Jump to content
House Price Crash Forum
interestrateripoff

Borrowing Figures Reveal Further Plunge Into Red

Recommended Posts

http://www.guardian.co.uk/business/2010/oct/20/government-borrowing-september-spending-review

UK public borrowing figures were today set to show a further slide into the red of around £15bn last month as the government prepared to reveal its deficit-busting cuts.

The latest data from the Office for National Statistics (ONS) was expected to show total borrowing for the first six months of the financial year pushed beyond £73bn.

The update came just hours before Chancellor George Osborne set out his austerity plans in the comprehensive spending review.

Philip Shaw, economist at Investec Securities, predicted public borrowing excluding financial interventions rose by another £14.6bn in September, up from £14.1bn a year earlier.

He said: "September is usually a month when the deficit is slightly in excess of the average for the year. This time should be no exception."

So on course to overspend income by around £140bn this financial year then?

It will be interesting to see what the actual figure is, I wonder if we will see the headline borrowing below expectations? Only £12bn borrowed this month on the way to recovery.

Share this post


Link to post
Share on other sites

http://www.guardian....spending-review

So on course to overspend income by around £140bn this financial year then?

It will be interesting to see what the actual figure is, I wonder if we will see the headline borrowing below expectations? Only £12bn borrowed this month on the way to recovery.

How is this ever going to get fixed?

Share this post


Link to post
Share on other sites

I will ask this question again, as it has not been answered any of the many times I have asked it before.

Exactly who are we borrowing this ridiculously huge amount of money from? Our national debt added to the similar debts of all the other leading nations surely exceeds the actual amount of money in circulation.

So who is it that would suffer if we just defaulted on the debt?

Share this post


Link to post
Share on other sites

Hey that is only £250 per capita this month. £1,000 for your average family of four.

I think it will just get more surreal as the years go by.. until it becomes the new normal.

Share this post


Link to post
Share on other sites

Hey that is only £250 per capita this month. £1,000 for your average family of four.

I think it will just get more surreal as the years go by.. until it becomes the new normal.

I think it has become 'normal',

How come people are so thick? that they can't see something has to be done

Share this post


Link to post
Share on other sites

Hey that is only £250 per capita this month. £1,000 for your average family of four.

I think it will just get more surreal as the years go by.. until it becomes the new normal.

Or.... only all the profit from TESCO x 45 pumped directly into the economy. Nothing to worry about! :lol:

Share this post


Link to post
Share on other sites

I will ask this question again, as it has not been answered any of the many times I have asked it before.

Exactly who are we borrowing this ridiculously huge amount of money from? Our national debt added to the similar debts of all the other leading nations surely exceeds the actual amount of money in circulation.

So who is it that would suffer if we just defaulted on the debt?

This question has been answered on here numerous times. The government borrows money by selling gilts - which are government bonds.

The government sells a gilt say for £100. It promises to pay (say) 3% interest on the gilt (usually for a fixed period) and, at the end of the fixed period, promises to give whoever bought the gilt their £100 back.

From an investors point of view UK government gilts are supposed to be as safe as houses(!) - in that it is allegedly inconceivable that the UK government could default on its debt because a government can always raise taxes to pay its debts.

The people who buy bonds - pension funds, fund managers and 'overseas investors'.

Gilts are tradeable - so the price can go up and down. When people are scared of investing in the stock market they will buy gilts - forcing the price above the issue price and, therefore, causing the yield to fall.

It seems there is an unlimited desire amongst 'investors' to finance the UK government's over spending.

Share this post


Link to post
Share on other sites

This question has been answered on here numerous times. The government borrows money by selling gilts - which are government bonds.

The government sells a gilt say for £100. It promises to pay (say) 3% interest on the gilt (usually for a fixed period) and, at the end of the fixed period, promises to give whoever bought the gilt their £100 back.

From an investors point of view UK government gilts are supposed to be as safe as houses(!) - in that it is allegedly inconceivable that the UK government could default on its debt because a government can always raise taxes to pay its debts.

The people who buy bonds - pension funds, fund managers and 'overseas investors'.

