How do individuals in the UK perceive the country’s debt issues relative to international trends?
Head Researcher: Samuel Rice
Researchers: Daniel Lindsay, Jacob Coutts, Sophia Nistor, Leonardo Cervi
Editors: Edwin Brattselius Thunfors and Grace Risucci
Editor-in-Chief: Edwin Brattselius Thunfors
Executive Summary
This paper aims to identify the main differences between the public perception of government debt in the United Kingdom (UK) compared to European Union (EU) countries. This is done through analysis of polling statistics, and existing as well as self-collected survey data. Using the gathered information, the paper evaluates how the perspectives of UK and EU citizens differ in relation to levels of concern, awareness, and understanding of their nation’s public debt.
The structure of the paper will begin by providing some context on the UK’s rapid rise in debt relative to GDP, and the various contributing economic factors beginning in 2008. We also provide context for a typology of EU countries, distinguishing between “fiscally responsible” states with traditionally low debt levels and “fiscally irresponsible” states with high debt-to-GDP ratios.
The paper first considers the existing data from polling and surveying of UK citizens and finds that a majority of voters see the UK government’s debt as a problem that must be addressed. It also becomes evident that there are fairly low levels of public finance literacy and high negative views on government spending transparency. An analysis of EU nations finds these trends of misconception or inaccurate understanding to also be apparent in several EU countries. It is noted though that levels of debt understanding vary across countries in the EU. The data shows that EU citizens are generally less concerned over their nation’s debt than in the UK, even those with higher debt-to-GDP ratios. It also shows that greater economic literacy levels may be correlated with lower concerns about debt.
Secondly, the paper analyses the responses to our own survey that was distributed among both UK and EU citizens. Here we found similar results to the existing polling when it came to levels of concern, as UK citizens were found to hold more negative views about their public debt than EU citizens. The survey also supports the conclusion drawn from existing data, that many citizens of both the UK and EU member states lack understanding and awareness of their countries’ budgeting and debt. The data is also clear that the majority of respondents, both in the UK and EU, would tolerate tax increases for more economic stability.
The paper then provides some policy recommendations, suggesting that governments, and specifically the UK, should make an effort to improve public finance literacy and awareness of their country’s debt and budgeting. This effort could be achieved through education initiatives and efforts to provide increased transparency such as “Plain-English Fiscal Reports” or “Budget at a Glace”-style reports when it comes to government borrowing and spending.
Thus, the paper concludes that the key difference between UK and EU public perceptions of government debt is the level of concern expressed over debt: UK voters are generally more concerned about their debt than citizens of EU member states. However, despite this contrast, both the UK and EU generally share a lack of understanding and accuracy when it comes to their estimations of public debt and budgeting.