The briefing that we are in for several more years of Austerity Britain was curious. How does this square with the more optimistic forecasts from the Office of Budget Responsiblity, the official forecaster?
The official forecasts do not think we are in for more years of austerity. “Whole economy earnings” grow at 2.6%, 2.2% and 3% in the three years up to the election. Wages and salaries rise by more than inflation this year and in 2014-15, and go up by 2.5% in the middle year when prices are forecast to rise 2.6%. In their graph the OBR shows real wages increasing just above zero next year, rising to a 2% annual gain by 2015. The OBR forecasts rising share prices throughout the period and small rises in property prices. There are too many people in the UK on low incomes, and have been for many years. At least the forecasts say more will have jobs and wages will start going up.
Current public spending rises every year in cash terms, and public sector investment spending also rises next year and the year after. The OBR confirms that in the period Quarter 4 2011 to Quarter 3 2012 the public sector has grown overall in real terms, contributing 0.4% to total economy growth, which came in at just 0.3%. They forecast small real declines in public spending hereafter, but that of course depends on how inflation turns out. With a pay freeze in place, if it were effective, the cash rises in spending should allow some growth in service provided.
The OBR forecasts 1.2% growth next year, 2% in 2014, 2.3% in 2015, and higher rates in the following two years. All this could better be described as “gently recovering Britain” rather than “Austerity Britain”. The number of jobs has outperformed their past forecasts by a wide margin, which is the one bit of good news.
The issue, however, is will these latest OBR forecasts be any more accurate than the ones they issued two years ago? Now they have slashed the 5 year growth figure from 13.2% for 2010-15, to under 6%, maybe they have cut it by enough. They do, however, still offer us the same profile of growth as before, with the fastest growth forecast for the latest years of the forecast. As the OBR say in their document “A key risk is that potential output turns out to be lower at the end of the forecast period than we currently assume”.
Indeed. The OBR’s gently recovering Britain could become Austerity Britain again, if inflation is not controlled, and or if output does not expand as planned. We need more growth and faster growth. The aim should be to help many more people enjoy rising and higher living standards.
I will look tomorrow at options to accelerate growth more, to make it less likely we have another disappointment.
December 7, 2012
Well one way to accelerate growth would be not give briefings that we are in for several more years of Austerity Britain. Confidence is half the battle. That and as we all know well -far lower tax rates, a much smaller state sector, cheap (non green religion) energy, fewer daft regulations, and functional banks, less EU, a few new sensible roads, 5 runway Heathwick and get rid of all the pointless traffic lights and road blocks islands they have installed. That is all that is needed, of course it would also be nice not to have Labour in 2015, as now looks inevitable with Cameron.
December 7, 2012
JR points out a pay freeze, while Osborne announces a 1% increase in welfare. How is this fair in anyone’s sense of the word? It is reported today there will be a £27 billion black hole in the government’s spending by the next election that will have to be filled with more taxers or more cuts- who should we believe?
JR has pointed out on countless occasions that the government needs to make cuts not just talk about cuts. It appears to me that the Tory led coalition has had some of the political pain for making cuts that actually have not happened. What is clear is that the UK cannot continue like this. Welfare has to be slashed to be viewed as a temporary measure to help people not a life choice (other than the poor disabled).
Welfare change might help reduce our mass immigration problem, but will not help at elections (Brown’s plan of a dependent state). The ridiculous comments by Teresa May the other day on the subject of immigration beggars belief why she is a minister- what progress to date has she made to reduce immigration in two and half years? Based on performance and electoral pledge she has failed. It does not take an investigation, inquiry, review or anything else to realise why immigrants prefer to come to the UK rather than stop in France, Germany or else where along the way. Wake up and smell the coffee. Government likes targets and a host of bean counters, by anyone’s standard she has failed, time to go. Ministers need to be held to account on performance, if they fail they go.
December 7, 2012
Teresa May is clearly not actually in control of immigration matters the EU are in the main. She is just pretending to be it seems.
December 7, 2012
Welfare isn’t pay, it’s a pittance given to people so they don’t starve to death. Also if it isn’t increased by the rate of inflation then it falls in real terms.
Unless you can magically create enough jobs for the 2.56 people who are unemployed then all your plan will do is force the unemployed into greater poverty and crime.
December 7, 2012
Oh spare me the childish, loony left wing propaganda uni,
Starve to death? I dont think so.
£26,000 max housing benefit paid, child benefit paid and a weekly cash benefit paid, added to free health and free education.
Not a huge amount of money to live on, but I challenge you to give us names of anyone who has starved to death in this country whilst on benefits.
December 8, 2012
Housing benefit goes to the landlord not the person on benefits, child benefit is £20.30 per week for the first child and £13.40 per week for each additional child, job seekers allowance is £71 per week, healthcare and education are free to all because they’re essential to a modern economy.
I stated quite clearly that Disaffected’s plan to cut the already low levels of benefits will lead to people starving. Try reading what I’ve written, not what you think I’ve written.
December 8, 2012
Wrong again as usual uni,
Housing benefit isn’t paid direct to the landlord get your facts right before you shout off.
Usual attacks on the person rather than addressing the argument
I notice no list of starve to deaths on benefits, carefully left out by you.
Usual propaganda of the left.
December 9, 2012
Many are caught bet tween heating and eating and many parents feed their children and do not eat properly themselves. You need to stop you looney right wing propaganda like families living in mansions. How many and where? About five in London is the figure. If you did see a rise in poverty related illness you would no doubt blame the poor for it.
December 7, 2012
You live in cloud cuckoo land. Welfare provides a good living as long as you have never worked. The trouble is if you have worked you get little on welfare.
December 8, 2012
Well you clear don’t know what you’re talking about.
The level of welfare the unemployed receive is based on your savings, so as long as you have less than £6,000 in savings you receive the same level of welfare as someone who has never worked.
December 7, 2012
Clearly the way to create jobs is to stop paying healthy people to encourage them not to work and cut the size of the 50% state spending so industry can compete again.
December 8, 2012
So your plan is to give the unemployed no money to buy food or housing; and you expect something other than mass homelessness, riots, and a huge increase in crime. That only happens in right wing fantasies, not real life.
December 9, 2012
Desperation will create jobs? Do tell us how. A single person would receive discounting housing and council tax benefits. £327 per month to live on. Is that to generous when utilities would account for half of this? A £150 a month for food clothes and transport. The food bank schemes are seeing ever greater expansion from all areas of society. The population will not just sit back and having nothing and being happy with it to fulfill your right wing fantasies and ideology. Ram it.
December 7, 2012
They don’t know how lucky they are to be getting anything at all. Same attitude to the NHS – which they also get absolutely free. Something for nothing and complete indifference, even contempt. You really need to wake up uanime5. The world does not owe us a living.
