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Uk Will Grow Sicker Until It Swallows The Bitter Pill Of Economic Reality

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http://www.telegraph.co.uk/finance/comment...ic-reality.html

Millions of ordinary Britons are worried sick about debt and falling incomes. Unemployment and house repossessions are soaring – glib statistics which mask a welter of human misery. Countless UK firms are struggling with cash flow as they try to balance the books. And we're all sick of the grim economic news.

No wonder the UK's "imminent recovery" is getting a lot of coverage. Last week, I returned from holidays abroad to find our media banging the "recession is over" drum. In truth, though, the UK remains in economic dire straits.

I write this not to "talk down the economy" – although I'll be accused of doing so. I'm countering the prevailing consensus because of the evidence. I'm also concerned that by insisting everything is rosy, a vast panoply of political and financial vested interests can claim their counterproductive "rescue measures" are working, while avoiding the tough regulatory changes we need to prevent another "sub-prime".

A series of self-serving surveys has fuelled the "imminent recovery" myth. Based on such hype, and a tidal wave of state largesse, UK shares have surged 15pc over the last two months.

The City was euphoric last week after it emerged that rather than contracting 0.8pc quarter-on-quarter during the second three months of this year, UK GDP fell only 0.7pc. News of this "rebound" was screamed from the roof tops. Less was made of the far more informative year-on-year data showing the economy shrinking by 5.5pc – our worst ever peacetime performance.

Coverage of the actual economic data is being overshadowed by the "results" of heavily promoted surveys from estate agents and stock brokers pointing to "rising house prices" and "growing confidence".

The genuine numbers, alas, show that firms slashed investment by a staggering 10.4pc during the second quarter of this year, more than the 7.6pc cut during the previous three months.

Business capital spending – the lifeblood of growth – is falling at its fastest rate in more than 50 years. Less investment not only suggests more limited future capacity, but lower productivity too – undermining the UK's medium-term growth trajectory.

Combine that with impending tax rises and the reality that we'll be spending ever more of our national income on unproductive debt-service, and it's hard to see how the UK can avoid a prolonged, bath-shaped recession.

The most important piece of data published last week concerned our still deeply dysfunctional credit markets – yet it generated little comment. British banks claim "lending is up" but that's untrue. Billions of pounds of taxpayers' money is being "lent" by banks to their off-balance sheet vehicles – in a desperate attempt to wipe out the sub-prime toxic waste said banks so stupidly took on. But that's not "lending" as far as UK firms and households are concerned.

Net lending to non-financial UK companies fell £4.1bn in July, the steepest decline since the credit crunch began. Despite the bank bail-outs, firms are desperately short of the working capital that makes commerce possible.

Credit-starved businesses will be forced to make more lay-offs in the months to come – particularly the UK's smaller firms, which employ millions of people but are finding it near impossible to access finance. Rising unemployment will push up default rates, not least as interest rates rise, threatening renewed financial turbulence as more mortgage-backed securities go wrong.

The credit crunch has hit the UK hard. Our households are more indebted and our reliance on financial services is greater than any other Western economy. Last week, the International Monetary Fund concluded the UK will suffer a sharper decline in its potential growth rate then the eurozone, the US and Japan as a result of this crisis. I worry, though, that while the UK is already destined to be among the very biggest crunch victims, our so-called leaders continue to foist a policy cocktail upon us that's making our predicament even worse.

Yes – other nations have implemented a fiscal boost. But the UK's finances were in an awful state going into this crisis and we're now borrowing at a faster rate than any other major economy.

Yes – quantitative easing has been used elsewhere. But the UK has been uniquely profligate in spending almost all the newly created "funny money" on government debt, rather than corporate instruments – making us uniquely vulnerable not only to a gilts strike, but also a potentially devastating currency collapse.

"Imminent recovery" is easy to swallow. The bitter pill of reality gets stuck in the throat. The UK needs to swallow hard and face the truth, ending the damaging stopgap measures that put at risk what's left of our economic future.

He's clearly not buying into the recovery hype, he needs some medication. Why is the Telegraph allowing to write this and not the normal happy clappy stuff we are used to.

Some very good points in the article and we can all relax easy that the banks are just trying to lend to themselves to cover up their own bankruptcy.

Viva recovery.

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rubbish, everything's comin up roses, blue skies nothin but blue skies

la la la la la la buy buy buy hpi hpi hpi green shoots money chutes piper flutes brand new suits la la la la la ... QE forever and ever and negative interest rates and lets all play kiss chase in the BoE car park and eat sweeties and pop and never grow up la la la la la...

hurrah for gordon & mervyn HURRAH i say !

