mattyfc

GDP is inflation adjusted, nominal GDP will be increasign 5-6% odd this year (2.8~ + 3.1~) You would think with this kind of growth and inflation 1% over target for the whole year? The only real negative indicators seems to be falling house prices. Has the ramping press in a right state.

Posted Earlier about BBC Website Headline story this morning. The BBC is a disgrace. Also 0.7% was predicted less than a month ago, now the consensus drops to 0.4? The negativity surrounding the spending cuts affecting economists? Q4 will probably be 0.4% ish though, also weak 1st half 2011, I think things will pick up again after that.

Typical BBC. It is only a "sharp slowdown" because the previous figures were about 100% higher than expected. Sensationalist drivel. If GDP had been previous 0.2% would they be wrting about GDP growth soaring 100%? Not likely. At least they could wait until the figures are released and then put up an article. Talking down the economy before they even have the data to support it?

First Myth: These cuts actually involve cutting total government expenditure year on year. Wrong, spending is still increasing year on year. 2010-11 696.8 2011-12 701.8 2012-13 713.0 2013-14 724.2 2014-15 739.8 Wow, what funny looking cuts... It is surely factually incorrect to describe the spending review as "cutting expenditure" when it is clearly still rising:

I think it's fair to say the Tories bought in to the bubble hook line and sinker. At least now they have realised how unsustainable and damaging a bubble like this is. I think they will let prices drop. Long run it will be beneficial. There is no alternative really. We need to develop other parts of the economy and mothball the debt / consumption monster that has enslaved us for the last 13 years. Expect pain though, like an addict going cold turkey it will not be a pretty sight.

I really hope this part is true. HPI is over, it's time to get back to earning a real living. No more loans to people with no means of repayment is a good first step.

Everyone will be delighted the the average house price will soar to £168,000,000,000,000,000,000,000,000,000 and they will need a wheel barrow to go shopping with. At least we now have debit and credit cards to prevent us the back ache involved in paying for a loaf of bread with 50kg of 50 pound notes. Best get investing in non printable assets fast.

No, just that the money invested in the Banks was not calculated as "real" government expenditure, the figures quoted for the deficits in 2008/9 do not include money put in to the banks. We borrowed £150bn + because the government spent £150bn + more than the tax revenue that was brought in. No banks involved. That is all.

Pretty sure the investments in the banks have never been part of the deficit figures, they are hidden off balance sheet. Otherwise we would have seen a huge spike (100-200bn extra 30% of GDP?) in the deficit in 2008. The deficit figures published only represent Tax - Normal Government Expenditure.

You would have to be stark raving to buy property with large leverage currently. Every indicator is showing prices are falling; buying is clearly financial suicide for the majority of people. No wonder mortgage approvals are dropping. The bubble is deflating; it will not be pretty. Especially from the media, who are usually the most leveraged and the biggest rampers. Expect plenty of whining. The question is how far and fast we it will go down. It would be nice to see some coverage of this focused on the obvious long term advantage of having house prices that are more affordable. The idea that every rising house prices is always good needs to be firmly flushed. Hopefully we can learn lessons and the mistakes of the last 13 years will not be repeated, we will get back to sustainable growth.

The government owns shares in RBS, Lloyds etc. Currently these shares are worth more than what they paid for them and they are actually sitting on a paper profit. The banks have nothing to do with the deficit. The only possible connection is through "boom" tax revenue that is no longer collected as they don't make much profit currently. The deficit is caused by insufficient tax revenue to cover government spending. http://www.ukpublicspending.co.uk/ http://www.guardian.co.uk/news/datablog/2010/apr/25/tax-receipts-1963 You may notice that the “cuts” actually involve increasing spending as well.

Yes we have the second highest deficit. No need for us to cut? We can borrow and print are way to victory. If spend our way up to 26% and borrow £400bn a year we can probably avoid a double dip, just don't ask us for the money back. Merv can pay with freshly printed bills.

Going to Stock holders as extra dividends, executives of Multi Nationals, back slapping about paying 2.4% tax (google) on billions of dollars of profit from EMEA. Certainly not going to the Irish treasury! The Irish must be delighted with the €, sure to help the export lead recovery they need to pay off that 26% of GDP deficit! Countdown to bust and default...

Greedy, certainly. In a situation where banks do not see the possibility of bust it makes sense to have virtually no capital, as capital sitting in the vaults does not generate profit for nice big bonuses. They only need capital to maintain solvency when they takes losses. With no more boom and bust what were they worried about? No one has solved the "to big to fail" problem yet? Some kind of profit retention scheme makes sense to me, so they can bail themselves out. Putting a gun to the taxpayers head and saying bailout or bust is not where we want to be.

Of course they can do innovation. However, they mainly copy ideas and turn out cheap low quality goods that can be sold in the west at rock bottom prices. Chinese industry is subsidized by the government, and through currency manipulation. Unemployment is seen as a threat to the regimes stability and will not be tolerated. Most Chinese industry will only exist as long as they can keep their costs down. They are going to need to keep wages down and prevent a middle class from developing to keep the status quo. 90% of the industrial base could be moved within a decade if another country undercut them IMO. There is also the paradox that their success will ultimately bankrupt their customers in the west leading to their own destruction as well. Not a very sensible long term strategy.

Her only sensible option is default / Bankruptcy. Why even pay the mortgage, default and let the lender repossess. Start again from scratch, not the end of the world.