Gilts are tradeable - so the price can go up and down. When people are scared of investing in the stock market they will buy gilts - forcing the price above the issue price and, therefore, causing the yield to fall.

It seems there is an unlimited desire amongst 'investors' to finance the UK government's over spending.

Don't forget that Insurance and Pension companies are required by law to have a percentage of their investments in Gilts. They are legally compelled to buy them as part of diversifying their asset base. Hence more the two-thirds are UK gilts are held by British institutional investors. The gilt interest pays your private pension or annuity.

That is why there is an unlimited desire for Gilts.

Share this post


Link to post
Share on other sites

I will ask this question again, as it has not been answered any of the many times I have asked it before.

Exactly who are we borrowing this ridiculously huge amount of money from? Our national debt added to the similar debts of all the other leading nations surely exceeds the actual amount of money in circulation.

So who is it that would suffer if we just defaulted on the debt?

I contacted the DMO a couple of years ago and asked for a breakdown of who owns the gilts.

They provided very scrappy information, and I suspect that they don't know in detail (due to nominee holdings etc.?)

One thing we do know is that, after QE, about £200 billion worth are now owned by the BoE, itself publicly owned.

In theory these could be defaulted since effectively the nation owes itself.

In practice such a move might have unforeseen consequences in the bond markets.

Share this post


Link to post
Share on other sites

08:30 GBP M4 Money Supply (MoM) (SEP P) (SEP P) -0.3%

08:30 GBP M4 Money Supply (YoY) (SEP P) (SEP P) 0.9%

08:30 GBP PSNB ex Interventions 16.2B 14.3B 14.8B

08:30 GBP Public Finances (PSNCR) (Pounds) (SEP) 20.7B

08:30 GBP Public Sector Net Borrowing (Pounds) (SEP) 15.6B 1

Read more at: Forex @ DailyFX - Economic Calendar | DailyFX Forex Events Calendar http://www.dailyfx.com/calendar#ixzz12t3Lqmx5

These are horrible figures, money supply shrinking too, all aboard the QE express!

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/public-borrowing-rises-to-record-high-for-september-reuters_molt-92b99d16235a.html?x=0

Public borrowing rises to record high for September
Buzz up! 0 Print..9:39, Wednesday 20 October 2010
LONDON, Oct 20 - Public borrowing hit a record high for a month of September, the Office for National Statistics said on Wednesday, just hours before Chancellor George Osborne details more than 80 billion pounds of spending cuts.
The government's preferred measure of borrowing, which excludes financial sector interventions, also hit its highest for a month of September since records began in 1993.
The total public sector net debt as a percentage of GDP
rose to a record 64.6 percent, the highest for any month since records began in 1993
.

All good stuff to send the FTSE and Sterling ever higher what? :D

Share this post


Link to post
Share on other sites

I will ask this question again, as it has not been answered any of the many times I have asked it before.

Exactly who are we borrowing this ridiculously huge amount of money from? Our national debt added to the similar debts of all the other leading nations surely exceeds the actual amount of money in circulation.

So who is it that would suffer if we just defaulted on the debt?

Found this don't know if its up to date

gilt-holdings.png

Share this post


Link to post
Share on other sites

This whole horrible situation is utterly out of control. From what we have heard of the Tory Lib cuts, they dont have what it takes to sort the problem out.

There is a huge structural deficit now in UK finances. This has been caused due to

1 ) Increased demands from the welfare state,

2 ) Public sector workers being paid too much.

3 ) Spending too much on things we dont need (Europe, Olympic Games)

The problem with the welfare state is mostly pensions. We live longer, but our retirement age hasnt been pushed back in step with that extended life. Instead of cutting this area, either by increasing the state pension age more aggresively, they have actually implemented a formula which gives pensioners MORE money, increasing the strain on state finances.

With regards to public sector workers, the evidence is clear that average pay is way too high. I have a lot of sympathy for lower paid public sector workers, who are tarred with the same brush as all public sector workers. Instead we should be looking at those in the public sector whose pay and benefits are clearly out of control. Bosses of Quangoes, MP's, Doctors, Nurses, Firemen, Policemen, Top Civil Servants, they would be the ones that I would be looking at to take the brunt of the cuts. I am sure that there are other categories as well. These people do useful and worthwhile jobs, dont get me wrong, but they are just overpaid for what they do. We also need to end all defined benefit pension schemes in the state sector, and prune back the benefits that are already accrued, they simply cannot be afforded.

