Realistbear Posted June 22, 2011 Share Posted June 22, 2011 (edited) http://www.telegraph.co.uk/finance/economics/8590527/UK-deficit-hits-record-despite-1.1bn-axe-on-borrowing.html UK deficit hits record despite £1.1bn axe on borrowing The Government cut borrowing in May, but not enough to prevent it racking up a record deficit for the first two months of the new financial year..../ The Office for Budget Responsibility (OBR), the independent fiscal watchdog, said that spending is going up faster than projected because the UK is paying higher interest payments on gilts – government bonds – which are linked to inflation, while tax receipts are not yet growing at the expected pace. Aye, and there'll be many a record broken these coming months I tell ye. Doomed, doomed........................ Edited June 22, 2011 by Realistbear Quote Link to comment Share on other sites More sharing options...
ken_ichikawa Posted June 22, 2011 Share Posted June 22, 2011 Consumer demand falls, governmenrt printing press makes up for it. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted June 22, 2011 Share Posted June 22, 2011 Default occurs when the rates creep up. Yep. Greece's main problem was having to pay very high rates to roll their debt. Though comparing their budget deficit with ours (below), it is hard to understand how come we are still being able to roll our debt so cheaply. Source: http://www.economist.com/node/18836676?story_id=18836676 Quote Link to comment Share on other sites More sharing options...
leicestersq Posted June 22, 2011 Share Posted June 22, 2011 The Tories needed to cut taxes, and balance the budget. That meant savage cuts, to state pensions, benefits, public sector salaries and employment, and general stuff. They have increased taxes and cut nothing, and in so doing have tightened the noose. I can only guess they are trying to bring about a state default, it is on its way. Just who is it that is buying 10 year gilts at 3%? Quote Link to comment Share on other sites More sharing options...
General Melchett Posted June 22, 2011 Share Posted June 22, 2011 When and why did the good old, self-explanatory 'Public sector borrowing requirement (PSBR)' phrase fall out of use? Seems to me the currently favoured term 'defecit' is just opening the door to Liebour and the muppet leaders of the public sector unions to misrepresent what the real problem is and what the cause is,* something which they seem to be doing several times a day to my hearing of the radio and TV news. Why not go back to calling a spade a spade? *I have no love for banks or bankers, but it is not them buying bags of pasta for 40 quid a time. Quote Link to comment Share on other sites More sharing options...
MrFlibble Posted June 22, 2011 Share Posted June 22, 2011 Yep. Greece's main problem was having to pay very high rates to roll their debt. Though comparing their budget deficit with ours (below), it is hard to understand how come we are still being able to roll our debt so cheaply. Perception (or maybe deception) that we are actually tackling the debt problem? Meanwhile the govt continues to smoke on the deficit crack pipe from hell. Quote Link to comment Share on other sites More sharing options...
exiges Posted June 22, 2011 Share Posted June 22, 2011 Yep. Greece's main problem was having to pay very high rates to roll their debt. Though comparing their budget deficit with ours (below), it is hard to understand how come we are still being able to roll our debt so cheaply. Because UK banks are buying the debt, it's genius Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted June 22, 2011 Share Posted June 22, 2011 (edited) Perception (or maybe deception) that we are actually tackling the debt problem? Meanwhile the govt continues to smoke on the deficit crack pipe from hell. Yes, I know, I thought so too, initially, but the gap has remained to wide, our rates too low, too close to Germany's, and for too long. I've grown increased suspicious of some "grand-arrangement" backstage. Last year I though China was helping to bank roll us, and the USA, to avoid a global crash. But I think/suspect that they have been reducing their "exposure" to us. Then a few weeks ago we saw that UK "banks" were replacing foreigners, but the BoE was included in this category. Because UK banks are buying the debt, it's genius Yes, I agree. But how much of it is by the BoE? And does that mean "new" (as in recently created) money? 'Cause If it is new money, then this is inflationary, and they won't be able to keep doing it, without pushing inflation up geometrically = going Zimbabwe. . Edited June 22, 2011 by Tired of Waiting Quote Link to comment Share on other sites More sharing options...
ken_ichikawa Posted June 22, 2011 Share Posted June 22, 2011 Yes, I agree. But how much of it is by the BoE? And does that mean "new" (as in recently created) money? 'Cause If it is new money, then this is inflationary, and they won't be able to keep doing it, without pushing inflation up geometrically = going Zimbabwe. . We're already going zimbabwe its just that we just shifted into a higher gear. Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted June 22, 2011 Share Posted June 22, 2011 Nice to see the budget balance for the whole Euro area at -4.3%. So much for -3% within the Maastricht rules. The only rule seems to be "we do what we like". Quote Link to comment Share on other sites More sharing options...
