UK trade deficit gap widens

Sir_Humphrey

Kohoutek wrote: »

James Dyson has made some suggestions, supported by the directors of Rolls Royce, GlaxoSmithKline and Imperial College London, and the Conservative Party:

All that costs public money and is inconsistent with the cuts agenda.

Generali

2 points:

- If the pound falls then at first the value of existing export contracts falls and that of import contracts rises so the trade deficit increases. When new contracts are being negotiated, exporters can negotiate keener prices so can win more business and the trade deficit falls. There will be 2 limits to how much more business UK exporters can get as their customers are mostly in a bad way and also it's hard to borrow to increase capacity as the banks are in a mess.

- Pretty much every developed country wants an export led recovery. They can't all have that as netted across the world the balance of exports and imports should be 0*.








*For that to work you'd have to include the value of smuggled goods.

Sir_Humphrey

Generali wrote: »

When new contracts are being negotiated, exporters can negotiate keener prices so can win more business and the trade deficit falls.

Or, if the company has no money to invest in increased capacity, it increases it's margin, (bearing in mind our relatively low industrial capacity).

Which sounds rather more likely methinks. The £ has been lower for over two years now (and as low as it's current level for over a year) so it really ought to be feeding now into more exports by now.

Kohoutek

Sir_Humphrey wrote: »

All that costs public money and is inconsistent with the cuts agenda.

The Tory agenda is to make cuts in non-productive areas and to cautiously increase spending in areas with the potential to have long term economic benefits, and cut taxes to small businesses. I think those are pretty sensible proposals for a sustainable recovery of the UK economy.

Generali

Sir_Humphrey wrote: »

Or, if the company has no money to invest in increased capacity, it increases it's margin, (bearing in mind our relatively low industrial capacity).

Which sounds rather more likely methinks. The £ has been lower for over two years now (and as low as it's current level for over a year) so it really ought to be feeding now into more exports by now.

That will happen but there's a limit to how far you can take it. Also, that doesn't really lead to an 'export led recovery', it just means a few companies are making higher profits, most of which end up in pension funds.

Sir_Humphrey

Kohoutek wrote: »

The Tory agenda is to make cuts in non-productive areas and to cautiously increase spending in areas with the potential to have long term economic benefits, and cut taxes to small businesses. I think those are pretty sensible proposals for a sustainable recovery of the UK economy.

Cuts in non-productive areas (still sounds like code for Hacker style "efficiency savings") still reduce aggregate demand. Increasing unemployment increases benefits spending (which deffo should not be reduced as this is an automatic stabiliser). Cautious increases in areas with long term benefits is nowhere near enough.

This is not like the early 1990s.

Sir_Humphrey

Generali wrote: »

That will happen but there's a limit to how far you can take it. Also, that doesn't really lead to an 'export led recovery', it just means a few companies are making higher profits, most of which end up in pension funds.

You can take it as far as your currency depreciates (allowing for imported input costs).

It seems a pretty neat explanation of what is being observed, (i.e a distinct lack of an export led recovery). Not a great advert for British capitalism really. The private sector need to get their act together and show some ambition.

Kohoutek

Sir_Humphrey wrote: »

Cuts in non-productive areas (still sounds like code for Hacker style "efficiency savings") still reduce aggregate demand. Increasing unemployment increases benefits spending (which deffo should not be reduced as this is an automatic stabiliser). Cautious increases in areas with long term benefits is nowhere near enough.

This is not like the early 1990s.

Well someone has to take the pain in reducing a £178 billion deficit don't they? Keeping government spending at the current levels is not an option, unless you're proposing funding deficits by debt monetisation. I would like prefer to more reductions in long term and non-means tested benefits than public sector redundancies, but the former seems to be even more politically unpalatable than the latter.

Future growth has to come from the private sector, not increased government spending. There's no easy or painfree way out. The idea of a V-shaped recovery was a bizarre and deceitful idea spread by the current administration. Just look at Japan's experience of the last 20 years for guidance, except we're in much worse shape now than Japan 20 years ago.

Generali

Sir_Humphrey wrote: »

You can take it as far as your currency depreciates (allowing for imported input costs).

It seems a pretty neat explanation of what is being observed, (i.e a distinct lack of an export led recovery). Not a great advert for British capitalism really. The private sector need to get their act together and show some ambition.

Ultimately, absent of state owned enterprises, the private sector generates the wealth and income that allows everything else (houses, health, welfare and pensions) to exist.

Who are British capitalists? British people living in the capitalist system. They need to get out there and grab something for themselves.

Really2

Graham_Devon wrote: »

Oi, really....are you a scorpio?

If not what are you? Need to find out why you are like you are

I can't stand people talking absolute rubbish GD that is all.

We export plenty so why make up some rubbish that we don't?

I think you would be better off asking why people make some stupid no factual statements than question my reaction to pointing out they are wrong.