UK Economy
Possibly, but I'd have thought that there'd be enough money from the 80% or so that doesn't come from borrowing to do that.
I think that the reason the government didn't go much further in their spending cuts is political - they know there would be a public backlash and that it could fracture the Coalition. But IMHO less pain now just means more pain later, so we should bite the bullet.
Jeff
I think that the reason the government didn't go much further in their spending cuts is political - they know there would be a public backlash and that it could fracture the Coalition. But IMHO less pain now just means more pain later, so we should bite the bullet.
Jeff
hgodden wrote:To pay for short term contracts and spending commitments that they can't cut, I'd imagine
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superfrank
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They are only reducing the deficit (i.e. the yearly overspend). While a deficit exists the national debt and the associated interest bill will keep rising.
Reading between the lines they've agreed with the IMF that the plan is to keep interest rates at 0.5%, print more money (further devaluation and imported inflation) and probably some token tax cuts before the election.
Or to sum up, kick the can even further down the road and let the great grandchildren pay the bill because the baby boomer generation (in power) won't tolerate their houses falling in value.
Reading between the lines they've agreed with the IMF that the plan is to keep interest rates at 0.5%, print more money (further devaluation and imported inflation) and probably some token tax cuts before the election.
Or to sum up, kick the can even further down the road and let the great grandchildren pay the bill because the baby boomer generation (in power) won't tolerate their houses falling in value.
Scandal of Britain's £700 billion overspend - http://blogs.telegraph.co.uk/finance/je ... overspend/
'Britain has not had a surplus in trade since 1982.'
So in other words, for the past 30 years, we've been buying more than we've been selling. I suppose in times of growth, that's not necessarily a problem, if you can pay off previous years' debts and this year's new debts through the extra income, and stay one step ahead of the grim repear. But when you get an economic slowdown, you're in trouble. Or is that an over-simplistic analysis?
Economic theory says that growth comes from exports, investment and innovation. Given that we're a net importer, we'd better hope that investment and innovation can deliver the goods...
Jeff
'Britain has not had a surplus in trade since 1982.'
So in other words, for the past 30 years, we've been buying more than we've been selling. I suppose in times of growth, that's not necessarily a problem, if you can pay off previous years' debts and this year's new debts through the extra income, and stay one step ahead of the grim repear. But when you get an economic slowdown, you're in trouble. Or is that an over-simplistic analysis?
Economic theory says that growth comes from exports, investment and innovation. Given that we're a net importer, we'd better hope that investment and innovation can deliver the goods...
Jeff
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superfrank
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Yeah, and we've made up the difference with debt.
I know I go on about house prices a bit, but don't underestimate the importance of them to those in power. If house prices corrected as they should then the banks would be dead and the main driver of 'growth' in the UK for the last 10 years would be gone.
Even the IMF realises that Britain's economy is dependent on selling overpriced houses to each other... John Lipsky (acting head of the IMF) on Monday, "Growth has flattened in recent quarters really as spiking energy and commodity prices together with the still weak housing market has weighed on consumer confidence".
So there you have it, rising house prices (based on increasing debt) fuelling consumer spending is what drives the UK economy. It's effectively a Ponzi scheme. We're doomed!
I know I go on about house prices a bit, but don't underestimate the importance of them to those in power. If house prices corrected as they should then the banks would be dead and the main driver of 'growth' in the UK for the last 10 years would be gone.
Even the IMF realises that Britain's economy is dependent on selling overpriced houses to each other... John Lipsky (acting head of the IMF) on Monday, "Growth has flattened in recent quarters really as spiking energy and commodity prices together with the still weak housing market has weighed on consumer confidence".
So there you have it, rising house prices (based on increasing debt) fuelling consumer spending is what drives the UK economy. It's effectively a Ponzi scheme. We're doomed!
I agree - which is probably why Mervyn King will find every excuse under the sun to avoid raising interest rates!superfrank wrote: I know I go on about house prices a bit, but don't underestimate the importance of them to those in power. If house prices corrected as they should then the banks would be dead and the main driver of 'growth' in the UK for the last 10 years would be gone.
If people can't pay their mortgages, and banks can't recover the money we're owed, then it could be 2008 all over again...
I'm not sure I'd go that far, although there will be difficult times ahead.superfrank wrote:We're doomed!
I probably sound like a grumpy old man writing this (I'm only 36!), but I think there is a problem with the British mentality. We lack discipline and drive as a nation IMHO. Maybe we need a good kicking to shake us up as a nation. Perhaps part of the reason Germany is doing so well is because of the economic problems of the Weimar Republic, which may have created a determination to avoid that situation ever arising again.
Jeff
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superfrank
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Stephanie Flanders - UK jobs figures bring good news, but also a worry
http://www.bbc.co.uk/news/business-13777923
http://www.bbc.co.uk/news/business-13777923
My money is on possibility 2!The more we see employment rising, this year, in a supposedly flat economy, the deeper the puzzle becomes.
