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Broke Britons Put Economic Recovery At Risk

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http://www.independent.co.uk/news/uk/politics/broke-britons-put-economic-recovery-at-risk-2342801.html

George Osborne is under mounting pressure from Conservative MPs for a change of economic course amid new signs that the squeeze on household budgets is choking Britain's fragile recovery.

Backbench Tory leaders are becoming increasingly jittery about the country's flatlining economy and fear it could cast a shadow over the party's annual conference in October. They are pressing the Chancellor to trail a go-for-growth package in his conference speech to counteract problems beyond his control in the eurozone and the United States.

Anxiety will be increased by a survey published today showing that fewer than half of Britain's 11 million low to middle-income earners have any money left over at the end of the month – another blow to hopes that the economy will pick up after the 0.2 per cent growth seen between April and June.

......

Research by Ipsos Mori for the Resolution Foundation think tank found that 48 per cent of people in low to middle-income households – defined as having a gross income of between £12,000 and £48,000 a year – have any cash left over at the end of each month. This is compared with 66 per cent among higher-income households.

Fewer than three in 10 (27 per cent) of low to middle-earners make any monthly savings, compared with 47 per cent of those on higher incomes.

The poll also reveals high levels of anxiety about job security. Only two in five (41 per cent) of those in work said that they felt secure in their jobs; among part-timers, the figure dropped to 33 per cent. One in four of the 1,980 people surveyed expect their financial position to get worse over the next year.

The foundation warned that low household spending, which makes up about two-thirds of gross domestic product (GDP), is dampening growth. Gavin Kelly, its chief executive, said: "Working people in low to middle-income households continue to be squeezed from all angles. Everyone is saying that households need to save more and run down their debt – but this new poll shows just how hard that will be.

"Families simply cannot afford to put money aside. This is a worrying picture both for the financial security of Britain's households and for the economy."

Won't someone think of the recovery...

No shocks really I wonder what the debt levels are like for the people in this income range. Although I suspect most of the problems will be with those of an income nearer £12,000 a year.

Still at least the bankers will all get their bonus this year, those on midele incomes should be thankful.

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Some great comments attached to the Independent article. Apparently the recession is all our fault for not spending the money we have not got. If we would only go back to the reckless debt based binge spending that got us in this hole in the first place everyone would be saved. Tory MPs worried that they might wind up on the dole in 2015 seem to be losing their enthusiasm for austerity and now want tax cuts and a dash for growth. If Osborne follows their advice then we really could see a return to the 20% plus inflation of the Barber years. At least the gold bugs will be pleased.

Edited by stormymonday_2011

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If Osborne follows their advice then we really could see a return to the 20% plus inflation of the Barber years.

"The Barber Boom"?

Doesn't really matter what they do, there's no way out.

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Doesn't really matter what they do, there's no way out.

Sure there is a way out: the government could stop spending money.

eg. admit all government pension schemes are bankrupt.

eg. bring army home. eg cut housing benefit by half.

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Sure there is a way out: the government could stop spending money.

eg. admit all government pension schemes are bankrupt.

eg. bring army home. eg cut housing benefit by half.

In theory they could, but no modern politician would do this by choice. It would be....

businessman-holding-gun-to-head-thumb6879897.jpg

Political suicide.

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In theory they could, but no modern politician would do this by choice. It would be....

businessman-holding-gun-to-head-thumb6879897.jpg

Political suicide.

Economic suicide as well at least in the short term as much of this spending is deficit financed so any reductions would not necessarily be compensated by corresponding tax cuts. Common delusion on this site is that people think their taxes pay for all current state spending when the reality is that much goes to pay interest on existing debt which would still be there. Of course that debt could be defaulted but that would wipe out savings and assets far beyond the benefit recipients and state pensioners. If possible politicians prefer inflation as their means of default.

Edited by stormymonday_2011

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Economic suicide as well at least in the short term as much of this spending is deficit financed so any reductions would not necessarily be compensated by corresponding tax cuts. Common delusion on this site is that people think their taxes pay for all current state spending when the reality is that much goes to pay interest on existing debt which would still be there. Of course that debt could be defaulted but that would wipe out savings and assets far beyond the benefit recipients and state pensioners. If possible politicians prefer inflation as their means of default.

Inflation won't stop the default, it's just a different type of default. Inflation isn't an exit route as the debt bubble will still collapse especially as wages aren't going up.

Don't forget a lot of savings and assets have been bloated by the bubble.

Politicians don't want to admit that the entire economy is over inflated, because people are attached to values and there is a powerful psychological affect on getting a bigger number.