"re-education centre for Mr Ripoff"

Edited by loginandtonic

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And the bitter pill will be...

Tadaaa....

More privatisations and more looting of what's left of Britain's infrastructure (transfer of ownership to private hands) so that ever more money can be extorted by the supra-governement a.k.a. banking system.

The marketing scam of privatisation will continue unabated until enough people realise what's going on.

I won't hold my breath though.

This is like a rerun of 1979, only much, much worse.

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And the bitter pill will be...

.... a GIANT suppository, devoid of any lubrication, rammed continuously up you @rse by the boot of the tax man for then next 20 years. :blink::(

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And the bitter pill will be...

Tadaaa....

More privatisations and more looting of what's left of Britain's infrastructure (transfer of ownership to private hands) so that ever more money can be extorted by the supra-governement a.k.a. banking system.

The marketing scam of privatisation will continue unabated until enough people realise what's going on.

I won't hold my breath though.

This is like a rerun of 1979, only much, much worse.

But that is what a lot on here want. All public sector workers are morons that can't cut it in the real world apparently.

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Halligan must be one of the few members of the MSM not intent on puffing up the bull trap so as to create more bigger fools to whom they can pass 'assets' at inflated values.

Edited by Radge

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http://www.telegraph.co.uk/finance/comment...ic-reality.html

He's clearly not buying into the recovery hype, he needs some medication. Why is the Telegraph allowing to write this and not the normal happy clappy stuff we are used to.

Some very good points in the article and we can all relax easy that the banks are just trying to lend to themselves to cover up their own bankruptcy.

Viva recovery.

Well it's not just him in the DT; look at Jeff Randall. A sensible counterblast to all the current hype - and that's all it is.

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But that is what a lot on here want. All public sector workers are morons that can't cut it in the real world apparently.

It's about ownership and who gets to skim off the massive amounts of revenue that such a scheme would generate. Why should some spiv in the city get to make money out of something that we already own.

Much of the moaning on here is to do with the layers of public sector non-jobs that seem to demand bloated salaries for doing not very much.

Infrastructure and transport can hardly be called non-jobs and besides, contractors are employed to do road maintenance so your argument doesn't really hold water.

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Guest skullingtonjoe
But that is what a lot on here want. All public sector workers are morons that can't cut it in the real world apparently.

Oh yes. The public sector is a great place for a mega-doss; unlike the sacred groves of academe (which have recently been inundated with uber-genius A-level students), the public sector is immune to such influxes. As a result, once you`ve got your feet under the table you`re laughing. <_<

Brings to mind a friend-of-a-friend-of-a-friend`s (or thereabouts) wife, who is working as town planner in Cambridge. God has she become hard-nosed. I was on the phone to my friend-of-a(etc) and we were talking about coastal erosion (why I don`t know - I guess that`s how boring I have become). Anyway, he said that it`s unfortunate that people are losing their houses to the sea, but there will be tough choices to be made in the future. I pointed out to him that there were some people who are close to retirement age who hadn`t allowed for the environment agency pulling the plug on coastal defences and that`s one hell of a sh1t sandwich for some.

His response: `well, that`s what my wife said`.

I realised that how much of a hen-peckee he had become, and - if that`s really his wife`s opinion - what a miserbale git she has become. :(

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And the bitter pill will be...

Tadaaa....

More privatisations and more looting of what's left of Britain's infrastructure (transfer of ownership to private hands) so that ever more money can be extorted by the supra-governement a.k.a. banking system.

The marketing scam of privatisation will continue unabated until enough people realise what's going on.

I won't hold my breath though.

This is like a rerun of 1979, only much, much worse.

Spot on , and this is already happening, wait til the tories get in for a speeded up version!

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Guest absolutezero
But that is what a lot on here want. All public sector workers are morons that can't cut it in the real world apparently.

But now they're moaning that the roads are about to be privatised by the Rothschilds... :blink:

They want it both ways.

I'm coming to the conclusion that a lot of people on here are no better than people on MoneySavingExpert, but for different reasons.

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Last week, the International Monetary Fund concluded the UK will suffer a sharper decline in its potential growth rate than the eurozone, the US and Japan

This is fantastic news for the UK economy.

Just think, the article could have said:-

Last week, the International Monetary Fund concluded the UK will suffer a sharper decline in its potential growth rate than the eurozone, the US and Japan put together

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Guest absolutezero
This is fantastic news for the UK economy.

