The severely affected the economies of all European countries, leaving behind huge holes in most governments’ budgets. In 2009 the UK government spent £660 billion against a revenue of £500 billion, a deficit of £160 billion or around 25% (= 160/660) of the total budget. As the new chancellor of the exchequer, George Osborne, has constantly reminded us since moving into No 11 Downing Street, this means that £1 in every £4 that the UK government spends is being borrowed. The £160 billion deficit of 2009 has increased the total debt of the UK public sector (i.e. the sum of the deficit that has been accumulated over the years) to £950 billion, which is around 68% of the gross domestic product (GDP).
If the state of the UK’s finance can be described as ‘fragile’, the situation in other European countries is even worse. In May 2010 the European Central Bank and the International Monetary Fund (IMF) defined a bail-out package of £100 billion to prevent Greece from defaulting on its debt.
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