Monday, Nov 24, 2008
Government borrowing is to soar and confirmed that the country will fall into recession next year
Telegraph: Alistair Darling confirms borrowing will reach £118billion
Speaking to Parliament as he unveiled a £20 billion package of tax cuts designed to boost the British economy in his pre-Budget report, Mr Darling said that borrowing would reach £78 billion this year - approaching twice what was originally budgeted for - and will reach £118billion in 2010.
Posted by malct @ 06:08 PM (728 views) Add Comment
17 Comments
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1. malct said...
so it's a six month recession then?
2. mountain goat said...
and GBP up nearly 3% on the dollar today !!!
3. Pete said...
Don't worry, everything will be just fine in 2010..... the entire cabinet will have moved to Bermuda.... but we will be fine!
Is there any point to being middle income anymore? It seems a waste of time working a 40 hour week for £40 K, its tax all the way... god help you if you don't have half a dozen kids to write off against benefits. I've moved down to part time and no worse off.
4. drewster said...
mg, the dollar's fall must be related to the Citigroup bailout that was announced last night.
In general I don't think the US is fundamentally worse off than the UK; both share the same problems. Unlike some people I'm not expecting a dollar crash, at least not against the pound.
5. bystander said...
Does this mean house prices are stabilising. Almost impossible to get vendors to budge on asking prices at the moment, if this continues and the lenders start really lending again, we will all continue to be well and truly priced out. People still buying at asking price, estate agents saying these new prices are well down on last year already so vendors definitely won't take offers, don't you just love the SW of London.
6. jack c said...
bystander - just sit tight, no need to panic buy, I'm warming slightly to techiemans theory of a bit of a bounce but it's imperative (IMO) you dont get sucked in at this stage for much bigger drops are inevitable. It's the timing thats difficult with house price forcasting but now is not the time.
7. drewster said...
bystander,
I can't see how house prices could stabilise so early in the downturn. The recession has barely begun to bite in Britain; unemployment is still relatively low. When people are fearful for their jobs then they'll stop buying houses at such high prices. Even people with a safe job can see prices are falling 2% a month and will just sit back and wait for the bottom.
Sellers can't wait forever, there are always some distressed sellers: the three Ds of Divorce, Death, and Destitution. When somebody dies, if they have no heirs then their house is (presumably) sold by the state. The state has no interest in waiting to see if the market recovers, they just sell for whatever they can get. The effect of that one sale is to make everyone else (those who are holding out for a higher offer) reconsider their positions; it also makes the Halifax/Nationwide/LandReg index fall. If vendors aren't budging now, just wait until some distressed sales uncover the true values.
8. drewster said...
jack c,
If there's a bounce we'll see it in the states first. They're 6-9 months ahead of us in the cycle. So far they haven't bounced.
9. jack c said...
drewster - caught sight of something briefly on Bloomberg TV today which suggests prices in the US are plunging - as I say I'm warming slightly to techiemans theory of a bit of a bounce but remain far from convinced. They could massage the figures of course.
10. planning4acrash said...
I think the bounce already occurred. We had a mini bout of stability in time for the election, down hill now possibly till March, when we'll possibly get a tiny little breaker, maybe for a week or two, before the death rattle.
11. malct said...
jack c, drewster here's your bounce? - dead bull not dead cat!
Strong Rebound Coming in Next 3 Months: Dr. Doom
http://www.cnbc.com/id/27834889
The sheer amount of money governments are pumping into the financial system will eventually lead to a very strong rally in beaten-down assets, investor Marc Faber said on CNBC Friday.
photo of a bull here
Photo: Oliver P. Quillia for CNBC.com
--------------------------------------------------------------------------------
But Faber also warned that if the markets remain depressed as liquidity increases the result could be a depression worse than in 1929. (Watch the video of Faber's appearance.)
12. alan said...
Didn't Gordo say in his last speech as Chancellor that the UK would have debt of £30bn in 2009?
If we go to £118bn, then servicing debt will cost more than Transport - approx £20bn, and almost as much as Defence....
Given Darling's ability to mis-estimate (Vince Cable said it first) can we trust these figures?
Glad I got a stash of gold...mmnn...maybe should have bought more...mmmnn!
13. bellwether said...
Faber is saying if the devaluation inherent in the bailouts doesn't work its depression and China might suffer the most, or rather might suffer more than the US - people tend to assume its the other way round.
I'm never clear why we waste our time complaining about what the Govt is doing. It's seems pointless and even dangerous as it skews perspective. If you hold sterling and don't fancy the UK's chances move into something you do like - relatively speaking.
Was going to rant about some posters fixation with gold but will leave that for another time!
14. malct said...
bellwether - what was all that about?
"I'm never clear why we waste our time complaining about what the Govt is doing. It's seems pointless and even dangerous as it skews perspective. "
REALLY? and you don't think the govnmint skews perspectives? CRUMBS Evolution of Consciousness 0 - Dick Heads 5
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