Just think, the article could have said:-

:lol:

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...

I'm coming to the conclusion that a lot of people on here are no better than people on MoneySavingExpert, but for different reasons.

Same people.

Same reasons: greed, stupidity.

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Cracking article from Saturday's Telegraph (apologies if posted already).

UK will grow sicker until it swallows the bitter pill of economic reality

Millions of ordinary Britons are worried sick about debt and falling incomes. Unemployment and house repossessions are soaring – glib statistics which mask a welter of human misery. Countless UK firms are struggling with cash flow as they try to balance the books. And we're all sick of the grim economic news.

By Liam Halligan

Published: 10:00PM BST 29 Aug 2009

No wonder the UK's "imminent recovery" is getting a lot of coverage. Last week, I returned from holidays abroad to find our media banging the "recession is over" drum. In truth, though, the UK remains in economic dire straits.

I write this not to "talk down the economy" – although I'll be accused of doing so. I'm countering the prevailing consensus because of the evidence. I'm also concerned that by insisting everything is rosy, a vast panoply of political and financial vested interests can claim their counterproductive "rescue measures" are working, while avoiding the tough regulatory changes we need to prevent another "sub-prime".

The City was euphoric last week after it emerged that rather than contracting 0.8pc quarter-on-quarter during the second three months of this year, UK GDP fell only 0.7pc. News of this "rebound" was screamed from the roof tops. Less was made of the far more informative year-on-year data showing the economy shrinking by 5.5pc – our worst ever peacetime performance.

Coverage of the actual economic data is being overshadowed by the "results" of heavily promoted surveys from estate agents and stock brokers pointing to "rising house prices" and "growing confidence".

The genuine numbers, alas, show that firms slashed investment by a staggering 10.4pc during the second quarter of this year, more than the 7.6pc cut during the previous three months.

Business capital spending – the lifeblood of growth – is falling at its fastest rate in more than 50 years. Less investment not only suggests more limited future capacity, but lower productivity too – undermining the UK's medium-term growth trajectory.

Combine that with impending tax rises and the reality that we'll be spending ever more of our national income on unproductive debt-service, and it's hard to see how the UK can avoid a prolonged, bath-shaped recession.

The most important piece of data published last week concerned our still deeply dysfunctional credit markets – yet it generated little comment. British banks claim "lending is up" but that's untrue. Billions of pounds of taxpayers' money is being "lent" by banks to their

off-balance sheet vehicles – in a desperate attempt to wipe out the sub-prime toxic waste said banks so stupidly took on. But that's not "lending" as far as UK firms and households are concerned.

Net lending to non-financial UK companies fell £4.1bn in July, the steepest decline since the credit crunch began. Despite the bank bail-outs, firms are desperately short of the working capital that makes commerce possible.

Credit-starved businesses will be forced to make more lay-offs in the months to come – particularly the UK's smaller firms, which employ millions of people but are finding it near impossible to access finance. Rising unemployment will push up default rates, not least as interest rates rise, threatening renewed financial turbulence as more mortgage-backed securities go wrong.

The credit crunch has hit the UK hard. Our households are more indebted and our reliance on financial services is greater than any other Western economy. Last week, the International Monetary Fund concluded the UK will suffer a sharper decline in its potential growth rate then the eurozone, the US and Japan as a result of this crisis. I worry, though, that while the UK is already destined to be among the very biggest crunch victims, our so-called leaders continue to foist a policy cocktail upon us that's making our predicament even worse.

Yes – other nations have implemented a fiscal boost. But the UK's finances were in an awful state going into this crisis and we're now borrowing at a faster rate than any other major economy.

Yes – quantitative easing has been used elsewhere. But the UK has been uniquely profligate in spending almost all the newly created "funny money" on government debt, rather than corporate instruments – making us uniquely vulnerable not only to a gilts strike, but also a potentially devastating currency collapse.

"Imminent recovery" is easy to swallow. The bitter pill of reality gets stuck in the throat. The UK needs to swallow hard and face the truth, ending the damaging stopgap measures that put at risk what's left of our economic future.

Edited by Dave Spart

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I'm coming to the conclusion that a lot of people on here are no better than people on MoneySavingExpert, but for different reasons.

Our big hugs are bear hugs.

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snip

I'm coming to the conclusion that a lot of people on here are no better than people on MoneySavingExpert, but for different reasons.

thats true, the posters have something very much in common...they are all people.

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