The Loonie Hour The UK Debt Spiral—A Cautionary Tale for Canada w/guest Liam Halligan
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Aug 15, 2025 
In this insightful discussion, Liam Halligan, a senior economics commentator at The Telegraph, dives into the UK's escalating fiscal crisis. He examines the troubling rise in bond yields and critiques government spending policies that could serve as a warning for Canada's economy. Liam draws compelling parallels between the two nations, stressing the urgency of addressing budget deficits to avoid a debt doom loop. With a keen eye on the political dynamics, he shares thoughts on how current economic strategies may impact future stability.
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Post‑COVID Debt And Rising Interest Burden
- The UK debt surged after COVID and QE, pushing debt-to-GDP from ~80% to ~100% and ballooning interest costs.
- In June the government borrowed £21bn, of which £16bn paid interest, revealing acute fiscal strain.
Rate Splitting Between Bank Rate And Gilts
- Markets are doubting the Bank of England's inflation story, causing long-term gilt yields to rise despite cuts to the base rate.
- This
Tax Hikes Undermined Revenues And Hiring
- Labour's big tax-and-spend package depressed hiring and asset transactions, reducing revenues instead of increasing them.
- Policy choices have deepened the fiscal hole by undermining business confidence and job creation.