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Britain To Have Worst 2014 Trade Deficit In Industrial World On Eu Forecasts

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I like AEP - his brand of doom suits my temperament.

From the comments section

Shut Up Shut Up Shut Up..............!!!!!!!!!!!!!!!!

House prices are up and that's all that matters, the country will be great and magnificent again George and Dave know it and say it...........

The Germans can keep their factories and stupid economic long term policies, we know whats best - immigrants and cheap bedsits that's the answer.

Made me laugh! :lol:

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C'mon, just immigrants and bedsits, what about all the others taking a slice of tomorrow. The great unproductive entitled that will hopefuly be replaced by robots in ten years. Train drivers, bus drivers, politicians, managers, consultants, elf n safety and not to leave the private sector out burger flipping minimum wage stuff that requires subsidisation. I envision a day when mortgages aren't measured in years but generations, where the only person getting paid 50k a year index linked on a train is the train driver and a billion pound garage behind a kebab shop thats been shut down by elf n safety.

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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.

This is the most important part of the article.

This is one of the primary reasons for the increase on house prices in the UK. If Sterling is falling in value the price of assets rise. Additionally, with low savings rates people move their money into other asset classes such as property (e.g. Buy to Let) to seek better returns.

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 money supply needs to constantly grow to meet the demands of interest. The main beneficiaries of this being the banking sector. Someone summed it up nicely on this forum a couple of weeks ago: the financial sector is the UK economy. Without it we are Romania.

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Britain has apparently been running trade deficits pretty much permanently since the mid 80s but it doesn't actually seem to have made any difference to anything. E.g you'd expect the exchange rate to suffer as a result but it appears uncorrelated.

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I bet the Germans don't have Homes Under the Hammer, LLL, Home in the Sun, Grand Designs, etc, etc. I mock their engineering prowess and laugh in the facr of their prudent fiscal planning!

Seriously, we need a HPC just so that the above crud is removed from TV and that the British Public demand public trials of those who made them.

The crash will be over when the public demand that such programmes are no longer made.

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Im just amazed that the pound hasnt gone down further given the continued trade defecit. I guess it is down to those "savy investors" in Asia snapping up London property.

You must be forgetting our assets value of £10 trillion (including housing) as some journo was saying the other day.

Nevermind so much of that value dependent margin to pay for them, whilst limiting number of forced sellers / stock to market. Let's have Cowie back to tell us how well he did from an interest only mortgage back in the mid 80s, to another, to now owning a house worth a fortune.

It just amazes me some people are so well paid for talking rubbish (since 1997 and Labour and Winter Fuel Allowance for pensions and tax-credits), and initiating more counter-productive schemes (including HTB1+2) to their own VI end and that of their special interests, when markets have been red-flashing the need to allow rebalancing. In the knowledge younger people are priced out and transactions would double with lower prices. Instead the excuses, like it's not a problem with house prices, but a problem with wages. Whilst our competitor in the EU readjust, take the pain, and become more competitive.

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Britain has apparently been running trade deficits pretty much permanently since the mid 80s but it doesn't actually seem to have made any difference to anything. E.g you'd expect the exchange rate to suffer as a result but it appears uncorrelated.

All reports suggest we have run a current account deficit of 1.6% of GDP since the 1980s, which should include invisibles. Yet when we come to the la la world of the overall balance sheet (our foreign assets over foreigners owning a slice of us) we have somehow gone into surplus to the tune of 167 billion from a deficit in the early noughties.

Edited by crashmonitor

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Net foreign assets curiously rising, so what is current account not capturing? Opening capital+ deficit = rising balance sheet :blink:

Just goes to show we can piss the money away to foreigners at Poundland and the foreigners get more and more in our debt.The magic of modern day international economic alchemy.

http://www.tradingeconomics.com/united-kingdom/net-foreign-assets-current-lcu-wb-data.html

Edited by crashmonitor

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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.

I'm shocked! laugh.gif

Who would have predicted such a thing? laugh.gif

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I'd been wondering if it could possibly be correct that despite a huge trade deficit and a smaller but still large current account deficit averaging -1.6% of GDP for three decades that all those foreigners slaving away for us could actually still be in our debt.

Well this link also makes out that they ARE IN OUR DEBT.....though there is a bit of room for error with 7 trillion assets and 7 trillion in debts.

So as mentioned earlier on this thread opening liabilities plus 30 years of current account deficit and we still mange to end up with net assets. It makes no sense to me at all, guess that's the price these foreigners must pay for recycling all their manufactured tat.........

I can only assume that we are wisely investing our overseas earnings and the Chinese are buying crap off us, because something doesn't square and sureky current account should have picked up the investing advantage if that is what puts UK plc in the black.

http://www.economicshelp.org/blog/2984/economics/uk-external-debt-and-assets/

.

Edited by crashmonitor

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I'd been wondering if it could possibly be correct that despite a huge trade deficit and a smaller but still large current account deficit averaging -1.6% of GDP for three decades that all those foreigners slaving away for us could actually still be in our debt.

Well this link also makes out that they ARE IN OUR DEBT.....though there is a bit of room for error with 7 trillion assets and 7 trillion in debts.

So as mentioned earlier on this thread opening liabilities plus 30 years of current account deficit and we still mange to end up with net assets. It makes no sense to me at all, guess that's the price these foreigners must pay for recycling all their manufactured tat.........

I can only assume that we are wisely investing our overseas earnings and the Chinese are buying crap off us, because something doesn't square and sureky current account should have picked up the investing advantage if that is what puts UK plc in the black.

http://www.economics...ebt-and-assets/

UK overseas assets - property, financial - are vastly overinflated by locally denominated Ponzi schemes.

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UK overseas assets - property, financial - are vastly overinflated by locally denominated Ponzi schemes.

