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Old 10.06.2015, 11:05
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Debt brake in the UK

Interesting that the UK may get legislation similar to the "debt brake" here in Switzerland:

http://www.bbc.com/news/business-33074500

Thing is, I can't see how it would be enforced as the government can change the law back any time they like!

Here it is part of the constitution so can't so easily be fiddled.

Any thoughts on how viable it will be?
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Old 10.06.2015, 12:10
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Re: Debt brake in the UK

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Interesting that the UK may get legislation similar to the "debt brake" here in Switzerland:

http://www.bbc.com/news/business-33074500

Thing is, I can't see how it would be enforced as the government can change the law back any time they like!

Here it is part of the constitution so can't so easily be fiddled.

Any thoughts on how viable it will be?
If you don't have a budget surplus when times are good, how can the country not go bankrupt?
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Old 10.06.2015, 12:23
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Re: Debt brake in the UK

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If you don't have a budget surplus when times are good, how can the country not go bankrupt?
By issuing debt, and using that to pay any shortfall and also the interest on previous debt. It's a bit of a pyramid scheme really.

If your GDP grows fast enough to keep your total debt percentage low enough, everyone assumes it will be OK.

Of course that doesn't preclude going bankrupt, just delays the inevitable as Greece is demonstrating and other countries are realising hopefully before it's too late.
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