Class war? Perhaps a new definition of it. The class of those who work hard and create wealth, and the middle class left wing social engineers who sponge off those who create the wealth in cushy state sector “jobs” at institutions like the BBC.
December 8, 2012
The state has a duty to care for its citizens and provide for them. Welfare isn’t a privilege it’s a right.
December 9, 2012
There are millions in this country who live in poverty the idea that it is all self inflicted and they should get a job is a regressive retarded argument. The middle class social security system helps many a sponger and the communism for the rich in this country is criminal. A return to 1900’s welfare rates is not going to happen and nor should it.
December 7, 2012
My main concern is immigration. When, when will someone get to grips with it. Anyone who does will win the next election
December 7, 2012
Replace “next” with “following” and you would be right .
They will all promise to get to grips with Imigration before the election , change the UK’s relationship with Europe , repatriate powers maybe even have a referendum on Europe but this is quickly forgotten when they get into power .
December 7, 2012
Good Morning, I have remarked before that these changes are getting on for being negligibly small in relation to the unarguably large margins of error . Given this, I hope you do not mind if I throw a small brickbat at you relating to the need for precision in beginning and end of periods. I am very far from accusing you of juggling with the tinkering but on the other hand when you refer to “the period Qtr 4 ’11 to Qtr 3 ’12” I for one seriously do not know (precisely) what you mean. There are three obvious likely possibilities (plus a lot of unlikely ones). If some kind of conventional usage has sprung up (or there is some Note to whatever you are looking at that I am unaware of) I deprecate it and I suggest that any such usage should not be carried forth elsewhere at least not without comment. That apart, I suggest that these so-called “Forecasts” ought to be termed instead something like “Working Assumptions (for Illustrative Purposes only)”, especially those 5 years out. In any event one should not expect the OBR or anybody else to be able to do what’s impossible and what they say should be read in that light.
Reply: I quote this time period because that is the time period reported in the official figures of the OBR.
December 7, 2012
Reply to Reply–Maybe, and sorry to go on a about it, but a Qtr to a Qtr is simply not a time period (I’m not sure what it is)–now if it were Qtr Beg (or End) to Qtr End it would of course be different–better yet plain old dates. If the OBR report as you say (and presumably with no Note) I think the less of them for it. Yes I appreciate the constraints from their point of view, but not yours, of columnar presentation.
December 7, 2012
See Table 2.2 (page 23) of
http://cdn.budgetresponsibility.independent.gov.uk/December-2012-Economic-and-fiscal-outlook23423423.pdf
to see the 0.4% and 0.3% numbers.
Page 22 is titled ‘Economic developments between March and December 2012’.
December 7, 2012
Caterpillar–Thank you for the link–I agree that the meaning of the OBR report, even as regards the tiny point I seek to draw attention to, is clear enough to any eyes, if only because of the many references in the text along the lines of “in the such and such (or final) quarter (of 2012 or 13)”. Also it would be disingenuous to say that the periods are not obvious from the overall context of the Report but I reckon a stand-alone blog comment, especially one by John, should have spelled it out–after all we are only talking a couple of “end of”‘s extra. Reading his diary today on its own it was not possible to be certain. It is not a hanging matter.
December 7, 2012
Government spends more, taxes more, devalues the currency more, racks up more unpayable debt. Meanwhile those of us that have to rely on earning from doing productive work find that life becomes harder every single year. We are expected to work harder, pay more tax to support the public sector with the prospects of ever being able to afford to retire receding further daily. Rents go on up, food costs continue to soar, energy prices are being rigged to go through the roof for the benefit of the elites and their climate con, more regulations to hinder business every month. Then we have our chancellor feeding us lines of spurious and meaningless statistics to justify all this and his total lack of courage. Hemingway once wrote that a man goes broke “slowly, then all at once.” Same with a country. Wonder when the “all at once” part will be?
December 12, 2012
When China stops propping up the US by buying it’s bonds?
December 7, 2012
It will be very interesting to read the diary tomorrow to see how growth can be accelerated. In the meantime my desperate/extreme view, based on the coalition seeming to be messing about rather than getting on with it, is:
Simply state to the electorate the percentage of spending that needs to be cut and cut it. Decimate benefits, privatise both the NHS and post-primary education if necessary, just get on and act with intent.
Stop propping up zombie business and zombie mortgagors with inappropriate QE/ZIRP policy. 4 years of CPI inflation at equivalent to 3.25% per annum needs to, at a minimum, be symmetrically compensated with 4 years considerably below target (and that will only get us back to an appropriate CPI, it doesn’t compensate for the years of consequential lost demand), a little deflation would help.
Get on with dropping the green belt, it has been and remains a constraint. It could be dropped but green corridors for flora and fauna introduced, and some brownfield turned green for relaxation.
If sufficient cuts can be made to make investment then be serious about the choices and act. There is possible evidence that crowding out occurs in UK, so choose monopoly breaking investments. This will tend to imply transport to break location based monopolies – stop talking about HS2 and start building HS2. Such projects are inevitable long term, but they are even longer term if they don’t start.
Simplify the tax system.
December 7, 2012
Why should all the things you don’t need be cut in order to balance the budget? Why not try to get the additional money from higher taxes on the wealthy?
December 7, 2012
Because there are not enough millionaires to go round uni.
If you taxed all the rich at even 80% there are simply not enough of them to provide the money you need.
The top 1% of earners already provide over 25% of all the income tax
December 7, 2012
uanime5,
I certainly haven’t said these are things I don’t need. The point is if the situation is as bad as many believe it is then the conversations should be had and not avoided with a wish that growth / more tax will, with a leap and a bound, come to the UK’s aid (though admittedly the unspoken pro-inflation ploicy has probably cost some growth).
On tax, whilst I am a supporter of simpler tax, I have also stated here before that if it is revenue that is needed then there is no evidence of a Laffer effect in consumption based taxes. People woud squeel at increasing VAT (- also something that could be simplified), but this is the tax that does not seem to have a Laffer effect, so cutting and simplifying elsewhere but increasing VAT to raise more tax may indeed be an approach. Also despite generally being for lower and simpler taxes I am a supporter of ‘wealth’ rather than income taxes, I am not sure that a mansion tax is the approach to go, but in terms of driging out unproductive capital and also being progressive then ‘wealth’ rather than income is the taxation route to go. Unfortunately I suspect, apart from the mansion route, this is probably tough to implement.
On NHS and education, it is not obvious to me why there would be less provision by privatising.
On dumping the greenbelt to allow expansion where needed, and switiching to providing nature with green corridors and city dwellers with internal new green spaces, I am at a loss to see why this is a problem.
On ZIRP and zombie households I cannot see why mortgagors are seemingly considered to have more ethical value than those renting or B&Bing whilst trying to save to buy a home of their own. These people are effectively subsidising the mortgagors, it makes for an inefficient market and gives more ethical value to those on the inside than those on the outside.
