Submitted by AutoModerator t3_xwbf66 in askscience
DoughnutMundane592 t1_ir9o21h wrote
Reply to comment by reasonable_riot in Ask Anything Wednesday - Economics, Political Science, Linguistics, Anthropology by AutoModerator
If a governments debt is too high, generally we will see a similar situation to the UK after the financial crash of 2007/08. Austerity measures to try to reduce the debt. The government can also lose credit rating, again as seen in the UK for example, where their credit rating has decreased from AAA to AA, meaning their borrowing is more expensive in the future. This in turn means they have to pay more back, so typically will have to raise more in taxes. Generally speaking if a govt borrows too much, it will mean the everyday citizen will have less disposable income at some point in the near future, usually through higher taxes. As well as less being spent on public services etc. countries will try to manage borrowing with further borrowing, but if they don’t get it right.l, they will spiral and have to take drastic measures to reduce the national debt, again, as seen in UK as a real life example
Viewing a single comment thread. View all comments