Deficit

[or in excess of]

Just heard a guy on Daily Politics claim that the deficit has been reduced by 33% since the election. Is this true?

[Bloo Loo]

Just heard a guy on Daily Politics claim that the deficit has been reduced by 33% since the election. Is this true?

probably.

taking funds from the BoE and taking the PO workers pension fund has contributed.

Now they are selling £3bn of energy shares just heard on R4.

what about next year though....

[Executive Sadman]

Yes and at the same time no. Who knows what kind of Clintonesque Royal Mail pension transfers and PFI's they've got up to to make public debt appear like private debt.

If you want to find the duplicity of the clinton 'surplus'es' just see the debt rise in surplus years.

I dare say the same will be apparent here. Nationalizing the Royal Mail pensions meant the deficit fell by £25bn or so last year, but the debt was £40bn higher than it would have been.

Still they play the party now pay tomorrow game. Every year it gets harder. Road network to be sold next.

[Executive Sadman]

Brown pretty much buried any worthwhile difference between public or private debt. Whoever took it out, whatever they wasted it on, criminal or not, the taxpayer will backstop it.

[The Knimbies who say No]

It's correct, deficit reduced from circa £165Bn to approximately £120Bn.

The problem is that it's still £4k per household, per annum, even at the reduced total.

[zugzwang]

probably.

taking funds from the BoE and taking the PO workers pension fund has contributed.

Now they are selling £3bn of energy shares just heard on R4.

what about next year though....

How about extending FLS to equipment leasing companies?

LONDON | Mon Apr 22, 2013 4:49pm BST (Reuters) - British leasing firms are in talks with the government and the Bank of England about extending a flagship government credit scheme to help companies to offer more finance, a trade body said on Monday.

Britain launched the Funding for Lending Scheme in August with the aim of kick-starting investment in a stagnant economy by offering banks and building societies cheap credit if they increased lending to households and businesses.

On Friday Osborne told reporters in Washington that he would announce changes to the scheme "fairly shortly", leading to media speculation about what he was planning.

One option would be for the FLS to be extended to cover leasing firms, which allow companies to hire assets that they cannot afford outright, and on Monday the industry's trade body confirmed that it was in talks with the government.

"The FLA is in on-going discussions with the government and the Bank about the operation of the Funding for Lending Scheme in the business equipment finance market," Julian Rose, head of asset finance at the body, told Reuters.

"We look forward to seeing the government's proposals when they are published," he added.

[zugzwang]

It's correct, deficit reduced from circa £165Bn to approximately £120Bn.

The problem is that it's still £4k per household, per annum, even at the reduced total.

The figure you're quoting is the primary deficit.

What really matter is the seldom discussed total deficit (primary deficit + interest on the national debt). Even if the primary deficit can be brought below £100bn by creative accounting the total deficit is still on course to soar uncontrollably.

[Blue Peter]

The figure you're quoting is the primary deficit.

What really matter is the seldom discussed total deficit (primary deficit + interest on the national debt). Even if the primary deficit can be brought below £100bn by creative accounting the total deficit is still on course to soar uncontrollably.

Not if we keep QE-ing. All the interest remains in-house,

Peter.

[SuperChimp]

It's correct, deficit reduced from circa £165Bn to approximately £120Bn.

The problem is that it's still £4k per household, per annum, even at the reduced total.

Where are you getting this figure from?

This is what I have found:

To fund it, the Government borrowed a monumental £170.8 billion last year. If all goes well, we're set to borrow another £167.9 billion this year.

From:

http://www.debtbombshell.com/britains-budget-deficit.htm

And then this:

Public sector net borrowing will come in slightly below the official forecast of £120.9billion in the year to the end of March, figures from the Office for National Statistics are expected to show.

In the previous year, the Government borrowed £121billion.

http://www.thisismoney.co.uk/money/news/article-2313051/Parlous-state-UK-public-finances-set-exposed-Government-borrowing-sticks-117billion.html?ito=feeds-newsxml

[crashmonitor]

Just heard a guy on Daily Politics claim that the deficit has been reduced by 33% since the election. Is this true?

I believe the deficit is currently stuck at 120 billion and will be for a further two years. I didn't realise that the deficit had peaked as high as 180 billion? Meanwhile the DEBT grows larger, another 360 billion to add over those three years, and they call this austerity.

I call it living beyond our means.

Edit...AH CHIMP BEAT ME TO IT AND CONFIRMS MY THOUGHTS THAT THE DEFICIT DID NOT GET TO 180BN.

Edited April 22, 2013 by crashmonitor

[crashmonitor]

I note that the Tory party were promoting their 25% reduction in the deficit in their recent party political broadcast.

They then showed surprised members of the public being interviewed about the reduction on the street.

Of course they were surprised they think of debt and deficit to be the same thing. Meanwhile the debt is propelled into the stratosphere.