Jie Bie Posted June 22, 2011 Share Posted June 22, 2011 The Tories needed to cut taxes, and balance the budget. That meant savage cuts, to state pensions, benefits, public sector salaries and employment, and general stuff. They have increased taxes and cut nothing, and in so doing have tightened the noose. I can only guess they are trying to bring about a state default, it is on its way. Just who is it that is buying 10 year gilts at 3%? Did they not cut corporation tax last month? That would seem like an attempt to encourage business in the economy. Obviously there is far more they could do (scrap employee NI contributions for example) but doing that would make the deficit even worse, which would push gilt rates up more. Quote Link to comment Share on other sites More sharing options...
MrFlibble Posted June 22, 2011 Share Posted June 22, 2011 Yes, I know, I thought so too, initially, but the gap has remained to wide, our rates too low, too close to Germany's, and for too long. I've grown increased suspicious of some "grand-arrangement" backstage. Last year I though China was helping to bank roll us, and the USA, to avoid a global crash. But I think/suspect that they have been reducing their "exposure" to us. Then a few weeks ago we saw that UK "banks" were replacing foreigners, but the BoE was included in this category. Monetization of debt only ever leads to one place - a wheelbarrow full of money to buy a loaf of bread. My personal feeling is we'll be lucky to see 10p back in the £ by the time this thing has fully played out (measured in real terms). If it goes hyper then all bets are off and money won't matter anymore as the more pressing issue will be food and survival. Quote Link to comment Share on other sites More sharing options...
leicestersq Posted June 22, 2011 Share Posted June 22, 2011 Did they not cut corporation tax last month? That would seem like an attempt to encourage business in the economy. Obviously there is far more they could do (scrap employee NI contributions for example) but doing that would make the deficit even worse, which would push gilt rates up more. I am sure that corporation tax was cut. It is the overall tax take that counts though. The logic of the Laffer curve is that if you tax too much, tax revenue falls, we must be near or beyond the point where that is happening, due to the incentives of now not paying tax, either legally or illegally. If you can find black market work, even at low levels of pay, it must beat taxed pay in the private sector. Decreasing taxes can increase the tax take. However, I dont disagree, that cutting tax will in the short term at least, increase the deficit. Which is why I was proposing savage cuts in public expenditure, the net effect of which, would be to reduce the deficit, and also encourage people to work in the private sector. Quote Link to comment Share on other sites More sharing options...
SHERWICK Posted June 22, 2011 Share Posted June 22, 2011 *I have no love for banks or bankers, but it is not them buying bags of pasta for 40 quid a time. Ah, but surely you understand that if you don't support the unions you must therefore support the bankers! Quote Link to comment Share on other sites More sharing options...
bendy Posted June 22, 2011 Share Posted June 22, 2011 Monetization of debt only ever leads to one place - a wheelbarrow full of money to buy a loaf of bread. My personal feeling is we'll be lucky to see 10p back in the £ by the time this thing has fully played out (measured in real terms). If it goes hyper then all bets are off and money won't matter anymore as the more pressing issue will be food and survival. tfh hat post this place was great when it was 90% foil. heavy duty foil no less too. Quote Link to comment Share on other sites More sharing options...
Riedquat Posted June 22, 2011 Share Posted June 22, 2011 I am sure that corporation tax was cut. It is the overall tax take that counts though. The logic of the Laffer curve is that if you tax too much, tax revenue falls, we must be near or beyond the point where that is happening, due to the incentives of now not paying tax, either legally or illegally. If you can find black market work, even at low levels of pay, it must beat taxed pay in the private sector. Decreasing taxes can increase the tax take. However, I dont disagree, that cutting tax will in the short term at least, increase the deficit. Which is why I was proposing savage cuts in public expenditure, the net effect of which, would be to reduce the deficit, and also encourage people to work in the private sector. If there's any tax at all there's an incentive to avoid it, and the higher it is the more people will try. You can't judge where we are on the Laffer curve by people avoiding tax. I always get the feeling that people arguing for cuts to increase tax take really just want to pay less tax and are using the Laffer curve as an argument to justify that. They may be right but I don't see how anyone can be very confident that they are. The same obviously applies for moving in the other direction, or staying put. There might be other benefits to a drop, though - can tax cuts reduce inflation (less pressure to increase prices)? Cuts in public expenditure can be counter-productive too; I firmly believe that there's an optimum point there as well (which isn't the same as the ideal expenditure - where that lies depends upon the state of the economy which, right now, probably is the same place come to think of it). In that case though I can't really see any argument against the view that we're well beyond the optimum. Quote Link to comment Share on other sites More sharing options...
MrFlibble Posted June 22, 2011 Share Posted June 22, 2011 tfh hat post this place was great when it was 90% foil. heavy duty foil no less too. I do like a good bit of foil, must be the shininess of it, seem oddly attracted to shiny metals these days, cannot imagine why Quote Link to comment Share on other sites More sharing options...
Expat_in_Norway Posted June 22, 2011 Share Posted June 22, 2011 Just in the name of "balanced reporting" UK public sector borrowing falls back in May* http://www.bbc.co.uk/news/business-13855098 *excluding the cost of bank bail-outs and other interventions Quote Link to comment Share on other sites More sharing options...
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