Economic impact of a Labour win

princeofpounds

Until the annual deficit is zero the national debt will obviously increase, as each annual deficit is added to it

Important point. But it's also important to add that the ratio of the national debt to GDP can decline even if there is a deficit, as long as growth exceeds borrowing sufficiently.

On that metric, the national debt is now - almost - under control at admittedly high levels (let's not worry about unrecorded liabilities or the impact of interest rates on debt service costs!).

http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp

Moby

Gangaweed wrote: »

What do folks think the economic impact of a Labour win?

Personally I think it would be quite catastrophic.

- Freeze in energy prices leads to zero investment in new power and higher prices in the medium term
- Bungling of the mansion tax will lead to property crash
- More deaths through incompetence and cover-ups in the NHS
- More spending leading to loss of confidence and a quicker rise of interest rates. In a worst case scenario, a full blown gilt strike.
- War on business leading to businesses relocating abroad
- Miliband to be the least popular PM EVER.

I think we can safely say if you think about the 'average wage' and how it is completely failing to keep pace with the cost of living that millions of people are already quietly suffering. As for the NHS scandals happen under all Governments. The question is who cares about it more!

Cyberman60

Thrugelmir wrote: »

August's figures suggest the the deficit reduction reduction programme is stalling. Stage one was the easy part.

I would say that Labour making an annual deficit of 160 Billion in 2010 was the easy part !! :eek: Getting rid of it is hugely difficult but the coalition did state this when coming to power. Yes, there will be good years and bad years and more tough decisions to be made on welfare spending. Stopping child benefit after the first two kids would be a major help.

Cyberman60

princeofpounds wrote: »

Important point. But it's also important to add that the ratio of the national debt to GDP can decline even if there is a deficit, as long as growth exceeds borrowing sufficiently.

On that metric, the national debt is now - almost - under control at admittedly high levels (let's not worry about unrecorded liabilities or the impact of interest rates on debt service costs!).

http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp

The National Debt is horrendous and costing around 50-60 Billion pounds a year in interest to finance it, double what is was only five years ago, and rising dramatically. That money would obviously be better spent elsewhere such as the NHS rather than financing debt. Therefore, curing the annual deficit has to be the number one priority, followed by running surpluses to clear a huge portion of that debt in later years. Only a Tory government is capable of that.

N1AK

Gangaweed wrote: »

What do folks think the economic impact of a Labour win?

- More deaths through incompetence and cover-ups in the NHS

Do you really buy into childish hyperbole like this, or think anyone else does? No better than Labour fanboys who'd claim another Conservative government will lead to the NHS closing and millions dying.

I'm economically conservative but as the conservatives seem to be selling themselves as UKIP-lite for pensioners these days I don't relish the idea of them winning.

antrobus

princeofpounds wrote: »

Important point. But it's also important to add that the ratio of the national debt to GDP can decline even if there is a deficit, as long as growth exceeds borrowing sufficiently.

On that metric, the national debt is now - almost - under control at admittedly high levels (let's not worry about unrecorded liabilities or the impact of interest rates on debt service costs!).

http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp

I wouldn't say that it was quite 'under control'. Not just yet anyway. The deficit was £107.7 billion last year, or 6.6% of GDP. This year it is supposed to come down again to £95.5 billion. All of these figures are way too big to be 'sustainable'. Granted, the current lot a have plans to get it all sorted out over the next few years, but at best, we're only half way there at the moment.

http://www.theguardian.com/business/2014/apr/23/uk-deficit-lowest-financial-crisis-osborne-budget

Anyway, back to the point. All governments are prisoners of circumstance. The numbers will make the decisions.

N1AK

Cyberman60 wrote: »

Stopping child benefit after the first two kids would be a major help.

Getting rid of it entirely would be a major help. Getting rid of it for 3rd+ children would be a far smaller help aimed at punishing those whose decisions differ from a societal norm.

Child benefit was originally created to help large families, not children in general. Why it is right for someone who has children they can't afford to get benefit for the first 2, but for someone who could then hits hard times not to get support for the 3rd is something I've never heard rationally explained.

N1AK

princeofpounds wrote: »

On that metric, the national debt is now - almost - under control at admittedly high levels (let's not worry about unrecorded liabilities or the impact of interest rates on debt service costs!).

This is an important point for people to remember. If you reach a balanced budget with 3% economic growth then the debt is decreasing is relative size by 3% a year. Consider it like borrowing £1,000 in 1980 and paying the interest off so you still owe £1,000 now then although you owe the same amount the debt is relatively far smaller when put next to your income etc.

princeofpounds

Therefore, curing the annual deficit has to be the number one priority, followed by running surpluses to clear a huge portion of that debt in later years. Only a Tory government is capable of that.

Agree, although I would say they are the only government willing to do it, rather than capable.

I wouldn't say that it was quite 'under control'. Not just yet anyway. The deficit was £107.7 billion last year, or 6.6% of GDP. This year it is supposed to come down again to £95.5 billion. All of these figures are way too big to be 'sustainable'

That's why I said 'almost'. And included caveats about the hidden debts. This year the deficit is likely to be about 5.8% of GDP, which is still way too high, yes, but at least we have some growth now too, so the debt burden is not spiralling in the way it once was.

chewmylegoff

N1AK wrote: »

Getting rid of it entirely would be a major help. Getting rid of it for 3rd+ children would be a far smaller help aimed at punishing those whose decisions differ from a societal norm.

Child benefit was originally created to help large families, not children in general. Why it is right for someone who has children they can't afford to get benefit for the first 2, but for someone who could then hits hard times not to get support for the 3rd is something I've never heard rationally explained.

I'd personally be happy to see child benefit scrapped all together but I can't imagine the fiddling around the edges planned by the major parties will have any impact on the deficit. Labour's promise about child benefit - whatever it was, I've forgotten now, cap it for 2 years or something - was presumably identified as the least restrictive way of showing how responsible Labour would be in government. The saving it would create seems irrelevant really. Changes to child benefit appear to have become a symbolic political football.