The UK chancellor of the exchequer has issued some grim news. The economy is growing slower than hoped, and the budget is in worse shape than expected. However, George Osborne has a solution. Unfortunately, it is just more of the same thinking that got Britain into trouble in the first place.

Why can’t politicians understand? More debt is not a solution for a crisis caused by too much debt. More borrowing at a time when foreign lenders are ravaging sovereign European debt markets is just asking for a pound sterling crisis.

With debt levels rising and the economy near stall speed, the dreaded bond vigilantes would probably already be ravaging UK government bonds if Portugal wasn’t hamstrung and virtually prostrate. But that is poor consolation. Britain could easily be next.

On Wednesday, Chancellor of the Exchequer George Osborne announced that less than one year into his five-year plan to balance the budget, his estimates may have been too optimistic. The government will need to borrow an additional 10 billion this year, and an additional 47 billion over the next five years—if things go according to the new plan.

But that is only if things go as hoped.

Under the new projections, the government will need to borrow 122 billion this year, followed by two more years of 100 billion-plus borrowing, before the hoped-for economic growth starts reducing the budget deficit to closer to zero by 2015.

But what if the hoped-for robust growth doesn’t come?

So far, the economy is showing few signs of improvement. The Office for Budget Responsibility has cut its growth forecast for 2011 to a minuscule 1.7 percent. But even this number may be too high according to the perennially optimistic Moody’s. On Thursday the ratings agency warned that if growth rates come in lower than hoped, Britain could lose it coveted aaa-rating.

Making matters worse: When economic growth gets this low, it becomes ever more difficult to determine what is real growth versus what is just inflation making the economy appear to grow.

Last Wednesday, the Office for National Statistics revealed that the official rate of inflation had jumped to 4.4 percent in February (up from 4.0 in January), meaning that the goods measured cost 4.4 percent more than they did just one year ago. That may be more government optimism.

For consumers, the real increase in cost of living is much greater.

According to PwC research, the real inflation rate has been higher than government estimates since 1997. This is because the government measures a broad range of items that have little impact on the everyday lives of consumers.

For example, the Independent reports that car insurance, fuel, home repairs and food are up 29 percent, 15.9 percent, 9.3 percent and 5.7 percent respectively. These mandatory items have gone up a lot more than 4.4 percent—even if the cost for the latest flat-screen tv may have fallen.

Meanwhile, salaries have stagnated.

The pound—the unit of measure of the nation’s wealth—has taken a beating too. Measured it against other devaluing currencies masks the true rate of the pound’s decline. But compared to hard goods such as grains, ores, oil and other commodities, the devaluation of the pound sterling is dramatic.

As recently as 2003 a pound could buy 1/200th of an ounce of gold. In 2006, it would buy only 1/300th of an ounce. By 2008 it was down to 1/400th of an ounce. By 2010, the pound had fallen in value so much that it would only buy 1/700th of an ounce of gold.

Today it will cost you almost 900 pounds to purchase a single ounce of gold. Talk about currency collapse.

What’s happening is that pound sterling is being devalued to inflate away the nation’s debt. But that means the nation’s collective wealth is being devalued too. It is becoming increasingly evident that Britain is on its way to becoming a nation of serfs. And when the pound collapses and the UK is unable to pay its foreign debts—it will become a nation of slaves.