Putting All Your Eggs In One Basket

[laurejon]

The Wiki entry for UK ECONOMY makes intersting reading.

This Government have relied on tax receipts from the finance industry, being the powerhouse of the economy via extraordinary House Price Inflation.

It is going to be interesting to know how Gordon intends to wriggle out of this one having place the UK and the Citizens at serious risk of hardship for generations to come. The perception that the UK is somehow gripped by Global Forces is incorrect, poor planning and a complete ignorance of running this nation is going to devastate future generations having any hope of living a decent life.

http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

Financial intermediation

The City of London, one of the world's major financial centresLondon is Europe's largest financial centre, with financial services based around two districts: 'The City' (the City of London) and the Docklands (particularly around Canary Wharf). The City houses the London Stock Exchange (shares and bonds), Lloyds of London (insurance), and the Bank of England. The Docklands began development in the 1980s and is now home to the Financial Services Authority, as well as several important financial institutions (such as Barclays Bank, Citigroup and HSBC). There are now over 500 banks with offices in the City and Docklands, with the majority of business in London being conducted on an international basis, with established leads in areas such as Eurobonds, Foreign exchange markets, energy futures and global insurance. The Alternative Investments Market has acted a growth market over the past decade, allowing London to also expand as an international equity centre for smaller firms.

The United Kingdom had £21bn of financial exports in 2005, contributing significantly towards the Balance of Payments. The UK has had an expanding export business in financial service, which has been influenced by a mixture of unique institutions, light regulation, and a highly skilled workforce.

Edinburgh also has a long established financial industry, the fifth largest financial centre in Europe, with many large firms based there, including the Royal Bank of Scotland (the second largest bank in Europe), HBOS (owners of the Bank of Scotland) and Standard Life Insurance.

Several of the major English cities have large financial sectors & related services, notably the Leeds city region which is home to several large banks & building societies. Manchester also has a large financial sector, including the Co-Operative Financial Services, who run the most succesful ethical fund in the UK and are the only major unit managers outside of London & Edinburgh. Manchester also has the largest professional services sector outside the South East, particularly legal activities.

The Blue Book 2006 reports that this industry added gross value of £86,145 million to the UK economy before adjustment of financial services valued at £50,165 million in 2004.[10]

Real estate and lettings

The UK property market has been booming for the past seven years and in some areas property has trebled in value over that period. The increase in property prices has a number of causes — sustained economic growth, an expansion in household numbers (including high immigration into certain regions), low interest rates, the growth in property investment, and restriction in the supply of new housing (through planning restrictions).

The UK property market initially peaked in July 2004 and had been static or falling in the capital and some other areas until late 2005. This had led many to start worrying about the possibility of a house price crash, many predicting the end of a major British property bubble. However, the property market strengthened considerably in the first half of 2006, showing particular strength in the capital. This has led many analysts to revise previously negative assessments of the market, with most now predicting continued modest growth in prices in the mid-term. [6]

A house price crash would be very damaging at the present time due to record levels of household debt. There are an increasing numbers of bankruptcies and home repossessions which has worried some economists. This has led many to propose that a correction in house prices would lead much of the country into a lengthy recession. In contrast however, first time buyers who currently have assets not consisting of residential property, but with no way of attaining residential property (in some cases at all, and in others without undertaking unsustainable debt amounting to on average up to 5 times their annual salary), would be better off, and able to enter the property market.

The rapid increase in Buy to Let speculators since 2000 of has created an artificial shortage of homes. The effect has been to price many first time buyers out of the market; they have declined from around 50% of sales to 25%, virtually equal to the expansion in Buy to Let. In London a survey in 2006 found that 67% of new properties were sold to Buy to Let speculators. This and planning restriction requiring builders to use brown field sites, has led to rapid growth in one and two bedroom apartments in cities such as Manchester, Leeds and Nottingham, creating an over supply of this type of property. Banks have relaxed their lending requirements for Buy to Let buyers from 75% of the value the of property in 2003 to 85%, effectively creating a highly gear investment that relies on rising prices. The perception of a housing shortage, despite there being little evidence of any shortage of property to rent (if not buy), means that most UK buyers believe property prices will always rise and any fall only be small and temporary.

