The end of austerity?

michaels

http://www.bbc.co.uk/news/business-37725544

Public borrowing is now increasing again year on year.

Othodoxy was that a deficit to GDP ratio of more than 3% was danger territory but now it looks like we will not go below 4.5% this cycle.

To me this is more the cause of sterling weakness than the euro fallout. Don't forget debt to GDP is now close to 90% - how far away are we from Greece when they had their first bailout?!

spadoosh

Greece where at about 130%

ETA. Italy, Spain, Portugal and France are in worse situations than the UK but anyone of those needing a bailout would be close to tipping the EU over the edge (including the UK)

michaels

spadoosh wrote: »

Greece where at about 130%

ETA. Italy, Spain, Portugal and France are in worse situations than the UK but anyone of those needing a bailout would be close to tipping the EU over the edge (including the UK)

Worse in terms of debt but I suspect not with the same deficit so no longer accumulating more problem....

kabayiri

I see Hammond continues the tradition of going on about making progress by referring back to 2010.

Any idiot knows that the easiest savings to make are the first savings.

Now it will come down to central and local government making harsh choices which will create obvious losers.

That's a problem when losers have memories and an ability to vote.

spadoosh

michaels wrote: »

Worse in terms of debt but I suspect not with the same deficit so no longer accumulating more problem....

Most EU countries are running a budget deficit, at least the big ones, i think germany are tracking pretty close to 0% though. A couple of percent difference maybe between Uk and other EU countries.

mayonnaise

Does this mean we'll need an emergency budget?

Filo25

Realistically I don't think Osborne was ever got to hit his targets even pre-Brexit, the politically tougher cuts still lay ahead of him, in many ways losing his job and the Brexit vote is not a bad thing for him politically, at least it helps cover up that unpleasant truth.

The fiscal outlook has undoubtedly deteriorated recently though, we have the prospect of a Hard Brexit on the horizon, devaluation induced inflationary pressures, and a government that seems to be pushing for higher interest rates, which if it happens is going to leave Fiscal policy with more of the weight to carry in terms of supporting the economy.

Not entirely a shock that bond yields have been rising, albeit still at very low levels.

I will be very interested to see what is in the Autumn Statement in any case.

michaels

Filo25 wrote: »

Realistically I don't think Osborne was ever got to hit his targets even pre-Brexit, the politically tougher cuts still lay ahead of him, in many ways losing his job and the Brexit vote is not a bad thing for him politically, at least it helps cover up that unpleasant truth.

The fiscal outlook has undoubtedly deteriorated recently though, we have the prospect of a Hard Brexit on the horizon, devaluation induced inflationary pressures, and a government that seems to be pushing for higher interest rates, which if it happens is going to leave Fiscal policy with more of the weight to carry in terms of supporting the economy.

Not entirely a shock that bond yields have been rising, albeit still at very low levels.

I will be very interested to see what is in the Autumn Statement in any case.

France and Croatia are the only 2 countries forecast to be over 3% deficit this year and next but what matters for debt is obviously the difference between the deficit and growth so deficit of 3.5% and growth of 2% adds approx 1.5% to debt, deficit of 5% and growth of 2% adds a much less comfortable 3% to debt to gdp ratio.

DiggerUK

michaels wrote: »

...........Public borrowing is now increasing again year on year............Don't forget debt to GDP is now close to 90% - how far away are we from Greece when they had their first bailout?!

The gross national debt has always risen over time. Couple of minor dips, but ever upwards.
The ratio to GDP is of no real importance. Just like personal debts, so long as they are serviceable, everything carries on as normal.
Greece, regarded by many as a basket case, is a cool 100% below Japan's 230% of GDP.

Debts only become problematic when liquidity karma turns to solvency drama..._

http://www.ukpublicspending.co.uk/uk_debt
http://www.tradingeconomics.com/japan/government-debt-to-gdp

stator

Freezing/cutting the state pension (but not the means tested pension credit) would solve a lot of problems very quickly.
It's a shame it's the Tories in government who aren't willing to do what needs to be done. Instead more young/poor/disabled people will be victimised/made homeless to help subsidise massive benefits for the lazy old generations who all retired at 60 and will live for another 40 years at our expense.

Tromking

kabayiri wrote: »

I see Hammond continues the tradition of going on about making progress by referring back to 2010.

Any idiot knows that the easiest savings to make are the first savings.

Now it will come down to central and local government making harsh choices which will create obvious losers.

That's a problem when losers have memories and an ability to vote.

Its a perfect storm for the Government unfortunately.
Trying and failing to cut benefits with a wafer thin majority and being idealogically opposed to raising personal taxes means that public services have had to bear the brunt of austerity
Factor in some government departments being excused any form of rationalisation and you get a situation where we now have a third world prison system and a deficit that refuses to budge at any great speed.
The autumn statement will be very interesting.