UK 'must cut spending or raise taxes,' say experts

Rochdale_Pioneers

leveller2911 wrote: »

I find it very worrying that after 10.5 yrs in government some people still refuse to believe they f*ucked up big time............. this government has had more than enough time to put right the wrongs and they didnt...

Yes yes very nice rant. Question - did I say anything which was FACTUALLY wrong? Say what you like about the things Brown actually did wrong. There are plenty of those.

But when people keep making up stuff about debt it makes THEM look stupid. Can you not add? Regardless of whatever else Brown did, UK national debt as a percentage of GDP DROPPED under Labour. Fact. Deal with it.

tomstickland

Rochdale_Pioneers wrote: »

The UK debt figures suggest that the Tories are lying through their teeth on this one. As apparently are you.

Brown claimed that there was an end to boom and bust. Ergo he did not have to save for the bust.

Of course, the national debt doesn't include PFI projects or unfunded pension liabilities. Include those and we're well over 100%.


http://www.taxpayersalliance.com/waste/2008/10/misleading-us-o.html

Someone else to do all the hard work for me:

A couple of points to note. First, it's true that since 1997 both gross and net debt have fallen relative to GDP. But as we blogged here, the OECD has not yet updated its numbers for any of the bank take-overs, or the latest recession borrowing surge. The OECD's updates to be published in December are likely to hike the 2008 figures significantly.
Second, although lower than 1997, both gross and net borrowing are hugely above the levels we had going into the last recession in 1991. And that despite the longest economic boom since records began.

As we can see, between 2004 and 2005, the difference - ie our netted off assets - suddenly jumped from around 8% of GDP up to 17%, a virtual doubling.
Why? The OECD summary tables give no clue. But judging from the size of the jump, our guess is that it is the £100bn + chunk of local authority assets which the ONS opaquely labels "Other UK equity" (ONS data series HN69 - FinStats Table 12.1M). But what are the underlying assets? And since they don't appear to be traded equity, how are they valued? Are they in reality highly illiquid investments such as social housing?
We will investigate further, but we are highly suspicious. How convenient it was for the UK government to suddenly find an extra £100bn of "assets" just at a time when its debt was taking off. And we wonder what else lies hidden in the OECD numbers.
The issue of public debt is now centre stage. There is no doubt that Labour's Big Government instincts are propelling us towards all manner of "Keynesian" spending projects, and our debt is set to soar.
But at least let's keep our eyes open. Don't let's get fooled into thinking more debt will be relatively painless because we've got so much less than other people. We haven't.

As a matter of interest, also look at this:
http://itulip.com/dollardown1currentaccount.htm

tomstickland

http://tpa.typepad.com/home/files/gordon_browns_economic_failure_embargoed_00.01AM%20FRIDAY%2019%20SEPTEMBER.pdf
If all debts are included, it's 129% of GDP.

Page 18.

Also,
official government figures show debt as a percentage of GDP:
1997: 42%
2001: 32%
2007: 37%

Page 20: Government surplus as percentage of GDP.

Wookster

Rochdale_Pioneers wrote: »

Regardless of whatever else Brown did, UK national debt as a percentage of GDP DROPPED under Labour. Fact. Deal with it.

Of course RP doesn't see that GDP is artificially bouyed by debt fuelled consumption. He doesn't know a Ponzi scheme when he sees one.

StevieJ

tomstickland wrote: »

Brown claimed that there was an end to boom and bust. Ergo he did not have to save for the bust.

Of course, the national debt doesn't include PFI projects or unfunded pension liabilities. Include those and we're well over 100%.


http://www.taxpayersalliance.com/waste/2008/10/misleading-us-o.html

Someone else to do all the hard work for me:







As a matter of interest, also look at this:
http://itulip.com/dollardown1currentaccount.htm

Of course, the national debt doesn't include PFI projects or unfunded pension liabilities. Include those and we're well over 100%.


