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Uk Slump To Last At Least Until 2020

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And finally, a grain of truth is admitted to the debate.

http://www.telegraph.co.uk/news/politics/spending-review/10106288/Britain-faces-decade-of-austerity-influential-think-tanks-warn.html

Britain faces a decade of austerity with public spending cuts likely to dominate the next two General Elections

By Steven Swinford, Senior Political Correspondent

2:37PM BST 07 Jun 2013

In a joint study, the Institute for Fiscal Studies and the Institute for Government warned that a further 250,000 civil servants may lose their jobs because of sluggish economic growth.

They said that both the 2015 and 2020 General Elections are likely to be fought on grounds of austerity, and that the situation could worsen with the decline of North Sea oil and the rising costs of healthcare.

Carl Emmerson, the Deputy Director of the IFS, said that one of the first actions of whoever is chancellor after the next election in 2015 may be to put up taxes.

The bleak assessment comes as Chancellor George Osborne prepares to set out his plans for the first year of the next parliament on June 26.

Julian McCrae of the IfG said that while Mr Osborne had delivered most of the cuts he had promised after the last election in 2010, Britain's debt rmained relatively unchanged.

Although the Chancellor has already conceded that economic austerity will have to continue into the first two years of the next parliament, Mr McCrae said international experience suggested it may have to carry on for far longer.

"It is very very rare for people to move out of these kind of holes very quickly. In 2017-18 we will still have a debt level at over 90%," he said.

"It is not necessarily true that a government has to do something about that debt level. If you have economic growth going forward, debt will fall. But 90% is quite an uncomfortable level to be at for the public finances."

An IfG briefing paper drew a comparison with Canada in the 1980s and 1990s when it took more than a decade to bring the budget back into surplus.

In the spending review, Mr Osborne has to cut departmental budgets by 2.8% - a reduction of £9.8 billion in real terms.

However Mr Emmerson said the Government's commitment to "ring-fence" spending on health, schools and international aid meant that the rest of Whitehall faced cuts averaging 8%.

If the Chancellor agreed that defence and the Home Office should receive below average cuts, that could mean some departments would see their budgets slashed by 10% or more.

Mr Emmerson said that by the end of 2015-16 the budgets of some Whitehall departments which have not been protected from the cuts could be around a third less than they were when the coalition took power.

The Office for Budget Responsibility, the official financial watchdog, has forecast that between 2010-11 and 2017-18 the economic squeeze would see the number of public sector workers fall by 1million.

However, an analysis by the IFS found that under government plans an additional 250,000 public sector posts could be axed.

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And finally, a grain of truth is admitted to the debate.

http://www.telegraph...tanks-warn.html

"It is not necessarily true that a government has to do something about that debt level. If you have economic growth going forward, debt will fall. But 90% is quite an uncomfortable level to be at for the public finances."

I am not sure if the author of this article is a complete idiot, but just to remind everybody:

even if there is 2, 3, or 4% growth of GDP it is not going to help too much if it requires a government deficit of 7, 9, or 12% of GDP to drive it

a Labour idea that pumping 100s of billions into the economy, which we have to borrow or print, will somehow create the real growth is proved to be just a myth ..

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Carl Emmerson, the Deputy Director of the IFS, said that one of the first actions of whoever is chancellor after the next election in 2015 may be to put up taxes.

:lol::lol:

Where do they get these people - as if they aren't putting up taxes as much as they can already.

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"It is very very rare for people to move out of these kind of holes very quickly. In 2017-18 we will still have a debt level at over 90%," he said.

and that's because of "austerity"? :o

"It is not necessarily true that a government has to do something about that debt level. If you have economic growth going forward, debt will fall. But 90% is quite an uncomfortable level to be at for the public finances."

but real growth depends on rebalancing not policies like Help to Buy which even bankers are calling moronic.

Edited by billybong

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and that's because of "austerity"? :o

but real growth depends on rebalancing not policies like Help to Buy which even bankers are calling moronic.

The UK will not rebalance because the UK doesn't need to rebalance. As a sovereign nation the UK can continue to print and devalue as it will only affect the masses who are too stupid to understand what is being done to them.