Uanime5, I suspect you might read the comments as neoliberal right wing drivel, as they are not gorunded in ‘need’ reasoning, but they are not aimed at that. They are aimed at saying the problem is large, there are directions that can be considered, they oughtn’t be political and indeed the winners and losers may be spread around – I suspect a readjusted housing market and changed greenspace would hit more coalition than labour followers.
December 8, 2012
My main criticism was that you believed that slashing benefits, education, and healthcare were a viable way to save money. The latter two are essential if you want the UK to have a healthy and educated workforce, while the former is essential because the lack of jobs mean not everyone can work from leaving school until they retire.
Regarding privatisation the problem is that only those who can pay will get access to healthcare and education. Until Obamacare was introduced the USA is a prime example of what goes wrong when free market private healthcare system is used (the poor didn’t get any medical treatment, nor did people with long term medical conditions).
There are plenty of brownfield sites available however developers prefer green belts because they’re cheaper to build on.
December 7, 2012
Taxes are a necessary evil and should based at the least amount possible. If you work you should get the rewards of your labour. Your money should not be thrown away on wind farms in the UK let alone Africa, EU, overseas aid, mass immigration, west coast rail line, AV voting, police commissioners.
December 7, 2012
This would not get through the house.
While a large chunk of that sounds good, there are some pretty damaging policies that would decimate the Conservative Party (Losing the greenbelts would be massive).
Flat tax, lower corporation tax & cheap energy would do rather well I think.
December 7, 2012
Scottspeig,
Well admittedly I am ignoring political reality, sonething that cannot be done under a FPtP system, one constraint is indeed our non-linear democratic system.
Whilst I agree that taxation needs to be changed and simplified, I am unconvinced that this (and energy) are the only binding constraints, nor can be efective without smaller state.
For me the question that the politicians, media and wishful thinking forecasters do not address sufficiently directly is –
– can the UK get itself out of its Structural mess without doing something more substantial?
December 7, 2012
More guesses on growth, more spending already assuming tax income goes up for the next few years, more tax rises to get more tax income.
When will someone look at the facts.
We have been spending more than our income for years, so do something about this very, very simple fact.
CUT EXPENDITURE TO THE KNOWN HISTORICAL INCOME.
NOT SOME PIE IN THE SKY GUESS.
Can I suggest the Government starts from ZERO and rebudgets all expenditure from scratch.
Sorry John, but all these guesses about future growth, future tax revenue, and increasing spending is just simply depressing.
Give us a break, put a smile on our faces.
Let us keep more of our own money, to spend how we want, on the things we choose, and you will perhaps get more people prepared to work that little bit harder or a little bit longer, and then you may automatically get some growth.
Why should anyone work harder or longer when the government gets the majority of the money they earn.
Many people have now changed their work /life balance simply because they see no point in working and rewarding someone else (the government) who they then see as pouring money down the drain.
Indeed this is one of the reasons I chose to retire earlier than originally planned.
I listened to the radio for some time yesterday with most reports seeming fixated on “more cuts to Benefits”, not one person thought a 1% rise (tax free)was exactly that, a small rise, they all thought it was a cut.
Given Benefits rose by 5.2% tax free last year perhaps they should think themselves rather fortunate.
Sorry but as a retired person my personal pension income has not risen by a bean, other than the State pension for which I have paid 49 years contributions.
My Wifes income has not risen at all, but increased taxes have reduced her net income.
My Daughter had a 2% salary increase, but after tax and Rail fare increases (to get to work), she is also net worse off than last year.
Time to think rather more of the workers and strivers who pay for all of this spending .
The Government has no money, it only has money it gets from taxpayers, and those taxpayers are getting rather fed up paying for all of this spending (that is why the alternative economy is growing) and the sooner the majority grasp this fact, the sooner we may see progress.
December 7, 2012
Alan–As regards budgets, I like what Thomas Carlyle had to say, viz “Our grand business undoubtedly is, not to see what lies dimly at a distance, but to do what lies clearly at hand”. Spending merely anticipated income is half the problem. A Budget should be just a means of assessing performance against a set of prior assumptions.
December 7, 2012
Most of the low paid do keep the money they earn because they’re net tax recipients, so any reductions in taxes will only benefit the wealthier. Another problem is that many people aren’t spending their money in the real economy but are saving it or investing it in things that have little economy benefit.
If benefits don’t rise in line with in line with inflation then that’s the same as cutting them. So effectively the chancellor is cutting benefits.
December 7, 2012
uanime5
“Most of the low paid ———- are tax recipients”
Pray tell me why any taxpayer should subsidise Companies paying low wages to their staff.
You can cut taxes and it not just benefit the better off.
You simply raise the personal tax threshold by a massive amount.
We need to encourage all reasonably able people to work.
No one on the minimum wage should be paying income tax, so set the personal tax level at that rate per annum for a 40 hour week.
At the same time tax all Benefits as earned income, yes I know it sounds daft, and it is costly in administration terms, but then perhaps, just perhaps, those who get money for nothing, will realise how much it all costs.
Why should those on Benefits get all or part of their income tax free.
The sooner we make work pay, the sooner the Country will get back on its feet.
I repeat what I said yesterday.
THE GOVERNMENT DOES NOT HAVE ANY MONEY, IT SIMPLY TAKES IT FROM THE POPULATION IN EVER INCREASING AMOUNTS.
Those who earn it have to be alloed to keep the majority share, otherwise why bother.
December 8, 2012
The problem with your plan is that it will leave those on minimum wage much worse off than the current system. Minimum wage isn’t enough to live on without additional benefits so even if the personal tax allowance was increased to £12,854.40 per year the loss of money from taxing benefit leave most people worse off.
Your plan would be disastrous for those working part time who already earn below the personal tax allowance, as they would get no benefits from an increased personal allowance but would suffer a large loss from having their benefits taxed.
Work won’t pay if you keep cutting the benefits of those who work.
December 7, 2012
Given that reductions in tax will benefit anyone who pays tax and benefit most, those on lower incomes you are wrong.
Given that benefits have risen with inflation up to now, which is far better than most workers in the private sector have enjoyed, this 1% rise is a fair settlement for those who live on benefits.
December 8, 2012
Given that increasing benefits by 1% is a 2% cut in real terms how is this a fair settlement?
December 9, 2012
See end of my para 2 “which is far better than those working in the private sector have enjoyed” and add …who feel it is unfair that they have to pay incresing taxes on a static salary whilst others who dont work have pay rises.
I presume uni you work in the public sector and are immune from this current reality.
December 7, 2012
@uanime5
“So effectively the chancellor is cutting benefits.”
Well something needs to be done to discourage welfare dependency, and cutting benefits would be the obvious solution.
At a stroke it would reduce the strain on the treasury, encourage the indolent to get off of their back ends and try to make themselves attractive to potential employers and it would have the added benefit of making the UK less attractive to freeloading immigrants.