What about the unfunded German pensions? I am sure they are a lot more generous than ours :eek:

Rochdale_Pioneers

StevieJ wrote: »

Of course, the national debt doesn't include PFI projects or unfunded pension liabilities. Include those and we're well over 100%.


What about the unfunded German pensions? I am sure they are a lot more generous than ours :eek:

Don't talk about other countries! We are the only country with debt....

The reason why I quote Eurostat figures ad not UK government is that they include off-books liabilities like PFI. The difference between their figures and the kinds of cooked ones quoted by some posters is that Eurostat understands the difference between theoretical debt and actual. For example, if you assume Northern Rock's entire mortgage book to be worthless, our "debt" shot through the roof. If you don't count our PFI payments and instead assume that the contract will default leaving us to foot that bill as well, then debt shoots up even more. And assume that pensions are worth nothing and again we are suddenly 1 billion% in debt or whatever stupid made-up figure they choose to quote.

The nice thing about the Eurostat figures is that the same methodology is applied to everyone. Its a fair comparison. Some posters here don't understand fair. They just desperately want to find some numbers - any numbers - to back up Cameroon's absurd clam that we are the most indebted nation on earth.

scousethife

tomstickland wrote: »

Regarding the "you're having a laffe" curve, I would expect tax revenue versus taxation levels to be a flat topped curve. Very high tax levels encourage people to move out of the country or find creative ways of evading. Clearly 0% tax raises no tax revenue.

The current administration seem to believe that they can ladle as many taxes as possible onto the population and thereby increase revenue.

Seem to believe and are doing.

They got away with it during the boom, now we are going bust people are getting angry.

Of course the above is untrue as Gordon says their will be no more boom/bust

kennyboy66_2

ManAtHome wrote: »

Confuzzled....

Surely if any dosh is spent on housing, somewhere down the line a builder will be flogging new ones (adds to GDP), and unless the Beemer was a direct import, will be some value 'added' through the retail chain..?

1) Housing - partly. A BTL terraced house has probably just increased prices as there has been no increase in supply. Obviously the BTL demand for 'apartments' aka flats will have increased the investment part of GDP as they sprung up eveywhere. You would certainly say there is an over-supply of 1 bed & 2 bed flats throughout the country.

2) Margins on cars (and electronic goods) are not huge, but there will be some effect.

I am not arguing that the boom will have increased GDP by some significant % but to attribute 6% to MEW is wrong IMHO

PFI schemes will have increased GDP - it basically brings forward building projects (schools & hospitals).

The past increases in education & health spending will have increased GDP as a large proportion of the increase has gone on extra bodies or higher salaries. (Government spending on salaries counts).

This is partly why I think that even when we come out of recession, that medium term growth will be fairly weak as these factors go into reverse.

tomstickland

I've just had another look at:
http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=REF_TB_government_statistics&root=REF_TB_government_statistics/t_gov/t_gov_dd/tsieb090

They show UK debt as percentage of GDP by whatever "fair" method Eurostat use:
1997 49.8%
2002 37.5%
2007 44.2%

Why did it rise from 2002 to 2007? Keynes said that during a boom debt should be reigned in.

Rochdale_Pioneers

tomstickland wrote: »

I've just had another look at:
http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=REF_TB_government_statistics&root=REF_TB_government_statistics/t_gov/t_gov_dd/tsieb090

They show UK debt as percentage of GDP by whatever "fair" method Eurostat use:
1997 49.8%
2002 37.5%
2007 44.2%

Why did it rise from 2002 to 2007? Keynes said that during a boom debt should be reigned in.

Because (a) Labour weren't following Keynes and (b) they were investing it in the NHS and schools. Still lower than 1997 isn't it? And much lower than at the end of the last recession when it was over 50%.

Congratulations for facing up to the truth - by any way you choose to measure it UK government debt was lower in 2007 than it was in 1997. When people say "we didn't put money aside for a rainy day" how do they explain the mass paying off splurge in Labour's first term? You find me a comparable 4 year period in our history where we paid off so much debt.