Is Britain in danger of going bust? – Personally, I do not think so…

Britain is officially in recession, and many are concerned if it is close to the stage of bankruptcy. The reasons for possible bust can be either the debt of banking system, either the debt of the state.

Those who argue that UK economy will bankrupt because of the private banking sector foreign debt say that it is over 4.6 trillion pounds, and with the depreciating currency British banks will be unable to repay it. It is true, but if we consider fact that that 1.5 trillion of those assets is held by the UK banks, and that the banking system has foreign currency assets, we can see that the UK is not likely to bankrupt because of it.

Other argument of people who have pessimistic attitude towards British economy, is that it will run of buyers of its debt as the sterling is loosing its value. Yet there is still plenty of potential buyers of governments debt, and it is sold on very low rates, so it is not very likely that the demand for it will dry up soon. Politicians are not planning to increase the interest rates in order to protect the value of pound, so there is no threat of further weakening of the economy.