MSE News: Economic growth slows to 0.2%

kabayiri

teddyco wrote: »

A cut in the VAT is something George Osborne needs to consider for the next budget.

I don't think the last VAT cut did much to the economy.

Maybe a few people brought forward purchases of expensive items like cars, but not much more.

peakoil_2

Generali wrote: »

That is my expectation.

Borrowing to consume (eg buying plasma TVs and paying public employees wages) just brings consumption forward from tomorrow to today.

We've had the extra consumption and now we have the reduced consumption across Europe and the US.

Australia has lucked out as while she has had profligate consumers, the Government has been relatively restrained.

where are you going to run to next when aus implodes?

Generali

peakoil wrote: »

where are you going to run to next when aus implodes?

Somewhere else with a nice climate and a booming economy.

I hear the Cayman Islands are jolly nice. GDP is almost $45,000/head and I'm sure that Mrs Generali and I would be perfectly capable of earning over the average each.

Luxembourg would be another option I guess. Very handy for the skiing.

HAMISH_MCTAVISH

Generali wrote: »

Somewhere else with a nice climate and a booming economy.
.

So how long until Aus implodes?:D

Or is the right question, how long until China implodes, taking Aus down with it?

Generali

HAMISH_MCTAVISH wrote: »

So how long until Aus implodes?:D

Or is the right question, how long until China implodes, taking Aus down with it?

The China thing is overdone IMO. Hard commodities are in a boom no doubt but they are still a relatively small part of the economy, a bit over 5%. If mining was to cease entirely in Aus tomorrow, the direct drop in GDP would be less than that experienced by the UK in the last recession.

The key for Australia is that she is an island of stability in a chaotic Asia. If you ran a large multinational where would you put your APAC headquarters? For my money it has to be Japan, India (perhaps) or Australia. Somewhere that you can be reasonably sure that you won't wake up one morning to discover that the army has taken over.

HAMISH_MCTAVISH

teddyco wrote: »

Generali,
It's not just the VAT reduction that I would like to see reduced but sweeping tax reductions in all areas of the economy
followed by massive cuts in government spending. It's been done before during the Thatcher/Reagan years and
it caused the economy to boom.

Whether or not George Osborne has the courage to do it is another matter for another discussion, but history shows us that lower tax rates
lead to higher tax revenues and economic growth.

Additional taxes discourage the activity being taxed, such as working or investing, and they yield less revenue rather than more. There are two rates that yield the same amount of revenue: high tax rates on low production, or low rates on high production.

I doubt Generali would argue that we've crossed the top of the Laffer curve with regards to total taxation.

HAMISH_MCTAVISH

Generali wrote: »

The China thing is overdone IMO. Hard commodities are in a boom no doubt but they are still a relatively small part of the economy, a bit over 5%. If mining was to cease entirely in Aus tomorrow, the direct drop in GDP would be less than that experienced by the UK in the last recession.

Next 15 years, better economic growth prospects.

UK or Australia?

IS there not still a sensation that the UK have had their recession whilst Aus is yet to have one? I'm wary of "paradigm shifts" being discussed in Aus regarding the boost to currency and terms of trade.

Generali

teddyco wrote: »

Generali,
It's not just the VAT reduction that I would like to see reduced but sweeping tax reductions in all areas of the economy
followed by massive cuts in government spending. It's been done before during the Thatcher/Reagan years and
it caused the economy to boom.

Whether or not George Osborne has the courage to do it is another matter for another discussion, but history shows us that lower tax rates
lead to higher tax revenues and economic growth.

Additional taxes discourage the activity being taxed, such as working or investing, and they yield less revenue rather than more. There are two rates that yield the same amount of revenue: high tax rates on low production, or low rates on high production.

The Thatcher Government increased VAT while reducing income tax and running almost balanced budgets. That was sensible at the time.

Right now I think the best thing for the UK economy would be a cut in income tax for the low paid and a smaller cut in welfare payments to the same group. The difference would be made up in reduced bureaucracy costs. It seems crazy to me to give with one hand and take with the other.

DervProf

No need to worry about the low growth figure when you consider that (according to The Express) the average house price has increased by £5K.

If the growth figure includes house prices, then there is need for concern.

If the growth figure doesn't include house prices, then things are looking great, aren't they ?

Thefunkygibbons

Like the inflation figures, it is an average

It is one's personal inflation figure and income growth/decline that really matters