Well you can't just keep borrowing and priniting more money will just lead to huge inflation and wont actually solve the problem. Defaulting on debts wouldnt be the end of the world but it should only be a last resort and could potentially have pretty disastrous consequences.
That only leaves two options, going by the poll but those are only really fiscal measures in cutting spending or raising taxes. I guess it should really be a mixture of both. The trouble with cutting spending is that it never seems to be done in the right places. The coalition is cutting billions which is having a detrimental effect to millions in the public sector who are at risk of losing their jobs and their incomes and it destroys consumer confidence and consumption. At the same time by wading into a civil war in Libya we've already spent £200m and the total cost could go up to £1billion the way things are going. It's insane, and it's a conflict we have no right to get involved in and Amnesty havent evend found any evidence for a lot of the accusations made against Gaddafi that was used as a pretext for intervention. Afghanistan & Iraq; another two wars which have cost billions and achieved nothing, at least we're basically out of Iraq now, Afghanistan is a mess and we'll never succeed there just as the Soviets failed in the 80s and we failed in the 19th century. It's that sort of thing where we should be cutting spending, how we can keep pumping money into these pointless endeavours while going on about the need to cut back and making thousands unemployed is beyond me.
Taxes are a difficult one. Again in the UK they can afford to cut corporation tax which is all well and good but then they say raising VAT is basically a necessity. I think it's questionable how much good a cut to VAT would do but raising it is just an attack on the less wealthy considering it's a regressive tax. Ideally the megarich would be taxed more but I dont think it's really feasible and it's not even certain that the top 50% rate is beneficial to the economy because people will just find ways to avoid paying it by storing money overseas or by moving abroad themselves to tax havens like Switzerland, and then it discourages people from making enough money to actually pay that 50% in the first place.
You could even cut taxes or increase spending to stimulate growth but the deficit we have in this country is too large for that really and we don't want to continously build up debt which will be burden for decades with increasinhly high levels of interest, I think we already spend something like £50billion a year on interest, it's ridiculous. Although certain taxes could be altered; I like what the Coalition is doing here raising the personal tax allowance so the amount you earn before you actually have to pay income tax increases, that should be an incentive for people to find work and get rid of the unemployment trap which should benefit the economy.
And then there are certain other policies, you could always reduce welfare benfits to incentivise more people to find work and increase the governments tax revenue and decrease its spending. Increasing interest rates is another option which should decrease the high inflation we've got atm but it also carries the risk of us falling back into recession.
So basically.. I dont know, it's a diificult problem to deal with and there are no easy solutions, I do think really that spending does need to be cut but they could go about it in a much better way. And then, if all else fails, then defaulting on the debt might prove to be a viable last resort, I wouldnt be surprised if it happens in Greece. Didnt intend that to be so long, it was basically the same question I was asked in my economics exam
