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Telegraph Artical

Public borrowing hit a record £19.9 billion in May, more in a single month than the Government borrowed throughout the 12 months of 2002.

With the recession continuing to take its toll, the Government is relying on a dwindling number of taxpayers to fund an increasingly large benefits bill – which in turn has forced it to raise more money from the bond markets.

Slowly people are waking up...

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Telegraph Artical

Slowly people are waking up...

Nasty, very nasty, still I'm sure everything will turn out fine....................I think it best we be bullish, don't you!

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Nasty, very nasty, still I'm sure everything will turn out fine....................I think it best we be bullish, don't you!

We are running out of people to sell our debt to...(what collateral?)

As are the yanks.

The jig is up.

The ONLY way forward for this little country in the medium to long term is to start BUYING BRITISH.

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Telegraph Artical

Slowly people are waking up...

Yes, this is still one of the biggest underlying probllems that will slowly drive down peoples disposable incomes.

The governments budget deficit is enourmous with too few taxpayers (and this group is shrinking fast) supporting a bloated public sector and trying to service huge public debt.

There was an interesting string on here a while back which showed the annual budget deficit was equivalent to what is gathered in a year from personal income tax. (Personal tax was approx 20-25% of total govt revenue, The rest comes from Corp tax, VAT, stamp duty C&E etc).

So to fill the budget deficit and maintain the public sector spend at its current size every personal tax payer would need to pay twice as much income tax annually as they do now....

But of course surging economic growth predicted per the Darling budget should ensure the tax takes pick up...

Really, i think all tax types are under pressure and they'll be lucky to get what they predict in budget..

- Personal tax - Due to unemployment, lower bonuses, pay cuts, sole traders declaring less income

- Corporate tax - Low company profits, plus some banks and other cos built up enourmous taxable losses in 2008 meaning they won't be paying UK tax for years.

- VAT - Rate down to 15% (of course budget allows for this), but consumer spending more cautious, and it will be a lot more cautious again if interest rates rise meaning everyones take home will be busy paying the banks for their mortgage.

- Stamp duty - Ha.. no houses sold = no stamp duty,.. plus these extended windows of no stamp duty on sub £175k will reduce takings from here.

- C&E on imports, Petrol tax etc etc - All demand driven.

Its not a pretty picture. There is going to have to be some pain somewhere along the line to bridge the government spending gap, either huge public sector cuts - or big tax increases. Flash Gordon is just stringing this out and talking up recovery coming along and saving the day. Defer pain, keep votes...

As for the swathe of public debt gilts flooding onto the market to fill the gap... who on earth is going to buy these over the coming years - especially given loads of countries are doing the same thing...

But hey, howabout another 5% for tube workers, and £10k more for MPs to bloat the public sector spend some more as everything is just peachy. I'm not optimistic,

As for house prices.., I see a possible scenario of a long slow period of down with dips steadily over time, as disposable incomes gradually fall. It may not be the further big bang 12 month drop everyone here is wanting.

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And now Gawd hsa come out and proclaimed he is fallible and it wasnt all his fault blah blah blah, there must be some big sh1t about to htf

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