Question about the defecit?

CLAPTON

Emy1501 wrote: »

http://news.bbc.co.uk/1/hi/8572149.stm

and so.................................?

JamesU

StevieJ wrote: »

I think we all know that one, 6 billion sound reasonable?

Yep, for sure. Or £7 billion if you believe the Telegraph. Based on the calculations I have been checking, if the (present) government can deliver on its economic promises we are still looking at £80 billion/yr deficit and £1310 billion of government debt in 4 yrs time. And Emy is spot on, there is a £30-40 billion/yr shortfall in how the government can get to this stage in the first place. So I am not going to argue over a billion here or there.....we seem to be doomed:eek:

http://www.telegraph.co.uk/news/newstopics/politics/labour/7539343/Labours-planned-National-Insurance-increase-will-cost-jobs-Alistair-Darling-admits.html

JamesU:)

CLAPTON

mbga9pgf wrote: »

Very true. But we have afew problems today which we didnt have then.
From "The hidden Debt" By brooks newmark:

"The Government claims that Britain’s debt stands at an already shocking £805 billion, equivalent to 57.5% of GDP. This is a significant underestimate. In truth, Britain’s public debt is an astronomical £2.2 trillion, equivalent to 157.2% of GDP. This means that, in addition to grappling with the effects of the recession and credit crunch, every single British household is being hobbled by the ball and chain of public debt to the sum of £85,610"

These figures are pre-credit crunch.

indeed so, it illustrates that there is no specific figure that has a particular unique significance

the UK public can vote for something different if they wish

Entertainer

JamesU wrote: »

Not surprised. The extent of the problem has not been clear enough. Hope you are right that we can extract sufficient revenue from the banks, cannot quantify it myself. My feeling is that CGT will go back up.

JamesU

It's a pinprick in the deficit. Even if the banks were taxed if they return to profitability then it would be in the order of a few billion. CGT raises next to nothing and a punitive rate decimates investment in risk areas, so it would do more harm than good.

Emy1501

and so.................................?

the EU 3% only applies to members of the Euro

EU rules say government deficits must be below 3% of GDP, but the UK's deficit is expected to hit £178bn - or 12.6% of GDP - this year.
Germany, France, Spain and Italy were also warned they were over-reliant on economic recovery to meet debt targets.
Brussels was commenting on plans by some of the biggest EU countries to bring down public spending.
'Absence of detail'
As was reported earlier in the week, the report warned that the UK was not on course to cut its deficit in line with EU rules by a deadline of 2015.

Entertainer

CLAPTON wrote: »

indeed so, it illustrates that there is no specific figure that has a particular unique significance

the UK public can vote for something different if they wish

So how high is too high then? 300%? Is it like the Hamish Mctavish cult of house prices- the sky's the limit- until it falls in.

What about Japan. 200% debt to GDP and they have had recession and moribund growth for 20 years. An albatross that they may never be rid of. And this in a country which should be at the cutting edge of the global economy with its technological innovation. It should be doing much of the heavy lifting for the rest of us just like America. Instead it's a basket case.

Is that what we want to aspire to?

JamesU

[FONT=&quot]

Emy1501 wrote: »

My understanding from what I have read is once your debt reaches 100% of GDP then as a country you cant grow or grow more than 1% and that I suspect would be the problem. Our debt will reach something like 90% of GDP by the end of next parliament and no party has a credible plan to stop it there and all three parties have a funding gap of about 30-40B which none are prepared to tell us how they will fill each year.

Emy, you seem to be spot on, have just reached a similar conclusion e.g. from labour manifesto:[/FONT][FONT=&quot]

Tough choices for £15 billion efficiency savings in 2010-11.[/FONT][FONT=&quot]
Tough choices on cutting government overheads: £11 billion of further operational efficiencies and other cross-cutting savings to streamline government will be delivered by 2012-13.
Tough choices on pay: action to control public-sector pay including a one per cent cap on basic pay uplifts for 2011-12 and 2012-13, saving £3.4 billion a year, and new restrictions on senior pay-setting.
Tough decisions on public sector pensions to cap the taxpayers' liability - saving £1 billion a year.
Tough choices on spending: £5 billion already identified in cuts to lower priority spending.
Tough choices on welfare: our reforms will increase fairness and work incentives, including £1.5 billion of savings being delivered.
Tough choices on tax: a bonus tax (£X/yr???), reduced tax relief on pensions for the best off (£X/yr???), a new 50p tax rate on earnings over £150,000 (£X???) and one penny on National Insurance Contributions (should raise £7 billion/yr??? newspaper article).
Tough choices on assets: £20 billion of asset sales by 2020.



[/FONT][FONT=&quot]Labour say they will halve the deficit over 4 yrs therefore e.g. £80 billion/yr deficit in 4yrs time?

But to do this, ignoring 20 billion of one-off asset sales, £44 billion/yr of savings suggested in the manifesto above (assuming they can all be made of course).

Suggests that a further £36 billion is required each year from the taxes above that have not been quantified?

And assuming this is possible, in 4 years time after tough choices, tough choices, tough choices, tough choices.........we still have a deficit of approx £80 billion/yr and because of this 4x80=£360 billion + exisiting £950 billion = £1310 billion of government debt, gradually increasing close to 100% of GDP?

JamesU:eek:
[/FONT]

mbga9pgf

Entertainer wrote: »

So how high is too high then? 300%? Is it like the Hamish Mctavish cult of house prices- the sky's the limit- until it falls in.

What about Japan. 200% debt to GDP and they have had recession and moribund growth for 20 years. An albatross that they may never be rid of. And this in a country which should be at the cutting edge of the global economy with its technological innovation. It should be doing much of the heavy lifting for the rest of us just like America. Instead it's a basket case.

Is that what we want to aspire to?

The reason they are in this state is because they listened to Keynes instead of friedman and went down the supporting bad practice route.

Like we did with the banks. Its not what we should aspire to. Its were we are headed. Lets face facts.

Somerset

Entertainer wrote: »

The politicians are living in a fantasy land of unaffordable giveaways and the public are ignorantly playing along............ Perhaps the nation has to reach the verge of bankruptcy before the penny drops.

I watched This Week hosted by Andrew Neil after the 'leader's tv debate'.

He asked Michael Portillo why none of the contenders were really addressing the deficit question, merely skating around it.

Answer '' Because they wouldn't be elected''.

If that is true, people don't want to hear/believe that public services will be annihilated. But it's fairly inevitable.

Kohoutek

Entertainer wrote: »

What about Japan. 200% debt to GDP and they have had recession and moribund growth for 20 years. An albatross that they may never be rid of. And this in a country which should be at the cutting edge of the global economy with its technological innovation. It should be doing much of the heavy lifting for the rest of us just like America. Instead it's a basket case.

Is that what we want to aspire to?

Japan is a basket case? That's probably news to most of the people that live there. Japan is still the second largest economy in the world, and their expertise in manufacturing and electronics is highly impressive to say the least. Crucially, Japan has a population that is able and willing to fund its debt at extremely low interest rates - 93% of their debt is domestically held.

Government debt in the United States is far from rosy...especially if take into account the disastrous fiscal situation in many of the states, e.g. California and Illinois. And like the UK, the fact that the US has to resort to funding a large proportion of its debt from foreigners means it has to pay significantly higher interest rates than Japan.