion.fool.com/u/Hawkwin)\ **Post date:** [January 22, 2025, 6:55pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/17 "2025-01-22T18:55:26Z")
> [@Divitias](#): > > He’s part of the woke, lefty, open borders class that now rules us. I’m not taking the report too seriously. So you reject it based on an ad hominem logical fallacy and not based on an actual review and consideration of the data. Got it. ---
**Author:** ![Goofyhoofy](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/goofyhoofy/32/4721_2.png) [@Goofyhoofy](https://discussion.fool.com/u/Goofyhoofy)\ **Post date:** [January 22, 2025, 7:06pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/18 "2025-01-22T19:06:51Z")
> [@Hawkwin](#): > > So you reject it based on an ad hominem logical fallacy and not based on an actual review and consideration of the data. No, I reject it based on results. I note, for reference, that it was the ignorati complaining about immigrants taking jobs, other countries taking advantage, wokism in schools, and all the other Murdoch inspired complaints that we are now seeing come to fruition in this country. Some people might want to draw a line between the two. Some will stick their head in the sand, and won’t. ---
**Author:** ![Leap1](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/leap1/32/72176_2.png) [@Leap1](https://discussion.fool.com/u/Leap1)\ **Post date:** [January 22, 2025, 7:13pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/19 "2025-01-22T19:13:22Z")
The factories take two years to start production. Give or take. Your plans have no factory production increases. Reckless. ---
**Author:** ![Leap1](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/leap1/32/72176_2.png) [@Leap1](https://discussion.fool.com/u/Leap1)\ **Post date:** [January 22, 2025, 7:17pm UTC](https://discussion.fool.com/t/debt-death-spiral/112526/20 "2025-01-22T19:17:05Z")
> [@captainccs](#): > > > [@Divitias](#): > > > > highest peacetime taxes > > Leap says it’s good. Compared to giving away the store to the billionaires in tax cuts, absolutely. Instead the store is getting built and will expand later when the factories open up. You have no plan of action. You expect to create massive deficits to give out tax cuts. Then blame the poor because you gave deficit money to the rich. Money that is not theirs. The rich using the resources such as roads provided by the state need to pay taxes. No brainer…I thought. But for some no brainers do not occur to them. [Next page](https://discussion.fool.com/t/debt-death-spiral/112526.md?page=2)