Beware of green shoots

rotate · 3 June 2009 at 2:21PM

Looking at the UK economy from a disspasionate point of view and having no axes to grind.I am not a FTB or a BTL landlord or interested in becoming one.
However I must view the outlook very pessimistically.Why?
Unemployment and the effect it has on the economy.I think that unemployment may rise to around 4-5 million .Look at the way that companies are still making employees redundant,the future for manufacturing is very bleak LDV and Vauxhall come to mind.
The Financial sector has huge scope for rationalisation and branch closures.
Now when people are unemployed,goverment tax revenues fall,less income tax,corporation tax,VAT,Business rates.The unemployed spend less so less VAT and revenue duty,lower expenditure on goods and services in the remaining economy.
At the same time goverment expenditure rises as it pays unemployment benefit and social security.
However the goverment has probably already exceeded the limit to which it can borrow to finance its expenditure.
It will have to cut and deeply(whichever goverment is in power),external forces,the goverments creditors or in the worse case the IMF will see to that.Plus it will have to raise taxes substantially.
This means large job cuts in the state sector and a big cut in state sector expenditure.Which I am afraid leads to more unemployed and a lower income stream and we get into a spiral.
I do not think the slack will taken up by expots as much of Europe and the US is in a similar situation.
As I have said in other posts,the outlook for housing and the general economy is very bleak

Really2 · 3 June 2009 at 2:27PM

rotate wrote: »

.Look at the way that companies are still making employees redundant,the future for manufacturing is very bleak LDV

If you were alive for the last 30 years+ you may well have known it as been like that for that long.

The main thing for growth is sentiment and how the markets see us.
If sentiment increases and people start to spend and the markets see we are recoving it will be practical over (that does not mean we are back to 2007 but out of decline).

At the moments things are looking better for a recovery than they did 6 months ago.

if you have no Axe to grind why be pessimistic? it will be optimism that fuels the recovery not pessimism:)

maryotuam · 3 June 2009 at 2:38PM

Optimism doesn't put money in pockets. As well as unemployment being a problem, I feel that the buying of trivial material goods have now gone out of fashion. There will also be less access to debt to buy these things and many people are in hock up to their eyeballs for the next 20 years. Increased taxes will be necessary to pay for all the bail out money given to the banks.

I can't help being pessimistic about "recovery" as the facts speak for themselves. Still, with any luck it will mean we slow down our consumption of planet Earth and lead to a healthier society.

cardsharps · 3 June 2009 at 2:44PM

Really2 wrote: »

if you have no Axe to grind why be pessimistic? it will be optimism that fuels the recovery not pessimism:)

Misplaced optimism will merely be the forerunner to the next collapse in confidence.

Really2 · 3 June 2009 at 2:58PM

cardsharps wrote: »

Misplaced optimism will merely be the forerunner to the next collapse in confidence.

A hamster on a wheel will run no further than a hamster with no legs.

Any one can make up a nice little ditty.

how about.

Misplaced pessimism will be the forerunner to the next boost in confidence.

It is in the end absolutely meaningless and simply a statement with no facts.;)

PS nice new socky FATPIG lol.

Really2 · 3 June 2009 at 3:02PM

fatpig wrote: »

You're still sweating over the decline in value of your dodgy new build wreck I see. It doesn't matter how much you wish it, it's never going to be worth what you paid for it. :rotfl:

Oh dear how much is my mortgage ah yes £137!

f off fatp!ck you will be lucky to afford some haribo with your attitude. :rotfl::rolleyes:

I am not worried, it looks like i purchased at bottom price nearly a year ago in the mean time paying off 7% of my mortgage.

What have you done?

If you want a nice picture or to stay in one of the three spare bedrooms you only have to ask.
i even have a detached double garage which could keep a very fatpig in and avoid the stench of bitterness.

purch · 3 June 2009 at 3:20PM

However I must view the outlook very pessimistically.Why?

Because all the joy and fun has been sucked out of your life ??? :rolleyes:

1984ReturnsForReal_2 · 3 June 2009 at 3:40PM

rotate wrote: »

Unemployment and the effect it has on the economy.

Unemployment is around 2m at the moment with another 1m in the next 9-12 months.

On top of that you have the effect of short weeks & pay drops. This effect on its own adds another 1m (approx) in financial terms.

On top of that again is those in receipt of Working Tax Credit etc. I have no idea what that rate is for that.

As the UK is crippled by debt at the moment it is only a downward spiral until growth is reached & companies reinvest the profit into wages & staff.

That is likely to be 24 months +.

No company is going to be upping numbers anytime soon..