December 8, 2012
Just one problem with your argument, those who work for minimum wage receive benefits. So cutting benefits punishes those who have gotten of their “back end” and found a low paying job.
December 7, 2012
Obviously the intention is that the country remain in thrall to the banks forever as the banks have done to so many other countries over the centuries .
As soon as a country borrows money it outsources it’s governance to the lender . That would be bad enough with asset backed money but is completely unforgivable with fiat money .
Oh for a law which made it illegal for politicians to run up debts in the name of the country and to spend more than they collect .
Proper accountancy standards need to be applied to the nation .
It doesn’t do the poor any good in the long run .
December 7, 2012
There is, of course, the minor issue of mass immigration and its effects in depressing wages whilst driving up demand for local resources – especially housing.
High costs and unaffordable housing are not because things have got ‘too expensive’ but because people have got ‘too poor.’ Though I don’t argue that we are blessed in this country it is our chosen trajectory which concerns me (chosen by whom.)
Starbucks (apropos Radio 4 this morning)
“Come to our country and sell your non-economic-growth-related product, Mr Starbuck. Your customers will provide a negligible tax regime and will even provide a subsidised work force for you to use – one which will work below living wage and which is specially imported to cover those they’re already paying for but who choose to stay in bed.”
Too right they’ve already coughed up £10m quid. etc
We simply cannot discuss issues such as the standard of living in this country without mention of the minor problem of mass immigration and its impact on the same.
I believe that this is where your 3-4million voters have been lost. Plan C it appears, is to let Labour back in – bankrupt us, destroy the welfare state and that way we at least take away one of the attractions. We’ll rebuild after that.
I have had to keep raising this subject on this site over the years because it barely gets mentioned in your posts.
Reply I regularly mention it and am seeking changes of policy over eligibikity to benefits and public services for non citizens, and a new control over our borders vis a vis the rest of the EU.
December 7, 2012
PS I see the BBC edited the mini budget to show the Tory front bench laughing whilst the presenter’s voice-over chuntered on about austerity and hardship.
The true context was deliberately left out. This was very unfair.
Ball’s balls-up was deftly turned into Mr Cameron’s by the BBC. They should not have been laughing at the despatch box at this time.
December 7, 2012
PPS, The recent BBC reports on the NHS meltdown … all down to the amount of pesky old people falling ill – no mention of mass immigration or health tourists at all.
Nor anything from the politicians about it.
So it’s okay to be ageist (against people who have paid their taxes.)
December 7, 2012
And no mention of the EU directive “Working Time” which is causing huge cuts in our hospitals due to less training and less time worked by doctors etc.
December 7, 2012
How are employees working less hours causing cuts? Surely if the doctors work fewer hours then this saves money because they’ll be paid less (unless doctors are forced to work a lot of unpaid overtime).
December 7, 2012
Come on uni, keep up.
Every NHS staff member has a big pension cost and training costs etc and when numbers of staff rise, due to each person now working less hours than they once were, and the NHS has to employ more staff to cover the hours, then there is an big additional cost to the organisation’s budget.
The doctors don’t get less pay.
In fact their pay has risen.
December 8, 2012
NHS porters living it up again. Ram it.
December 8, 2012
Bazman,
Read again what I said not your left wing fantasy of what I said.
Where was there any mention of hospital porters?
How is that even slightly relevent to the argument
Can you prove what I say is wrong. Where are your ,where are you arguments?
None… thought not
Thats why you have to resort to shouting rubbish.
December 8, 2012
Does a pension for 2 employees working 37.5 hours per week cost more than a pension for 1 employee working 75 hours per week? If not then having more people working fewer hours won’t increase the pension bill.
Also training costs will only increase if individual training is used. If students are trained as a group, such as at a university, it’s possible to increase the number of students trained without increasing costs.
December 7, 2012
It is possible to opt out of the directive so no one is forced to work the hours. Or forced to work the hours…
December 7, 2012
@Electro-Kevin
Are you still funding the “Ministry of Truth” channel?
You really should stop it.
Send the message to the establishment that we’ve seen through the BBC and we are not prepared to pay for our own brainwashing any more.
December 8, 2012
How often does the NHS end up looking after old people by default rather than because they are ill ?
Sort out care of the elderly and a lot less old people will end up burdening the NHS because there is nowhere else for them .
December 7, 2012
The OBR’s forecasts are just as unreliable as those from the BoE. That is part of the problem of lack of confidence. Is not the main threat that the government’s debt is growing inexorably and if interest rates on gilts were to rise the government would be unable to finance the debt and we would be like Greece, Spain and Portugal? With that in mind is GDP really an appropriate measure of success? After all we can have growth if the government borrows and spends more but I fail to see how that helps reduce the deficit, in fact quite the opposite. Despite this we are told daily that all we need is more growth. We want growth in the private sector not the public sector. Is there not another index that can also be used which excludes government current spending?
December 7, 2012
Brian–Now you are talking–Apart from being very odd in what goes in to it, even if we could overcome that, it is not, as you say, terribly relevant. When did we start worrying about it–or am I dreaming that it used not to be regarded as important at all?
December 7, 2012
Leslie,
I can’t put a date on it but it is only recently that is has become an obsession for the politicians and the media. Like other targets the government sets, it distorts thinking and diverts attention from the real issue which is debt. What will they say if growth increases and the deficit still persists and continues to add to the debt, which is what will happen if the government carries on spending more and more?
December 7, 2012
Compared to some other countries, Greece being the most obvious example, overall we haven’t yet had much in the way of “austerity”.
Of course the adverse effects of the economic downturn and the government’s attempts to reduce its horrendous budget deficit are not spread uniformly across the population; so certainly some people are already suffering significant hardship, but for many others, the great majority, the effects have been rather marginal so far.
That would change for the worse if the UK government found that private investors were no longer willing to lend it enough money to fund its budget deficit, as happened with the Greek government, and so it was forced into making drastic cuts in its spending.
Thanks to the novel funding device known as “quantitative easing” both the Labour and coalition governments have been able to avoid drastic actions such as suddenly cutting 20% off state pensions and welfare benefits, shedding large numbers of public employees and cutting the salaries of the rest, which would have created genuine “austerity” and moreover would have been counter-productive in the short to medium term.
Just a pity that the general public still don’t understand that as practised in the UK so far the primary objective of “quantitative easing” has always been to make sure that the government doesn’t run out of money to pay its bills, and so don’t fully understand that the government must take some painful measures to shrink its budget deficit.
December 7, 2012
Ed Conway, Economics Editor for Sky News, recently made a revealing report about the unevenness of the recession across the UK. In fact London and the SE, overall, have not been affected in the same way as, say, the North which has been hit hard. There is also ignorance about what has actually happened to government spending – most people interviewed thought it had been savagely cut. The politicians themselves are partly responsible for this, aided and abetted by those media organisations with an agenda of their own.
