Friday, Jul 14, 2006

Budget cuts for government departments

FT.com: Brown turns screw on Whitehall budgets

Crash Gordon has managed - somehow - to be rather accurate in his long term predictions of tax revenues and economic performance, defying his critics. This articles shows he is now CUTTING budgets in many Government Departments. Why would he do this? Perhaps because he is predicting tax receipts will be falling in the next 3 to 4 years. What could cause tax receipts to fall - apart from an economic downturn? Any clues?

Posted by talking rot @ 12:51 PM (575 views)
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6 Comments

1. denzil said...

It's either cuts in Government spending or tax rises. A tax rise would not not bode well for Brown's chances of ever becoming PM.

Friday, July 14, 2006 02:26PM Report Comment
 

2. talking rot said...

I feel uncomfortable commenting on my own post but I feel this is one of today's big news stories. The economy of the UK has been kept floating by consumer spending and public spending. This article reports that public spending is going to be capped, so one of the economy's 2 buoyancy aids is about to be lost. How long can the consumer hold up?

If both consumer spending and public spending decrease then the outlook for the economy does not look good. Unless manufacturing or service industry can pick it up - something I doubt.

When the economy falls, so will house prices.

Friday, July 14, 2006 03:30PM Report Comment
 

3. Manjip said...

Talking rot, can't believe what you are saying are you admitting that there may now be a HPC, I thought you were in staunch support of no HPC

Friday, July 14, 2006 04:26PM Report Comment
 

4. inbreda said...

TR - I thought you were of the 'house prices won't crash' camp?

Or are you on the fence?

Friday, July 14, 2006 07:55PM Report Comment
 

5. talking rot said...

inbreda

Sort of. I'm of the camp that says House Prices won't crash until there is a major change in the economy. Such a major change could be a dramatic rise in interest rates, or a rapid rise in unemployment, or basically anything that takes a lot of cash out of peoples pockets and puts those people in a position where they are forced to sell - hence they have to accept a lower price. Putting aside the validity of the CPI, interest rates remain at historically low levels; inflation remains stubbornly low thanks to Chindia and cheap Polish labour and unemployment is a fraction of the millions it was once. So there will be no house price crash today or tomorrow.

When some fundamental of the UK economy changes for the worse - the pigeons come home to roost - then I'll allow myself to believe the HPC is around the corner. Currently there are many risks (pigeons) but these risks haven't yet formed into reality (there is a lack of roosts). The sky may be full of pigeons but I haven't seen a single roost yet! This is why I tend to scorn those who say "next year will be very interesting .... " People on this site said 2005 would be interesting - then they said 2006 would be interesting. From my perspective, both years were extremely dull as I had to listen to friends - yet again - boasting about how much their house was worth. This does become tedious in the extreme.

Friday, July 14, 2006 10:17PM Report Comment
 

6. sirgoogle said...

At work we have had 20-50% price increases in charge out rates for some types of programmers since March. Tell me there is not inflation present - and it is starting to affect wages. We will of course be eventually passing these costs onto our customers.

Friday, July 14, 2006 11:07PM Report Comment
 

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