Jump to content
House Price Crash Forum
operator

Scandal Of Britain's £700Bn Overspend

Recommended Posts

http://blogs.telegraph.co.uk/finance/jeremywarner/100010510/scandal-of-britains-700bn-overspend/

Here’s a startling, though depressingly unsurprising, factoid I came across while – sad ******* that I am – digging around in the Office for National Statistics data base. Britain has not had a surplus in trade since 1982, or nearly thirty years, and even back then, it was only the gusher of still relatively new North Sea oil development that sustained it. The current account, which includes income on overseas investment, looks little better. There’s been no current account surplus since 1984.

I’ve added up the numbers in this sad history of shame, and the brutal truth is that since 1984 Britain has spent a sum more than it has earned equivalent to well over half of the country’s entire national income, or in round numbers, £700bn. I’m reminded of Mr Micawber’s famous recipe for happiness. “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

In Britain, we long ago forgot about the importance of living within our means. The consequent misery visited on us in the financial crisis is the modern equivalent of the debtors’ prison to which Mr Micawber was eventually condemned. Yet still we don’t seem to have learned our lesson. Despite a near 25pc devaluation in the pound since the start of the financial crisis, one of the biggest devaluations ever – which should in theory make British goods and services more competitive – we are still importing far more than we are exporting. Last year, the current account deficit was again on the increase, to 2.5pc of GDP.

I'm showing my age here, but can remember when the trade figures, good or bad would be the lead item on the news.

Share this post


Link to post
Share on other sites

http://blogs.telegraph.co.uk/finance/jeremywarner/100010510/scandal-of-britains-700bn-overspend/

Here’s a startling, though depressingly unsurprising, factoid I came across while – sad ******* that I am – digging around in the Office for National Statistics data base. Britain has not had a surplus in trade since 1982, or nearly thirty years, and even back then, it was only the gusher of still relatively new North Sea oil development that sustained it. The current account, which includes income on overseas investment, looks little better. There’s been no current account surplus since 1984.

I’ve added up the numbers in this sad history of shame, and the brutal truth is that since 1984 Britain has spent a sum more than it has earned equivalent to well over half of the country’s entire national income, or in round numbers, £700bn. I’m reminded of Mr Micawber’s famous recipe for happiness. “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

In Britain, we long ago forgot about the importance of living within our means. The consequent misery visited on us in the financial crisis is the modern equivalent of the debtors’ prison to which Mr Micawber was eventually condemned. Yet still we don’t seem to have learned our lesson. Despite a near 25pc devaluation in the pound since the start of the financial crisis, one of the biggest devaluations ever – which should in theory make British goods and services more competitive – we are still importing far more than we are exporting. Last year, the current account deficit was again on the increase, to 2.5pc of GDP.

I'm showing my age here, but can remember when the trade figures, good or bad would be the lead item on the news.

What an insightful, well written and pertinent post.

The figures are thoroughly depressing, and 'living within our means' is a phrase that a generation or two consider only as being 'old fashioned'.

Share this post


Link to post
Share on other sites

Why does the current account deficit matter anyway?

Wealth is not measured in bullion or the foreign currency reserves of a nation, but in the goods and services that are produced and are available to its people.

Share this post


Link to post
Share on other sites

Why does the current account deficit matter anyway?

Wealth is not measured in bullion or the foreign currency reserves of a nation, but in the goods and services that are produced and are available to its people.

The country is hemorrhaging money. At some point perpetually running a deficit matters. A nations currency is based on trust and productivity.

Share this post


Link to post
Share on other sites

1982. Interesting. Denninger keeps mentioning how the US hasnt had genuine growth since 1983.

Seems the early 80s was the turning point.

Hmm it is almost as if the UK and USA embarked on insane economic policies in the late 70's, early 1980's. I suspect socialists were to blame though ;)

Share this post


Link to post
Share on other sites

Britain was at it's zenith in 1984..