December 7, 2012
“There are too many people in the UK on low incomes, and have been for many years. At least the forecasts say more will have jobs and wages will start going up.”
Didn’t Mervyn King say at some point that the expansion of the workforce through mass immigration was depressing wages and consequently reducing consumer price inflation, meaning that interest rates could be set lower than would otherwise have been the case?
December 7, 2012
Growth doesn’t solve the government mess. A simple calculation shows why.
Get 1 million back to work. Most will get min wage jobs. So that generates 3K a year in tax, and 12K a year less in benefits. 15K better off for each one. Assuming you spend nothing.
So that’s 15 bn. How does that deal with a deficit running at 150 bn?
Even that assumes you aren’t running none of those schemes that only get 5% back into work at vast cost.
So that means when you talk about ‘growth’ you really mean we don’t have to cut spending so long as we screw more money out of the working tax payer.
December 7, 2012
Getting people into full time minimum wage jobs will save far less than £15 billion for the following reasons.
1) You can still claim most benefits if you’re working full time in a minimum wage job and you’re eligible for working tax credits (minimum £130 per week). So each pound earned doesn’t mean one pound less in benefits.
2) Those not working get £71 per week in job seekers allowance, those working minimum wage jobs get a minimum of £130 in working tax credits. So people working in minimum wage jobs can cost the treasury more than being unemployed.
3) Of the £12,071 you get working 37.5 hours per week, 52 weeks per year at £6.19 £7,475 isn’t taxed due to the personal allowance; so the taxable amount of money earned is £4,595.50. As the income tax rate and NI is 32% of earning this means the treasury only gets £1,470.56 in taxes, not £3,000.
December 7, 2012
Best to just let everyone stay unemployed then…is that what you are saying
December 7, 2012
And uni, can you tell Balls and Milliband because they keep banging on that the best way to get the UK economy going is to get unemployment down.
“get Britain back to work”….
December 8, 2012
Better ask them whether they believe in British jobs for British workers .
The Labour party doesn’t , neither do the Conservatives , neither do the Lib Dems , nor the TUC , nor the CBI .
December 8, 2012
I’m saying that if people work in minimum wage jobs the treasury won’t save much money and may even lose money. Though if they work in higher paying jobs they may actually contribute something to the treasury.
Minimum wage is currently too low.
December 9, 2012
So uni,
By your logic the solution is to put the minimum wage up to say £20 per hour and we can all end up fully employed and happy ever after.
Just need to give that big money tree a shake.
If you had ever run your own business in a competitive market you would realise this is a total fantasy.
December 7, 2012
It is very odd indeed that the government keeps banging on about “austerity” when in fact spending is continuing to increase. A majority at the next election will not vote for “austerity” so why pretend there actually is any ? I’m puzzled. Maybe it is to try to fool the bond markets and keep yields low ? One effect of it is to prevent people and companies spending and thus helping the economy.
December 7, 2012
Roy–It is another inexplicable decision from this daft-as-a-brush Government. They have not made clear – far from it – even whether spending categories are going up or down at all, never mind by how much, and I would have thought that NOT saying something like (too late now of course), “There will be some reductions but hardly such as could be called austerity” would have been Way To Go. Perhaps we need some spin doctors with bar charts showing what is going on. My dictionary has on the meaning of austerity, “applied during World War II to national policies limiting non-essentials as a wartime economy” and I do not think we are quite at that stage yet.
December 7, 2012
Off subject, the subject of police conduct in the current investigation of child abuse would be an interesting subject , which you may wish to raise.
(Comment on an individual police officer removed as probably not relevant)
The MET website does not state which senior officers are in charge of operation Yew Tree, but the officer running the site appeals for any abuse victim to contact the NSPCC and says that the number of people claiming abuse has been very large. He promises to take allegations seriously. The NSPCC is well known as a campaigning organisation against sexual abuse.
It seems strange that lessons have not been learned from the events ten to twelve years ago, when the police were found to have ‘trawled’ for victims, many of whom who turned out to be have been encouraged to accuse ‘abusers’ and claim compensation. Many of these were later found to be innocent. Recently, the accusations over the North Wales home resulted in another farce.
No doubt there were many cases of illegal sexual conduct in the days of the sexual revolution, groupies, and drug fuelled performances. Personally, at the time I thought these goings on a ridiculous fad, but today the idea that the police, in partnership with the NSPCC would be trawling again for the now late middle aged ‘victims’ equally ridiculous. Anyone in the public eye during this time must be very worried about possible claims.
The Institute of Psychiatrists warned practitioners of ‘recovered memory’ that ‘false memory’ was likely, and could be enhanced if actively encouraged. I have heard of two cases where women under treatment for mental disorder made claims which resulted in great harm to the accused. In one case this was retracted and in the other there was a feud over a will, which has spit a whole family. Yet a proportion of therapists continue to use this method, and the abuse sector is thriving. Talking to a senior psychologist over dinner recently, I was told that patients who recover memories split into different groups, one of which she termed ‘hysterics’. These often suddenly remember so much abuse that they are easily suspected as false.
The current hunt for ‘Yew Tree’ abusers seems to be expanding daily and unless Ministers act to question the direction of the investigation, it may become the most expensive and damaging police farce so far. Just enter ‘false memory’ or ‘sexual abuse’ in the Wiki sites and all the evidence of previous mistakes is there.
Reply Police independence means politicians do not and should not seek to guide an investigation into reported crime. Let us hope this wide ranging investigation is well conducted – there is no evidence that it is badly conducted, and people do have a right to make complaints and produce evidence. Of course the authorities have to make sure before charging someone or tarnishing their reputation that there is evidence that could stand up in a court of law. The problem with sexual abuse cases is that one person can make an allegation, the other person vehemently denies it, and there may be no witnesses or external evidence. In this situation one or other of the two people is badly done by, depending on who has the truthful memory.
December 7, 2012
Who ever thought of the title ‘Yew Tree’ with its association with graveyards, rather than the more obvious ‘Witchhunt’, obviously has an acerbic wit. Of course, all the alleged abusers are elderly white males.
How can the police be taken seriously, complaining of cuts, when they drop current serious crime to investigate fifty year old alleged offences for which there is no possible forensic evidence.
One has to wonder whether this whole charade is underway to divert attention from rather more recent outrages.
December 7, 2012
There is a danger of making perfection the enemy of the good .
Even a paedophile who is not rich or powerful must through their network know of other paedophiles in important positions who they could threaten to have called as character witnesses .
Someone who was ( a high profile person) could call a whole stream of paedophile priests , MP’s , MEP’s , judges , TV presenters before charges were dropped .
December 7, 2012
It’s United Nations Agenda 21 in action John isn’t it ?
Apparently the Western Lifestyle is threatening the planet and we all have to be impoverished for the greater good .
Educated people consume more so education has to be dumbed down .
State vs the individual in action .
