Sharpe's Opinion

As With Northern Rock, So With Britain

Stumbling and Mumbling suggests the [cref 1563 terrifying debt statistic from Coffee House] is not so bad after all:

Our huge gross assets and liabilities, to a large extent, reflect the UK’s position as a financial centre. If a UK bank  swaps with, say, a German a fixed-rate loan for a floating rate one, UK assets and liabilities vis-à-vis Germany both rise by the same amount. Because the UK does more of this sort of thing than other countries, so our overseas assets and liabilities are disproportionately big relative to other countries.

Nice to know that the same logic which proved Northern Rock wasn’t in any trouble whatsoever (that they have assets to cover their liabilities) can also be used to prove that the UK is well placed to weather the economic storm. It’s comforting.