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Unbowed By Criticism, Osborne Will Announce New Government Cuts

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http://uk.reuters.com/article/2015/11/09/uk-britain-economy-osborne-idUKKCN0SY00120151109

Chancellor of the Exchequer George Osborne will spell out on Monday the first set of spending cuts to be imposed on government departments as part of an overall 37 billion-pound austerity plan to turn Britain's deficit into a surplus by 2020.

Osborne, seen as the frontrunner to succeed Prime Minister David Cameron, is seeking to shore up his credentials as a safe pair of hands on the economy after an embarrassing parliamentary defeat over welfare cuts last month.

Britain's transport, environment, local government and finance departments will have their day-to-day budgets, excluding capital expenditure, cut by an average of 8 percent a year over the next four years, Osborne will announce, according to advance extracts of the speech.

Since 2010, Osborne has overseen the return of growth to the British economy, but opponents accuse him of crimping the recovery by focusing on cutting spending and of failing to meet his original target to eliminate the deficit by 2015.

In his speech on Monday, Osborne will hit back at those critics, adopting an unapologetic stance over spending cuts and restating his view that Britain should be running a surplus.

Even if we got a surplus in 2020, a modest £10bn a year surplus for over 150 years would be needed to clear the debt...... I'm sure George will be pointing this out.

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That would require him knowing the difference between debt and deficit

He does but in public he's obliged to wear Thatcher's household budget metaphor as badge of honour like a financial poppy.

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Stupid is as stupid does.

Moronic buffoon.

What he wont be telling his Telegraph/Mail "saver" boomer voting cohort is the tighter he runs fiscal policy, the lower the rate theyll get on their savings. Amusing.

Edited by R K

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Sometime, the budget and current account deficits will blow up the the UK.

Just because they have not so far does not mean they will not.

I would guess the Osborne's strategy is if people do not want to cut tax credits then he will take the money from elsewhere. This is the major flaw in tax credits - they will suck in as much money that is made available.

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Osborne 'secures deals' on 30% cuts

Four government departments have provisionally agreed to cut their spending by an average of 30% over the next four years, George Osborne says.

..

"I know some ask: why do we need this surplus?" he said. "I'll tell you why: to protect working people.

"A surplus will make our country more resilient, safe and secure. It means that next time we have the money to help us through the tough times when the storms come. Let me put it another way: if our country doesn't bring the deficit down, the deficit could bring our country down.

"That's why, for the economic security of every family in Britain, the worst thing we could do now as a country is lose our nerve."

I wonder what the reality of the savings will be. Very easy to make a provisional saving on a spreadsheet.

And then more BS from George, considering the last crisis added about £1tr to the national debt in under 10 years, we are going to have to generate a huge surplus greater than current GDP which currently stands at a nominal £1.809tr. Fantasy economics at it's finest luckily we have an educated press that's highlighting this nonsense for what it is.....

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Stupid is as stupid does.

Moronic buffoon.

What he wont be telling his Telegraph/Mail "saver" boomer voting cohort is the tighter he runs fiscal policy, the lower the rate theyll get on their savings. Amusing.

Don't worry, they already get Pensioner Bonds at 3.5% over the base rate.

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Stupid is as stupid does.

Moronic buffoon.

What he wont be telling his Telegraph/Mail "saver" boomer voting cohort is the tighter he runs fiscal policy, the lower the rate theyll get on their savings. Amusing.

Yeah true that. But in theory at least moving to tighter fiscal, loose monetary policy is actually good for the kids and the unborn.

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Yeah true that. But in theory at least moving to tighter fiscal, loose monetary policy is actually good for the kids and the unborn.

Well no, because his fiscal policy (cutting tax credits for instance) increases inequality today. Plus monetary policy cannot easily be loosened to offset it.

Moreover, Osbournes surplus target is a self-imposed political one. It has no economic merit. In fact, the opposite.

Perhaps the most charitable explanation for this failure of journalism is that most people do not understand some very basic points. Governments running surpluses are rare. Unlike individuals, nearly all governments have always had a large amount of debt. Unlike individuals, nation states live for a very long time. Because the amount they produce also grows over time (real growth and inflation) that means that the ratio of debt to GDP (which is what matters) can stay constant even if they run deficits. For example with debt at 80% of GDP, and a conservative estimate of average 4% nominal growth, the UK’s debt to GDP ratio would stay constant with a deficit of 3.2% of GDP.
3.2% of GDP is a lot of money. It means the government could run deficits of £60 billion today (£70 billion by 2020) and not raise the debt to GDP ratio. By comparison, the now derailed cuts to tax credits were worth less than £5 billion, and the spending review is trying to save £20 billion.

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Well no, because his fiscal policy (cutting tax credits for instance) increases inequality today. Plus monetary policy cannot easily be loosened to offset it.

Moreover, Osbournes surplus target is a self-imposed political one. It has no economic merit. In fact, the opposite.

http://mainlymacro.blogspot.co.uk/2015/11/where-would-you-get-money-from.html?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed:+MainlyMacro+%28mainly+macro%29

I can meet you halfway. But I'm really talking long term, about the many generations of unborn not the current recipients of TCs.

Odds of reforming current pensioner perks is zero but the chance of cutting them for people born after 1970 is much higher and would be a nice step towards better inter-generational equality.

Having a nominal growth target of 4% is punchy given that's what the UK averaged over 1994-2014 with a massive private credit bubble that will never be re-created. Unless we have a reset.

I'd rather use 2, in which case I'll let them target a 1.6% deficit!

Edited by bankstersparadise

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Transport. Oh heck. Imagine what the M25 will be like to drive on in a decade! Maybe we'll all have compulsory driverless cars by then ?

