Posted: July 2nd, 2015

The Depth of Debt – How Sustainable is the UK National Debt?

Executive Summary

Introduction

• Brief discussion on national debt, why is it such an important topic? Why has the level of debt increased over the years since the 80’s
• Discussion on what needs to be addressed:
• Banks create new money when people go into debt
• For every pound of money, there’s a pound of debt
• If we want more money in the economy, we have to go further into debt
• If we try to pay off debt, then money supply reduces
• Brief discussion mentioning how this report will look into the sustainability of UK National Debt in relation to UK GDP

Key Terms

• Provide definitions of key terms (National Debt and Fiscal Sustainability, Aggregate Demand and its components, GDP, Fiscal Policy etc.)

Background Information

• Overview of UK National Debt (what is it used on? what is the current level?)
• The need to borrow (How and why firms are funded by debt? – In order to repay debt, you issue more debt. What are the consequences of this? How and why countries are mostly funded by debt? For individuals too)
• How is sustainability measured? Eg. Debt/GDP ratio
• Time horizon (Data used from 2010 to 2015)

Aims and Objectives

• To investigate the sustainability of the UK National Debt
• To evaluate the impact of the key factors which contribute to UK National Debt

• These aims will be achieved through secondary research – looking at past and present data; as well as looking at future predictions
• Key factors include the UK government spending (G), business investment (I) consumption (C), Imports (M) and Exports (X)

Note: This research project is measuring sustainability by looking into the components of Aggregate Demand and their influence on National Debt

Literature Review

• Arguments for and against increases in National Debt
• Theories in favour and not in favour of National Debt
• Theories related to fiscal sustainability
• Look at the strengths and weaknesses of each and give our own perspective

Limitations, access and ethical issues

• The influence of the EU was not considered; anything else which is necessary should be included
• Any other access issues encountered

Research/Results

• Secondary research should be presented in graphs, tables and diagrams along with explanations
• Time frame from 2010 and forecasts should be included up to 2025; including forecasts for GDP
• Research should be done for each factor; then collated and analysed for aggregate demand and each
• This will help summarise in the conclusion
• Results for Debt/GDP ratio should be calculated or found through research for forecasts up to 2025 if possible
• For investment – relate to gearing levels and economic cycle
• Governments – Fiscal policy, show trend analysis, identify research of surpluses and needs, look at the key drivers of growth
• Individuals – levels of individual debt and abilities to repay
• Please highlight the impact of debt repayments at different levels of the economic cycle

Conclusion

• Review aims and objectives and answer the question based on results and literature review
• This should result into an overall rounded argument

Recommendations

• Example – Increase privatisation in order to reduce expenditure and gain capital from sale; therefore reduce National Debt
• Any suitable recommendations from conclusion for sustainable debt

References

• 50 references
• Harvard
• Alphabetical order

Bibliography

Appendix