Tuesday, December 21, 2010

Are we still in recession

Tax Revenues Near 20 year low

Are GDP figures being generated by the ONS reflective of what is going on in the economy. While we sit 4.5% below GDP peak, recent GDP growth (driven by stimulus and deficit spending) is being regarded by the main stream as self sustaining. This seems unlikely where we remain in a (household) balance sheet recession. Little has really changed since 2008/9 and matters are possibly worse. The consumer remains compromised by (a) patchy employment prospects - see recent stats (b) wage compression esp relative to the cost of imported items (esp commodities) (c) declining house prices looking set to accelerate and (d) a reduced capacity and appetite for credit. Certainly tax revenues relative to GDP dropping 3 years straight suggest an economy weaker than GDP figures alone indicate.

Posted by bellwether @ 02:37 PM (2483 views)
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2 thoughts on “Are we still in recession

  • general congreve says:

    I think tax take weakening, especially in lieu of taxes rising, is far more indicative of what is happening in the economy than phony GDP figures that include deficit spending. Taking into account both the falling tax take and the deficit spending component of GDP, this paints a much fuller picture of the dire situation we are in, and also puts to bed the argument that people in public sector jobs paying taxes are a financial boon for the country, these figures clearly make a mockery of that foolish notion.

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  • Things are very bad. Tax revenues are down and according to the BBC today the November debt was £23.3bn, up from £17.4bn last November. It is becoming very clear the government is not interested in making any serious cuts until April next year. They want to somehow stimulate the economy. The writings on the wall. They risk an even bigger slump than if they had made the cutbacks the moment they came into office. Like I have said on previous occasions you can read nothing into the economy or stock market until the debts start to be repaid. The housing market is no doubt a kind of beneficiary in many ways, but it won’t be for much longer.

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