Not sure on railways. Presumably in 10-20 years they'll be 3x ticket prices for the same train carriages running today.

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He's in a lose lose situation. He cant exactly come out and just say what we are all thinking - The UK is royally ******ed - there is just too much debt.

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IDS has a way of saving face now..complain about cuts to his beloved UC and resign..UC collapses and Osborne takes the fall.

Very very true.Osborne is trying to get the taper rate up in UC.This will have the same affect as the tax credit cuts just an easier sell,the perfect way out.The problem is it only works if all families are moved onto UC over the next three years as IDS has promised.If IDS is telling porkies and families dont move over the budget will blow up.Who is calling whos' bluff here?.Is IDS fighting so hard because he knows if Osborne bases the savings on UC working IDS is finished and will be found out at last.Or is Osborne forcing this because he knows UC wont come in,so IDS will accept much larger cuts in the DWP budget to avoid facing the music over UC.

I still think he will simply stage the lowering of the taper rate over three years,but UC might be about to get found out.

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Very very true.Osborne is trying to get the taper rate up in UC.This will have the same affect as the tax credit cuts just an easier sell,the perfect way out.The problem is it only works if all families are moved onto UC over the next three years as IDS has promised.If IDS is telling porkies and families dont move over the budget will blow up.Who is calling whos' bluff here?.Is IDS fighting so hard because he knows if Osborne bases the savings on UC working IDS is finished and will be found out at last.Or is Osborne forcing this because he knows UC wont come in,so IDS will accept much larger cuts in the DWP budget to avoid facing the music over UC.

I still think he will simply stage the lowering of the taper rate over three years,but UC might be about to get found out.

Or ...

As politicians - elected + unelected - are reluctant to reduce tax credits then the savings have to come from other government spending. Point cuts at department that has annoyed you and cut away. (Baroness Hollis is one of Brown's people).

Then you can fall back to removing the TC get-out from the benefit cap. Introduce the 27k limit for everything - HB + tax credits - CTC + WTC. And whack!

I'm surprised (not really, as people are greedy) at the level of protest to the TC changes. Problem is the alternatives are much worse. And, no, not cutting is not an alternative. GO must look at the current (trade) investment deficit on weekly basis and cr.p his pants. Its like sitting on an unexploded bomb

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Or, instead of trying to cut Working Tax Credits, cut/abolish Child Tax Credits.

Or bump up the hours needed to qualify, so people drop from 400/week TC and end up on 60/week JSA.

Seriously, if I was on TC I would be claiming it and keeping an eye out fro it stopping.

The eyed scots tnuc made TC so complex there are so many ways to scrap it.

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Or bump up the hours needed to qualify, so people drop from 400/week TC and end up on 60/week JSA.

Seriously, if I was on TC I would be claiming it and keeping an eye out fro it stopping.

The eyed scots tnuc made TC so complex there are so many ways to scrap it.

I don't care how it's done, as long as it's done.

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Or bump up the hours needed to qualify, so people drop from 400/week TC and end up on 60/week JSA.

Seriously, if I was on TC I would be claiming it and keeping an eye out fro it stopping.

The eyed scots tnuc made TC so complex there are so many ways to scrap it.

This has been my view all along, not sure the other half has taken this view but certainly when it came to the mortgage and we got the maximum borrowing figure quoted which included this income I took about £20k off that figure on the assumption that this tax credit give away at some point would be pulled.

In some respects many people have simply become in a sense good capitalists and have found how to maximise their income, at the personal level this makes sense but in the wider economic context it's fundamentally flawed as the economy can't absorb this type of work welfare.

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Well no, because his fiscal policy (cutting tax credits for instance) increases inequality today.

Cutting tax credits balances working and the middle class. Equality as in equally poor.

Selectively giving people money does not decrease inequality, unless you aim to give everybody the same tax credits.

Edited by phantominvestor

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Or, instead of trying to cut Working Tax Credits, cut/abolish Child Tax Credits.

+1

Seems reasonable and abolish all other welfare if in receipt of the extravagant tax credits.

Edited by billybong

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We've seen this film before. Osborne did the whole 'Iron Chancellor cutting the budget by 30%" act when he got the job in 2010. 5 years later we're still running £100bn deficits.

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Wasn't the main argument for the mass privatisation and out sourcing the saving of public money?!

And those savings get reinvested back into the infrastructure?!

Well we need the French and Chinese state to build the infrastructure which our private utility companies are unable to provide and public finances have never been worse.

Obviously the answer is more privatisation, outsourcing and austerity. All hail the deficit hysteria.

Then the next government comes in and barks on a massive spending program to bring NHS etc back to 21st century status and the wheel turns on....

How about making the austerity dodgers pay their dues?! Services are kept and dramatically improved and bankers don't get any more interest... Ah

Edited by PopGun

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He's obviously very qualified for job by having a the biggest ever current account deficit, £1.6trn national debt, and no understanding that a surplus will take demand out of the economy (even a recession?) and forcing the private sector/households to take up the slack with private debt.

The OBR have forecast that private debt will balloon by 2020, the same debt which caused the financial crisis.

I'll post this little gem from Osbourne in the budget, 2010:

"A sustainable private sector recovery built on a new model of economic growth, instead of pumping the debt bubble back up"

Then came HTB :lol::lol::lol::lol:

Edited by Assume The Opposite

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We've seen this film before. Osborne did the whole 'Iron Chancellor cutting the budget by 30%" act when he got the job in 2010. 5 years later we're still running £100bn deficits.

Krug and Aston Martins don't pay for themselves...

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