The Tories seem to be trying to attack the third area, spending money on things we dont need. I cant help but think though that they are cutting things we actually do need. I quite like paying tax for defence. An aircraft carrier for example, is a useless waste of money, right up to the point where you actually need it. Emaciating our defence so that we can enrich our senior citizens doesnt sound like the sort of trade I would chose.

And it is beyond me why we dont withdraw from the fraudulent pile of dog poo that is the European Union. Money for free withdrawing from that as far as I am concerned.

So the Tories are having a go at cutting things we need, which is going to be doomed to fail the most basic test, which is one of balancing the budget. They cant achieve that with what we have seen. This is really dangerous, as the welfare state is turning into an out of control monster, whilst at the same time, workers in the private sector, having to compete against the growth of low wage economies, are not only seeing their wages and benefits slashed in order that they may compete, but are saddled with rising taxes, and an exodus of the finest talent from the private sector into the cushy public sector. Tax receipts will continue to disappoint.

The Government appear to be blessed with one portion of good news, a bond market that is benign. I say though, that this is a curse, a bit like your nerves not working. Pain might hurt, but it teaches you not to do silly things and to protect your body. The pain of high interest rates isnt switched on, allowing the government to fill the hole from public finances by simply dipping into the bond market, as those with cash compete to protect themselves from the forces of deflation.

Markets are a fickle thing. They can turn, they will turn. And when they do the Government is going to find itself with a massive debt, that it can no longer service at any reasonable rate of interest. Then the government will either have to print, driving up interest rates even further, or cut to balance the books. Bringing down the axe under such circumstances will cause 100 times the pain of the cuts we are about to witness. It would be far better to accept a bit more pain now, for a lot less pain then.

Share this post


Link to post
Share on other sites

http://uk.finance.yahoo.com/news/instant-view-september-public-borrowing-higher-than-expected-reuters_molt-92a78ce9ea6e.html?x=0

Reuters
Instant view: September public borrowing higher than expected

Lotsa unexpected data out this would I should expect. Must mean no one knows what they are doing or what any of the possible outcomes will be. Doesn't exactly instil confidence in our leaders does it?

Share this post


Link to post
Share on other sites

This whole horrible situation is utterly out of control. From what we have heard of the Tory Lib cuts, they dont have what it takes to sort the problem out.

There is a huge structural deficit now in UK finances. This has been caused due to

1 ) Increased demands from the welfare state,

2 ) Public sector workers being paid too much.

3 ) Spending too much on things we dont need (Europe, Olympic Games)

The problem with the welfare state is mostly pensions. We live longer, but our retirement age hasnt been pushed back in step with that extended life. Instead of cutting this area, either by increasing the state pension age more aggresively, they have actually implemented a formula which gives pensioners MORE money, increasing the strain on state finances.

With regards to public sector workers, the evidence is clear that average pay is way too high. I have a lot of sympathy for lower paid public sector workers, who are tarred with the same brush as all public sector workers. Instead we should be looking at those in the public sector whose pay and benefits are clearly out of control. Bosses of Quangoes, MP's, Doctors, Nurses, Firemen, Policemen, Top Civil Servants, they would be the ones that I would be looking at to take the brunt of the cuts. I am sure that there are other categories as well. These people do useful and worthwhile jobs, dont get me wrong, but they are just overpaid for what they do. We also need to end all defined benefit pension schemes in the state sector, and prune back the benefits that are already accrued, they simply cannot be afforded.

The Tories seem to be trying to attack the third area, spending money on things we dont need. I cant help but think though that they are cutting things we actually do need. I quite like paying tax for defence. An aircraft carrier for example, is a useless waste of money, right up to the point where you actually need it. Emaciating our defence so that we can enrich our senior citizens doesnt sound like the sort of trade I would chose.

