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£12Bn 'black Hole' In Public Finances Could Mean Austerity For Years To Come

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http://www.guardian.co.uk/business/2011/sep/19/economy-austerity-black-hole-osborne

Britain could face many more years of austerity to balance the country's books, City economists warned, after a potential £12bn black hole was found in the public finances.

A calculation in the Financial Times says the structural deficit — the deficit that persists even if the economy is growing at its full potential — is 25% bigger than previously thought, leaving chancellor George Osborne with a £12bn gap. Plugging it would require new austerity measures equivalent to raising VAT to 22.5%.

Analysts described the claim as credible because the calculation was based on the Office for Budget Responsibility's own methodology.

Not sure if this full potential is during the recession or after.... If it's after this structural deficit is likely to be even bigger than the estimate here....

Still if the BoE prints we'll all be saved from hell... :ph34r:

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Still if the BoE prints we'll all be saved from hell... :ph34r:

Exactly, more printed money is what we need, just like a glue-sniffer needs another whiff of bostik...

I look forward to Merv saving us again with yet another round of QE :)

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Absolutely right that there there will be years of austerity to close the structural deficit, but you can be absolutely sure that it will be the many that will make sacrifices the few. Absolutely zero chance of sorting the public sector pensions subsidy or cutting the workforce there much more. So it will indeed be 22.5% VAT and state retiement pension at 70 for the rest of us to pays for Brown's public sector spending crusade.

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Cable is reported as DENYING it

Cable denies knowledge of £12bn black hole

Mon 19 Sep 2011

LONDON (SHARECAST) - Business secretary Vince Cable has denied a report in the Financial Times that the structural deficit in 2011/2012 is £12bn, 25% higher than previously thought.

The FT said it came up with the figure by replicating the model used by the Office for Budget Responsibility (OBR), which was set up by the coalition government to monitor its attempts to tackle the deficit.

“I do not recognise those numbers. We need to look at them very carefully,” Cable said.

The FT said the government now faces the prospect of prolonging austerity measures until the next parliament or introducing more spending cuts or tax increases before the election.

Surely St Vincent would not deny it if it were true?

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St Vincent of Cable denied it didn't he?

He did deny it, but seemed to know nothing about it.

It is very likely as the structural deficit is bound to grow in the forthcoming return to recession. I have always said that even the Coalition's idea of cuts to bring the budget into balance were not enough by a hefty margin. The problem is that the national debt is growing so fast that it will be too big to pay down once the cuts have arrived. That means that the interest to service the national debt will have grown to a size which virtually cancels out the savings made by the cuts. Only a very small uptick in our debt interest rates would cause the national debt to be unsrviceable even now at £1 trillion.

It is why I do not believe that the crisis will be resolved by just cuts. If it was only the UK that had blown up with debt then we could expect to grow out of them in time. But as it is most of the industrialised world all suffering much the same fate, we will not be growing out of the debts in time. This applies to all of the PIIGS, ourselves and even France I suspect. It is also why some sort of spending boost cannot any longer work o pull us away into growth. Only some public infrastructure projects might help in marginal ways.

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The deficit in real terms can't be cut, all they can do is try to slow it down a bit....every year the deficit is added to the overall debt.....we will forever be living on overdraft, and will continue to keep consolidating. ;)

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The deficit in real terms can't be cut, all they can do is try to slow it down a bit....every year the deficit is added to the overall debt.....we will forever be living on overdraft, and will continue to keep consolidating. ;)

The should have called these guys.

http://www.youtube.com/watch?v=UY_mPrjHQyY

What a gloriously pre-credit crunch advert!

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I have to facepalm at the context by which the word "austerity" is being used these days. It seems to be synonymous with not spunking *quite* as much money as before as opposed to any actual hardship.

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State failure.

Told ya.

State failure won't result in your anarchic utopia. It will result in an even worse state (pun intended).

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State failure won't result in your anarchic utopia. It will result in an even worse state (pun intended).

Yes, I know.

I say state failure because mathematically and practially the state must fail. I know that afterwards comes facism and brute rule.

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I say state failure because mathematically and practially the state must fail. I know that afterwards comes facism and brute rule.

And guns. Lots of guns.

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Edited by RufflesTheGuineaPig

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Ha! So not all bad then. ;)

If you don't mind dying decades earlier than you otherwise might and you want to live in fear and misery, I guess not.

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Or we could hold those people responsible accountable, arrest and charge them with treason, put them on trial and in prison (assuming their guitly of course <_< ) and stop issuing money as debt for the benefit of a few controlling elites.

If only more people understood MONEY AS DEBT we would make good progress. It makes no sense for high street banks to create money out of thin air with every loan they make and then charge interest on it. People need to wake up and educate themselves as the day of reckoning draws near.

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12 billion ? Pah - we spent about 45 billion on INTEREST ALONE last year.

Just think - if we didn't have all this pointless debt to make the same houses have a different 'value' - even though they are the same house as they were 10 years ago. We would be sitting pretty well. :(

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Never realised the UK came 3rd in percentage borrowing last year

General government net lending or net borrowing as a percentage of GDP for eurozone and the UK

Did you think we were higher or lower?

Showing excellent improvement and consistency since 2003

2003 7th

8th=

4th

5th

3rd=

3

3

2010 3

I know we face stiff competition but surely those figures show potential for a number 1 spot?

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  • 343 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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