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Emergency Budget 2010: Slaying The UK Debt Monster

14 years ago

22nd June, 2010 00h00

At the start of the year, I wrote an article predicting that 2010 would see the end of the era of credit. So here it comes, our big bang moment of the year. Today, the new UK coalition government will begin the arduous task of attempting to reign in the biggest debt monster in our fiscal history. The ‘recession’ we’ve experienced so far, I suspect, will be nothing compared to what comes next. Tomorrow the tide of credit we’ve been drowning in finally goes out. And when it does we’ll really see who’s been trying to swim with no trunks on. Inappropriate Optimism? Make no mistake, this has to happen and it will be painful. But at least there are two reasons to be comparatively optimistic.
  1. We’re doing this of our own volition. However painful George Osborne’s budget is, it will be less punitive than if we simply kept on racking up our debt. According to Nick Clegg, we (the UK government) are currently paying £80,000 of interest a minute.
  2. The presence of the Lib-Dems within the government perhaps ensures some degree of balance to the cuts that have to be made. (I may be in business but I strongly believe in social justice.)
By choosing to step off the debt train now and bring some order to public finances we will hopefully avoid falling off the cliff as Greece has done and the US threatens to do. We maintain the ability to control our own destiny, rather than, in effect be dictated what to do by our creditors and risk even deeper cuts and the social unrest seen in other countries. Phoney Growth Recent figures that put the UK in growth are perilously propped up by government spending, or put another way – it is phoney growth. Today that stops. Today reality bites and in all likelihood people will lose jobs. Potentially lots of people will be leaving the public sector and looking for private sector employment. Implications for Vet Practice If your practice exists in an area dependent on these jobs then this is going to hurt. If your practice exists elsewhere then at least the spectre of interest rate rises looks less likely (as this would almost certainly put the UK into an economic tailspin). But consumer confidence will be shot to pieces for some time to come. So it will be harder to get clients to come in and harder to get them to spend when they do. The time has come to put those management skills into practice, to squeeze every piece of value you have out of your practice. As the tide of debt goes out it will be replaced with the fire of recession – a fire that will burn out bad business. The Party’s Over As vets we have always been seen as ‘recession proof’. But with changed market conditions the recession of 2010 (or as some are calling it - the great correction) looks like it will put this to the test. The debt monster has been partying hard for over a decade, but finally the music has stopped. Today the hangover begins – it also promises to be a monster.

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