Prime Minister warns of 'Years of pain ahead'

Mr_Mumble

Lex has an intriguing take.

As a way of softening up the nation for a round of spending cuts, it is less than subtle. The new UK government is threatening – or is it promising? – to cut public spending in its June 22 budget in ways that will “affect our economy, our society, indeed our whole way of life”. Full marks for honesty, at least: governments across the world must come clean with voters about the scale of the fiscal adjustments ahead. There is plenty of room for cutting fat from the UK public spending bill, which is now the second highest among G7 countries, behind France.

The coalition unveiled cuts of £6bn last month; now it says it wants to emulate Canada’s achievement in the 1990s as it considers longer term austerity measures. Canada eliminated a budget deficit of 5.3 per cent of gross domestic product between 1994 and 1999 by rethinking the scale and purpose of public spending. It worked. The country’s debt to GDP ratio fell from 70 per cent in 1995/96 to 30 per cent; and it ran budget surpluses until 2007. Canada also avoided a banking crisis during the global financial meltdown; its economy grew 6.1 per cent in the first quarter of this year.

The UK’s problems are, if anything, deeper than were Canada’s. The UK is not Greece, but, as Deutsche Bank notes, its aggregate fiscal position is worse than that of the eurozone as a whole. Its fiscal deficit will be 12.9 per cent of GDP this year and next, compared to 6.5 per cent in the eurozone; and its gross debt to GDP ratio will be 94 per cent, compared to 93 per cent. The UK is also running a current account deficit, forecast to be 2.2 per cent in 2010/11. The UK economy has tended to bounce back quickly from recessions; spending cuts that reduce the debt to GDP ratio should contribute to economic growth, not retard it.

Blacklight

What dictates the amount of interest payable on the national debt?

chucky

Graham_Devon wrote: »

Figures don't matter here. It's a labour supporter trying to spin that cameron is now lying.

well it's either David Cameron is lying or Nick Clegg is spinning or even the other way around.

it has absolutely got nothing to do with Labour supporters but cloud the issue as you feel free.

one of them is spinning the truth. defend them as you like.

Thrugelmir

HAMISH_MCTAVISH wrote: »

But the reality is that most people won't even notice it's being done, the cuts involved are that small in percentage terms.

Well around a third of all jobs in Scotland are allied to the public sector. Thats direct and indirect. So be interesting to see how little people notice in your part of the world.

In Dundee, the % employed in relation to the public sector apparently is around 37%.

StevieJ

donaldtramp wrote: »

Better than expected?????????
It's a lot worse than that. The debt isn't £156 billion. The budget deficit is £156billion, which means we are currently living beyond our means to the tune of £156billion per annum.

Actual Debt is closer to one trillion, built up over years of increasing budget deficits.

Try to actually understand what is behind the numbers please before you rec posts eh?

Debt is 770 million, bad enough without you trying to exaggerate it.

Kohoutek

Mr_Mumble wrote: »

Lex has an intriguing take.

Osborne's comparison with Canada is pretty stupid - doesn't he know that Canada's main export partner had a booming economy when they made those 'bloodbath' cuts. Our main export partner has a collapsing currency and threats of sovereign defaults....

Maybe Osborne will be end up being compared with Philip Snowden, not Paul Martin...

http://en.wikipedia.org/wiki/Great_Depression_in_the_United_Kingdom

In an effort to balance the budget and restore confidence in the pound, on the 10 September 1931 with Phillip Snowden still as Chancellor, the new national government issued an emergency budget, which immediately instituted a round of draconian cuts in public spending and wages. Public sector wages and unemployment pay were cut by 10%, and income tax was raised from 4s 6d to 5s in the pound (from 22.5% to 25%). The pay cuts did not go down well however and resulted in a Mutiny in the Royal Navy.

These measures were deflationary and merely reduced purchasing power in the economy, worsening the situation, and by the end of 1931 unemployment had reached nearly 3 million. The measures were also unsuccessful at defending the gold standard, which the National Government had ostensibly been created to defend.

chucky

Kohoutek wrote: »

Osborne's comparison with Canada is pretty stupid - doesn't he know that Canada's main export partner had a booming economy when they made those 'bloodbath' cuts. Our main export partner has a collapsing currency and threats of sovereign defaults....

leave him alone - he trying his best and knows what he's doing

Mr_Mumble

StevieJ wrote: »

Debt is 770 million, bad enough without you trying to exaggerate it.

You're giving the ex-financial intervention figure from March 31st of £772bn there.

Net debt was £893.4 billion at the end of April and will be well over a trillion come the next financial year.

StevieJ

Graham_Devon wrote: »

Figures don't matter here. It's a labour supporter trying to spin that cameron is now lying.

I think Churchill had a much kinder phrase for it.

Terminological Inexactitude

StevieJ

worldtraveller wrote: »

George Osborne is planning to eradicate Britain's budget deficit by emulating Canada, where borrowing was brought under control within just three years by spending cuts of 20 per cent.



Telegraph.co.uk

Canada did a good job in the 90's considering their debt is now 72% of GDP ( UK 69%).