There are two possibilities - or maybe three.
One is that the GDP figures are simply wrong: employers are hiring this much because output is actually rising faster than the official figures suggest. That is what you might call the good news solution to the conundrum.
The second possibility is that not only the level of UK productivity, but its potential growth rate was permanently damaged by the financial crisis - or maybe, the crisis revealed that we had been kidding ourselves for a long time about the rate at which the economy could safely grow.
As I suggested yesterday, that would be bad news - not just for the economy, but also for the government, because it would mean the public finances are in an even worse state than we thought.
And the third possibility? The third possibility would be a combination of these: the GDP figures are a bit better than we thought (as the Bank of England has long believed), but we are also seeing a prolonged hit to our productivity, not just from the crisis, but as a result of subsequent re-balancing of the economy.
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superfrank
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Ed Ball's solution to every problem (the same as his old boss') - spend money we haven't got and put it on the slate... http://www.bbc.co.uk/news/uk-politics-13787108
I see David Cameron is shelving the plan to give people lesser sentences in exchange for pleading guilty - something that would have saved the taxpayer millions, perhaps billions, of pounds...
I'm reminded of Norman Lamont's resignation speech:
'The Government listen too much to the pollsters and the party managers. The trouble is that they are not even very good at politics, and they are entering too much into policy decisions. As a result, there is too much short-termism, too much reacting to events, and not enough shaping of events. We give the impression of being in office but not in power. Far too many important decisions are made for 36 hours' publicity.'
That was in 1993, but it seems little has changed...
Jeff
I'm reminded of Norman Lamont's resignation speech:
'The Government listen too much to the pollsters and the party managers. The trouble is that they are not even very good at politics, and they are entering too much into policy decisions. As a result, there is too much short-termism, too much reacting to events, and not enough shaping of events. We give the impression of being in office but not in power. Far too many important decisions are made for 36 hours' publicity.'
That was in 1993, but it seems little has changed...
Jeff
Latest ONS public sector finances data shows the need for deeper cuts
http://www.taxpayersalliance.com/econom ... -cuts.html
'For all the talk in the media of ‘savage cuts’, total current expenditure rose from £50.6 billion in May last year to £51.7 billion in May 2011. Meanwhile, current receipts rose from £35.1 to £38 billion. After net investment is added, that leaves net borrowing at £17.1 billion, down from £19.3 billion.'
Jeff
http://www.taxpayersalliance.com/econom ... -cuts.html
'For all the talk in the media of ‘savage cuts’, total current expenditure rose from £50.6 billion in May last year to £51.7 billion in May 2011. Meanwhile, current receipts rose from £35.1 to £38 billion. After net investment is added, that leaves net borrowing at £17.1 billion, down from £19.3 billion.'
Jeff
Global growth fears send FTSE to 3-month closing lo
http://uk.news.yahoo.com/ftse-seen-open ... 56631.html
http://uk.news.yahoo.com/ftse-seen-open ... 56631.html
UK economy suffers blow as tepid growth confirmed
http://www.telegraph.co.uk/finance/econ ... irmed.html
http://www.telegraph.co.uk/finance/econ ... irmed.html
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superfrank
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UK High Street: More retailers hit by consumer squeeze
http://www.bbc.co.uk/news/business-13941983
More casualties of property speculation. UK landlords seem to act as a cartel to maintain highs rents - it seems they would rather be sat with empty units rather than reduce rents.
http://www.bbc.co.uk/news/business-13941983
More casualties of property speculation. UK landlords seem to act as a cartel to maintain highs rents - it seems they would rather be sat with empty units rather than reduce rents.
Worrying times...
I wonder whether the landlords aren't so much greedy, as acting out of necessity. Perhaps they are paying sky-high repayments on the loans they took out in order to buy the properties, and realise that if they lower their rents they'll go into administration themselves.
But I'm not sure that's the crucial issue here - if rents were crippling high street chains, then you'd have thought they could afford to get together and buy new premises themselves. I think the main problem is simply that the public aren't spending...
Jeff
I wonder whether the landlords aren't so much greedy, as acting out of necessity. Perhaps they are paying sky-high repayments on the loans they took out in order to buy the properties, and realise that if they lower their rents they'll go into administration themselves.
But I'm not sure that's the crucial issue here - if rents were crippling high street chains, then you'd have thought they could afford to get together and buy new premises themselves. I think the main problem is simply that the public aren't spending...
Jeff
superfrank wrote:UK High Street: More retailers hit by consumer squeeze
http://www.bbc.co.uk/news/business-13941983
More casualties of property speculation. UK landlords seem to act as a cartel to maintain highs rents - it seems they would rather be sat with empty units rather than reduce rents.