America isn't the only country that is facing a severe financial crisis right now. England, like the United States, is also struggling with an irresponsible government that has been engaging in excessive spending and piling up a massive deficit. As of today, April 23, 2009, the United Kingdom's budget deficit to hit a record £175 billion. The economic future for Britain doesn't look very good as the total government debt will double to 79% of GDP by 2013 - the highest level since the Second World War. To make matters even worse, Britain's trade deficit gap is getting wider.
Politicians are pretty much the same around the world: They're stupid. They think raising taxes while continuing to spend beyond what they can afford will bring them out of the current economic crisis and into financial prosperity.
The British government is attempting follow America's approach to resolving the financial problem by raising taxes. Chancellor Alistair Darling has announced that he will be increasing the tax rate from 45% to 50% for those who are making £150,000 and above. That is not the only tax increase England will see. He has also announced that he will be increasing taxes on fuel, alcohol and cigarettes.
The Chancellor of the Exchequer, Allistar Darling, isn't afraid to explain the justification for the massive tax increases. The justification is a simple which is "to pay for additional support for people now." Basically, he's saying that an increase in taxes is needed for an increase in spending. To be even more blunt, Allstair Darling is raising taxes to keep the British Welfare state alive.
Ever since Allistar Darling released the details of the British government's budget last Thursday, the GDP fell by 1.9% during the 1st quarter, making Darling's 3.5% fall over 12 months look overly optimistic (and they only have 1.6% left for the next 9 months!)
If the forecasting by the government is wrong, then the debt figures quoted will be wrong too. It is widely expected that borrowing will exceed £200bn now.
Yet, the current Chancellor of the Exchequer refuses to learn from the past. Raising taxes on the rich never works as intended.
Mr. Darling has received a lot of harsh criticism for being financially irresponsible with the tax payer's money but taxes are only one side of the problem.
The other side of the problem is excessive spending. Even some politicians are getting upset on this issue. Look at the Conservative MEP, Daniel Hannan, attacking Prime Minister Gordon for spending beyond what England can afford.
Politicians like Daniel Hannan are rare. However, the truth is that the British deficit cannot be attributed to just a single party. Falling into debt occurred regardless if political parties such as Labor, Tory, or BNP had the majority power.
I think citizens of England should have their own "tea party" as a way of fighting against financially irresponsible politicians. For obvious reasons, I don't think Britons would like call their protests "tea parties."
What do you think the name of the British version of the tea party should be called?
UPDATE (5. 22.09) : Britain's debt outlook lowered to negative from stable by Standard & Poor's