Tuesday, 09 February 2016 10:30

How Much Debt Is Too Much?


In this article Robert Skydelsky, Professor Emeritus of Political Economy at Warwick University, tries to explain if there is there a “safe” debt/income ratio for households or debt/GDP ratio for governments and if so, how can we compute it. With a very interesting example he says that “expansionary fiscal policy is taboo, because it threatens to increase national debt further. But much depends on how governments present their accounts. In 2014, the Bank of England held 24% of UK government debt. If we discount this, the UK’s debt/GDP ratio was 63%, not 92%”. So, how much is too much?



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