Sunday, May 30, 2010

Bite that bullet…oh NO…STOP

UK at risk of double-dip, fiscal cuts should wait

"Britain faces the risk of a double-dip recession and the government should hold off making big spending cuts until the recovery is assured, according to the British Chambers of Commerce. In its latest economic forecast published on Sunday, the business lobby group revised up its projection for growth this year to 1.3 percent from 1.0 percent in its March forecast". OK folks - what should we do, I'm confused?

Posted by alan @ 01:08 PM (2181 views)
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13 thoughts on “Bite that bullet…oh NO…STOP

  • The fundamental problem here is that in real terms the UK isn’t actually out of recession. Sure, we printed £200bn and Brown saved everyone, but are we any better off for it? No, we are in worse shape now than we were in 2007. The issue seems to be that nobody wants to suffer any pain or make any loss, so instead the pain keeps being postponed and the loss keeps being socialised amongst all of us.

    Those recent £6bn cuts by Osborne against a backdrop deficit of £3bn a week should tell everyone that this cannot continue. The shock and awe of £6bn worth of cuts is nothing when two weeks later the money saved has been spent again all over again.

    I find a tragic than Brown’s last months in office were spend blowing the last of our money at the Casino to get the growth figures barely positive. The problem now is that we are looking at re-entering the negative territory again, unless off course we do not face your demons, call up Merv ‘Xerox’ King and pretend all is well. Fingers crossed Cameron & Osborne are man enough to make the hard choices ahead.

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  • Now is the best opportunity the government have to try and correct the mess. Because there isn’t any other point in a government where they have this amount of time before another election.

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  • Globalisation says:

    If we have double dip recession that means BOE rates will stay low for longer and decrease the chance of HPC

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  • For the government to do the right thing and whats required would see the official unemployment figures rise to 5 million, this would take 10 years to clear in to the private sector, Cameron has 5 years. What your seeing with this £6 billion in cuts, is just a show for the press and the markets. My guess is they looked into the abyss the day they took power, and realised we are too far down the line for any possible economic u-turn which would result in Labour being swept back into power with a massive majority in 2015. There is only one politically acceptable route which Merv has embarked on already……..inflate or die.

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  • The Micawber principle:

    “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

    It really is as simple as that.

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  • crash n burn says:

    Hasn’t that £6bn saving already been spent by paying the IMF to save Greece? By my reckoning, we are an extra 2 bill down.

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  • mark wadsworth says:

    Alan, do you mean “What should we do [as a nation]” or “What should we do [as individuals]”?

    CNB, yes it very much has. If you include the amount that the UK will have to pay for Euro bail out via the IMF, the total cost is £10 billion to £15 billion, so we are actually £4 billion to £9 billion down.

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  • Hi Mark W,
    There’s not much I can do as an individual…I’m swept along with the tide, just like anybody else. What about the country?

    Do we cut heavily (and get a downgrade like Spain), or wait a bit (and let the debts rack up).

    Either way, house prices aren’t likely to go up (sorry, Daily Express).

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  • Print 167 Billion. They’ve already printed 200 Billion. (which begs the question – why pay taxes)
    Wipe away this thing called the deficit with the swipe of a computer key. It’s a all a big fraud anyway

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  • nomad @3 Tell that to those who argue that government spending/deficits create demand, demand generates more spending, spending generates economic activity and growth, growth generates jobs, increases government revenues, reduces deficits and ends recessions. Whichever way you argue it’s got to be less simple than the Dickens formula, which applied to household budgets. Countries which have tried to slash their deficits recently aren’t exactly booming.

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  • gone-to-colombia says:

    Despite what the BCC want is there really any choice?
    The government is not spending its own money.
    The market will not accept and support any government that continues to spend far beyond that which it can raise by taxation.
    The government´s options are running out as the overspend continues.

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  • They will continue to devalue the pound and print their way out of it .

    They need to get the entire public sector on 21st century employment contracts .

    Scrap public sector pensions and replace them with something which is accessible to everyone .

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