George Osborne warns £25bn more cuts needed

grizzly1911

Perelandra wrote: »

Why not go the whole hog, and say that all benefits are merely loans?

Upon death, the government gets first dibs on your estate, to the tune of the value of benefits you've taken over your lifetime, on the basis that you didn't "need" those benefits to live.

If there is insufficient in the estate to repay back the benefits-loan, then clearly do did "need" an element of state support during your life?

Seems a good enough reason to shed your estate before you pass away.

MFW_ASAP

Thrugelmir wrote: »

Selling Government debt is already becoming more difficult.

This is interesting, do you have a link to any articles or info on this?

I cashed out of Bonds and Gilts a while back because I felt there was a bubble. If the government is having trouble selling debt, then this will have an impact on that decision.

Graham_Devon

Kennyboy66 wrote: »

Are you sure about this ?

This report seems to indicate that there are 94k claimants getting pension credit & 136k claimants below the pension credit qualifying age.

All the stats came from here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220238/support-for-mortgage-interest.pdf

Your stats are much more recent, so thanks for that. However, it's not just those on pension credit who avoid the 2 year time limit. Those on IS do too.

jamesd

Thrugelmir wrote: »

Selling Government debt is already becoming more difficult.

"The DMO saw strong demand for Treasury bills from an increased number of investors", 2012-13 UK Debt Management Office Annual report, page 8, 16 July 2013.

"The DMO performed strongly in 2012-13 in carrying out its cash management function. All related objectives were met, despite challenging money market conditions. The DMO also saw on-going strong demand for Treasury bills from an increasingly diverse set of investors, at the weekly tenders and also via bilateral sales. As with gilts, Treasury bills continued to attract significant overseas investor interest, with 43% of the market being held by such investors at the end of 2012-13.", DMO Annual Review, 2012-13, August 2013, page 2.

"Gilt sales planned during the year 2012-13 [budget] 164.8, Outturn [actual sales] £165.1. Planned during 2013-14 £155.7 billion", DMO Quarterly Review, July-September 2013, published November 2013.

The chief executive has recently been quoted as wondering whether it might become harder in the future due to the prospect that interest rates will eventually rise: "If however, you're buying debt and you think rates will rise even further in the next weeks or months afterwards, you might be a little bit less eager to put your money on the table and purchase our debt. So I think the investor base might at times be a little more reticent than perhaps it has ... However, I do believe that the market and the efficiency of the market will help us in that task.".

NS&I could have its targets increased beyond the little bit above break even that it currently has, an increase on last year where the target was just break even, implying that no, it wasn't hard to raise money.

Perhaps you have some source other than the DMO and its chief executive for your claim that it's become harder to sell UK debt?

Thrugelmir

jamesd wrote: »

Perhaps you have some source other than the DMO and its chief executive for your claim that it's become harder to sell UK debt?

Harder as in a connatation, i.e. bid to cover ratio on long dated issues.

The UK's debt is going to get sizably bigger yet.

Who are the buyers going to be? If the rates on offer aren't attractive.

CLAPTON

Thrugelmir wrote: »

Harder as in a connatation, i.e. bid to cover ratio on long dated issues.

The UK's debt is going to get sizably bigger yet.

Who are the buyers going to be? If the rates on offer aren't attractive.

there are no shortage of buyers of UK government debt : in fact the government doesn't have a single index linked NS&I product available

what evidence do you have of the opposite i.e. as actual failure to raise money

jamesd

Thrugelmir, the DMO is raising each year about four times what was raised before 2008. That's hardly a sign of there being trouble selling the stuff.

The UK's debt is going to get higher but with the deficit falling and projections that government spending, including debt servicing costs, is going to end up lower than at any time since the post WW2 period when the NHS had been introduced, it's hardly looking like a period of difficulty.

The worst might be temporary reluctance to buy out of concern that prices might fall due to future higher interest rates, which would be solved by selling at higher interest rates and lower prices, anticipating the future interest rate increases. That debt will cost us more than the dirt cheap interest rates being paid today but it's still going to be easy enough with such low public sector spending on the cards.

There was a failure to sell all gilts, in March 2009, one of the worst selling periods around, when 1.63 billion instead of the desired 1.75 billion was sold, with the end of the financial year and comments by Mervyn King blamed. That was for forty year maturity gilts, 2049 version, some of the longest around, and most sensitive to possible future interest rates and inflation. The previous failure was in 2002. More recently, in November 2011, Germany failed to sell some ten year bonds.

We and the DMO are in very good shape compared to the world as a whole and the borrowing we're doing. Could be better, of course, but it's not bad or anywhere close to bad.

gazter

Generali wrote: »

It doesn't work like that.

Unemployment falls so spending on benefits fall.

and economic growth makes a gigantic difference to the figures and future projections.