The Governments Deficit Reduction Plan?

talexuser

lvader wrote: »

The deficit isn't/wasn't affected by the banks.

I thought RBS and Lloyds were off balance sheet but Northern Rock and Bradford Bingley were according to this
http://www.thisislondon.co.uk/standard-business/article-23917008-economy-slowing-as-it-enters-year-of-austerity.do

lvader

talexuser wrote: »

I thought RBS and Lloyds were off balance sheet but Northern Rock and Bradford Bingley were according to this
http://www.thisislondon.co.uk/standard-business/article-23917008-economy-slowing-as-it-enters-year-of-austerity.do

They may be in the debt figures but I don't believe they were ever part of the deficit figures which is the gap between government spending and tax receipts.

Ark_Welder

opinions4u wrote: »

If the opportunity came with a time machine,

You could be in danger of just talking Morlocks now...:)

IronWolf

The reductions to the deficit have only just begun to take effect. The deficit wont be gone until 2015/2016.

We've still got a long way to go yet.

talexuser

I'm genuinely trying to understand why deficits became a problem at the same time as the banking crisis/bailout. If the so called billions created for the bailout is not in the deficit, why has deficits all round the world become such a problem in such a relatively small time scale?

Is it just a question of confidence and therefore interest rates? In that case the mortgage/property/CDS/Hedge Fund (choose your favourite) etc bubble created by low gov interest rates just burst and destroyed confidence?

opinions4u

talexuser wrote: »

I'm genuinely trying to understand why deficits became a problem at the same time as the banking crisis/bailout. If the so called billions created for the bailout is not in the deficit, why has deficits all round the world become such a problem in such a relatively small time scale?

Is it just a question of confidence and therefore interest rates? In that case the mortgage/property/CDS/Hedge Fund (choose your favourite) etc bubble created by low gov interest rates just burst and destroyed confidence?

Government spending plans were all based on growth projections. I think between 2% and 4% a year from memory. This would have meant ongoing growth in tax revenues as well.

Instead, the economy shrank. Tax revenues fell. Benefits payments rose.

It's a bit like a household budget where you borrow to the hilt based on the overtime you've always been able to earn. £1,500 a month comes in. £1,500 a month gets spent on bills and food. Suddenly you lose £350 a month in overtime and your food bills go up 20% and that mortgage you secured based on your overtime remains stubbornly expensive. What do you do?