The UK will soon lose its Triple-A credit rating. Big institutions will then be forced to dump UK gilts – leading to a disastrous spike in yields. Interest rates right across the economy will balloon, whatever the Bank of England does.
For international debt markets, the name of the game is supply – how many gilts will be issued, and when. The Government will have to pay much more for credit, leading to even deeper spending cuts.
Fears are growing that "quantitative easing" – printing money – will soon push inflation up. When that happens, gilts will look much less attractive. As sterling keeps falling, that's also weakening the demand for UK government debt.
David Davis, the former Tory leadership candidate, wrote a newspaper article calling for "the debate to start on how to cut public spending". He mentioned some "unmentionables" – including Trident, public sector pensions and the renegotiation of PFI contracts.
http://www.qsl-tenders.co.uk/about.php
In the certain absence of international investors to buy the massive quantities of proposed UK government gilts there is realistically only one option for the UK. A fundamental, root and branch reassessment of all government spending.
The formula a future government must adopt is well known and well practised by the IMF. Quite simply, the run away government spending of recent years must be brought back into balance.
not my own work
but worth a read and weep!
