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EA news warns of double dip recession and housing market slump.
Comments
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HAMISH_MCTAVISH wrote: »Totally agree.
The reality is that the Public Sector needs to be shrunk, but this could be achieved through spending freezes and real terms cuts without losing a single job in the short term.
Just freeze public sector pay, benefits, spending and hiring for 5 years, and the effective cuts would be massive, but all achieved through inflation and natural attrition.
Throw in some nice big cuts in useless programmes like ID cards, and it could all be done relatively painlessly.
We're only looking for a 14% cut to balance the budget. Find a way to inject private sector management and efficiency savings into all public sector departments and I guarantee you could save more than that.
We are looking for a 14% cut in expenditure when compared to GDP hamish.... the government doesnt spend 100% of gdp just yet. Its a lot more than a simple 14% cut of budget. Its more like 30% to balance the budget. Nice. If we cut expenditure/raise taxes to cover 30% of current expenditure, there will be consequences.0 -
We are looking for a 14% cut in expenditure when compared to GDP hamish.... the government doesnt spend 100% of gdp just yet. Its a lot more than a simple 14% cut of budget. Its more like 30% to balance the budget. Nice. If we cut expenditure/raise taxes to cover 30% of current expenditure, there will be consequences.
Fair enough, which is why we won't be cutting 30%.
Freeze spending, borrow the difference, and let growth sort it out with borrowing declining every year until it's balanced. Which is going to be the plan no matter who gets in.
I guarantee you that, or something close to it, will be the way that is chosen. Anything too severe is politically unnaceptable, tipping the country back into recession would ensure a single term for the party that does it.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
I guarantee you that, or something close to it, will be the way that is chosen. Anything too severe is politically unnaceptable, tipping the country back into recession would ensure a single term for the party that does it.
And what part of "politically acceptable" is occuring in Greece at the moment?
GIven the choice, as a central banker/treasury official do you
1) Make the cuts necessary to placate the bond market even if they are politically untenable.
2) ignore the market, get downgraded and take a 50 basis point hit in debt insurance and see your debt servicing costs skyrocket?
Ratings are far easier to maintain than get back. The country is going to have to bend over a barrell and think of Britain... Politicians dont make hard choices without good reason. But they still make unpopular decisions.
Growth
thats a good one. Want to suggest some sources of significant growth and wage inflation?
Cameron knows he may be in for a single term. But would anyone be stupid enough to vote labour back in? By the time the election run up is over, the electorate will give cameron the mandate to sort out Labour's mess. And it aint going to be pretty. See what Canada did to their public sector a few years ago. As I said, those sorts of moves have major consequences, especially for the UK and its reliance on public spending.0 -
HAMISH_MCTAVISH wrote: »
We're only looking for a 14% cut to balance the budget. Find a way to inject private sector management and efficiency savings into all public sector departments and I guarantee you could save more than that.
Oh yeah!! I wonder why no one has thought that before? Somebody phone Whitehall quick!0 -
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You should stop hanging round posh people's bins, pickled... 0
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Lots of derilict land and empty tin sheds where factorys used to be here0
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I personally think our debt situation gets blown way out proportion on here and the so-called carnage which aparantly awaits may be one hell of an anti-climax.
There is a lot more wealth floating around than people like to beleive.
The wealth floating around is though, held by a minority. The country itself cannot run on this minority.0 -
Graham_Devon wrote: »The wealth floating around is though, held by a minority. The country itself cannot run on this minority.
that's not really the case...
70% of property is owner occupied - that's not a minority
the average household has a net wealth of £200k - that's only made up by 40% property, the rest pensions and money held in bank accounts or shares..0
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