This sector includes letting of dwellings and other related business support activities. The Blue Book 2006 reports that the lettings industry added gross value of £83,037 million to the UK economy in 2004 while other real estate and business support activities added gross value of £175,333 million.[10]

Edited July 10, 2008 by laurejon

[interestrateripoff]

The whole UK economy has been a fairy tale, if only we had a central bank led by a Prof who had the balls to act like an independent body and give the govt the kicking it deserves.

[lets get it right]

The whole UK economy has been a fairy tale, if only we had a central bank led by a Prof who had the balls to act like an independent body and give the govt the kicking it deserves.

But the government doesn't get a kicking. The people take the kicking.

Blair, Brown, Prescott, Blears, Kelly, Harman, Smith, Benn and the rest of the misfits people were stupid enough to allow to rule us for the last 11 years all walk away with their gold plated pensions.

We'll be left (and we're an even more unproductive economy now than we were 11 years ago) paying for a million more public sector workers for the rest of our lives.

[laurejon]

Reading between the lines 40% of the workforce work in the Public Sector, the vast remaining majority in private industry work either for the Construction Industry, or the Financial Industry, so last recession was a picnic by comparison.

It has always struck me as odd why the Tories didnt just lower interest rates to 2% and kickstart the economy much earlier, printing Billions of pounds along the way.

I can now see why, however it has taken years of reading up to get just the slightest understanding, it is clear New Labour did not do their homework.

On another note.

Is it possible that we may one day return to the "Gold Standard" I am thinking that the confidence in paper credit notes on a Global Basis is going to wane pretty soon. ?

[Injin]

But the government doesn't get a kicking. The people take the kicking.

Blair, Brown, Prescott, Blears, Kelly, Harman, Smith, Benn and the rest of the misfits people were stupid enough to allow to rule us for the last 11 years all walk away with their gold plated pensions.

We'll be left (and we're an even more unproductive economy now than we were 11 years ago) paying for a million more public sector workers for the rest of our lives.

Bankrupt entites don't give pensions.

The state is going to collapse.

[laurejon]

Bankrupt entites don't give pensions.

The state is going to collapse.

Promise me one thing.

Please Please tell me that the public sector pensions pot will be raided by the Tories and handed out to feed the new poor who were created by New Labour and Gordon Brown

Edited July 10, 2008 by laurejon

[DrGUID]

It's not all doom and gloom. The IT industry is still doing OK - my own little software company is having its best year ever .

The problem is that IT jobs and workers are highly mobile and if taxes soar all the best people will go abroad again.

[lets get it right]

Promise me one thing.

Please Please tell me that the public sector pensions pot will be raided by the Tories and handed out to feed the new poor who were created by New Labour and Gordon Brown

They will just put taxes up. We'll be told it's a short term fix to deal with global problems.

[laurejon]

It's not all doom and gloom. The IT industry is still doing OK - my own little software company is having its best year ever .

The problem is that IT jobs and workers are highly mobile and if taxes soar all the best people will go abroad again.

Where will they go abroad to ?

I just trained up some Indians who will be working for £15 a day, and they are highly skilled grad developers!!!!.

[Shrink Proof]

Promise me one thing.

Please Please tell me that the public sector pensions pot will be raided by the Tories and handed out to feed the new poor who were created by New Labour and Gordon Brown

No it's OK, that won't happen.

The reason is that there is NO public sector pensions pot.

At all.

To take the example of the NHS, folk such as nurses have a chunk deducted from their monthly pay marked "Pension" but it goes straight to paying today's NHS pensioners (those ex-nurses already retired).

Tomorrow's not-yet-qualified nurses will be paying the pensions of those in work today...

[joey]

It's not all doom and gloom. The IT industry is still doing OK - my own little software company is having its best year ever .

The problem is that IT jobs and workers are highly mobile and if taxes soar all the best people will go abroad again.

The IT was doing fine last time around prior to the Recession, downturn came in 1990. Banks cut staff and projects etc, building company cut projects. The Canary Bird sign is usually when Contractors get laid off, projects cancelled, this had a knock on effect to small companies. I 'd say we are at the early 1989 stage of the Last Recession . Property had stalled etc , building contractors getting laid off.

