Events in the UK should serve as a warning to Bermuda about what unbalanced and unsustainable Government spending can do to an economy and the future:
The prime minister laid the blame for the situation squarely on what he called "reckless" spending by the Labour government, which was in power for 13 years before being defeated in last month's election. He said that as the financial crisis was "Labour's legacy," so, too, would be the spending cuts.
"Nothing illustrates better the total irresponsibility of the last government's approach than the fact that they kept ratcheting up unaffordable government spending even when the economy was shrinking," he said.
Labour argued that spending would help boost the economy, Mr. Cameron said, "conveniently forgetting that if you start with a large structural deficit, ramping up spending even further is likely to undermine confidence and investment, not encourage it."
Larry Burchall has been doing yeoman's work laying out the bleak financial picture the PLP has put us in. But in case you're feeling comforted that Bermuda's debt is nowhere near the size of the UK's GBP 771B (USD 1.116B at today's exchange rate), let me disabuse you of that notion.
UK Debt = $1,116.0B
UK Population = 6,141,4062
UK Per Capita Debt = $18.117
BDA Debt = $1.0B
BDA Population = 65,000
BDA Per Capita Debt = $15,385
Not so fast. I haven't included the imminent $500M bond issue, nor the imminent budgeted $400M hospital redevelopment which they're trying to hide off balance sheet with a Public Private Partnership.
Throw that extra $900M in and the debt almost doubles to 29,000 per capita. That's 60% higher than the UK's.
But unlike Bermuda, the UK has monetary policy options. They have a central bank and can print money and play with interest rates (not that it will make the debt go away).