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What staggers me is that both the survey and the article see consumption (financed at least in part by debt) as the way forward but it is that that has gotten us in the mess we are now in. What is happening is what needs to happen, that is a reduction in consumption so that investment and exports can provide the basis for recovery. Whether investment and exports will take up the strain is of course debatable but that us the theory. People seem to have little or no understanding of these issues.

IIRC the OBR themselves have forecast that consumer debt would increase by £300bn over the next four years in order to finance the consumption as part of the recovery. What should happen of course is that debt should be paid down substantially not increased and that that will have to come from consumption.

Incredible!

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What staggers me is that both the survey and the article see consumption (financed at least in part by debt) as the way forward but it is that that has gotten us in the mess we are now in. What is happening is what needs to happen, that is a reduction in consumption so that investment and exports can provide the basis for recovery. Whether investment and exports will take up the strain is of course debatable but that us the theory. People seem to have little or no understanding of these issues.

IIRC the OBR themselves have forecast that consumer debt would increase by £300bn over the next four years in order to finance the consumption as part of the recovery. What should happen of course is that debt should be paid down substantially not increased and that that will have to come from consumption.

Incredible!

That sounds like we're back to my point that we're still producing, with ease, everything that needs producing (food, water etc.), but are lumbered with a system that falls apart unless there's ever-increasing consumption of unncecessary stuff on top of that. Utter madness.

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The reason that people dont save as much as they used to is due to our welfare system. What is the point of saving for a rainy day, if when that rainy day comes, you cant get state handouts because you have saved too much?

The only point in saving is if you have a realistic chance of saving so much, that the income from those savings exceeds what the state will give you. For many this is not a realistic possibility.

And then you have to consider that people have huge amounts of tax taken off of them to provide a safety net for those who are experiencing a rainy day, many of whom could have provided for themselves anyway, but instead have chosen to spend all their income, knowing that others would have to stump up should it rain.

The idea then, that the government should spend even more to solve this problem, is utterly absurd. It can get the money either from borrowing, which is deferred taxation, or more taxation now. Both of which are going to make it even more difficult for working people to save.

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Backbench Tory leaders are becoming increasingly jittery about the country's flatlining economy and fear it could cast a shadow over the party's annual conference in October. They are pressing the Chancellor to trail a go-for-growth package in his conference speech to counteract problems beyond his control in the eurozone and the United States.

So that's the backbench Tory leaders so let's know what their partners the libdems have to say about it. After all it is a coalition.

Their memories are so short. In the run up to the election they claimed that "go- for-growth" would mean higher interest rates which would be bad for the UK.

Of course what they meant during the election was they would get in power on the basis of responsible policies, allow inflation to rip, find that their conference was more important than the future of the UK so cave in to any pressure - and suchlike.

So they're going to "counteract problems beyond his (Osbornes) control". So it IS possible to counteract after all - but if it's possible to do that then why didn't they do it earlier for example when the MicBrown was in charge. As opposition they could have suggested counteracting measures in the run up to the crash.

It also goes to show that they DO have the ability to anticipate events such as "it could cast a shadow over the party's annual conference in October" and everything isn't always "unexpected".

The real problem is that they pick and choose what to expect. Their self service and hypocrisy is writ large.

Edited by billybong

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DECLINE IN HIGH STREET SALES ACCELERATES IN AUGUST - CBI

Retail sales volumes fell on a year ago in August at the fastest pace for over a year, the CBI said today (Thursday).

Meanwhile, retailers were the most negative they have been about the general business situation since February 2009.

The CBI’s latest quarterly Distributive Trades Survey found that 31% of retailers saw the volume of sales rise in the two weeks to 16 August, while 46% said they fell. The resulting rounded balance of -14% was in line with expectations (-12%), and the most negative since May 2010 (-18%).

Price inflation on the high street remains above average but +55% is the lowest balance since November 2010 (+45%). The continued rise in average prices isn’t expected to slow much in the coming month, however.

A balance of -11% of retailers said they felt more negative about the business situation over the next three months than they did three months ago, the most negative for 18 months.

Sales growth for the time of year was not considered quite as bad as had been expected, with a balance of -28% compared with -37%. However, the volume of orders placed with suppliers fell (-22%) at the fastest pace since May 2010 (-24%). Orders are expected to fall again next month (-11%).

Looking ahead, retailers expect the volume of sales to fall again in the year to September, but at a slightly slower pace, with 27% expecting a rise and 35% predicting a fall, giving a balance of -7%.

Retailers are scaling back investment plans over the next 12 months, with the balance of -11% the most negative since February 2009 (-26%).

Judith McKenna, Chair of the CBI Distributive Trades Panel and ASDA Chief Operating Officer, said:

“As expected, August was a tough month on the high street. Sales volumes fell at a pace not seen in over a year, as consumers have continued to see their real incomes squeezed by a combination of inflation and weak wage growth.

