Tough Economic Choice for UK Govt - Opinion
The new government in the UK faces some painful economic choices much along the lines of the ones the Greek government had to make recently with its austerity plan.
With a gross debt of 72 percent of GDP and a deficit heading for 12.6 percent this year, the UK may have to start making deep cuts in its spending. As Greece's example shows, the population and unions are likely to react badly, posing the government with a major challenge.
In addition, the UK does not have the backup that Greece did, because it is not a member of the Eurozone. Only the IMF can effectively launch a bailout if it is needed, and after Greece tapped a 110 billion euro financial aid package, the question is, how feasible and realistic could a second bailout package for the UK be?
As UK election returns come in, it looks like no one party has a clear majority and a coalition may have to be formed which will have to act quickly to stem the receding tide of financial confidence. Because if Britain's financial problems turn out like Greece's, the impact on Cyprus' economy is bound to be felt if tourists from the UK lose the spending power they have only just recently regained.