A shocking report from Morgan Stanley shows that Britain’s economic situation is much more fragile than we think. Although public debt is not likely to cause concern, the consolidated debt figures is really a reason for worry. The consolidated debt, which includes the debt of financial institutions, non-financial institutions, the government and the households is approaching 1,000% of GDP! In other words, the entire debt burden of British people and companies is ten times higher than the country’s gross domestic product, that is what the British economy produces in a year.
A graph that has spread on the economic blogs in recent days and has its source Haver Analytics and Morgan Stanley Research indicates a consolidated debt of around 950% of GDP. In these circumstances, the war of statements between France and United Kingdom might end badly for the British side, while the rating agencies, markets and even Great Britain’s population have became very attentive to macroeconomic figures and especially the risks they could hide.
Moreover, in early 2010, consultants from McKinsey research company showed that in 2008, Britain was the most indebted country among major economies, with a total debt of 481% of GDP, even more indebted than Japan.
