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Ash4781

The Consumer And Growth

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An article in the telegraph has the obr which says that consumer growth and household spending key. This is a bit odd compared to some recent warnings in trading updates and margin guidance from retailers. Inflation without the wage inflation will cause big problems in the margins. Though wage inflation will also create problems driving the risk free rate up.

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An article in the telegraph has the obr which says that consumer growth and household spending key. This is a bit odd compared to some recent warnings in trading updates and margin guidance from retailers. Inflation without the wage inflation will cause big problems in the margins. Though wage inflation will also create problems driving the risk free rate up.

If wages stay where they are demand will drop off the cliff and inflation will fade away. Rising prices against a back drop of falling demand due to affordability is not a recipe for sustainable inflation IMO. As we are seeing now in the housing market.

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And today, the OBR are saying living standards will fall for the next 2 years

http://uk.finance.yahoo.com/news/Office-Budget-Responsibility-tele-3395436296.html

Discussed here: http://www.housepricecrash.co.uk/forum/index.php?showtopic=161524&pid=2940392&st=0entry2940392

You gotta laugh, haven't you?

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When 50% of your salary is rent.

10% of it is council tax. Utilities are 20%, Travel is 10% and you have 10% left over for food, you aren't much of a consumer.

And when your starting out in the world of work where you begin with low wages and work yourself up. When car insurance is 50% of income and the running costs 20% you really need the jobs to come to you.

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If wages stay where they are demand will drop off the cliff and inflation will fade away. Rising prices against a back drop of falling demand due to affordability is not a recipe for sustainable inflation IMO. As we are seeing now in the housing market.

not the imported inflation we have..commodities, raw materials, energy...all rising.

this will lead to a squeeze on margins leading to unemployment and bankruptcies.

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When 50% of your salary is rent.

10% of it is council tax. Utilities are 20%, Travel is 10% and you have 10% left over for food, you aren't much of a consumer.

And when your starting out in the world of work where you begin with low wages and work yourself up. When car insurance is 50% of income and the running costs 20% you really need the jobs to come to you.

Obviously too rich for your own good.

Even in Thatcher's time, only a small minority were so obscenely rich as to run a car before at least their late 20s when insurance costs come down.

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So lots of companies going bust, job losses etc as the consumer stops spending. Everything seems to be working out nicely.

....nice for the consumer that stops wasting/spending so much, they just get richer....not so nice for the company that goes bust or the person that loses their job. ;)

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What happened to "re-balancing the economy"?

The "re-balancing the economy" mantra was found to be a beyond-design-basis event and has been quietly dropped because we can't be consumers and exporters all at the same time.

Edited by interestrateripoff

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....nice for the consumer that stops wasting/spending so much, they just get richer....not so nice for the company that goes bust or the person that loses their job. ;)

Providing they stay in work. If the company they work for goes bust, they too end up poorer.

There is no pain free exit from this bubble that will inevitable burst.

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What happened to "re-balancing the economy"?

they've realised it cant be done before the next millennium, sorry election, so are trying to get a consumer boom instead.

Let's face it, the OBR are collectively clueless and heavily influenced by desperate VIs.

The panic will creep in soon, when they realise the magic growth fairy doesn't exist.

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“There you have big companies coming back to the UK instead of leaving the UK and that’s going to help us all with the growing economy,” the Chancellor said in response to the announcement.

Yeah just what the UK needs.

Another bunch of parasites and leeches coming back to the UK and offshoring work.

Osborne at the helium again.

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The problem is that consumption id a SYMPTOM of economic growth, not a CAUSE of economic growth.

Economic growth essentially comes down to two things, using more capital or using the same capital more efficiently.

More capital requires heavy investment, but using it more efficiently just means that the same capital can produce more things (be they goods or services or whatever).

Ultimately what makes us rich is that we only need to use the work of one person to feed 100 others, that means they are free to do other things for each other or nothing at all.

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Obviously too rich for your own good.

Even in Thatcher's time, only a small minority were so obscenely rich as to run a car before at least their late 20s when insurance costs come down.