And it is beyond me why we dont withdraw from the fraudulent pile of dog poo that is the European Union. Money for free withdrawing from that as far as I am concerned.

So the Tories are having a go at cutting things we need, which is going to be doomed to fail the most basic test, which is one of balancing the budget. They cant achieve that with what we have seen. This is really dangerous, as the welfare state is turning into an out of control monster, whilst at the same time, workers in the private sector, having to compete against the growth of low wage economies, are not only seeing their wages and benefits slashed in order that they may compete, but are saddled with rising taxes, and an exodus of the finest talent from the private sector into the cushy public sector. Tax receipts will continue to disappoint.

The Government appear to be blessed with one portion of good news, a bond market that is benign. I say though, that this is a curse, a bit like your nerves not working. Pain might hurt, but it teaches you not to do silly things and to protect your body. The pain of high interest rates isnt switched on, allowing the government to fill the hole from public finances by simply dipping into the bond market, as those with cash compete to protect themselves from the forces of deflation.

Markets are a fickle thing. They can turn, they will turn. And when they do the Government is going to find itself with a massive debt, that it can no longer service at any reasonable rate of interest. Then the government will either have to print, driving up interest rates even further, or cut to balance the books. Bringing down the axe under such circumstances will cause 100 times the pain of the cuts we are about to witness. It would be far better to accept a bit more pain now, for a lot less pain then.

Great post

Share this post


Link to post
Share on other sites

The more you borrow the harder it is to pay back. The UK started borrowing after the war and has never paid it back in any meaningful way other than a year or two here and there (Early part of last government for example and not much then TBH - banks told Gordon to borrow and spend so he changed tack like the good little boy he was).

Osborne will borrow and QE. The maths say he can do no other. The "cuts" are a distraction. If you want them you will be disappointed by the end of today. All the announcements will be for next year or the year after or after that. The Tories hate the lower orders and will kick them in the nuts because its what they do, so a few quid off the poor and sick are to be expected. No tax rises for the rich. The Lib Dems are a bit less unpleasant so the harsher shrills in the Tory party will be put back in their box. All in all little economic effect if any.

All the options have been exhausted.

Thatcher blew the oil bonanza and the privatisation money.

Brown blew the HPI boom money.

Osborne is about to put the economy into reverse gear.

Default is the only answer IMO - the question now is when and who first?

Share this post


Link to post
Share on other sites

This question has been answered on here numerous times. The government borrows money by selling gilts - which are government bonds.

The government sells a gilt say for £100. It promises to pay (say) 3% interest on the gilt (usually for a fixed period) and, at the end of the fixed period, promises to give whoever bought the gilt their £100 back.

From an investors point of view UK government gilts are supposed to be as safe as houses(!) - in that it is allegedly inconceivable that the UK government could default on its debt because a government can always raise taxes to pay its debts.

The people who buy bonds - pension funds, fund managers and 'overseas investors'.

Gilts are tradeable - so the price can go up and down. When people are scared of investing in the stock market they will buy gilts - forcing the price above the issue price and, therefore, causing the yield to fall.

It seems there is an unlimited desire amongst 'investors' to finance the UK government's over spending.

In addition - or that they would simply 'print' the money to pay its debts.

Share this post


Link to post
Share on other sites

http://www.bbc.co.uk/news/business-11582479

The government borrowed a record £16.2bn to plug the gap in the public finances in September, figures from the Office of National Statistics show.

It is the highest borrowing figure for September on record, and is unexpectedly up from the £14.8bn borrowed in September last year.

Excellent just a mere £16.2bn borrowed, I'd hate to see how much we would need if finances where out of control.

Share this post


Link to post
Share on other sites
Hey that is only £250 per capita this month.

I think if it was presented like this in the media more the public would be more willing to make cuts.

£250 for every man woman and child.

£500 debt taken out in the name of every working person.

Each month.

Every month.

Perhaps we could get a newspaper to print a running "personal debt" on the front cover each day... showing each working persons personal share of the national debt as it rises.

Share this post


Link to post
Share on other sites

just when I thought I was being pessimistic :)

we're going to need those nukes, nothing like the threat of MAD to prevent us being bent over a table by our creditors

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.