The experts' view: Twenty questions you were afraid to ask

Pundits speculate whether Britain is on the verge of bankruptcy. A currency dealer says sterling is "finished". David Cameron says Britain could soon "run out of money"... So just how bad are things? We asked a panel of our writers – business editor Margareta Pagano, personal finance editor Julian Knight, political commentator John Rentoul, and assistant editor David Randall – 20 key questions about the economy

Are we heading for bankruptcy?

Britain's debt is at record levels, sterling is falling like a stone, and investors are pushing up bond yields – a sure sign they want proper compensation for lending to the Government. But the bailiffs are only a distant prospect.

If we actually go bust, what would this mean?

A visit to the International Monetary Fund, national bailout, ignomy, Brown exiting Downing Street, and some severe public spending cuts...

How big is the national debt?

Officially, around £650bn. This doesn't include liabilities taken on by the nationalisation of Bradford & Bingley and Royal Bank of Scotland, nor more than £30bn of Private Finance Initiative projects that government accounting trickery has kept off the books. National debt could be as high as £850bn.

How deep is the recession?

The UK economy contracted by 1.5 per cent in the final three months of 2008. Output has not fallen so badly for more than 28 years.

Do we know the full extent of banks' toxic debt liabilities?

Absolutely not. Lending between banks seized up in 2007 because none of them trusted each other. This fear remains. Absurdly complex product and accounting structures mean bank bosses are most likely in the dark even about their own operations.

Is public spending really out of control?

Not yet. Gordon Brown has said: "We have low public debt, we have low inflation, wages are under control." Few economists agree. Research firm Capital Economics says: "Borrowing is going to rocket. Things are already pretty bad and there's worse to come."

How big a brake on recovery are high levels of personal debt?

Britons are the most indebted in the world. Between us, we owe around £1.4 trillion. Having to service all this debt has dragged down consumer spending. However, Bank of England rate cuts should aid recovery in the long term.

Will property prices stabilise this year?

Capital Economics says prices will not stabilise until early 2010.

The pound – is it all over?

Unlikely. Goldman Sachs last week told its clients to stick with sterling, which it expects to bounce back quite soon.

Can we afford present levels of public spending?

The real question is can we afford not to spend on big infrastructure projects?

Where in Britain is worst hit?

July-September 2008 jobless figures show unemployment in London at 7.4 per cent, second only to the North-east, at 8 per cent. Yorkshire & Humber, the North-west, Wales and West Midlands all come in around the 6.5-6.8 per cent range. Northern Ireland is lowest, with 4.1 per cent.

Does short-time working help?

It's a lot better than lost jobs because it means there are more people still in work – not taking benefits – and still paying taxes.

Where are the first genuine green shoots of recovery liable to appear?

Earlier this month, media giant Reed Elsevier raised $1.5bn in bonds to repay some debts. In pre-credit crunch times such a success was common, but it is unheard of now. This deal, and rumours of corporate takeovers, suggest the beginnings of resuscitation may appear in the City quite soon.

Do Brown and Darling know what they're doing?

Possibly. They err on the side of avoiding the worst. If throwing money at the problem averts a slump, it'll have been worth it. If it doesn't, we'll just have to get used to Swedish levels of tax for a decade or so.

Is the VAT cut likely to be repealed in the Budget?

Not a chance. The trickier question for Darling is whether to prolong it beyond 31 December, when critics say putting VAT back up will trample any green shoots.

Is the Government so associated with the problem that it cannot solve it?

If recession becomes slump, then Brown's departure will be a precondition of the return of confidence.

What should a young, non-property-owning person do?

Cut down on credit card debts, overdrafts or personal loans.

What should a property-owning, middle-aged person do?

Weigh the financial implications of unemployment. Look at building up at least six months' income in a savings account. Don't cut back on pension payments.

What should a retired person do?

Shop around for the best savings rate, but don't deposit more than £50,000 with any one bank.

Finally, should I emigrate, and, if so, to which country?

The Independent's Simon Calder recommends New Zealand or Dubai.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat