Deficit growing again...

Generali

I'm surprised nobody's posted this yet:

http://www.bloomberg.com/news/2012-10-19/u-k-posts-smallest-september-budget-deficit-since-2008-1-.html

Britain posted its smallest September budget deficit since 2008, providing a boost for Chancellor of the Exchequer George Osborne as he struggles to meet his borrowing targets.

The shortfall excluding government support for banks narrowed to 12.8 billion pounds ($20.5 billion) from 13.5 billion pounds a year earlier, the Office for National Statistics said in London today. The median of 21 estimates in a Bloomberg News survey was for a deficit of 13.5 billion pounds. The fall was due to an improvement in the finances of local government and publicly controlled companies. Central-government tax revenue and spending both rose by 3.7 percent.

Unemployment is falling, the deficit is falling, GDP is very likely to be on the rise. As long as the Europeans don't beggar things up then it's looking good.

Loughton_Monkey

Generali wrote: »

I'm surprised nobody's posted this yet:

http://www.bloomberg.com/news/2012-10-19/u-k-posts-smallest-september-budget-deficit-since-2008-1-.html

Unemployment is falling, the deficit is falling, GDP is very likely to be on the rise. As long as the Europeans don't beggar things up then it's looking good.

I'm not surprised.

It is our duty to remain miserable, cynical, and pessimistic during a long recession.

As things start to get better, then we can be miserable, cynical, and pessimistic about it not happening fast enough. Once we are 'booming' again, then that's the time to be miserable, cynical, and pessimistic that it's not going to last and a 'bust' is just round the corner.

Some of us actually love being miserable, cynical, and pessimistic. I certainly do. Of course I hide it so well that you wouldn't notice it from my posts....

Masomnia

I think the main thing is the downward revision for the whole year to date. Not really surprising given the unemployment figures, I thought.

Masomnia

HAMISH_MCTAVISH wrote: »

We don't have a "debt crisis". Therefore we're obviously not borrowing to get out of one.

We should be borrowing to invest in long term infrastructure, which would create jobs and increase competitiveness in the future.

It has literally never been cheaper for the UK government to borrow money. The markets are begging us to borrow. We should not pass up that opportunity.

Do you really think borrowing 11-and-a-bit-% of GDP per annum is/was sustainable?

I think £375billions worth of QE buying gilts muddies the water somewhat, and do we really want more money going into government bonds when businesses are in need of finance?

HAMISH_MCTAVISH

Masomnia wrote: »

Do you really think borrowing 11-and-a-bit-% of GDP per annum is/was sustainable

Over the short term, yes. Over the long term clearly not.

The only debate is over the speed of cuts, not whether we should have cut at all.

But like it or not, the opportunity currently exists to finance long term infrastructure projects at record low rates. We should not miss that opportunity.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

....But like it or not, the opportunity currently exists to finance long term infrastructure projects at record low rates. We should not miss that opportunity.

I really cannot agree with this one, Hamish. It was fine once, when debt wasn't the most major issue. Spend £1 bn, and virtually all of that is paid to british workers to put british materials together and produce a new road or bridge....

But today, the money is 100% borrowed, and paid very largely to foreign workers, a few foreign owned consultants, and using a lot of foreign imported materials.

Quite literally what you are doing, is paying your local corner shop £100 a week as a bribe to employ your idle son at £60 a week. Yes. Your son has now finally got his 4rse off the couch and is bringing in money. But you are far better off just giving him £60 and keeping the other much needed £40 in your own pocket.

Your challenge (and that of the government) is somehow to 'do something' with that shop owner, at little or zero cost, to convince him that he can increase his trade enough to need to employ your son at £60 a week. It is the 'something' that sadly no-one really knows what it is - especially the economists - because we haven't been in the same type of recession before.

ShAnE

HAMISH_MCTAVISH wrote: »

Over the short term, yes. Over the long term clearly not.

The only debate is over the speed of cuts, not whether we should have cut at all.

But like it or not, the opportunity currently exists to finance long term infrastructure projects at record low rates. We should not miss that opportunity.

Have you considered a job at WONGA?
"In debt? We can help you spend your way out of it"

In essence your suggesting to someone whose house is in negative equity that they should take out a loan to build a conservatory because they can get a low interest rate, instead of cutting their bills to help pay off their debt.