Debt-to-GDP ratio: Difference between revisions
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The ratio between government debt and its gross domestic product. | ''Public sector finances.'' | ||
The ratio between government debt and its gross domestic product (GDP). | |||
This ratio is used investors, leaders, and economists to gauge a country's ability to pay off its debt. | This ratio is used investors, leaders, and economists to gauge a country's ability to pay off its debt. | ||
A high ratio means a country is not producing enough to | A high ratio means a country is not producing or earning enough to service its debt. A low ratio means there is plenty of economic activity to generate the value to meet the commitments. | ||
<span style="color:#4B0082">'''''Ongoing | <span style="color:#4B0082">'''''Ongoing deficits in the UK'''''</span> | ||
: "The net effect of the coronavirus impact and the policy response is likely to be a sharp (but largely temporary) increase in government borrowing that will leave public sector net debt permanently higher as a share of GDP. ... Before the impact of the coronavirus became clear, the | : "The net effect of the coronavirus impact and the policy response is likely to be a sharp (but largely temporary) increase in [UK] government borrowing that will leave public sector net debt permanently higher as a share of GDP. ... Before the impact of the coronavirus became clear, the government was content to run an ongoing deficit that would broadly stabilise the debt-to-GDP ratio over the medium term rather than reduce it – a judgement that it will no doubt re-visit in the wake of the current crisis." | ||
:''The OBR’s coronavirus analysis, 14 April 2020'' | :''The UK OBR’s coronavirus analysis, 14 April 2020'' | ||
==See also== | ==See also== | ||
* [[COVID-19]] | |||
* [[Debt]] | * [[Debt]] | ||
* [[Deficit]] | * [[Deficit]] | ||
* [[Gross domestic product]] | * [[Gross domestic product]] | ||
* [[Office for Budget Responsibility]] | * [[Office for Budget Responsibility]] (OBR) | ||
* [[Public sector]] | |||
* [[Ratio]] | * [[Ratio]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:The_business_context]] | |||
[[Category:Identify_and_assess_risks]] | |||
[[Category:Manage_risks]] | |||
[[Category:Risk_frameworks]] | |||
[[Category:Risk_reporting]] | |||
[[Category:Financial_products_and_markets]] | |||
Revision as of 14:53, 20 May 2020
Public sector finances.
The ratio between government debt and its gross domestic product (GDP).
This ratio is used investors, leaders, and economists to gauge a country's ability to pay off its debt.
A high ratio means a country is not producing or earning enough to service its debt. A low ratio means there is plenty of economic activity to generate the value to meet the commitments.
Ongoing deficits in the UK
- "The net effect of the coronavirus impact and the policy response is likely to be a sharp (but largely temporary) increase in [UK] government borrowing that will leave public sector net debt permanently higher as a share of GDP. ... Before the impact of the coronavirus became clear, the government was content to run an ongoing deficit that would broadly stabilise the debt-to-GDP ratio over the medium term rather than reduce it – a judgement that it will no doubt re-visit in the wake of the current crisis."
- The UK OBR’s coronavirus analysis, 14 April 2020
