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Was Debt And Deficits A Problem In The 90S Recession?

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For the posters old enough to remember, how big a problem was debt and deficits to the UK economy in the early 90s recession?

I read somewhere of an 8% deficit at peak?

Any antedotal stories or links to show the situation back then?

Obviously we now have CNN and 24 hour news talking about the issue so it is difficult to make a direct comparison, but what sort of debt or deficit issues if any were talked of back then?

Cheers.

Edited by ringledman

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For the posters old enough to remember, how big a problem was debt and deficits to the UK economy in the early 90s recession?

I read somewhere of an 8% deficit at peak?

Any antedotal stories or links to show the situation back then?

Obviously we now have CNN and 24 hour news talking about the issue so it is difficult to make a direct comparison, but what sort of debt or deficit issues if any were talked of back then?

Cheers.

Somebody posted a link to this book a couple of weeks ago. Go to page 229, the last third of page 230 is interesting. As far as I remember there were no issues with public debt or deficits at the time.

http://books.google.com/books?id=BlLxLxM_3lsC&pg=PT168&dq=hyams+centre+point+empty&hl=en&ei=5ncYTp3RM8_GswbBl4CgDw&sa=X&oi=book_result&ct=result&resnum=3&ved=0CDAQ6AEwAg#v=onepage&q=hyams%20centre%20point%20empty&f=false

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National debt was 25% at the beginning of the 1990s recession. (fell throughout the late 80s)

Was nearly 50% at the start of this one (actually started rising years before the 'credit crunch') as Gordon relaxed his 'golden rule' :lol:

Private debt i guess was less of an issue too. Obviously took near 15% rates to cause mass repos. Given the peak of £63k in housing in the late 80s was around £120k in 2007 terms, and 2007 peaked around £200k, i guess private debt is probably 60-70% higher this time round.

Think many could survive 15% rates today? Or even 5% rates?

Makes sense I suppose, though lots of stuff is probably hidden. We borrowed maybe 15% at worst this time, 7.5% last time. This ones twice as bad. Except last time, throughout the 90s, we had falling commodity and input prices to encourage growth. This time we dont. Thanks QE.

And we had oil and gas

And less elderly

And lower welfare commitments

etc etc.

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And we had oil and gas

And less elderly

And lower welfare commitments

etc etc.

One of the consequences of the internet age, is that it's so much easier, quicker and cheaper to start your own startup business. This means we now have a lot more potential competition from abroad. Don't get me wrong, I'm aware of startup successes, especially in London, but your average Chav is going to remain washed up on the shore. I've been compiling a directory of startups in spain, at SpainUpNews.com and there has been an absolute explosion in startups (possibly because the talented young geeks don't have a menial job to distract them!). I'm sure this is happening in various countries. We still have a slight advantage in this country, as English is our native language as well as being the world's language of commerce, but things are going to get even tougher.

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And we had oil and gas

And less elderly

And lower welfare commitments

etc etc.

We also had much more manufacturing cabaility - the official numbers are ******** and just measure the conversion of already manufacured goods into finished produts with a label on them with nearly all the component parts imported.

So what we get now are ever growing trade deficits - even during recession.

There is no base left siginificant enough to build out of any more, so much has changed (been destroyed) in the lat decade, the damage was hidden (and largely done) by running the imaginary economy on debt.

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There's a historical national debt graph here.

From memory, the 1990's recession was entirely "artificial". The government was trying keep sterling up with the Deutschmark and had to keep raising the base rate. There were legally binding trading ranges for sterling as a prelude to EMU (joining the Euro - then called the Ecu). Once the rate reached 15% the economy collapsed. They then said sod EMU, reduced the rate to 8% and the economy recovered.

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  • 277 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
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