How will the economy be affected by SNP MPs; will it be for richer or for poorer and

Shakethedisease

kabayiri wrote: »

That £7.6bn deficit; it's *every* year Scotland would need it unless the economy grows significantly or swingeing cuts are made.

This figure is on top of the £7bn+ subsidy enjoyed by Scotland as a result of a completely out of date formula nobody likes.

This is where Hamish gets the £14bn+ shortfall from, by a clever process called "addition of 2 numbers".

If Scotland gains FFA and a 14bn deficit.. What does that leave rUK with in terms of a remaining deficit once you minus the 14 billion ?

I'd be more inclined to worry about Osborne's latest wheeze myself.

Osborne plan has no basis in economics

The chancellor’s plans, announced in his Mansion House speech, for “permanent budget surpluses” are nothing more than an attempt to outmanoeuvre his opponents (Report, 10 June). They have no basis in economics. Osborne’s proposals are not fit for the complexity of a modern 21st-century economy and, as such, they risk a liquidity crisis that could also trigger banking problems, a fall in GDP, a crash, or all three.

http://www.theguardian.com/politics/2015/jun/12/osborne-plan-has-no-basis-in-economics

77 of the best-known academic economists, including French economist Thomas Piketty and Cambridge professor Ha-Joon Chang, said the chancellor was turning a blind eye to the complexities of a 21st-century economy that demanded governments remain flexible and responsive to changing global events...
...The academics said Osborne was shifting the burden of debt from the government to ordinary households because “surpluses and debts must arithmetically balance out in monetary terms”..

The OBR has predicted a dramatic increase in household debt over the next five years to levels last seen before the financial crisis. In the wake of the Lehman’s crash, borrowing declined from 169% of GDP to about 135% of GDP before rising again. The OBR says it will breach the ceiling set in 2008, rising to more than 173%, by 2019.

http://www.theguardian.com/business/2015/jun/12/academics-attack-george-osborne-budget-surplus-proposal

14bn ( not that am agreeing but just for talking's sake )..might seem like a walk in the park. Mabye we're best off not getting mixed up with the above sort of economic policy and getting out before it's too late.

Thrugelmir

Shakethedisease wrote: »

I'd be more inclined to worry about Osborne's latest wheeze myself.

At least by setting such an objective. There's a chance of hitting break even.

I'd be more concerned by a policy of a reduction in the budget deficit at a slower pace. As the likelihood that interest rates are going to cause the cost of Government borrowing to rise in the years ahead. This will simply compound the problem. Post war Governments have relied on inflation to bail them out. With a shifting of global financial power away from the West to the East. Such a policy cannot be relied on in the medium term.

Shakethedisease

Thrugelmir wrote: »

At least by setting such an objective. There's a chance of hitting break even.

I'd be more concerned by a policy of a reduction in the budget deficit at a slower pace. As the likelihood that interest rates are going to cause the cost of Government borrowing to rise in the years ahead. This will simply compound the problem. Post war Governments have relied on inflation to bail them out. With a shifting of global financial power away from the West to the East. Such a policy cannot be relied on in the medium term.

Osborne is guilty of doing just that during the last parliament. he had to ease off and reduce the deficit at a much slower pace. That's why he missed all his much trumpeted 2010 targets. He was choking off growth.

But you're saying 'it'll be different this time' ? And that while a deficit for Scotland is an insurmountable barrier to FFA or further powers to Holyrood.. But that you're 'willing to take the chance' that Osborne's policies going forward.. despite the fact they crashed and burned a few years ago... of risking " a liquidity crisis that could also trigger banking problems, a fall in GDP, a crash, or all three. "

Well then, if true. Then you should have no problems whatsoever in completely understanding that SNP voters, are willing to take some risks too.. in the hope of better economic outcomes than exist at the present time. Just different ones, that's all.

CLAPTON

Debts and surpluses (saving) do indeed need to balance out (i.e. be equal and opposite),
just like imports and exports must mathematically balance too.

Of course we are talking about a world economy and not the UKs or Scotland's.

So does it matter if an independent Scotland had large foreign debts or a large trade imbalance, content in the knowledge that (e.g.) Germany or Norway had large savings (surplus) and a trade surplus?

An interesting question, although it can, of course, be reduced to the juxtaposition of the evil English Tories and the virtuous Scots.

elantan

kabayiri wrote: »

That £7.6bn deficit; it's *every* year Scotland would need it unless the economy grows significantly or swingeing cuts are made.

This figure is on top of the £7bn+ subsidy enjoyed by Scotland as a result of a completely out of date formula nobody likes.

This is where Hamish gets the £14bn+ shortfall from, by a clever process called "addition of 2 numbers".

I see what you have done there, you have assumed that Scotland would run it's economy like WM ... Swinney will sort it oot dinnae worry

CLAPTON

elantan wrote: »

I see what you have done there, you have assumed that Scotland would run it's economy like WM ... Swinney will sort it oot dinnae worry

no, of course the SNP won't run the economy like Westminster; they will borrow borrow, spend spend until there is no tomorrow

Thrugelmir

Shakethedisease wrote: »

Osborne is guilty of doing just that during the last parliament. he had to ease off and reduce the deficit at a much slower pace. That's why he missed all his much trumpeted 2010 targets. He was choking off growth.

But you're saying 'it'll be different this time' ? And that while a deficit for Scotland is an insurmountable barrier to FFA or further powers to Holyrood.. But that you're 'willing to take the chance' that Osborne's policies going forward.. despite the fact they crashed and burned a few years ago... of risking " a liquidity crisis that could also trigger banking problems, a fall in GDP, a crash, or all three. "

Well then, if true. Then you should have no problems whatsoever in completely understanding that SNP voters, are willing to take some risks too.. in the hope of better economic outcomes than exist at the present time. Just different ones, that's all.

What was Osborne doing to choke off growth? Governments of the day can only pull levers and see what happens. So not taking a chance. Policies will be adapted to changing circumstances. No different to the way business works.

If you think that the past 5 years was austere. Then see what the next 5 years brings. As it's only going to get tougher.

GDP is of little concern outside of politics as means little. Banking is still undergoing fundamental change. The likelihood of a liquidity crisis in the UK banks has well passed, as that was the fundamental purpose behind QE. The BOE role is maintain stability in the banking system.

kabayiri

elantan wrote: »

I see what you have done there, you have assumed that Scotland would run it's economy like WM ... Swinney will sort it oot dinnae worry

It's just a starting position, the £14bn you need to find.

I am not one who says this is insurmountable. I do think it will mean some pretty stark choices in the short/mid term.

We could spend all day arguing whether you need to cut £5bn or £10bn from the annual budget to be a viable independent entity. It's not going to be something smallish like £500m though.

The only way to know is to test the water. Try and operate on say £3bn less in 2016. See if the voters like the day to day impact this brings.

Long term, I can't see Westminster putting up with a £7bn subsidy when the rest of the UK is seeing difficult cuts. You might as well try and strike out on your own.

kabayiri

Shakethedisease wrote: »

Osborne is guilty of doing just that during the last parliament. he had to ease off and reduce the deficit at a much slower pace. That's why he missed all his much trumpeted 2010 targets. He was choking off growth.
...

I don't think he expected a relatively moribund Eurozone during the last parliamentary term.

This has just as much impact on growth.

You seem to think it so easy this prediction business.

How come the SNP didn't anticipate the slump in oil prices in the referendum discussions? What happened to that prediction?

Thrugelmir

kabayiri wrote: »

How come the SNP didn't anticipate the slump in oil prices in the referendum discussions? What happened to that prediction?

There was no plan B. Fanatics have a total disregard for such trivial matters.