Economics A Level

Interest Payments. The cost of paying interest on the government’s debt is very high. In 2008 Debt interest payments will be £31 billion a year (est 2.5% of GDP). In 2009, they will be £35 billion (similar to defence budget). Public sector debt interest payments could be be the 4th highest department after social security, health and education. Debt interest payments are rising close to £70bn given rise in national debt.

The rate of Consumer Prices Index (CPI) inflation rose to 4.5%, from 4.4% in July, according to figures from the Office for National Statistics (ONS). The Retail Prices Index (RPI) measure increased to 5.2% from 5%.

Could Greece be Europe's Lehman Brothers?

Three years ago today, US Treasury Secretary Hank Paulson made a momentous decision - to let the investment bank Lehman Brothers fail. The US government had helped to rescue a string of financial institutions, but markets kept pushing more to the wall. Mr Paulson was running out of time and options. There was no political support in Washington to keep throwing money at the problem. Wall Street would just have to learn to bear the consequences of its own folly. Today, many say that it was the wrong decision. The resulting financial meltdown (the stock market plummeted 43%) forced the authorities to do exactly what they had been trying to avoid - commit trillions of dollars to rescue the financial system.

Now fast-forward to the present. The "troika" of lenders to Greece - the European Union, International Monetary Fund (IMF) and European Central Bank (ECB) - may soon face a similar moment of reckoning.

Unemployment rises above 2.5m milestone • Jobless total rises to 2.51m • Unemployment rate at 7.9%• Public sector employment falls by 111,000• Claimant count rises by 20,300 in August•Youth unemployment increases to 972,000