Is austerity or spending best for the UK economy?

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Former_MSE_Debs
Former_MSE_Debs Posts: 890 Forumite
edited 15 April 2013 at 4:19PM in MoneySaving polls
Poll started 15 Apr 2013

With the economy struggling, there's much debate as to whether it's best to spend our way out of the mire to promote growth, or make Government cutbacks to reduce the deficit and the national debt.

If you were Chancellor, which of these deliberately stark choices would you choose to best help the UK economy?



Did you vote? Why did you pick that option? Are you surprised at the results so far? Have your say below. To see the results from last time, click this.
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Comments

  • stevemcol
    stevemcol Posts: 1,666 Forumite
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    Perhaps this has all been a lesson that economies based on perpetual growth can't be sustainable in the long run.
    Apparently I'm 10 years old on MSE. Happy birthday to me...etc
  • piprod01
    piprod01 Posts: 11 Forumite
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    Paul Krugman outlining the case for government spending:
  • MrGoggle
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    Spending should only increased on infrastructure projects/NHS/Education while cutting back in other areas that are considered non essential.

    Overall the government needs to spend, but in the right areas while cutting back in some.
  • AndyLandy
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    MrGoggle wrote: »
    Overall the government needs to spend, but in the right areas while cutting back in some.

    Quoted for Truth.

    Blanket austerity and blanket spending are about as bad as each other, it's about finding the right balance. We want to spend as little as possible, but we need to make sure we spend enough money on what's important.

    Hang on, isn't that the key lesson from MSE?

    Martin Lewis for Chancellor of the Exchequer! :money:
  • piprod01
    piprod01 Posts: 11 Forumite
    edited 16 April 2013 at 12:45PM
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    AndyLandy wrote: »
    Quoted for Truth.

    Blanket austerity and blanket spending are about as bad as each other, it's about finding the right balance. We want to spend as little as possible, but we need to make sure we spend enough money on what's important.

    Hang on, isn't that the key lesson from MSE?

    Martin Lewis for Chancellor of the Exchequer! :money:

    I don't think many are arguing for either blanket spending or austerity. People are arguing for overall spending/austerity. There's almost always room to cut fat in the system, but overall I think government spending should increase to stimulate the economy. This comparison of the government as a household is a poor analogy, as the video I posted above explains:
    Krugman: There are a lot of ways to try and answer that, but I think the main thing to say is,
    If you try to have a situation in which everyone is trying to slash at the same time, in which the private sector is trying to slash spending because it feels it has too much debt, and in which then the government is also saying well we have too much debt so we’re all trying to slash then we run up against the fundamental fact that we are not a household we are an economy, and that your spending is my income, and my spending is your income, and if we are both trying to do this slashing at the same time, what we end up doing is producing a depression that leaves us worse off.

    And this is another great (garbled), I’ll get my 1930’s American economist, the, the, Irving Fisher, who of course was Keynes’ contemporary, who said that, in times like this, when everyone tries to pay down debt at the same time, what happens is, the more people try to save, the more they owe. We’re actually worsening the debt problem by not having the government, go, act as the, the fly-wheel, the stabilising factor, when the private sector is engaged in this ferocious deleveraging.
  • [Deleted User]
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    Surely borrowing and borrowing turns our economy, in the long term, into nothing more than a giant nation-sized Ponzi scheme? :P
  • Masomnia
    Masomnia Posts: 19,506 Forumite
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    The government is already spending £120,000,000,000 more than it takes in taxes every year. The government is no where near paying down debt, not even close, it's not really austerity at all.
    “I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse
  • John_Pierpoint
    John_Pierpoint Posts: 8,391 Forumite
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    edited 17 April 2013 at 5:18AM
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    More worryingly just how long do we expect to ponce off the rest of the world?
    Just how long will they believe that our kids will keep up the repayments on mum and dad's consumption spending?

    http://touchstoneblog.org.uk/2013/03/balance-of-payments-where-is-britain-in-the-global-race/

    The following graph is a bit unfair because that pound back in 1970 was probably worth at least a dozen pounds today.

    Don't expect a manufacturing miracle to solve the problem any time soon.

    Colonising chunks of the world using the military isn't the option it used to be.

    Printing more pounds and using those is likely to get a dusty response.
    ca-1950-2011.jpg
  • XRAT
    XRAT Posts: 239 Forumite
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    Great question, very evenly matched results! Interesting.
    Government's answer used to be, "Buy British" (goods) to keep the currency here and employ workers rather than support them with benefits.
    Why is it today that the government is happy to pay foreign workers direct and let them export currency?
  • MisterMotivated
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    I voted "continued austerity" though I don't agree fully with any of the options. We definitely need to cut spending, particularly on non-essentials. We also need to do something to try to get money flowing again, but I don't think building a few new roads or railway lines is going to magically fix everything, especially if the only money that starts flowing around the economy is the extra we've borrowed from somewhere else. We need something to change people's mindsets and create confidence. I'm not suggesting people go out and spend their life savings, but it seems everyone is now clinging for dear life to every penny they have as the media is constantly bombarding us with stories of yet more companies closing resulting in job losses by the hundreds/thousands. The result is that people afraid of losing their jobs = no spending = no income for companies = more job losses = self-fulfilling prophecy.
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