There is no need for a fifth runway at Heathrow because Britons are to be deliberately impoverished so they can’t afford to go anywhere ever again .
Briton’s will have to settle for watching other parts of the world on pravda .
Wake up people , there is no intention of allowing Britain to recover .
December 7, 2012
The BBC were talking up 20-30% cuts in non protected departments following the recent IFS report and that big tax rises would be needed to avoid this situation. The obvious implication being that no government would countenance such a cut in spending. If this is the case, it is difficult to see where any growth would come from either from the producers or potential consumers who are facing a continuous squeeze. Notwithstanding this, most of their forecasts have been quite a long way off target. We have mentioned that the distance between 13.5% and whatever we end up with by the end of this Parliament is requiring an awful lot more money to be borrowed or QEd to finance continued public spending…..
zorro
December 7, 2012
One of the main things that must be done is a serious squeeze on inward migration. It is unbelievable that we continue to pay benefits to millions when we have allowed millions to come in and take jobs which have been created in the economy. We would not be in this mess if hey on trolled the borders and access to benefits more tightly. We certainly would not be spending countless billions extra in DWP or the NHS as a working population would be generally more healthy. All this is perfectly achievable if there was a will, but there isn’t no matter how much they huff and puff…..
zorro
December 7, 2012
We have a dreadful imbalance within our spending and GDP with regards to what is spent by the state on social spending…..
zorro
December 8, 2012
The big problem with Western economies is there are no measures to prevent flight of capital out of the country .
When the few World class companies we have are bought by foreign owners production can be moved overseas .
We’d do well to lose those parts of the financial services industry (most of it) which do little more than facilitate the flight of capital overseas .
Same with human capital . The real entrepreneurs which society relies on ; middle class businessman , local company proprietors and white van man are leaving the country in droves .
Europe , the UK is in Europe sadly is uninvestable . Look at the complete horlicks the UK has made of shale .
France has enshrined UN Agenda 21 principle 15 , the “Precautionary Principle” , in their constitution .
The Precautionary Principle states that the authorities don’t have to scientifically prove you are doing something which might be harmful to the environment in the future , they only have to decide that you are .
So they can decide that you are in an area populated by endangered wildlife and confiscate your house or prevent you farming without even having to actually prove there is endangered wildlife there .
All these aims sound admirable but they are designed to be used against the individual by an unscrupulous society .
December 7, 2012
Sorry. Para 6- the family was split, not spit.
December 7, 2012
I am interested to read that “…..the public sector has grown overall in real terms, contributing 0.4% to total economy growth”
How on earth can the growth of the public sector contribute to the economy? This is money being taken OUT of the public purse (our taxes) to pay for yet more waste. If this is what the government thinks then nothing will ever happen. We may as well put Labour back in; at least some of them had gravitas, none of the present do, in fact, most of them are still wet behind the ears.
Reply Because the public sector supplies services like healthcare and education just as the private sector also supplies some healthcare and education – both add to GDP
December 7, 2012
“Because the public sector supplies services like healthcare and education”
Well, just open the borders then and look forward to vistas of unbroken growth.
December 7, 2012
Ah, but then we would have to talk about GDP per head.
December 7, 2012
Reply to reply,
What is the use of adding to GDP if it is not reducing the deficit? Or is our main problem not unsustainable debt?
December 7, 2012
The Coalition might be more politically savy to say “clearing the last Labour Government’s debts is taking longer than anticiapted” rather than using the word “austerity” continually. Ed Balls is totally unrepentent about his role in bringing about the present situation and is ever cocky and of course no interviewers ever challenge him about it!
December 7, 2012
But we’re a very long way from “clearing” the accumulated debt, we’re still adding to it albeit at a slightly slower rate.
December 7, 2012
Would a majority Tory government be doing better on the economy? I doubt it. We would have similar policies whoever was in charge. I see no end to this deficit and debt cycle whilst real cuts to wasteful state spending are avoided. Emigration looks to be the only answer, I’m afraid.
December 7, 2012
Without having read the other comments, so forgive me if any is a repeat.
We could start by exiting the EU and releasing business from the onerous and burdensome regulatory straight-jacket. This alone can save £150Bn/year.
Drop the ridiculous wind program, saving the £10Bn/year planned over the next decade.
Stop foreign aid except in response to disaster. £12Bn/year.
Reduce taxes, esp. corporation tax, but also simplify and close the many loopholes so we are internationally competitive for investment, i.e. job creation. That way, more tax revenue is achieved and less paid out in benefits (and less completely law abiding companies are accused of being immoral!).
December 7, 2012
Given that any company that wishes to sell something in the EU will have to make good that conform to EU laws the UK will have to obey some EU laws regardless of whether the UK is in the EU or not.
Since when has removing tax loopholes resulted in making a country “internationally competitive for investment”? Also if companies are looking to perform a labour intensive task with low profit margins then low wages are more important than low corporation tax.
December 7, 2012
And..
Cancel HS2 — 32Bn
Cancel Trident — xx Bn
Cap Public sector salaries and restrict public sector pension payouts to 100k max
December 7, 2012
The Office of Budgetary Responsibility, a Soviet politburo name to be sure, could not accurately forecast anything. They have the track record to prove that. It takes a certain ignorance to be that arrogant to think they can. The best traders in the world, who unlike the OBR, risk their own money, get their guesses correct about 60% of the time, at most. They make money by being nimble, especially when they are wrong. Govts get it wrong far more frequently and stay wrong for decades.
The OBR and their ilk have been hopelessly wrong since 2008. The Bank of England have been wrong for at least a decade. Nobody in the brain dead govt or its quangos even saw 2008 arriving. They thought that the crashing of biggest credit bubble since the 1930’s bust, which took almost 25 years to repair, would be over in 18 months or less. This credit bubble was at least 3 times larger than that of the 1930’s. It has not been resolved, on the contrary it is still being maintained by govt fiat. The Dow peaked in 1929 and only regained those valuations in 1953. If anyone thinks that this is nearly over has not read any history. History may not repeat but it does rhyme and the most basic probability says these forecasters don’t have a clue what they are talking about.
Why should the govt and its quangos now suddenly become wise ? It is impossible to predict markets accurately all the time, or usually even most of the time, because if there was a guru or machine that could do it would be be the most sought after item in the world, because untold riches could be gained from that knowledge and it would most certainly not remain in the preserve of the govt for long. Not to mention that once such knowledge leaked out, the markets would frontrun the program , rendering it useless very quickly.
It is pie in the sky to believe this govt forecasting nonsense. It is about time the govt realised this and got out of the markets, but that would require the decision of more capable people than govt attracts. The ultimate catch-22.
December 7, 2012
Mr Redwood,
The simple truth is that the government needs to stop overspending.
If you keep increasing welfare benefits you will attract claimants from all over the world.