In effect what saved the IT industry last time around was PC and LAN being implemented into to the workforce from the dummy type terminals and also Y2K projects (remember prior COBOL programmers were out of work).

Going abroad again, this could be a worldwide recession. Possibly India or China may be a safe bet but the $$$ may be alot lower

When a RECESSION hits it hits all sectors . Companies pull the finances

[steve99]

Promise me one thing.

Please Please tell me that the public sector pensions pot will be raided by the Tories and handed out to feed the new poor who were created by New Labour and Gordon Brown

Since I can remember (and its a long time now) The period in which Thatcher reigned was the worst ever for normal working people (80% of the population) she created poverty and fear in the workforce that the Victorians would be proud of. Labour made the mistake of not punishing the perpetrators of the last recession/crash, caused in totality by the arrogance and stupidity of the Tory government at the time. All those made unemployed by the darlings of Tory, ie the banks who pulled the plug on many viable businesses, big business who were given absolution of responsibility to their workers on a plate etc etc, and those that lost their houses due to the aggressive nature of those government approved organizations (who obviously bribed tory politicians with money and sex parties etc), should all have been compensated via a tax on the rich, along with closing every offshore tax haven loophole that they currently subscribe to. The banks should have been regulated to the penny. This was labours failing, however we still haven't by any measure achieved the misery of the Thatcher/Whatshisname years.

[laurejon]

Since I can remember (and its a long time now) The period in which Thatcher reigned was the worst ever for normal working people (80% of the population) she created poverty and fear in the workforce that the Victorians would be proud of. Labour made the mistake of not punishing the perpetrators of the last recession/crash, caused in totality by the arrogance and stupidity of the Tory government at the time. All those made unemployed by the darlings of Tory, ie the banks who pulled the plug on many viable businesses, big business who were given absolution of responsibility to their workers on a plate etc etc, and those that lost their houses due to the aggressive nature of those government approved organizations (who obviously bribed tory politicians with money and sex parties etc), should all have been compensated via a tax on the rich, along with closing every offshore tax haven loophole that they currently subscribe to. The banks should have been regulated to the penny. This was labours failing, however we still haven't by any measure achieved the misery of the Thatcher/Whatshisname years.

I agree, Gordon has got to make the working classes suffer much more yet. For sure the working classes are squeeling now, but like you I too look forward to the day that Labour make them beg for mercy on their knees in starvation, without roofs over their heads.

And now to reality, the working classes have never ever been taxed as much as under labour.

And that was during a boom!!!!!!

If you felt slighted because some Tories went to a better school than you, and you felt inferior to a Green Grocers Daughter, you are in for a shock.

The sooner the Public Sectors Pensions are taken over by the Tories and handed out to the poor in compensation for the wrongdoings of this inept Government then the sooner peace and stability can return to the working classes.

[Thread Killer]

Since I can remember (and its a long time now) The period in which Thatcher reigned was the worst ever for normal working people (80% of the population) she created poverty and fear in the workforce that the Victorians would be proud of.

But that was the correct thing to do. By the late 70's the British population had become lazy and spiteful, going on strike instead of getting on with their work. What Mrs Thatcher did was to inflict poverty and fear on the worse of them to show them that the world doesn't owe them a living, and they better get on and work and work hard.

Since then the country has done much better, and living standards have risen, ready for mew Labour to wreak it all again.

Edit: An unfortunate freudian slip :-) I meant New Labour, not mew Labour.

Edited July 10, 2008 by Thread Killer

[dryrot]

Since I can remember (and its a long time now) The period in which Thatcher reigned was the worst ever for normal working people (80% of the population) she created poverty and fear in the workforce that the Victorians would be proud of.

[deleted]

This was labours failing, however we still haven't by any measure achieved the misery of the Thatcher/Whatshisname years.

Sigh... the country was bankrupt in 1979 - Denis Healey had gone to the IMF for a bailout - remember the winter of discontent? Taxes were 70% on icome, 98% on investment income, the nationalised industries were bleeding money...

