UK Economy

[Iron]

the way the BBC likes to report it, Britain is "suffering" austerity the same as the PIIGS.

all absolute bolux. the govt is still spending £120Bn more each year than it receives in revenue. that's not austerity, it's the reverse.

+1

And it's not just the BBC's news reporting that gives that impression. I was watching Holby City a while back, and there was some talk about redundancies due to government NHS cuts. Maybe it's escaped the BBC's attention, but there have been no real term cuts in NHS funding, so that is just fear mongering!

Jeff

[Euler]

+1

[Iron]

Autumn statement: George Osborne says Plan B would be a 'complete disaster' for Britain - http://www.telegraph.co.uk/finance/budg ... itain.html

' The Chancellor's admission, combined with lower growth forecasts expected from the Government's official forecaster next week, means Mr Osborne could be forced to borrow up to £81bn more in the years ahead, and raises the prospect of a further fiscal squeeze.'

'The OBR's March estimate of 0.8pc growth for this year looks set to be brought down to "mildly negative territory", said economists at Investec. They also expect next year's forecast, currently for growth of 2pc, to be trimmed by around 0.5 percentage points.'

Get a grip Mr Osborne! What's needed isn't Plan A - it's Plan A on steroids! Otherwise we could end up like Greece, but without the lovely weather...

Jeff

[superfrank]

What we'll get is Plan Q(E).

Economic growth was only achieved post 2000 by credit growth, and the general plan is all about increasing credit (i.e. pumping up the bubble even though there is a big hole in it).

We keep hearing that the solution is "to get the banks lending again", and we now have the BoE giving near-free money to banks and building societies so they can offer mortgages at less than the rate of inflation. The problem is that we have reached debt-saturation point - and there's little demand for new credit even at interest rates lower than inflation. They may get their longed for short-term bounce in house prices as a result, but it will be a dead-cat, nominal bounce.

Britain will be running deficits for many many years to come (adding to the already huge national debt burden) which will eventually be monetised thus crushing an already crushed currency.

Next will come deficit financed tax-cuts in a last ditch effort to spur economic growth.

But it's all doomed to fail - an economy based on credit growth, asset price growth and consumption (of imported goods) is, and always was, unsustainable - and the sooner tptb wake up to that fact the better.

[Iron]

Excellent article by Allistair Heath - http://www.telegraph.co.uk/finance/comm ... anger.html

'Pak Hung Mo, a Chinese economist, found that every 1pc point rise in government consumption as a share of GDP reduces growth by 0.216pc and every 1pc point rise in transfer payments cut growth by 0.172pc. But he also found that a 1pc point rise in capital expenditure boosts growth by 0.167pc. UK public spending remains 11 percentage points of GDP higher today than it did in 1999, and all of the increase has come from consumption and benefits, even after Osborne’s latest tinkering, thus almost completely choking the British economy.'

Jeff

[superfrank]

he's on the right track is Allister Heath - i've exchanged emails with him in the past and he's one of the few who gets it.

the govt. are petrified of reducing spending by much because of the temporary impact on GDP, but by failing to take the necessary, difficult decisions they are not just preventing the chance of any real long term recovery, they are also storing up even greater problems in future.

nothing will change because the politicians (and the public) have no stomach for a fight and will keep taking the easy option - plan Q(E) - until it all blows up in their faces.

[Iron]

Labour Taxed Poor More and Rich Less Than Coalition - http://order-order.com/2012/12/12/labou ... coalition/

You wouldn't know it from watching the BBC...

Jeff

[superfrank]

Most consumers 'spent less on Christmas this year'
http://www.bbc.co.uk/news/uk-20869522

Just under half - 46% - used some form of debt to help them meet their bills.

"It also shows how far we are from a consumer spending-led economic recovery."

oh yeah, cos a "consumer spending-led economic recovery" is just what we need!!

[Iron]

This is the kind of biased nonsense from the BBC that the government would have to face if they were to decide to tax the rich less - http://www.bbc.co.uk/news/world-us-canada-20869137

'The Republicans are in a corner - over a barrel - although perilously unaware of their plight. [...] Republicans are voting for a tax rise on most people.'

Jeff

[superfrank]

yeah, they don't report economic news, it's mainly political comment.

it starts with "America's reckless politicians" - like running a budget deficit of $1.1 trillion a year is not at all reckless!!

[Iron]

Some analysis you won't get from the BBC:

'Calculated in 2012 money, Labour was spending £615 billion seven years ago. Next year, Mr Osborne will spend £104 billion more than that, a real increase of about 16 per cent since 2005.

...

Politically the Chancellor is in a terrible place: successfully portrayed by critics as a thrift-crazed axeman, chopping his way to national calamity, when, in truth, government spending is set to rise as a percentage of GDP next year, its cash outlay will be about £45 billion higher than this year’s, and national debt is on course to hit £1.53 trillion by 2017-18, 50 per cent more than in 2011-12.'

From http://www.telegraph.co.uk/news/politic ... nough.html

Jeff

[superfrank]

'Blame The Weather' As UK Heads For Unprecedented Triple-Dip-Recession
http://www.zerohedge.com/news/2013-01-2 ... -recession

As snow blankets much of the nation, it would appear the next round of central bank easing will be to print 'sunshine'.

the pound has fallen sharply again in recent days ahead of the inevitable next round of "easing".

[Iron]

UK GDP: Economy shrank at end of 2012 - http://www.bbc.co.uk/news/business-21193525

Slightly misleading headline from the BBC, given that GDP doesn't represent the size of the economy...

Jeff

[staker72]

It's more misleading than that, shrank slightly would be a better phrase, the more imporant fact is that teh economy has in effect stayed level with pretty much zero growth for the year, admittedly standing still puts us ahead of many European counterparts who shrank.

[Iron]

If you took government non-investment expenditure out of the equation, I would hazard that the picture would be one of a country that's haemorrhaging wealth. When you have an economy that's a net importer, that has little investment going on, and that's spending much of its wealth on interest repayments, then it's hard to reach any other conclusion.

I'd say we're a bit like a company that is up to its eyeballs in debt, isn't making a profit, and is only staying afloat due to its cash reserves...

Jeff