The growth of 1.2% was 100% more than expected. 0.4% Would make it 2% for the year with one quarter remaining, quite respectable and above most forecasts. Will be interesting to watch what the BOE do. With inflation over target all year, PPI rising and falling sterling. The argument that QE will provide any stimulus to the economy is very tenuous. I think it will generate inflation, but no extra growth. It will probably mean much higher long term interest rates to bring the resulting inflation under control. We seem to have very short memories, only 25 years ago we had double digit interest rates as inflation raged. I don't see any real risks from the actual "cuts" . Confidence will be the main problem as result of the ludicrous hyperbole that has surrounded them. The real threats to the economy are potential inflation from short sighted monetary policy and external shocks. The world economy is still incredibly unbalanced, in Asia, The USA and Europe there are major structural issues that have not been addressed. There is a big risk of one of the problems exploding and severely damaging world trade and the economy. To grow long term we need a strong worldwide economy and I don't think we will get it.

The key point here seems to be "too high". Obviously a certain level of government spending is beneficial. Funding Universities and Medical Research Councils should be top of the spending priority list. A better trained workforce, R & D and innovation will aid growth massively. The problem with University funding seems to be large numbers of students doing degrees that do not offer the tax payer value for money. They do not have sufficient benefit to the student the economy or society to justify the cost of the course. Ensuring those who have the most ability rather than those who have the most money attend university should be a key education spending priority as well.

Rising tax income is the only way to pay off the deficit. It is quite possible for the economy rapidly and the deficit to widen at the same time. What matters is how the growth is generated, all growth is not equal. Excessive Government spending does not create any sustainable growth or Jobs. It is funded from the private sector through tax. Once the tax burden get’s too high the private sector will be stifled. For the private sector to grow, we need a reasonable level of taxation that does not punish success. Incentives to invest in manufacturing, R & D and innovation. This has been sorely lacking for the last decade (http://www.bankofengland.co.uk/publications/speeches/2006/speech282.pdf) (http://www.statistics.gov.uk/cci/nugget.asp?id=258 ) We need an efficient private sector that is incentivised to manufacture, innovate, exploit resources more efficiently and most importantly export. If we do not cut back spending the resulting taxation burden will crush the private sector. We do not need excessive consumption fuelled by debt. More Public spending, House price inflation, and more debt. This will create growth but not wealth or sustainable tax income.

The deficit , used to bribe the electorate with its own money. Looking only at the short term and to hell with the long term consequences. This is why public debt has reached 45% of GDP and will continue rising ( http://www.economicshelp.org/blog/uk-economy/uk-national-debt/ ). The real point is, why does the government need any debt at all? For infastructure projects that can't be financed in a single tax year? Why for anything else? A surplus should be run in a boom to pay for the eventual bust. Not a 2-3% Deficit. The so called Golden rule. (Missed by £480bn) These consequences will be: How progressive. The equivalent of 2/3 of the current NHS budget will be spent on interest to Bond holders. How can any socialist support this? The sooner the deficit is reduced, the sooner we can start paying off our 1trn debt. The sooner we will get £70bn back to spend on actual services that help the poor, not debt interest. We need a mechanism in place to prevent this kind of economic vandalism in future. Politicians who spend public money to serve themselves rather than the public should face treason charges.

This is total nonsense: From http://online.wsj.com/article/SB10001424052702304023804575566350666801536.html?mod=WSJEUROPE_hpp_MIDDLETopStories The difficult bit is going to be meeting our growth targets. No more HPI, we will have to find a new sustainable way to grow. Having our own currency should make it easier.

Germany is massively benefiting from the euro. In a normal recession ( like in 1990~) weak inefficient consumer lead economies (like us) are able to devalue so they can compete with the more efficient exporting economies (like Germany). 40% of German exports go to the eurozone. It is reasonable to assume that without the euro most European currencies would have devalued 30% against the Deutschmark. Spain and Greece probably more like 50%. German growth would be much lower than it is now. Growth in the rest of the Eurozone would be much higher. They are "stealing" growth from the rest of the eurozone. Without external rebalancing there is no way of the periphery of Europe growing. They are already in recession according to the PMI data released yesterday. Germany♠ will end up recycling the growth generated as loans to keep the periphery of the eurozone solvent and will gain nothing. Brilliant.

He is attempting to justify his vote for QE despite inflation being 1%+ over target for 7 months in a row. Essentially he is saying he is ignoring the government inflation target as he thinks inflation is not going out of control. We had an inflation problem before in the 1980's that required double digit interest rates for several years to bring under control. The BOE have a rather short memory and are taking an inflation gamble. If they are wrong we might get a HPC after all.

The € Only seems to respond to data from Germany and France. They are both performing well. The periphery area is already in contraction mode according to the latest PMI data out today (http://www.ft.com/cms/s/0/5e25a2b2-dcf0-11df-884a-00144feabdc0.html). How are these countries going to grow and pay down their deficits when their economies are contracting and they have no way of rebalancing externally? Do France and Germany plan to endlessly support them? I don’t think the € is a viable currency in the long term as it is currently set up. It will probably go down and take us with it. The next crash perhaps?

You are not missing anything. The regulators and government of the period have equal responsibility for the crisis. The taxpayer is actually making money out of the investment in the Banks. No to mention the tax revenue generated for the period preceding the crisis. The deficit has nothing to do with them. The Banks made an easy scapegoat for the previous administration who did not want to be blamed themselves. Despite the FSA and BOE MPC being set up on their watch. They did not ensure the Banks had sufficient capital as they did not believe a recession was possible. The great delusion. A brilliant piece of propaganda, swallowed by nearly everyone.