CBI Press Release

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The reason that people dont save as much as they used to is due to our welfare system. What is the point of saving for a rainy day, if when that rainy day comes, you cant get state handouts because you have saved too much?

The only point in saving is if you have a realistic chance of saving so much, that the income from those savings exceeds what the state will give you. For many this is not a realistic possibility.

And then you have to consider that people have huge amounts of tax taken off of them to provide a safety net for those who are experiencing a rainy day, many of whom could have provided for themselves anyway, but instead have chosen to spend all their income, knowing that others would have to stump up should it rain.

The idea then, that the government should spend even more to solve this problem, is utterly absurd. It can get the money either from borrowing, which is deferred taxation, or more taxation now. Both of which are going to make it even more difficult for working people to save.

People on low incomes have enough trouble paying the everyday bills, never mind saving for a rainy day.

What about restricting benefits to those whose circumstances have precluded savings? Take into account income, number of dependents, realistic allowances for essential expenditure, over their working life. Make it clear that those who can save, because they have an adequate income, that they have to save instead of spending every penny because come that rainy day they won't be bailed out.

Rather complicated calculations, I grant you, but what are computers for?

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http://www.independent.co.uk/news/uk/politics/broke-britons-put-economic-recovery-at-risk-2342801.html

Won't someone think of the recovery...

No shocks really I wonder what the debt levels are like for the people in this income range. Although I suspect most of the problems will be with those of an income nearer £12,000 a year.

Still at least the bankers will all get their bonus this year, those on midele incomes should be thankful.

How about Osborne stops scams like Philip Green's wife taking a £1.2bn a year tax free dividend from 'her' UK businesses and add the money to tax allowances at the bottom end of the spectrum.

Just think closures of tax loopholes for a few dozen people could put around £60 in every tax payers pocket in the UK instead of bolstering Monaco's coffers.

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How about Osborne stops scams like Philip Green's wife taking a £1.2bn a year tax free dividend from 'her' UK businesses and add the money to tax allowances at the bottom end of the spectrum.

Just think closures of tax loopholes for a few dozen people could put around £60 in every tax payers pocket in the UK instead of bolstering Monaco's coffers.

You scratch my back I'll piss over the taxpayers is the strategy being employed I believe...

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""Families simply cannot afford to put money aside. This is a worrying picture both for the financial security of Britain's households and for the economy.""

Could that be due to anything to do with house "prices" per chance?? :rolleyes::huh::rolleyes:

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How the fck can the people who make up the economically active having no money put the recovery at risk, its like saying doctors without medical expertise are putting thier patients at risk.

Just another "People without money don't spend as much shocker" FFS!!!

Some great comments attached to the Independent article. Apparently the recession is all our fault for not spending the money we have not got. If we would only go back to the reckless debt based binge spending that got us in this hole in the first place everyone would be saved. Tory MPs worried that they might wind up on the dole in 2015 seem to be losing their enthusiasm for austerity and now want tax cuts and a dash for growth. If Osborne follows their advice then we really could see a return to the 20% plus inflation of the Barber years. At least the gold bugs will be pleased.

Just before reading your last sentence I thought "Mmmm, that'd be good, I'd be relatively richer and a loaf £20". At least those who gorged on debt would be made to suffer disproportionately more than I :)

Edited by zebbedee

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Economic suicide as well at least in the short term as much of this spending is deficit financed so any reductions would not necessarily be compensated by corresponding tax cuts. Common delusion on this site is that people think their taxes pay for all current state spending when the reality is that much goes to pay interest on existing debt which would still be there. Of course that debt could be defaulted but that would wipe out savings and assets far beyond the benefit recipients and state pensioners. If possible politicians prefer inflation as their means of default.

Political suicide yes, economic suicide no.

Reducing government spending, especially if it is deficit financed spending, reduces the national debt.

It's not about tax cuts for the rich, it's about paying off debt.

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People on low incomes have enough trouble paying the everyday bills, never mind saving for a rainy day.

What about restricting benefits to those whose circumstances have precluded savings? Take into account income, number of dependents, realistic allowances for essential expenditure, over their working life. Make it clear that those who can save, because they have an adequate income, that they have to save instead of spending every penny because come that rainy day they won't be bailed out.

Rather complicated calculations, I grant you, but what are computers for?

Savings v spendings is a matter of choice.

There are those that will spend up to and more than they earn and those in similar curcumstances that will save more and spend less than they could although they earn the same or less.

....what you earn or spend beyound a certain amount is a choice....spending more does not mean feeling better or even happier.....in fact it could mean quite the reverse. ;)

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  • 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%



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