Sebastian Coe, Daley Thompson and Tessa Sanderson got gold in the summer Olympics (less said about Mary Decker and Zola Budd)

Torvill and Dean got gold in the winter Olympics

Thames barrier opens

McEnroe vs Connors in the tennis

Steve Davis vs Dennis Taylor in the snooker

Band aid

The FTSE 100 starts

Edited by exiges

Share this post


Link to post
Share on other sites

http://blogs.telegra...00bn-overspend/

Here's a startling, though depressingly unsurprising, factoid I came across while – sad ******* that I am – digging around in the Office for National Statistics data base. Britain has not had a surplus in trade since 1982, or nearly thirty years, and even back then, it was only the gusher of still relatively new North Sea oil development that sustained it. The current account, which includes income on overseas investment, looks little better. There's been no current account surplus since 1984.

I've added up the numbers in this sad history of shame, and the brutal truth is that since 1984 Britain has spent a sum more than it has earned equivalent to well over half of the country's entire national income, or in round numbers, £700bn.

I wonder if that is quite as bad as it sounds. 700e9/60e6=£11.5k, and that is over nearly 20 years, so under fifty quid a month each. I don't think this will bother us very soon with the comparable figure for the deficit running at well over £100. It just means that bit-by-bit Britain is being bought by foreigners, but i) at this rate it will take rather long before the locals need to learn how to say "thank you" in Mandarin, and ii) I bet the Greeks are not all that worried about foreigners owning assets in Greece now that the value of everything in that country is on the precipice, and they would certainly prefer to have sold said assets while the going was good rather than now in a firesale?

Am I just an incurable contrarian?

Share this post


Link to post
Share on other sites

Hmm it is almost as if the UK and USA embarked on insane economic policies in the late 70's, early 1980's. I suspect socialists were to blame though ;)

I dont think its a socialist/capitalist thing. Those words nowadays are used purely to give the (mis)perception of choice.

In the 70s Britain maxed out the state credit card. The IMF we're called in, and Thatcher, Major, Bliar and Brown spent the next three decades transferring this unsustainable situation to private credit cards. That reached its endgame back in 2007, and the state credit cards taken over again. Only this time is growing at such a rate it wont take decade's for the numbers to hit a wall.

Share this post


Link to post
Share on other sites

I wonder if that is quite as bad as it sounds. 700e9/60e6=£11.5k, and that is over nearly 20 years, so under fifty quid a month each. I don't think this will bother us very soon with the comparable figure for the deficit running at well over £100. It just means that bit-by-bit Britain is being bought by foreigners, but i) at this rate it will take rather long before the locals need to learn how to say "thank you" in Mandarin, and ii) I bet the Greeks are not all that worried about foreigners owning assets in Greece now that the value of everything in that country is on the precipice, and they would certainly prefer to have sold said assets while the going was good rather than now in a firesale?

Am I just an incurable contrarian?

Me too. If we run a deficit, it means the creditors owe us some demand.

Share this post


Link to post
Share on other sites

Britain was at it's zenith in 1984..

Sebastian Coe, Daley Thompson and Tessa Sanderson got gold in the summer Olympics (less said about Mary Decker and Zola Budd)

Torvill and Dean got gold in the winter Olympics

Thames barrier opens

McEnroe vs Connors in the tennis

Steve Davis vs Dennis Taylor in the snooker

Band aid

The FTSE 100 starts

Almost, some of those events were 1985, but I know what you mean. The decline has been masked by North Sea oil (its bounty wasted compared to Norway who had amassed a sovereign wealth fund of £259bn by 2009 linky). There was the bad recession in the early 90s, but there did seem to be improvements that decade.

We are just not blessed by our cretinous, short-sighted, interfering politicians. A balanced budget and good housekeeping should be the norm.

Edited by tinker

Share this post


Link to post
Share on other sites

Why produce when you can import for cheaper....

Because importing requires that you send the producers something of equal value. Thus you must look around to see what you have got to send them. Whatever it is that you send them, you no longer have it. When you produce inside the country, you don't have to send anything abroad. Thus the imported product has a cost whilst the internally produced product has none. It's all about capital flows.

Share this post


Link to post
Share on other sites

I dont think its a socialist/capitalist thing.

Well had we had a sound money system we could never have run up these deficits.

As we all know socialists love debt which is why they always run out of other peoples money.

Maybe it suited the Socialists to allow Mercantilist China to undercut our industry forcing more and more of us in to debt slavery and the arms of the state.

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.

  • 284 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.