Boris Johnson, the new UK prime minister, made a series of promises during his campaign as well as in his first speech as PM which includes hiring an additional 20,000 police officers to fight crime as well as to increase education funding and to slash taxes.
These are ambitious plans that are likely to increase the country’s spending by billions of pounds, and it is not clear how the new prime minister intends to fund the larger budget given that his tax cuts have been estimated to cost the country up to £10bn each year.
The new PM has hinted that he will use the £26.6bn accumulated by Her Majesty’s Treasury under the previous chancellor Philip Hammond to pay for his spending plans, but this is hardly a permanent solution given that the amount will cover only 2.5 years before being exhausted.
Johnson’s policies mirror those of President Trump in the US where annual budget deficits are in excess of $1tn and set to keep rising. This seems to be the trend in some developed countries, including Italy, which typically leads to fiscal distress, debt defaults, and crises.