Why the U.S. may soon start defaulting on federal loans
Posted On June 17, 2021
USA Today (USA) article The U.K. may default on its debt by 2020, with Britain’s finance minister saying it could lead to the country “defaulting on a lot of loans.”
Boris Johnson has said that Britain’s debt has reached “the point where I am absolutely convinced that it will happen in a year’s time,” the Times of London reported.
If the debt does not be repaid, the U .
K. could be forced to exit the European Union.
“I am sure it will be an extremely difficult time for the people of Britain,” Johnson said at a press conference Wednesday.
The U.k. is expected to pay the interest on its £8.9 trillion debt on March 18.
Johnson said the government would ask Parliament for a referendum to hold the debt ceiling temporarily in order to force a debt restructuring.
Britain’s central bank governor, Mark Carney, told a conference Wednesday that the government will use a bond market to determine how much of the debt would be paid back by the end of the year.
Carney said he is confident that the country’s debt will be paid by March 31.
According to Reuters, Britain’s borrowing costs are expected to fall as a result of the crisis, with the central bank predicting that borrowing costs will fall by 0.7% in the third quarter, from a forecast of 0.9% in 2016.
Despite the risks of a U.N. bailout, some economists believe the U,S.
and the rest of the world will be able to avoid the worst-case scenario.
While the U., UK and the European countries have a majority of sovereign debt, the other member countries of the euro area, including Germany, have debt obligations that are at least twice as high as the U and the U-K.
Even with a new debt ceiling in place, the government’s ability to meet the debt payments will likely be limited.
U.S., UK to pay down debt by 2019The U, U. K. and U. S. have a total of $7.5 trillion in outstanding debt, according to Reuters data.
Although the U S. has a debt burden of $1.6 trillion, the British government has a $1 trillion debt, or about $10,000 per person, according the Washington Post.
At least $10 trillion of the U s debt is backed by a single U. s government-sponsored agency, the Department of Education.
In total, the debt of the United States is $1,086 trillion.
For the U , the debt is largely backed by the federal government, with $741 billion in outstanding bonds.
And $400 billion of the outstanding debt is paid off through borrowing, with only $100 billion of that owed to U. N. agencies.
Most of the remaining $1 tranche is held by the US.
Treasury, the second largest holder after the U in the U niversity’s debt pile, with a $500 billion debt.
Many analysts think that if all U s debts are paid off by 2019, it would leave the U ns debt-to-GDP ratio as the highest in the world.
There are a number of reasons for the U ths debt situation, according with Reuters: The U S is the only nation that does not have a sovereign debt.