I am curious about the idea that we’re paying for installation of wind turbines in Uganda. On the “follow the money” principle, who is selling the hardware to the Ugandans at our expense?
Do any of our MPs have a finger in the pie?
As Alan Jutson has said many times, spending money you do not have results in misery for all.
December 7, 2012
David Cameron said in October:
“”we have cut a quarter off the deficit in the past two years. 25 per cent. That’s helped to keep interest rates at record low levels… …keeping mortgages low.””
I am happy to say that I have evidence to prove that David Cameron is more than telling the truth. From a MarketOracle Article “Bank of England Cancels Britain’s Debt, Coalition Government Budget Deficit Crisis is Pure Propaganda”:
“The rate of QE since March 2009 has been averaging at about £120 billion per year, which approximately covers the whole of the governments budget deficit and therefore ALL of the new deficit debt that is being issued on an ongoing basis is being effectively cancelled and there is no sign that this trend is going to end anytime soon, especially in the run up to the 2015 election as the Collation government will increasingly attempt to buy votes with further money printing QQE.”
Due to this increased money creation by a public entity – which I am in favour of; we also need to increase Bank Reserve Requirements dramatically; which has also commenced.
This behind the scenes covert “Greenbacks” production should be carried out in a more open manner so that the Government can stop this Fairy Story of Austerity, and cut PFI programs which just create excessive interest payments for Public Infrastructure Projects which could be paid directly with Government created money balanced by restriction on Private Bank created money to keep inflation at bay.
With; Oil, Water, Food, Increasing Population and other resources in Exponential decline with Population Growth in exponential growth, we have massive problems which are not being tackled because the rather abstract resource of “Money” is so disfunctional it fails to contribute postively to our other problems.
An interesting presentation was recently done by Chris Martenson. This discusses the requirement for Exponential Growth in Debt inorder for the current system to remain stable. A doubling of debt every seven years from 1970, until 2008/9. The debt curve is flat lining.
“Chris Martenson’s presentation at the Gold & Silver Meeting in Madrid”
available on YouTube.
December 7, 2012
Yes, Nadeem goes on to mention that the QE program (which will never be paid back) effectively means that actual government debt (which needs to be repaid) drops down to about 43% at the moment…..
zorro
December 9, 2012
So perhaps QE and central bank creation of money is to maintain the status quo and only ever used in extremis. Never to be acknowledged for the public benefits it can bring. Then when the crisis has been stayed , remove the debt free money. (Bradbury Treasury Notes- our greenbacks)
That powerful enduring relationship between politicians , private bankers and central bankers. (Inflation is the weapon of choice)
We need to target money into the economy, bypassing our current banking system but they wont.
1) – at the low paid by tax reductions (read NI removal)
2)- at SME by lowering monthly cashflow (read NI removal)
3)- we need to encourage stability, share capital formation and sensible levels of leverage. (reduce/remove the tax benefits of leverage).
4) Retained earnings converted to a creditors buffer or share capital should encouraged in SME by tax deferral until exit.
5) Start to tax financial speculative activity (like alcohol, cigarettes).
6) Increase the level of savings disregard for some benefit e.g. council tax and income based benefits
7) Encourage mutual societies and banks like the C0-op with direct capital injections to encourage ethical banking on non usurious terms.
8) Encourage self sufficiency and reduce import substitution ( all resources including human).
Above all remove the risk of ponzi banking by preventing creation of private debt money which they cannot loss absorb. Ensure Bank Directors of public banks & private banks requiring state support are exposed to significant financial loss and liabilty.
December 10, 2012
I Agree.
I would add a couple of things though …
9. Prevent Banks lending more than the Rentable Value of a Property.
(This would mean that those with more savings would then bid up the deposit). The leverage cycle would be stabilised.
10. Prevent speculative second “Home” investments by increasing CGT to 85%. (Many Seaside Towns have been turned into Ghost Towns by Londoners buying up all the little Cottages and only using them for a few weeks a year, or every other weekend, while local residents have been priced out of there own Towns).
11. Eliminate Income Tax altogether. Why should people who contribute their productive skills, talent and hard work be Taxed ?
12. Remove all forms of Housing Benefits and Subsidies.
(In a fair Society, there should not be a need to subsidise a Housing Market if proper Price Discovery is allowed to occur.)
Yes, I do tend to focus on the Housing Market because it has many effects on the Economy. It is often said that the British are lazy and greedy – because they demand high wages. My argument for that is that if easy credit hadn’t blown up the House Prices so that two wage earners are now required to service a mortgage, wage demands wouldn’t be so high. Everyone needs somewhere to live so if a Bank says – Yes to an overpriced House by lending the money they create out of nothing, there is a tendency to push the price up for the next person who wants to buy a House. The escallation in House Prices then draws in the speculators…
December 7, 2012
I’m no expert in financial things but even I can see where some cuts could have been made in this new mini budget. When Mr O said, he was protecting the foreign aid budget I was so angry; a the same time I was reading about our own citizens having to beg at food banks. He should have stopped this aid immeadiately, if he really was concerned for his own citizens whom he does have a responsiblity. We have no moral duty to provide for foreign shores, and my small tax bill I pay willingly, toward my own British citizens, as does my two off springs at a much higher rate. I object strongly to this aid being effectively ring fenced, while our own are on the breadline with no jobs on offer to get them out of the mire.
He could have stopped foreigners from claiming child benefit here and request they claim in their own countries, they claim here because its higher, no other reason. Then he should have considared paying our own for the first two only within six months, to give the treasury full benefit.
He could also have made it possible for health tourists to pay for treatment before they receive it to put money back into the NHS, for our own interests. He could then have helped fill this 27 billion black hole, this year instead of after the next election. Lastly, he could also use a sting on bankers bonuses as another way of helping to fill the hole. There are I’m sure many more things he could do.
Its no good keep damaging the poorest in our society, that was done in the 80s with results like the riots that happened, pushing one sector to far is discrimitory, and they have been cut very much. For those who assume its right, I hope they don’t become part of the poorest and suffer what they propose for others. Greed is manifesting it’s self again in this country, and we all know where that will lead, social unrest, riots, and that’s no good for any country.
December 7, 2012
We know we can’t rely on the BBC to abide by their charter so when in someone going to conduct an inquiry into the behaviour of certain people that used to work in the treasury under Brown?
As I understand it, Balls designed the bank regulatory framework which included lowering their liquid capital requirements to circa 4%? which set the whole thing off. We have never been told the REAL reason why so much gold was sold at bottom dollar over a long period (pre announced in Commons).
More journalists need to challenge the man (had he been in a Director position and behaved like this he would probably be in jail), I’m afraid he and his party are NOT fit for government and never will be – the tories need to listen more to UKIP and look at working together.
Also why do other liabilities such as PFIs and Pensions do not get a mention when they talk about debt. On a company balance sheet they are normally liabilities so surely there should be a column for this when the treasury and OBR present data.