That's because it took a larger amount of resources to ceate a car in the seventies (the insurance cost is just a risk and remains more or less constant)

Now, because everyone has a car, you are unlikely to make rent reliably unless you also have one.

Edited by Stars

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Yeah just what the UK needs.

Another bunch of parasites and leeches coming back to the UK and offshoring work.

Osborne at the helium again.

Ask a filipino maid what it's like to be from a country that isn't home to high-value industries.

The more productive companies that get priced out, the closer we get to becoming the next generation's filipino maids. That is, those lucky enough to get any kind of paid employment.

No I don't mean the strawman of city bankers: happy to call their bluff. I do mean lots of companies who employ people and pay taxes, from the ten-billion-pound trophy of WPP down to a long tail of back-bedroom companies.

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That's because it took a larger amount of resources to ceate a car in the seventies (the insurance cost is just a risk and remains more or less constant)

70s? I said Thatcher's time, though the same comment applied even more strongly in earlier times.

Now, because everyone has a car, you are unlikely to make rent reliably unless you also have one.

Twaddle. In the days of the Internet and 3g+, there's less need than ever to move people about. Unless you're disabled, a private car is pure self-indulgence.

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Twaddle. In the days of the Internet and 3g+, there's less need than ever to move people about. Unless you're disabled, a private car is pure self-indulgence.

It is still the case that for the vast majority of employment in the uk, you need to turn up at a particular place, at a particular time every day

Edited by Stars

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It is still the case that for the vast majority of employment in the uk, you need to turn up at a particular place, at a particular time every day

Yep, that's a key part of what's wrong.

It's also why I haven't worked for a UK employer or client (beyond a couple of small contracts, max. about £2000 in a year) since returning to the UK in 1998. This country is far too addicted to the 19th/20th century office and Dilbertian work practices.

But I didn't have a car before that, either. Being able-bodied, I had (and still have) a bike.

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Yep, that's a key part of what's wrong.

It's also why I haven't worked for a UK employer or client (beyond a couple of small contracts, max. about £2000 in a year) since returning to the UK in 1998. This country is far too addicted to the 19th/20th century office and Dilbertian work practices.

Yes, i agree

Uk managment seems to have large self worth issues. I think this is pretty deeply embedded in our culture, though

But I didn't have a car before that, either. Being able-bodied, I had (and still have) a bike.

Since then the rent line has moved to accomodate the utility of more widespread car ownership; if you don't have a car you may find yourself unable to make this line.

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Ask a filipino maid what it's like to be from a country that isn't home to high-value industries.

The more productive companies that get priced out, the closer we get to becoming the next generation's filipino maids. That is, those lucky enough to get any kind of paid employment.

No I don't mean the strawman of city bankers: happy to call their bluff. I do mean lots of companies who employ people and pay taxes, from the ten-billion-pound trophy of WPP down to a long tail of back-bedroom companies.

Indeed we do need and are very short of high-value industries who will employ UK people and not easy come easy go parasites and leeches offshoring employment and moving from country to country every 2 or 3 years. The UK's where it is now at least in part because of them and already young people from the UK are having to look overseas for work and even affordable housing just like Filipino maids have done.

The UK continues to struggle and live on debts and benefits while the bankers and their ilk including tax predator companies continue to live the life of Riley and now that Ireland's in the muck and the leeches and parasites are leaving they're also living the life off Riley as well as the UK.

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Indeed we do need and are very short of high-value industries who will employ UK people and not easy come easy go parasites and leeches offshoring employment and moving from country to country every 2 or 3 years.

If only the parasites would push off somewhere else , unfortunately the uk tax system is ideal (made for) for parasites, so they stay while the producers move out

Edited by Stars

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Twaddle. In the days of the Internet and 3g+, there's less need than ever to move people about. Unless you're disabled, a private car is pure self-indulgence.

hmm,

pretty difficult to get to a job using public transport anywhere outside the big cities.

In Oxfordshire there are many places that see one bus a day - hardly Ideal. (and yes you can cycle - but only if you are fit and your workplace has somewhere you can change afterwards)

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  • 312 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%



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