Indeed the article does make the point that we are over leveraged for an economy our size and small movements in overseas assets could leave us heavily indebted. The article is 2011 and the accounting period 2008, things may have changed and it all comes down to whether you can trust the bean counters anyway.

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I like AEP - his brand of doom suits my temperament.

From the comments section

Made me laugh! :lol:

I had a look at the comments and noticed one that linked to this website.

What do you think of this?

So we should be confident that debt levels and the ratio to GDP will continue to fall even when the government is tipping small amounts of credit into the housing market through the ‘Help to Buy’ scheme. The Cassandra’s will ask the question – “if increased debt is not driving the recovery what is the magic ingredient that has made the difference” – what are the other factors that could have sprung us from the liquidity trap that had us so tightly pinned down earlier this year? Well, there are a couple of important things going on that have made a big difference: The first of these is that we have been on the receiving end of huge capital inflows, these flows have come from emerging markets that are in a panic induced by the thought of higher long-term interest rates, a by-product of the Fed’s QE tapering. These in-flows have provided the much needed liquidity that the UK economy. The UK has benefited because we are out of the Eurozone and the Pound is better value than the US Dollar.

The second reason for our unexpected recovery is related to our flexible labour market. During the credit crunch companies in the UK were able to cut costs by reducing pay without losing staff. Bonuses were cut, salary increase were banned, over time was restricted, commission weren’t paid and zero hour contracts were implemented. After three years of declining wages public sector companies have started to add back the flexible element of staff pay, this feeds through to the real economy very quickly. I expect that we will see a big jump in take home pay this year when the numbers are out. It is this extra cash that is driving consumer spending not increased borrowing. The official figures only measure basic pay so much of the earning increases are unaccounted for. Recent figures show basic pay, excluding bonuses, in the private sector pay was up 1.2pc rose May and July. Actual income is rising much faster, and for the first time in a while, faster than inflation. Importantly this extra cash is going to families who have the propensity to spend significantly – families and the working middle classes.

The third reason for the recovery has been the rise in employment since 2010 the British economy has created over 1.3 million private sector jobs and overall employment hit another record this quarter with 29.84m in work. Despite the fact that productivity is still very low employment is now up 275,000 on a year ago. More families have two wage earners, more young people are living at home and this is driving up household disposable income. As increase demand flows through to our economy productivity should rise and disposable incomes will move in the right direction - a virtuous circle. The firm evidence for some of this good news is still in the pipeline but we can expect to get data in the near future that confirms our recovery is indeed the right type of recovery – fueled by affordable consumer spending and improved productivity.

http://getwd50.blogspot.co.uk/2013/09/the-right-type-of-recovery.html

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I had a look at the comments and noticed one that linked to this website.

What do you think of this?

Neat, plausible and wrong.

Capital outflows from emerging markets have increased notably this year as the global economy has swooned, which in turn has served to reinforce their slowdown (see India, Turkey etc scrambling for dollars). But this slump must clearly have come at the expense of UK export growth in trade and financial services. In turn, commodity and energy prices have retreated sharply, leaving the likes of Saudi and Qatar with significantly reduced spending capacity. Besides, these EM outflows are on nothing like the scale of the capital flight out of Greece and Spain in 2011/12 which signally failed to lift UK house prices.

The UK doesn't need liquidity. It's suffering from a debt deleveraging not a credit crunch.

As for wages, we should expect to see consumer prices firming ahead of any sustained pick up in wage inflation. In fact we see neither. CPI is threatening to go below 2% for the first time since 2009, as the global slowdown bites into demand internationally and household debt continues to suppress demand domestically, and wage inflation looks on course to turn negative in the New Year.

Employment is up, yet full-time employment is barely changed on 2009. Having some opportunity to work is probably better than none, but many of these 'jobs' are zero hours contracts and make-work placements. Full-time employment is what you need to buy a house.

P.S. Capital inflows are often a precursor of financial crises.

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When they are working out our trade deficit do they include all the London real estate we sell abroad?

London real estate seems to be Britain's biggest export.

We get all the smart phone,xbox's and big tv and they get all the London houses. I think we are ripping off the Chinese if you ask me I think we are getting a good deal.

Edited by gf3

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When they are working out our trade deficit do they include all the London real estate we sell abroad?

London real estate seems to be Britain's biggest export.

We get all the smart phone,xbox's and big tv and they get all the London houses. I think we are ripping off the Chinese if you ask me I think we are getting a good deal.

I assume that is why despite a huge trade deficit and three decades of supposedly negative current account when it comes to the big UK plc balance sheet the foreigners somehow owe us money, so current account is failing to capture something. They work like slaves for us and they still owe us, seems like a good deal to me too.

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Guest spp

With domestic energy production cut by 50% over the last 10 years and now back to the year 1900 level...exactly how much longer can the UK be considered 'industrial'??

If not for the deficit and the low interest rates supporting the mountain of DEBT...wouldn't the lights already have gone out?

How was this ever allowed to happen!! :angry:

Edited by spp

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With domestic energy production cut by 50% over the last 10 years and now back to the year 1900 level...exactly how much longer can the UK be considered 'industrial'??

If not for the deficit and the low interest rates supporting the mountain of DEBT...wouldn't the lights already have gone out?

How was this ever allowed to happen!! :angry:

Nuclear takes decades of planning and is expensive and doesnt give any immediate yield and therefore voting popularity...

A tax cut or tax credits so people can accumulate more chinese tat however....

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Guest spp

Nuclear takes decades of planning and is expensive and doesnt give any immediate yield and therefore voting popularity...

A tax cut or tax credits so people can accumulate more chinese tat however....

Not to mention it being foreign owned... what a mess!

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