UK trade deficit gap widens

Sir_Humphrey

Kohoutek wrote: »

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.

Japan's problems stem from them refusing to take the easy option when it arose - it took many years before they tried infrastructure spending (their infrastructure was already excellent making that option less appealing). QE started over a decade after the crash. The Japanese experience makes monetisation look an attractive option!

Japan has the opposite problem to the UK; too much private saving and not enough private consumption. Same for Germany.

Generali

Sir_Humphrey wrote: »

Japan has the opposite problem to the UK; too much private saving and not enough private consumption. Same for Germany.

It was the change from Japan being a high spending to a high saving nation that caused many of their problems, so called 'deleveraging'.

Japanese used to be voracious consumers; if a new model of TV or whatever came out they would buy it and sling out the old one, even if it was just a year or two old. That is what drove their consumer electronics firms forward, this incredible domestic demand that they had.

Then the crunch came and people started to fear they'd lose their jobs so they started to pay down their debts if they could and save. In a few years they went from being one of the world's great consumers to the greatest savers, despite very low interest rates.

There are strong analogies that can be drawn between what happened in Japan and what is happening in the UK. For example, the savings rate in the UK went negative briefly during the boom I think and was generally very low, about 1.5%. It is now 8 or 10% I think.

1984ReturnsForReal_2

Generali wrote: »

Japanese used to be voracious consumers; if a new model of TV or whatever came out they would buy it and sling out the old one, even if it was just a year or two old. That is what drove their consumer electronics firms forward, this incredible domestic demand that they had.

.

After all they purchased their own household brands, mostly manufactured in their own country & the manufacturers reinvested, developed & exported.

That is a good economy.

Generali

1984ReturnsForReal wrote: »

After all they purchased their own household brands, mostly manufactured in their own country & the manufacturers reinvested, developed & exported.

That is a good economy.

That is how these things are generally thought of however a big trade surplus can also be seen as a reflection of poor domestic demand either as a result of poverty (eg China) or a fear that the future is going to be bad so you need to save a lot (eg Japan and Germany).

The UK has the opposite: she imports more than she exports. The problem with this is that to maintain this you need to sell assets abroad or borrow from abroad which is ultimately unsustainable (although can continue for a very long time as has been the case in the UK and US).

The best thing IMO is trade that is roughly in balance. Selling abroad what you need to finance your imports but still giving domestic consumers a good standard of living.

Graham_Devon

Really2 wrote: »

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.

In another thread people were talking about star signs, was asked if you were scorpio.

Chill dear.

tomterm8

Generali wrote: »

The best thing IMO is trade that is roughly in balance. Selling abroad what you need to finance your imports but still giving domestic consumers a good standard of living.

The problem is that, unless we can convince foreign blighters to buy our goods, the only way we can get trade that is roughly in balance is actually to have a lot less stuff. Which sucks. Especially when everyone else in the world seems to have the opinion they should be in trade surplus. Since not everyone can be in trade surplus, there isn't going to be much trade at all. And, when you look at that kind of arithmetic, you come to the conclusion... well... we're all somewhat FCUKed.

/cue running around like a headless chickent... "don't panic Mr Mannering"... etc.

Maybe we should try exporting to Mars?