U.K.’s economic variables over the last decade in the context of the current corona crisis

In January 2007, U.K. Government debt to GDP stood at 32.5%. By December 2019 it had grown to 89.5% and the latest data from September 2020 show a government debt level of just over £2 trillion, while its debt to GDP level did increase to 103.5%. The Quantitative Easing program by the Bank of England started in November 2009 with a purchase of £200 billion U.K. gilts. The amounts were increased to £375 billion in July 2012; further to £435 billion by August 2016; to £645 by March 2020 and finally (so far) to £745 billion by June 2020. The current Bank’s base rate is 0.1% and discussions are ongoing about the desirability of introducing a negative base rate in future. The U.K. households’ main net wealth items were and are: private pensions and property wealth. Over the period July 2006-June 2008, property wealth was assessed at £3.537 trillion and private pension wealth at £2.886 trillion. By the period April 2016-March 2018 net property wealth had grown to £5.09 trillion and private pension wealth to £6.10 trillion. These items -together at £11.19 trillion- can be compared with the U.K.’s GDP of 2018 of £2.144 trillion. They show a multiple of 5.2 times GDP. If one includes individual households’ financial wealth of £2.12 trillion in 2018, the multiple increases to 6.2 times GDP. The above data show that collective and individual savings far outweigh GDP levels; in its most extreme case by more than 6 times. This raises the question why not more use is made of such savings. After all, U.K. government expenditure as a share of GDP “only” amounted to 39.4% in fiscal year 2018 to 2019. One element that will be explored in this paper is the difference between a profit or loss to a household or a company –an income gain or loss now or in the future- and a collective loss or gain. The first one represents the usual principles of profits; the second one can be defined as a country’s gain or loss: country profit. The two types of profit often do not overlap. This paper has as an objective to show that there are ways in ...