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UK BUDGET DEFICIT IS PINT-SIZED

29 June 2010

29 June 2010: It would take the country’s total population to drink 14 pints of beer each day for a year to swallow the country’s deficit, according to an Institute for Turnaround economic model.  For the working population, it would be about 30 pints a day, in round terms £90 per person per day or £32,000 per annum. Alternatively, that makes 62,405 Olympic-size swimming pools full of beer.

Christine Elliott, Chief Executive & Director at the Institute for Turnaround said:

"When turnaround professionals helping companies in difficulty are trying to explain the business impacts of large numbers to stakeholders who are not finance and business professionals, they need to use imaginative ways to communicate. We have simply applied this approach to bring an eye-watering abstraction down to earth.

UK public sector net debt was recently calculated as £848,500,000,000 but 59.9% of National GDP is not the only unprecedented deficit statistic. There is, according to IFT member Jon Moulton, a dearth of insolvencies. Over the past 5 years, the average liquidations rate has been 0.7%, around half of the norm. If the average rate were applied, over 80,000 additional companies would have been liquidated and about 743,000 additional jobs lost may still be lost as a result.

The UK’s new political leadership also has to contend with the implications of sovereign debt (back to WW2 level at 120% and could send the economy into reverse); Crown debt – what the taxpayer is owed (officially less than £10bn but probably over £30bn) and burgeoning public sector pension liabilities.

So far, the government has rightly created a sense of urgency and its excellent intentions have been given airtime. The real test will be in implementing their policies and the hugely complex UK public sector lacks the necessary mechanisms to do so.

Our accredited turnaround professionals work with organisations to bring uncertain situations under control, whilst restoring and strengthening the bonds of trust between all parties, giving them the information, understanding and confidence to move forward."

Notes to Editors:

The Institute for Turnaround (IFT) is the leading professional body in Britain and Europe for operational, funding and advisory practitioners in business. It is an independent professional body with stringent conditions for membership and accreditation. It is a nonprofit making company limited by guarantee. It was established in late autumn 2000, supported and encouraged by government, the clearing banks and other financiers, private equity investors and leading accountancy firms.

 

For full details of the economic model and sources, see the IFT journal, Swift, June 2010 edition.  (Total UK population 61,414,062; working population half that; volume of an Olympic swimming pool 2500 cubic meters; average UK lager price £2.72; with thanks to Jon Moulton, Better Capital and William de Lazlo, RCapital).

 

For more information please visit:

http://www.instituteforturnaround.com/default.asp

For further information, please call Natalie Bateman or Surinder Gill on 0207 618 9197 or ift@luther.co.uk.


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