Experts Urge George Osborne To Make U-Turn On Austerity

[interestrateripoff]

http://www.telegraph.co.uk/finance/economics/9478745/Experts-urge-George-Osborne-to-make-U-turn-on-austerity.html

The revolt by the same experts whose support for the Tory economic strategy was a pivotal moment in the pre-election debate in 2010 will be acutely embarrassing for the Chancellor. He is already facing calls from institutions such as the International Monetary Fund and employers body the CBI to take action on growth in the wake of the double-dip recession.

Only one of the 20 economists who put their names to an influential letter in February 2010 said he continue to have faith in the Chancellor. Asked by the New Statesman whether they now regretted signing the supportive letter, nine urged Mr Osborne to change course and promote growth through tax cuts or higher spending on infrastructure. The other 10 failed to comment.

Since the original, pro-austerity letter was published, the UK economy has stagnated. In the past nine months alone, it has shrunk by 1.4pc and is still 4pc smaller than its pre-recession peak. Low growth is undermining the Chancellor’s deficit reduction goal, with several forecasters predicting borrowing will rise this year despite the £18bn of planned austerity.

Of the signatories, Roger Bootle, managing director of Capital Economics, and Danny Quah, professor at the London School of Economics, said they had changed their minds. Seven others, including former Bank of England rate-setter Tim Besley, who organised the letter, either called for more infrastructure investment or failed to repeat their endorsement for the Chancellor.

And how many of these great "experts" saw the economic crash coming?

Got to love the 10 who have such faith in their convictions they can't even offer comment.

As debt has been the key to expansion any austerity which stopped that expansion was clearly going to cause a contraction in GDP. In the current system the only option they have is to keep expanding the debt...

[silver surfer]

nine urged Mr Osborne to change course and promote growth through tax cuts or higher spending on infrastructure

At last, nine wise men. This is the right thing to do.

[zebbedee]

'Experts Urge George Osborne To Make U-Turn On Austerity'

What and actually have some?

[Georgia O'Keeffe]

I suspect they all thought like us, that they would try and reduce spending on wages and benefits - but instead they went for the low hanging fruit of slashing infrastructure and investment spending which has led to a construction depression and concomittant effect on overall gdp.

Basically thay targeted entirely the wrong thing. They thought they would pay down the public deficit by increasing private debts. But private debts are simply too high. They should have targeted reducing private debts first (as in USA where deleveraging is far more advanced), squeezed wages and benefits (private and public) but spent more into the economy via infrastructure/investment spending. This way the external trade balance would be aided too rather than just propping up consumer demand and house prices that has sucked in imports.

I suspect they didnt consider the Conservative economic rebalancing would be quite as successful and well targeted as it has been and now that George has rebalanced everything so quickly theres no need for a 10% deficit and we can get back to 20% and staying on top of the the poverty target of 72%+ Mercedes SLR Coupes on every street

Edited August 16, 2012 by Tamara De Lempicka

[happy_renting]

At last, nine wise men. This is the right thing to do.

Injecting money into the private sector to produce actual products services and infrastructure would stimulate the economy by producing things of actual value. Cutting the unproductive parts of the public sector is still necessary. Too little has been done in each case.

I'm all for stimulating the building industry too - HPC'ers dislike property developers, but the supply of property is a major factor in house prices.

The present Government doesn't seem to have a clue. At this rate we will be run by the Economically Illiterate Sons of McDoom after the next election, after which this country will be iredeemably, totally wrecked.

[slacker]

Quite, all I see is public sector spending on the increase and some cost cutting of PS pensions that don't even start for ten years.

The irony is that coalition will be forced by popular demand to reverse the 'austerity' that never happened.

I suspect we'll see some rewording of existing policies, and a few more quid for key coalition demographics like the hardworking families in Devon and pensioners.

[erranta]

At last, nine wise men. This is the right thing to do.

They need to break up every chain retail company BEAST in the UK inc supermarkets/petrol etc

- into maximum of county/Small City sized businesses and stop the outflow of local economic wealth/cash being transferred to the CITY to FEED THEIR GREED

[zugzwang]

Injecting money into the private sector to produce actual products services and infrastructure would stimulate the economy by producing things of actual value. Cutting the unproductive parts of the public sector is still necessary. Too little has been done in each case.