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The UK will not rebalance because the UK doesn't need to rebalance. As a sovereign nation the UK can continue to print and devalue as it will only affect the masses who are too stupid to understand what is being done to them.

The government does not print money to cover spending.

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Of course it does. Printed money feeding into HPI = more tax revenue

No. Firstly, they do not print money, the money being created is all electronic. The idea of a bunch of printing presses being started up is absurd.

The UK government can only raise revenue through taxation and selling bonds (gilts). I do not agree with this, I believe the government should be able to create as much money as it wants but that is not what happens.

Quantitative easing was used to buy up UK gilts and lower their price (the interest that has to be paid) as the government would have been unable to raise funds otherwise. This has forced pension companies to invest their funds elsewhere, such as the stock market and housing market.

HPI is caused predominantly by the privately owned banking industry, who as the primary issuers of debt and with the ability to charge interest on that debt have funneled huge amounts of credit into the housing market through cheap mortgages.

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Printing money will eventually affect bond yields.

It has affected bond yields, by lowering them. That was the whole purpose. This has severely damaged pension companies and inflated both the stock market bubble and the housing bubble.

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What do you mean by 're-balancing'?

Generally speaking the term rebalancing means introducing different things into the economy in different percentages (in the UK it implies more productive stuff) rather than being so reliant on things like housing, financial sector along with the emphasis on consumption ...........etc.

The CBI published a paper in 2011 on the subject which describes the process

http://

www.cbi.org.uk/media/1231301/cbi_rebalancing_the_economy_report_301211.pdf

In posting the link it doesn't mean agreement with its contents but its just to demonstrate the general meaning of "rebalancing" so far as the UK is concerned.

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The UK will not rebalance because the UK doesn't need to rebalance. As a sovereign nation the UK can continue to print and devalue as it will only affect the masses who are too stupid to understand what is being done to them.

In economic terms and as a relatively short term fix (in historical terms) but printing, devaluing and inflating etc etc to the extent that the UK seems intent on continuing also devastates and weakens any nation not only economically but politically as well.

Then the entire (sovereign) nation becomes subject to more powerful external influences some of which aren't always benign. That's already starting to get established in the UK already - indeed it's been happening for quite some time now.

The process has also been well demonstrated throughout history.

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Are the MSM really that dim. Firstly, it's not Austerity that's being engineered. It's Financial Repression that's been chosen as Austerity is politically impossible.

Secondly, it's not going to be finished by 2020. The last time a Financial Repression was engineered in the UK it went on for about 30 years. The starting debt levels in % terms were about the same.

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Generally speaking the term rebalancing means introducing different things into the economy in different percentages (in the UK it implies more productive stuff) rather than being so reliant on things like housing, financial sector along with the emphasis on consumption ...........etc.

I never understand this argument. Most 1st world economies are over 80% service based. We cannot compete with China, India etc. on a manufacturing level but we should start investing in that sector anyway?

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I never understand this argument. Most 1st world economies are over 80% service based. We cannot compete with China, India etc. on a manufacturing level but we should start investing in that sector anyway?

Providing services is fine when the buyers of the services are other countries who pay for them with real money. When the services are bought and sold to each other within the same country and are funded by money printing then who is actually creating any wealth?

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When the services are bought and sold to each other within the same country and are funded by money printing then who is actually creating any wealth?

So abolish the money printing. Have a finite or slowly expanding money supply. That is the answer, not building a few more factories.

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I never understand this argument. Most 1st world economies are over 80% service based. We cannot compete with China, India etc. on a manufacturing level but we should start investing in that sector anyway?

Well the message coming from what we must call 'the government' is that we must indeed compete with China- hence the drive for a 'more flexible' (that is cheaper) labour force.

At the same time housing costs must-of course- be kept high to prevent reality from overwhelming the banks.

So the plan is as simple as it is absurd- a cheap flexible labour force paying top dollar for a roof over it's head while paying higher costs for basics due to the devalued currency in which they are paid.

Brilliant.

