UK at dangerous junction /Item Club

JayScottGreenspan

HAMISH_MCTAVISH wrote: »

Current mortgage debt = 1.2 trillion pounds.

A 0.25% cut in rates puts 3 Billion pounds a year back into the economy.

£3bn per year equates to approximately £10 per month per household. Dwarfed by rising food and fuel bills, then.

shortchanged_2

Kennyboy66 wrote: »

It manufactures more than ever before (at least up to 2007).

In terms of output, manufacturing in 2007 was double that in 1958.

Yes thanks for that Kennyboy. I stand corrected on the figures.

I suppose it shows that we now have a much greater demand for things than we did years ago particularly with the boom in high tech gadgets.

However I suppose it is this boom in all this gadgetry that has helped fuel this credit fueled situation we are now in. That and house prices of course.

HAMISH_MCTAVISH

shortchanged wrote: »

Do you understand the concept of trade deficit Hamish? The UK is already a net importer.

So anything that discourages imports and encourages exports is a good thing.

Like a weak currency, for instance.

Increase demand for UK produced goods. What goods? The UK maunfactures very little by historical standards. If we were talking about Germany, then you may be correct.

Nonsense.

UK manufacturing output in both production and value has increased steadily since 1945, and in 2007 was higher than at any time in history.

It has decreased as a percentage of GDP, but only because the rest of the economy has grown faster than manufacturing.

Although the manufacturing sector's share of both employment and the UK's GDP has steadily fallen since the 1960s, data from the OECD shows that manufacturing output in terms of both production and value has steadily increased since 1945.

A 2009 report from PricewaterhouseCoopers, citing data from the UK Office for National Statistics, stated that manufacturing output (gross value added at 2007 prices) has increased in 35 of the 50 years between 1958 and 2007, and output in 2007 was at record levels, approximately double that in 1958.[1]

This is a trend common in many mature Western economies. Heavy industry, employing many thousands of people and producing large volumes of low-value goods (such as steelmaking) has either become highly efficient (producing the same amount of output from fewer manufacturing sites employing fewer people- for example, productivity in the UK's steel industry increased by a factor of 8 between 1978 and 2006 [2]) or has been replaced by smaller industrial units producing high-value goods (such as the aerospace and electronics industries).
http://en.wikipedia.org/wiki/Manufacturing_in_the_United_Kingdom

Graham_Devon

Hamish.

You silly boy.

Mallotum_X

Graham_Devon wrote: »

Can't believe you have said this.

When talking about rates rising, you pop up to tell us it won't effect that many as many are fixed and many are on collars which will need to be breached before it impacts on the payments.

Yet when talking of lower ing interest rates you come up with the above!?

Hes back in the thread but I guess wont comment on this point.

shortchanged_2

HAMISH_MCTAVISH wrote: »

So anything that discourages imports and encourages exports is a good thing.

Like a weak currency, for instance.



Nonsense.

UK manufacturing output in both production and value has increased steadily since 1945, and in 2007 was higher than at any time in history.

It has decreased as a percentage of GDP, but only because the rest of the economy has grown faster than manufacturing.

Although the manufacturing sector's share of both employment and the UK's GDP has steadily fallen since the 1960s, data from the OECD shows that manufacturing output in terms of both production and value has steadily increased since 1945.

A 2009 report from PricewaterhouseCoopers, citing data from the UK Office for National Statistics, stated that manufacturing output (gross value added at 2007 prices) has increased in 35 of the 50 years between 1958 and 2007, and output in 2007 was at record levels, approximately double that in 1958.[1]

This is a trend common in many mature Western economies. Heavy industry, employing many thousands of people and producing large volumes of low-value goods (such as steelmaking) has either become highly efficient (producing the same amount of output from fewer manufacturing sites employing fewer people- for example, productivity in the UK's steel industry increased by a factor of 8 between 1978 and 2006 [2]) or has been replaced by smaller industrial units producing high-value goods (such as the aerospace and electronics industries).
http://en.wikipedia.org/wiki/Manufacturing_in_the_United_Kingdom

Yes thanks for that Hamish I just read that and I stand corrected.

However I still believe that a reduction in the interest rate to 0.25% would not be a good thing for the UK economy and the fact that it is being mooted is highlighting nothing more than a worsening UK economy.

HAMISH_MCTAVISH

shortchanged wrote: »

However I still believe that a reduction in the interest rate to 0.25% would not be a good thing for the UK economy

Why?

and the fact that it is being mooted is highlighting nothing more than a worsening UK economy.

Well they wouldn't be talking of lowering rates if the economy was recovering as planned, that's for sure.

But the simple fact is that economies do respond to stimulus and changes in monetary policy, so if the economy does worsen you can expect more.

shortchanged_2

HAMISH_MCTAVISH wrote: »

Why?



Well they wouldn't be talking of lowering rates if the economy was recovering as planned, that's for sure.

But the simple fact is that economies do respond to stimulus and changes in monetary policy, so if the economy does worsen you can expect more.

Because we have had interest rates at 0.5% for god knows how long now and even with that level of 'stimulus' we still can't fight our way out of a paper bag.

A futher cut of 0.25% will do diddly sh*t

JayScottGreenspan

Our economy can't function with interest rates at 0.5% because it has structural problems. Cutting to 0.25% won't solve them.

A cut to 0.25% could help buy us a tiny bit more time to address the structural issues. But current policy is actively to prevent the structural problems unwinding.

So it would just kick the can a tiny bit further down the road.

Conrad

shortchanged wrote: »

Increase demand for UK produced goods. What goods? The UK maunfactures very little by historical standards. If we were talking about Germany, then you may be correct.

The UK is the world’s sixth largest exporter of goods and services