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

tomstickland

Doom laden article from the Guardian, basically saying that we can't afford luxuries when we run out of money.
http://www.guardian.co.uk/commentisfree/2009/feb/02/hastings-max-recession?commentpage=3&commentposted=1

tomstickland

Rochdale_Pioneers wrote: »

That makes it even stranger. If Major cut government spending AND we increased GDP% debt from 32% to 52%, where in the name of God did all that money go?



So lets get this straight. You are claiming that Labour increased debt? So it was 50% when they too power in 1997 and was 44% in 2007. Thats a 6% decrease isn't it?

I make that a 13% increase.

Er, no you're right.

If you hadn't pointed that out to me I'd still be struggling.


Anyway:
1997 49.8%
2002 37.5%
2007 44.2%
I believe that 2002-2007 was a boom, so they should have been reducing debt over that time.

You are of course right that 44% is above the level seen in 1991. But then again debt rose exponentially during the 4 years following 1991, so thats not really a surprise is it?

Debt rose in the years following 1991, during the recession.

2002-2007 are the years before the current recession.

Generali

UK Government net borrowing since 1997 (-ve = borrowing, +ve = debt repayment) according to the Blue Book for last year updated October 2008:

1997 - 18,584,000,000.00
1998 - 837,000,000.00
1999 8,623,000,000.00
2000 13,954,000,000.00
2001 7,660,000,000.00
2002 - 20,183,000,000.00
2003 - 41,173,000,000.00
2004 - 43,061,000,000.00
2005 - 40,778,000,000.00
2006 - 34,866,000,000.00
2007 - 38,322,000,000.00
2008 -64,000,000,000 (estimate)

The Labour Government has run a deficit most years since taking power. Debt has decreased as a proportion of GDP as GDP has grown by more than the debt. Overall, the total UK Central Government debt has increased by GBP 271,567,000,000 since Labour took power. UK 10 year Gilts yield 3.69%. At this yield, that extra debt will cost GBP 10,020,822,300 to finance in 2009.

It looks like the UK deficit for this year is going to be in the region of GBP140,000,000,000.

Rochdale_Pioneers

tomstickland wrote: »

Anyway:
1997 49.8%
2002 37.5%
2007 44.2%
I believe that 2002-2007 was a boom, so they should have been reducing debt over that time.

I believe that 1993 to 1995 was a period of growth following the recession. the Tories should have been reducing debt in that time. Brown borrowed in the second term to invest - contentious I know but we do at least know where the money was invested/spent/wasted depending on your point of view.

Where did the cash go in 1993-95? Or 1990-93 whilst we're on the subject. I'll talk in basis points so that we're clear about the terms of reference (100 basis points = 1% percentage, ie add 100 bps to 3% and you get 4%).

In what is the biggest global recession since 1929, complete with mass bank bailouts and fiscal stimuli, UK debt as a percentage of GDP is forecasted to increase by 1300 basis points from 44% to 57%. In the last recession - with no bailouts or stimuli - our borrowing increased by 2,000 basis points from 32% to 52%.

On a simple basis (called adding) the recession of the early 90s cost us far more than this one looks set to cost, and whereas this time we will come out owning various banks and assets to be sold later, in the 90s we came out with what to show for it?

My point is this - the Tories bashing Labour round the head for financial mismanagement should look at their own record and show how it was better. And thats before we start comparing interest rates and inflation.

Generali

For clarity, the deficit 1987-1997:

1987 - 8,849,000,000.00
1988 - 351,000,000.00
1989 1,170,000,000.00
1990 - 11,610,000,000.00
1991 - 20,463,000,000.00
1992 - 40,548,000,000.00
1993 - 52,189,000,000.00
1994 - 47,333,000,000.00
1995 - 42,790,000,000.00
1996 - 32,477,000,000.00
Total GBP225,000,000,000.

It should be noted that for much of the period 1987-96 the UK was experiencing a recession or slow growth. That cannot be said about the period 1997-2008.

bubblesmoney

Wookster wrote: »

Except when the Germans go off and sort out there own gas deal with Russia. Quite foolish to do it as a country rather than the EU.

germany and russia have mutually benefitting economies. german manufacturing sector has got a lot to benefit from russias natural assets. so if it benefits their economy they (& any other counbtry in their position) would jump and do whats best for their country than sit around arguing whats best with a group of countries with different needs). wouldnt you want the uk to negotiate independently with any country that benefits the uk rather than having to run around beaurocrats in the EU to seek their opinions

bubblesmoney

depends on how the books were cooked as well. govt assets were sold off on the cheap and that would have been shown as income. debt written off probably might have been shown as income as happened in many financial companies.

selling the family silver and jewels in the good years isnt exactly prudent. many times the jewels were sold at low prices and people involved made killings of 19,000% on their investment and these were the chumps that advised the govt on the disinvestment. senior management at quinetiq made 19,000% on the investment after the disinvestment and they were involved in the advice given to govt during the disinvestment. govt made 14% return i think and carlyle made 140% or somewhere in that region. see the detailed NAO report into this scandal, cant remember the link though.

again the same things happened in NHS PFI deals the links which i posted in another thread yesterday. govt land and assets get transferred at a pittance to private contractors who do the PFI contract based on loans with govt guarantees then make a killing on return of investment plus a bigger killing even after the 30y PFI contract ends as some hold 150-250y leases on the land giving them access to further contracts. some have £250 million pound break clauses if they dont get the contracts.

also govt gold was sold off at the worst time.
see graphical representation of this sale
for some reason the image is not uploading on MSE. so here is the link

also see overseas debt wrt gdp . how much of this is unofficially on the tax payers books as big firms now cant go bust apparently.

a couple more links froom the tax payers alliance about browns financial management
http://tpa.typepad.com/research/files/the_real_cost_of_gordon_brown.pdf

http://tpa.typepad.com/home/files/gordon_browns_economic_failure_embargoed_00.01AM%20FRIDAY%2019%20SEPTEMBER.pdf

see some interesting graphs on those links

WTF?_2

tomstickland wrote: »

Doom laden article from the Guardian, basically saying that we can't afford luxuries when we run out of money.
http://www.guardian.co.uk/commentisfree/2009/feb/02/hastings-max-recession?commentpage=3&commentposted=1

Yeah - there's no doubt about it, some very noticeable cuts in the standard of living coming along for a lot of people, probably enough to make a change in how we act as a society.

Maybe it will encourage a more meaningful set of values ... and the appreciation of little luxuries more instead of taking them for granted and moving on to the next toy.

Rochdale_Pioneers

bubblesmoney wrote: »

selling the family silver and jewels in the good years isnt exactly prudent. many times the jewels were sold at low prices and people involved made killings of 19,000% on their investment and these were the chumps that advised the govt on the disinvestment. senior management at quinetiq made 19,000% on the investment after the disinvestment and they were involved in the advice given to govt during the disinvestment. govt made 14% return i think and carlyle made 140% or somewhere in that region. see the detailed NAO report into this scandal, cant remember the link though.

Sadly the same is true of most privatisations. Set the value low to ensure demand and thus spread the ownership of shares - this was a stated Conservative policy of the 80s as a means of converting voters from socialism to capitalism. You look at how shares in the utilities all performed after floatation, and a lot of people made vast amounts of money - everyone except the taxpayer.

nickj_2

did we really need experts to tell us this
presumably these were the same experts who didn't see the credit crunch coming :rolleyes: