The Western world is awash with debt. The financial crisis originated, and was worst, in places where everyone – people, companies, banks and governments – had borrowed too much. The causes of this indebtedness are many and varied, but governments have been spending far more than they collected in revenue over many years, despite a long period of economic growth with high tax receipts.
The recession, stimulus measures and the cost of bailing out banks have dramatically revealed the problems, but long before the crisis governments had embarked on sustained and unaffordable overspending, including ever-rising entitlements to pensions and healthcare.
