UK economic recovery worse than Great Depression, and no sign of improving

HAMISH_MCTAVISH

Wookster wrote: »

It appears you cannot do basic arithmetic.

It appears you lack basic reading comprehension skills.

Try going through the thread again...

Spending is enormously depressed because everyone is paying off debt,

No kidding.

You think that might be why I devoted an entire post earlier in the thread to debt deleveraging then?

especially mortgages on historically expensive houses (relative to earnings).

Mortgage debt payments as a percentage of earnings is at near record low levels, thanks to low base rates.

Try again.

Thrugelmir

Itismehonest wrote: »

Yet many are paying off mortgages early or re-mortgaging for BTL?

No clear sign of this in the BOE figures.

Itismehonest

Thrugelmir wrote: »

No clear sign of this in the BOE figures.

I imagine (I don't follow figures that closely ) that, as far as paying off early is concerned, it would, indeed, be the case recently - presumably since things started to bite more - but the BOE certainly reported that it was happening back at the turn of 2010/11.
We only have to read MSE to see how many people are still trying to BTL their way out of problems.
In contrast the base rate fell steadily from 2007 until it hit the bottom 3 years ago which means savers have been hit for far longer & much harder than in past recessions.
We seem to be left with very few who have the money to put into the system which can't help IMO.
I've no idea what the answer to the problem is, though.

Pobby

Wookster wrote: »

It appears you cannot do basic arithmetic. Spending is enormously depressed because everyone is paying off debt, especially mortgages on historically expensive houses (relative to earnings).

Agreed. HPI has done nothing than been a total blight on society. Imho, it has screwed much of the economy for many reasons. £1,000 a month mortgages seem quite the norm these days.

I recall, 20 years ago paying £700, including a pretty use less endowment, on a £58,000 mortgage. Again, not a comfortable p;ace to be.

Starting out in the mid 70`s, it was far easier to buy as inflation was not just about commodities but also related to wage rises. Lending was a lot stricter and all the better for it.

I may well be flamed but for my money, I really would have like to have seen a far cooler property market.

Itismehonest

Yes, historically lending was much stricter.

Chicken & egg question......

Which came first HPI or ridiculously easy mortgages & people extending themselves to fight over property which, in turn. drove up prices?

Generali

michaels wrote: »

So gdp was artificially inflated by 6% by borrowing to consume. In that case surely we should reset benefits to the level they were when gdp was last at current levels as otherwise those on benefits are relatively better off with all the consequences in terms of reduced incentives that produces.

I think I was the first person on the bbc hys to mention the gdp pull forward conspiracy theory - apologies.

No problem.

Economic theory I believe either believes that people don't borrow to consume or that if they do it's to maintain a steady level of income during their lives.

There is no theory i am aware of that looks at people borrowing huge sums of money across the economy and spends it on buying stuff from Tesco (other ways of blowing the equity in your house are available).

I think that we've all come up with a new economic theory there. Well done MSE.

kabayiri

Generali wrote: »

...
Economic theory I believe either believes that people don't borrow to consume or that if they do it's to maintain a steady level of income during their lives.
...

Does that reflect a political and cultural change which I believe has happened since the 80s (well into the third decade) ?

Isn't the general view now that its the consumer/business which 'knows best' and not the state ?

Hence, we have people on state support paying their own rents ; council house sales ; privatisation on a grand scale ; direct state monetary support to individuals via tax credits or child trust funds or free laptops for selected groups; not forgetting a dramatic liberation of the credit markets with direct access to individuals and unparalleled freedom of operation.

I can see why one would think all this creates a more dynamic, liberated economic populace, but maybe this caused the economic 'spring' to unwind too far pre-2007; and it's now got further to contract.

Spending (supporting growth) in the first half of the noughties - can that ever be considered a normal pattern, or an unusual period.

Wookster

HAMISH_MCTAVISH wrote: »

It appears you lack basic reading comprehension skills.

Try going through the thread again...



No kidding.

You think that might be why I devoted an entire post earlier in the thread to debt deleveraging then?



Mortgage debt payments as a percentage of earnings is at near record low levels, thanks to low base rates.

Try again.

Do you really seriously believe that record amounts of debt are not affecting consumption?

Seriously?

ruggedtoast

Could still be worse imo.

abaxas

Vastly reduce benefits payments and scrap the min wage.

Job done.