I'm all for stimulating the building industry too - HPC'ers dislike property developers, but the supply of property is a major factor in house prices.

The present Government doesn't seem to have a clue. At this rate we will be run by the Economically Illiterate Sons of McDoom after the next election, after which this country will be iredeemably, totally wrecked.

At this rate Gordon Brown himself will be leading the Tories into the next General Election!

[easy2012]

http://www.telegraph.co.uk/finance/economics/9478745/Experts-urge-George-Osborne-to-make-U-turn-on-austerity.html

If anything, it is more difficult to do business now then in 2007 as there are more regulations and red tape than ever. There is a sense that the agencies are increasing 'regulation' to show that they are doing something I suppose. Some of the new financial regulations too get past through the banks (you get all these verified your info, change of terms and conditions letters once in a while if you got couple of accounts, merchant account etc).

Then you get all these price increase letters coming through, partly due to money printing, and partly due to the environment that makes it harder for bank to make money and so they have to find some other 'avenue'.

Tax returns used to be easier to file and now you have all these iXBRL innovation where the HMRC PDF version of the return will not cater for the needs of anyone with anything unusual ( everybody is going to the cloud, but HMRC is going for a downloaded version where you have to fiddle with the electronic signature to get it to work).

In the private sector, people innovate to make life easier, in the public sector, people innovate to make the life other's more complicated.

So, basically we have a really good bubble 7 years or so (2000 - 2007) and then a host of 'catch up' regulation, tax increases after that. Topsy turvey I would say...

Having said that, we will of course live through this and prosper, eventually...

[PopGun]

'Experts Urge George Osborne To Make U-Turn On Austerity'

What and actually have some?

any idea where the money is going then?!

[righttoleech]

Viv Nicholson time again!

[(Blizzard)]

Just what we need another false dichotomy to steer the debate away from real change.

[Dorkins]

we will of course live through this and prosper, eventually...

+1

[gf3]

Why can't we get some of the 2.5 million unemployed people on HB to build their own homes?

This would reduce the rents paid by other people who could spend the extra disposable income into the economy.

I find it hard to believe that if you took a blank piece of paper and wrote all the figures down that the numbers wouldn't add up.

So long as they do add up I don't see why Britain should be down graded.

[Lewis Gordon Pugh]

Just what we need another false dichotomy to steer the debate away from real change.

This is exactly right. I cant believe the posters on this thread are getting suckered into this pantomime AGAIN.

[SuperChimp]

Since the original, pro-austerity letter was published, the UK economy has stagnated. In the past nine months alone, it has shrunk by 1.4pc and is still 4pc smaller than its pre-recession peak. Low growth is undermining the Chancellor’s deficit reduction goal, with several forecasters predicting borrowing will rise this year despite the £18bn of planned austerity.

I can't remember the exact figure but I am sure around 45% of GDP comes from public-sector spending.

[flyingsaucer]

Quite, all I see is public sector spending on the increase and some cost cutting of PS pensions that don't even start for ten years.

Yep, I must have just imagined that big increase in my PS pension contributions in April, the first of several planned over the next few years. Plus that indefinite pay freeze already several years old.

[happy_renting]

Yep, I must have just imagined that big increase in my PS pension contributions in April, the first of several planned over the next few years. Plus that indefinite pay freeze already several years old.

Do you do anything useful and productive?

[Oliver Sutton]

Yep, I must have just imagined that big increase in my PS pension contributions in April, the first of several planned over the next few years. Plus that indefinite pay freeze already several years old.

Do you have to contribute to your pension?

[zebbedee]

any idea where the money is going then?!

I have no idea where they are squandering the money but they are spending more, those who think they are contributing more as the government are contributing less miss the point that all that has happened is the have reallocated money from where they can get someone else to spend it to where they can't. Projected to decline slightly next year but with talk of spend more now how long will they hold out considering spending more next year and the year after will allow them time to make the voters sweet in time for an election but before the inflation caused by the source of that extra money hits.