As for austerity – our cuts apart from the (Armed Forces which are one of the last things you should cut) spending reductions have been miniscule and buried in inflation.
The Media really needs to wake up – making a big thing about people of benefits only getting 1% PA is nonsense. They have not gone after the disabled + pensioners – people that need to get out and work.
I can point to countless private sector employees that have had no pay rises for years, its normal. If they want to see real Austerity – look at Greece, Spain etc.
December 7, 2012
before anyone berates me – TYPO
“They have not gone after the disabled + pensioners – people that need to get out and work” They have not gone after the disabled JUST people that need to get out and work
December 8, 2012
Can look closer to home , the Republic of Ireland .
They managed to cut public spending whilst minimising social costs .
December 7, 2012
“There are too many people in the UK on low incomes, and have been for many years.”
Others are not mealy-mouthed as how this situation arose.
Cameron wishes to concrete over prime food producing land because young people cannot get on the housing ladder now whilst paying exorbitant rents for a roof over their heads without assistance from family. It’s always been fairly difficult to get on the housing ladder apart from in the recent past when banksters were advancing 125% loans on self-certified mortgages; they were equally generous with buy-to-letters.
This government and the last have not succeeded in reviving the economy because not only have they misdiagnosed the condition, they have the wrong patient in intensive care. The patient is the real economy, not the banksters or their property speculating clientele. Iceland has demonstrated how to revive an economy crashed by banksters; it is time to sacrifice the banks and their rentier mortgagers in order to revitalise the real economy. The banks must be forced to clear their balance sheets of all dubious assets. The BoE would then be able to stand behind what is left to ensure that lending for property at market clearing prices and for real businesses that add value can commence.
Unlike those constrained by Eurozone madness, we have our own currency so we have freedom of action; unfortunately, we do not have anyone in charge who is motivated by patriotism rather than the welfare of a very small sectional interest.
December 7, 2012
You have hit on one of the major problems of the current house building plans. For historical reasons the best farming land is located close to our major towns. We are increasingly building on this fertile land and pushing our farmers onto the poorer land. This means that food prices increase due to lower yields, increased imports, higher transport costs etc.
The government must urgently move extra housing needed by the expanding population onto the land much less suitable for agriculture.
December 7, 2012
Underlying the 2008/9 recession was the fact that property related assets were overvalued. Underlying the current low growth is the fact that the average household debt to income ratio was very high in 2010 and is being steadily reduced. These are both corrective processes that are not complete and there is no logical reason for there to be an upside further down the line.
The assumption that the Chancellor should make is that real GDP growth will make a slow recovery to 2.0% pa, its long term average. I’m sure that Mr Redwood will come up with imaginative measures to accelerate growth, but it is more a question of eliminating government behaviour that reduces growth. Plan prudently and don’t expect too much (that doesn’t sound like an election winning slogan but this time it might be).
December 7, 2012
My Westcountry tenants let me know yesterday that they had both lost their jobs on the same day this week. Her be a school assistant and he be a pasty maker with no demand. Public and private in austerity and no money for rent. Happy Christmas!
December 7, 2012
The government causes inflation by printing too much money or “quantitative easing” as it is now called. We need an Act of Parliament that specifically prohibits “quantitative easing”.
December 7, 2012
What inflation? There has been virtually no inflation beyond 2% since the government started using quantative easing. All governments for the last sixty years have aimed for inflation at least 2% in order to reduce their debt problems.
December 9, 2012
http://www.bbc.co.uk/news/business-15344297 is 5.2% inflation enough!
December 7, 2012
If the Office for Budget Responsibility was credible, it would be paid according to results. Either money would be saved, or its forecasts would be of some value.
December 7, 2012
Austerity? This isn’t austerity. Another word used to mislead and divert the unthinking and foolish.
It is the bloated socialistic state apparatus and its hangers-on, agents and apologists who are impoverishing the ordinary people while making themselves rich.
The country has become too complex to manage and we are likely to go completely broke. We may then learn what austerity really is.
We need a cultural revolution to break away from the weakening practices and State dependency philosophies of the Left who have spoiled the lives of so many millions of otherwise good people. Millions have been imprisoned this way.
The Left are the reactionaries who resist essential change. We should support those who espouse and demand change, whether this is via small government, freedom of thought or independence and self-reliance.
December 7, 2012
The OBR was set up by Osborne to support him on everything. Given that they’re not independent of the treasury their prediction are little more than what the Chancellor wants to hear, not what is likely to happen. This is why they have been wrong on growth every year (this year was originally meant to have 2.8% growth).
Shall I assume that the options to accelerate growth involve giving the wealthy tax cuts, something promoted by Mitt Romney and George W Bush which failed to deliver growth and causes a huge financial loss.
Also for those who think that trade outside the EU will help the UK I have bad news; the UK’s trade deficit with non-EU countries has continued to increase:
http://www.telegraph.co.uk/finance/economics/9726463/Weak-trade-renews-triple-dip-fears.html
Reply The OBR is independent
December 8, 2012
They may be independent but they have no skin in the game and have no interest in whether their predictions are right or not .
Like the client who asked his stockbroker whether to buy or sell a security and was told the commission was the same either way .
The country needs the whole public sector to be moved onto defined contribution pension schemes so they have skin in the game and can empathise with us lesser mortals .
December 9, 2012
moving the whole public sector onto defined contribution schemes, particularly the higher ups & preferably invested in the same scheme as the plebs. Hell might freeze over first, it might if the HOC heating was turned off!
No private schemes unless we can follow the money and join the dots.
December 7, 2012
When Labour came to power in 1997 the government’s take of GDP was c.£256 billion, it’s now c.£750 billion, 300% growth in approx 15 years. The economy has not grown by that amount, therefore it’s clear we’re spending way in excess of what we can afford. If we were in the Euro we’d now be experiencing the calamity befallen Greece & Spain. That we’re not is a blessing, however only in the short terms as the government has been able to devalue the currency, ‘rob’ savers and pull some other accounting trickery to stave off the same sort of disaster.
The economy needs to be put on a war footing and we have to cut ourselves free from the yoke of the EU.
I get the feeling that the government and OBR are hoping something will turn up; I have a horrible suspicion it won’t and we could be faced with our own fiscal cliff moment before the next election.
December 8, 2012
It is possible to go from £256 billion to £750 billion in 15 years if the economy grows on average by 7% each year.
December 9, 2012
Er……uanime5……I have to tell you something……The UK economy has not been growing at an average rate of 7% for the last 15 years…..So yes, government spending has risen far too much in comparison to our overall economic performance.
zorro
December 7, 2012
Pay rises increasing. I’ll believe it when I see it but that would be nice. When it all came to a head I didn’t expect much growth for 10 years no matter what people were saying. Certainly not if Labour had won. If we are starting to crawl out then thats good but I’m not going to splash losts of money just yet.