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zugzwang

Uk Trade Deficit 'worst In The Industrial World'

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Osborne's Death Bubble is giving the rest of the world a serious leg up.

http://www.telegraph...-forecasts.html

Britain to have worst 2014 trade deficit in industrial world on EU forecasts

UK's burgeoning current account deficit suggests recovery is driven by credit-fuelled consumption

By Ambrose Evans-Pritchard

2:27PM GMT 05 Nov 2013

Britain's commercial deficit will be the highest in a quarter century next year, a sign that recovery is badly out of kilter and that the country is still living far beyond its means.

The European Commission forecasts that Britain's current account deficit -- covering both trade in goods and services -- will rise to 4.4pc of GDP in the 2014, with little improvement after that.

This is the highest deficit of any major industrial country, and far worse than the US as it moves towards energy independence. It is also the highest since the Lawson boom in 1989 when the Treasury's policy of 'shadowing' the German D-Mark at the wrong time caused the economy to overheat.

The Commission said in its Autumn Report that Britain will have the fastest-growing economy for the next two years among the major European countries, doubling its GDP growth forecast to 2.2pc in 2014 and 2.4pc in 2015. "2013 has thus far exceeded expectations and the outlook is quite bright," it said.

However, the mini-boom is being driven by a steady fall in the household savings rate, down to 6.2pc this year from 7.3pc in 2010. The Commission said it expects UK consumers to "dip into their savings" to cover spending. "The debt burden of households remains a distinct risk to private consumption."

With the exception of the late 1980s, Britain has not run a current account deficit of this magnitude since the Second World War. It raises concerns that the recovery is being fed by a premature return to bad habits of house price inflation and credit-driven spending rather than a revival of manufacturing and productive investment.

The 20pc devaluation of sterling after 2007 has had remarkably little effect on the trade balance, in contrast to comparable episodes in 1992 and 1931 where the trade gains fed though quickly.

Michael Saunders from Citigroup said the double-dip recession in Europe had the effect of smothering demand for British export and nullified most of the gains from a weaker pound, but this will diminish over time. "We're more optimistic than the Commission. In any case, it is better to have unbalanced growth no growth, given the human cost of high unemployment. GDP per capita is still 7pc of below its previous peak," he said.

Simon Ward from Henderson Global Investors said the UK is structurally unbalanced, relying heavily on imports to meet demand as confidence returns. "The supply-side of the economy is performing very poorly. The Bank of England claims there is massive overcapacity in the economy but we don't think that is correct, and the current account deficit is the evidence."

"A lot of the output before the recession was phantom. It has gone forever, and that means our capacity to produce and export is less than we thought," he said.

Mr Ward said his gauge of money supply growth -- six-month real M1 -- is surging at double-digit rates. This is a level that usually triggers inflationary booms. This time a large part of this stimulus is leaking into imports, at least so far.

The Commission said Britain still has a structural budget deficit of 5.7pc of GDP even after years of austerity, showing the sheer scale of Britain's rebalancing task. This compares to minus 1.5pc in the eurozone, minus 0.8pc in Italy, and a surplus of 0.5pc in Germany.

Edited by zugzwang

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Industrial world. Is that some kind of sick joke?

We don't have any industry and we aren't industrious.

A nation of shopkeepers selling products we don't make to people without any money. Great!

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But ....but.. he said it was going to be a export led recovery

deficit is wealth

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Mr Ward said his gauge of money supply growth -- six-month real M1 -- is surging at double-digit rates

Money=Debt

Debt is growing at double digit rates.

Thats OK, its not like we've already got a high debt load :rolleyes:

McKinsey-debt-and-deleveraging-resize_549.jpg

I only hope this all blows up before 2015 and that globalist-EU stooge Gidiot is dragged out on the streets and publicly flogged.

Im shocked the pound has held up this long. Time to get out.

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But ....but.. he said it was going to be a export led recovery

The PM said at the last election: 'we need to rebalance the economy.' 'We need to start making things.' 'Houses are not productive investment.'

However, the policy of supporting house prices has had exactly the damaging effect we all stated on this forum for years.

"[b]With the exception of the late 1980s, Britain has not run a current account deficit of this magnitude since the Second World War. It raises concerns that the recovery is being fed by a premature return to bad habits of house price inflation and credit-driven spending rather than a revival of manufacturing and productive investment.[/b]

The Govt has turned out to be crap. We have been so badly governed in this country for over 50 years precisely because the Englishman's castle has become a vehicle of speculation and not just a home, based on average earnings prices.

Edited by plummet expert

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The PM said at the last election: 'we need to rebalance the economy.' 'We need to start making things.' 'Houses are not productive investment.'

However, the policy of supporting house prices has had exactly the damaging effect we all stated on this forum for years.

"[b]With the exception of the late 1980s, Britain has not run a current account deficit of this magnitude since the Second World War. It raises concerns that the recovery is being fed by a premature return to bad habits of house price inflation and credit-driven spending rather than a revival of manufacturing and productive investment.[/b]

The Govt has turned out to be crap. We have been so badly governed in this country for over 50 years precisely because the Englishman's castle has become a vehicle of speculation and not just a home, based on average earnings prices.

To be honest this one is not all down to our gov. A large part can be laid squarely at the door of the germans. The economic policies they are forcing on europe has crushed the internal demand of the latin states, while at the same time they are being pushed to run substantial trade surpluses so as to have a means to pay for the trade deficits they are running against germany. The end result of that is that someone has to run larger and larger trade deficits vs europe. We are one of those lucky someones.

There is of course the possibility that we follow the PIIGS example and have 20% unemployment rates, crushed internal demand, etc, and ourselves seek to run trade surpluses.

Finally the last option which is the one we should undertake but never will, is to stick two fingers up at the merchantalists, institute protective policies, and tell them to sort out their own problems internally rather than relying on us to take on more debt to help them out.

Edited by alexw

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To be honest this one is not all down to our gov. A large part can be laid squarely at the door of the germans. The economic policies they are forcing on europe has crushed the internal demand of the latin states, while at the same time they are being pushed to run substantial trade surpluses so as to have a means to pay for the trade deficits they are running against germany. The end result of that is that someone has to run larger and larger trade deficits vs europe. We are one of those lucky someones.

At least the German people have a government that puts the interest of its own citizens first.

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At least the German people have a government that puts the interest of its own citizens first.

That's the thing they haven't. What do you think will happen to all those german surpluses and debts owed to germany when the latin nations default?

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Yup. germans should have been building alliances with countries with favourable demographics...southern europe in many cases are as elderly as the germans, or even more so in the case of Italy.

Unfortunately, germany, like us, is chock full of EU obsessives who fail to understand our future is beyond the insular and obsolete EU.

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Unfortunately, germany, like us, is chock full of EU obsessives who fail to understand our future is beyond the insular and obsolete EU.

Fog in Channel; Continent Cut Off!

Edited by sombreroloco

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Boe not keen on domestic deflation. Here come the 10% year on year gas and electricity bills and other essentials moving above cpi inflation. Of course manipulating the inflation index without wage growth still appears as collapsing margins at consumer facing retailers. I suppose can plug the gap with credit. It's neatly Christmas afterall!

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