Edited April 22, 2013 by crashmonitor

[The Knimbies who say No]

Where are you getting this figure from?

This is what I have found:

From:

http://www.debtbombshell.com/britains-budget-deficit.htm

And then this:

Public sector net borrowing will come in slightly below the official forecast of £120.9billion in the year to the end of March, figures from the Office for National Statistics are expected to show.

In the previous year, the Government borrowed £121billion.

http://www.thisismoney.co.uk/money/news/article-2313051/Parlous-state-UK-public-finances-set-exposed-Government-borrowing-sticks-117billion.html?ito=feeds-newsxml

Yes, the usually understood figure for 'deficit' as far as public discussion goes is the PSNB. Edit getting in a muddle with figs. The statement made by the person on the telly would compare the 2010 or 2009 figure with the most recent to get the one-third reduction statement. I agree with everyone else who says that the UK is on a disastrous course in any case, and the PSNB figure does not capture the whole picture. But it's still very bad.

Edited April 22, 2013 by cheeznbreed

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

Isn't the solution to inflate away the debt? Isn't that the logical conclusion?

[The Knimbies who say No]

Isn't the solution to inflate away the debt? Isn't that the logical conclusion?

Seems so, but unfortunately for Osbrowne that requires nominal GDP growth in excess of debt growth. The best the UK seems to manage is teetering in and out of recession, despite pumping fantasy numbers like imputed rents. Baldrick's plans look like sagacious masterpieces by comparison. And this is before Carney's arrived...

[Dorkins]

It's correct, deficit reduced from circa £165Bn to approximately £120Bn.

(165-120)/165 = 27%, more like a quarter than a third. Still, I'm sure the politicians realise that it is more important to sound good than to be truthful.

Edited April 22, 2013 by Dorkins

[The Knimbies who say No]

(165-120)/165 = 27%, more like a quarter than a third. Still, I'm sure the politicians realise that it is more important to sound good than to be truthful.

Indeed.

At the time of the last election, the deficit was planned to be under £90Bn by now. Oh dear.

Edited April 23, 2013 by cheeznbreed

[sf-02]

Indeed.

At the time of the last election, the deficit was planned to be under £90Bn by now. Oh dear.

If you include the Royal mail pension fund (short term asset & long term liability), QE profits, bringing forward 4g auction thus raising less than forecast, and delaying payments to internation agencies such as the world bank and also domestic govt dept delays in March to April then spending does scrap to £90bn and 33% lower. All a facade though.

Someone on here used to put up a table with the latest months spending figures compared to a year earlier - including how much certain dept spending was increasing or decreasing. Was pretty interesting but I cannot find it on the ONS download. Anyone got it or know where to find it?

[fluffy666]

Seems so, but unfortunately for Osbrowne that requires nominal GDP growth in excess of debt growth. The best the UK seems to manage is teetering in and out of recession, despite pumping fantasy numbers like imputed rents. Baldrick's plans look like sagacious masterpieces by comparison. And this is before Carney's arrived...

Yes.. policy seems to be 'Anything apart from wage inflation (especially at the low end), or actually doing something physical'.

Which means that they are giving away money to bid existing, often unproductive assets into the stratosphere, hoping that a little of the money from this trading will somehow seep into the real economy.

Presumably, when these guys want a glass of water, they first fill a bath, put a glass on the floor of the bathroom and throw a stick of dynamite into the bathwater, hoping some of the splash will fill the glass.

[JaneTracy]

There real sign of the problem with the UK fiscal deficit is all the ruses and machinations which are being used to try to make it look better. I saw them explained earlier.

The next level is to consider how reliable these numbers are as in a clear sign of the times there have been plenty of distortions. Here are the ones from the numbers above.

In 2012/13, public sector net borrowing and public sector net investment are reduced by £28.0 billion as a result of the transfer of the Royal Mail Pension Plan in April 2012

In 2012/13, public sector net borrowing and public sector current budget deficit are reduced by £6.4 billion as a result of cash transfers from the Bank of England Asset Purchase Facility Fund to Government. (Sorry if your head is hurting at all this but this £6.4 billion improvement came from a transfer of £11.3 billion! Yes I do know why but will leave it there for now…)

As you can see there has been plenty of ,ahem, assistance and muddying of the waters in 2012/13 which in many ways is the best guide to the mess we are in. But there is more as you see there were others which seem to have slipped the attention of the headline writers.

These include the £2.3 billion transfer to Government of the final profits of the Special Liquidity Scheme (SLS) and the £2.3 billion receipt from the 4G spectrum auction.

The SLS is something of a specialist subject of mine but even I have to confess to some confusion as it has spun around the public finances like a modern-day whirling dervish! Or if you prefer it has been like the song the “Hokey Cokey” where “You put your left leg in and your left leg out”. However as we move on we are aware that there was only one of it so next year it will be gone from the deficit figures.

http://www.mindfulmoney.co.uk/wp/shaun-richards/the-uk-public-finances-are-a-shambles-of-which-we-should-be-ashamed/

I would call all that an utter mess! Especially if you see the answer provided.