Edited by wonderpup

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I never understand this argument. Most 1st world economies are over 80% service based. We cannot compete with China, India etc. on a manufacturing level but we should start investing in that sector anyway?

yes we can, if we follow the "value added" route.

ie start making car engines that can routinely average 100mpg instead of 30-40,

also things like agricultural technologies, water purifcation/desalination , also waste management/biotech/fuel production......ie boffins create GM enzyme that ferments grass cuttings/old newspapers( and maybe some plastics) at high speed and turns them into useable fuel.

these are extremely "exportable", and with a lot of revenue-generating potential....but we need to look after our own first, and get these things in place here to reduce the "inter-over dependence factor"

lets face it, the current globalist structure is not going to survive if we are unfortunate enough to get either of the following:

i) a pandemic

ii) a large regional war which knocks out 75-80% of world oil/fuel supply........and with the situation in syria right now this one looks highly likely fairly soon....might only be as little as 12-18 months away if things deteriorate rapidly(and they probably will)

...this one is likely to spread, and will also engulf "friendly" oil producers like saudi, so we can't guarantee we'll be getting stuff from them, also we can expect the mad mullahs to also target pipelines in places like turkey/kazakhstan etc......and they take much much longer to build than they do to blow up.

... it is a complete U turn from our previous governments, who have all been about "how do I keep control??.....oh legislation.( wrong answer)

we need innovation.,and we need it NOW.

Edited by oracle

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I never understand this argument. Most 1st world economies are over 80% service based. We cannot compete with China, India etc. on a manufacturing level but we should start investing in that sector anyway?

There are other things the UK could manufacture but in any event the UK isn't even being given a sporting chance to get on terms with the likes of China because of high housing costs supported by crazy government policies and which even bankers are starting to call moronic.

One of the most prosperous nations in europe is Germany with its significant manufacturing base and the UK has tried to compete with the likes of Germany and its standard of living and consumption by borrowing and employing people in industries (supported by the borrowing) like housing and suchlike.

Industries that don't earn much of a living for the UK and in fact tend to suck in lots of imports (fridges, freezers, televisions, timber, steel, you name it........).

Of course the UK has no competition to building housing inside its own borders (except through the many foreign building companies and suppliers that now operate within the UK).

Money borrowed and mainly "invested" in consumerism is pretty much wasted money and the risks of all the debt are pretty clear. Countries like Greece and Cyprus are having to confront the consequences right now and the UK is likely going to try inflation which just takes the country back beyond square one where it started.

Edited by billybong

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No. Firstly, they do not print money, the money being created is all electronic. The idea of a bunch of printing presses being started up is absurd.

Really? And all this time I thought that when people here were talking about money printing they meant literally spinning up printing presses and spewing out fivers and tenners. :rolleyes:

Hint: Most people understand the concept of 'a figure of speech'.

Edited by Sour Mash

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Really? And all this time I thought that when people here were talking about money printing they meant literally spinning up printing presses and spewing out fivers and tenners. :rolleyes:

Hint: Most people understand the concept of 'a figure of speech'.

I really don't think that they do, as the post I was referring to showed. Or at the very least they do not understand where money comes from. If they did they would talk about Quantitative Easing or the expansion of money as measured by M1 or M2.

Many people seem to think that the UK economy runs like a household budget with strict constraints on spending. They think that money is separate from debt and do not realise the importance of interest. You cannot begin to understand the causes of inflation in the UK housing sector or the wider economic problems without grasping these things.

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This whole subject is extremely simple,

Running a budget deficit for any length of time is simply not possible, with out either printing money to oblivion and/or defaulting eventually.

Expanding services on the basis of borrowing more is not a good idea. Ok some services are exports but we still have a trade deficit.

We need to turn the trade deficit into a massive surplus, if we do that through services all well and good, but we haven't so far.

I suppose the question is how much of the exporting services business rely upon none exporting services maintained by public borrowing to exist.

I think the problem is that sooner or later the game will be up for exported services,

Whether or note we rely on services, the uk and most of Europe is just not competitive cost wise.

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I wonder what they expect to happen after 2020? Unless there is a default or massive money printing to inflate the debt away we will be as close to recovery as Greece is now.

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  • 243 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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