You could argue interest rates were too high for too long, but the disaster that Labour left was the real problem.

(Hint: where are we today?)

[Moo]

Since I can remember (and its a long time now) The period in which Thatcher reigned was the worst ever for normal working people (80% of the population) she created poverty and fear in the workforce that the Victorians would be proud of. Labour made the mistake of not punishing the perpetrators of the last recession/crash, caused in totality by the arrogance and stupidity of the Tory government at the time. All those made unemployed by the darlings of Tory, ie the banks who pulled the plug on many viable businesses, big business who were given absolution of responsibility to their workers on a plate etc etc, and those that lost their houses due to the aggressive nature of those government approved organizations (who obviously bribed tory politicians with money and sex parties etc), should all have been compensated via a tax on the rich, along with closing every offshore tax haven loophole that they currently subscribe to. The banks should have been regulated to the penny. This was labours failing, however we still haven't by any measure achieved the misery of the Thatcher/Whatshisname years.

Would it be fair to say that you'd have preferred Britain to keep going the way it was in the 70s then? Okay, that was never an option, but something had to be done.

The problem with that viewpoint is it makes exactly the same mistake the Labour government have spent the last ten years making in spades. Specifically, it says the only things politicians are allowed to do are Nice Things. Sorry, but there was no Nice Way of purging out the disaster of the 1970s, it just wasn't possible.

Look at the situation we're in now. We've got a horrifically complex tax\benefit system, we've got an ever-growing state sector in the economy, we've got a government up it's **** in debt at exactly the point where it should be running a surplus, and that's ignoring all the other problems we've got. How do you think that's going to get sorted out? Spending cuts, possibly substantial interest rate rises... not Nice Things, are they, but they're necessary things.

Or, for a super-simple analogy, if you show up at A&E with acute appendicitis, the you're gassed, cut open, a surgeons roots around inside your abdomen, you get stitched up, probably pumped full of drugs, then popped in a bed. This is good. It stops you dying. I'm sure it would be nicer if the A&E nurses had given you a grand in cash plus a flat screen telly, although it wouldn't really do all that much to solve the problem.

Politicians can't be nice all the time.

[right_freds_dead]

The perception that the UK is somehow gripped by Global Forces is incorrect, poor planning and a complete ignorance of running this nation is going to devastate future generations having any hope of living a decent life.

we, being the first to have our lives on hold or interrupted by this financial monkey ride.

[laurejon]

Would it be fair to say that you'd have preferred Britain to keep going the way it was in the 70s then? Okay, that was never an option, but something had to be done.

The problem with that viewpoint is it makes exactly the same mistake the Labour government have spent the last ten years making in spades. Specifically, it says the only things politicians are allowed to do are Nice Things. Sorry, but there was no Nice Way of purging out the disaster of the 1970s, it just wasn't possible.

Look at the situation we're in now. We've got a horrifically complex tax\benefit system, we've got an ever-growing state sector in the economy, we've got a government up it's **** in debt at exactly the point where it should be running a surplus, and that's ignoring all the other problems we've got. How do you think that's going to get sorted out? Spending cuts, possibly substantial interest rate rises... not Nice Things, are they, but they're necessary things.

Or, for a super-simple analogy, if you show up at A&E with acute appendicitis, the you're gassed, cut open, a surgeons roots around inside your abdomen, you get stitched up, probably pumped full of drugs, then popped in a bed. This is good. It stops you dying. I'm sure it would be nicer if the A&E nurses had given you a grand in cash plus a flat screen telly, although it wouldn't really do all that much to solve the problem.

Politicians can't be nice all the time.

Labour have been nice, why can this not continue.

My friend Wesley has 12 BTL's and doesnt have to go work anymore, his girlfriend who owns her own pad has six children and get over 2k per month from the Social, and the only work she has to do is to walk into town once a week to sign on.

I have another friend Stuart who works for the local council, he can arrive and leave when he feels like, can work from home, has six weeks holiday, a good pension, and earns over 50k for a job he would only get 15k for in the private sector.

Why does this have to end, with the Tories coming to power and ruining it ?