But if you consider the £4.6 billion total above as a one-off then the £300 million improvement is dwarfed is it not?

[The Knimbies who say No]

There real sign of the problem with the UK fiscal deficit is all the ruses and machinations which are being used to try to make it look better. I saw them explained earlier.

http://www.mindfulmoney.co.uk/wp/shaun-richards/the-uk-public-finances-are-a-shambles-of-which-we-should-be-ashamed/

I would call all that an utter mess! Especially if you see the answer provided.

Yes, Osbrowne wouldn't be scrabbling about in such an undignified manner if the carrot of getting under last year's borrowing was not on the cards, it's pathetic. Nevermind, a few billion here and there is chickenfeed compared to the total. No serious plan for getting the deficit down to 'sanity' levels of say sub-£20Bn has yet been put forward.

Edited April 23, 2013 by cheeznbreed

[fluffy666]

Yes, Osbrowne wouldn't be scrabbling about in such an undignified manner if the carrot of getting under last year's borrowing was not on the cards, it's pathetic. Nevermind, a few billion here and there is chickenfeed compared to the total. No serious plan for getting the deficit down to 'sanity' levels of say sub-£20Bn has yet been put forward.

Problem is, you have to wonder if such a plan is even possible.

Cut £100bn from spending.. but a fair chunk of that will be salaries and you'll lose the PAYE straightaway. Or you can cut pensions and benefits.. but even then you'll lose VAT,and retail spending will drop sharply.

And it's worse.. with unemployment already at 2.5 million and goodness knows how many Bulgarians and Romanians en route, those you fire won't be quickly getting jobs. Better set aside some more cash for that. Hell, if some people really would be better off on benefits then firing won't save anything at all..

Basically, there is no way of cutting the deficit by cutting spending. Especially as we already have a serious unemployment problem. If we managed nominal growth and pursued an aggressive full-employment policy (with immigration capped until unemployment was well below 1 million) we might get somewhere. Plus a serious effort to stop offshore tax avoidance - something that needs to be globally coordinated.

The deficit might go up initially - but the problems I've mentioned above act to mitigate it. Spend £50 billion getting people into jobs and a fair chunk comes back as tax and vat straightaway. And if that money goes to building something of value that's even better. Hell, you could even build houses, save on housing benefit..

[The Knimbies who say No]

Problem is, you have to wonder if such a plan is even possible.

Cut £100bn from spending.. but a fair chunk of that will be salaries and you'll lose the PAYE straightaway. Or you can cut pensions and benefits.. but even then you'll lose VAT,and retail spending will drop sharply.

And it's worse.. with unemployment already at 2.5 million and goodness knows how many Bulgarians and Romanians en route, those you fire won't be quickly getting jobs. Better set aside some more cash for that. Hell, if some people really would be better off on benefits then firing won't save anything at all..

Basically, there is no way of cutting the deficit by cutting spending. Especially as we already have a serious unemployment problem. If we managed nominal growth and pursued an aggressive full-employment policy (with immigration capped until unemployment was well below 1 million) we might get somewhere. Plus a serious effort to stop offshore tax avoidance - something that needs to be globally coordinated.

The deficit might go up initially - but the problems I've mentioned above act to mitigate it. Spend £50 billion getting people into jobs and a fair chunk comes back as tax and vat straightaway. And if that money goes to building something of value that's even better. Hell, you could even build houses, save on housing benefit..

Utter tosh, in my view.

Edited April 23, 2013 by cheeznbreed

[marceau]

Cut £100bn from spending.. but a fair chunk of that will be salaries and you'll lose the PAYE straightaway. Or you can cut pensions and benefits.. but even then you'll lose VAT,and retail spending will drop sharply.

These statements in reference to deficit reduction are utterly bonkers. A mathematical impossibility.

Please take some time to think about what you've written here.....

[The Knimbies who say No]

These statements in reference to deficit reduction are utterly bonkers. A mathematical impossibility.

Please take some time to think about what you've written here.....

There's little need for Big State lovers to concern themselves with such trivialities as physical impossibilities, common sense or anything else. All that matters is adherance to the belief that the act of moving pounds from the pocket of person 'A' to the pocket of person 'B', via the State with the associated skims for beaurocracy, make the country a better place and the economy fundamentally stronger. You'll note that there is absolutely no reference whatsoever to whether the output of the cut workers is actually required or desired.

The sooner this country has an honest debate about the levels of service we are prepared to pay for in a sustainable fashion, the better. At the moment we are running but underservicing a big motor, safe in the knowledge that we have a willing future buyer signed up at an agreed 'minter' price tag. It's immoral.

[cashinmattress]

Oh great, a reduction in deficit?

Like saying, 'hey buddy, I hear you've got 10% less terminal cancer'.

Whatever.