Why Britain's debt is on a dangerous trajectory

StevieJ

A look at a recent OBR report on govt debt, looks like we need Brexit to be a major success to help us out of this hole. Some would say unlikely, especially as one of the great drivers for Brexit was a reduction in immigration, if carried out could be major drag on government finances.



http://www.economicsuk.com/blog/002271.html#more

buglawton

So said David Smith the Times' Remainer-in-Chief

Meanwhile:
UK treasury July surplus at 18 year high
https://forums.moneysavingexpert.com/discussion/5885035/uk-governments-july-surplus-at-18-year-high
Source: ONS

Graham_Devon

StevieJ wrote: »

A look at a recent OBR report on govt debt, looks like we need Brexit to be a major success to help us out of this hole. Some would say unlikely, especially as one of the great drivers for Brexit was a reduction in immigration, if carried out could be major drag on government finances.



http://www.economicsuk.com/blog/002271.html#more

Let's be honest, if this weren't turned into a brexit remain thing, if I had posted this, I would be seen as doom mongering!

Some of us have been talking about this for ages - and before the brexit vote....!

mayonnaise

Graham_Devon wrote: »

Let's be honest, if this weren't turned into a brexit remain thing, if I had posted this, I would be seen as doom mongering!

Some of us have been talking about this for ages - and before the brexit vote....!

Erm...ok.

The article is about the negative impact of Brexit on public finances and the negative impact on the country's demographics due to lower immigration resulting in a depleted tax base combined with an aging population.
But if you prophesied all this, way before the brexit vote, than all I can say is "Well done, Graham!" :T

HAMISH_MCTAVISH

mayonnaise wrote: »

Erm...ok.

The article is about the negative impact of Brexit on public finances and the negative impact on the country's demographics due to lower immigration resulting in a depleted tax base combined with an aging population.
But if you prophesied all this, way before the brexit vote, than all I can say is "Well done, Graham!" :T

FWIW I don't recall Graham posting about this issue back then.

I do recall someone else did though... :whistle:

HAMISH_MCTAVISH wrote: »

Our rapidly ageing population, combined with decades of the birth rate being below replacement level, has resulted in a crisis situation where there simply are not enough young people in the UK and far too many old people.

Without massive immigration over the last couple of decades, we'd already be in real trouble economically.

Here is the ratio of working age people to retirement age people and how it has changed, and will change further without immigration.....

1950- 5.58 workers to support every pensioner

1980- 3.74 workers to support every pensioner

2010- 3.59 workers to support every pensioner

---

and without significant immigration, it would fall to around 2 workers to support each pensioner by 2050.

Obviously, the costs borne by every worker increase significantly the fewer of them there are per pensioner, which has direct and significant implications on the amount of tax and NI paid by working age people.

But the negative impact on people's personal finances is only the beginning... Just wait until you see how bad the national debt gets with lower immigration.

The OBR has forecast the outcomes of three different levels of migration to the national debt over the next 50 years.

The central projection they have used, of 140,000 net migrants, reflects this governments stated aim to reduce immigration from the 250,000+ seen during most of the last decade yet still shows net debt at around 100% of GDP 50 years on.

The zero net migration options shows UK debt shooting off the charts and nearly doubling over the same timeframe.

But the higher migration scenario, which is actually not high at all but rather what we have been used to in recent times at around 250K per year, shows we could radically reduce the national debt to just 40% of GDP over the same timeframe.

Good to see it's finally being picked up by mainstream economists in The Times...

Nearly 4 years later.

Nasqueron

buglawton wrote: »

So said David Smith the Times' Remainer-in-Chief

Meanwhile:
UK treasury July surplus at 18 year high
https://forums.moneysavingexpert.com/discussion/5885035/uk-governments-july-surplus-at-18-year-high
Source: ONS

July is usually a surplus because it's when the treasury gets loads of tax from self assessment people. This sum does not somehow show Brexit will work (or not work for that matter). Brexit has not happened yet, we are still in the common market and can trade tariff free. A no deal Brexit under WTO tariffs will be terrible (something even the department for leaving the EU, while under arch leaver David Davis, admitted in their forecasts)

CETA (EU/Canada free trade deal) took 7 years to organise and that included 2 years of ratification inside the EU 28, even then there are still some tariffs and it will be 7 more years before industrial products are fully tariff free. Moreover, there is no passport agreement for Canadian firms for finance, something that will cause major issues for UK finance firms (hence why the hypocrite Rees Mogg's investment firm Somerset Capital now operates in Dublin as well to remain inside the EU he insists we are better off out of!). The UK services sector would also not have full access to the EU under a CETA still agreement.

The EU / Japan deal still has tariffs and was started around 2013 but wasn't agreed until last month. The EU / South Korea deal was started around 2007 but wasn't fully effective under December 2015

buglawton

Nasqueron wrote: »

July is usually a surplus because it's when the treasury gets loads of tax from self assessment people.

That's why the original article carefully stated:
"the biggest surplus for July in 18 years"

buglawton

HAMISH_MCTAVISH wrote: »

FWIW I don't recall Graham posting about this issue back then.

I do recall someone else did though... :whistle:

Good to see it's finally being picked up by mainstream economists in The Times...

Nearly 4 years later.

To quote from your own earlier postOriginally Posted by HAMISH_MCTAVISH
"But the higher migration scenario, which is actually not high at all but rather what we have been used to in recent times at around 250K per year, shows we could radically reduce the national debt to just 40% of GDP over the same timeframe."

Are we supposed to believe that adding a million imported people to the population every 4 years would take us on the road to zero national debt and that's a good idea?

If so, all I can say is, how about we earn our way out of it instead, like other countries are expected to?

Thrugelmir

mayonnaise wrote: »

But if you prophesied all this, way before the brexit vote, than all I can say is "Well done, Graham!" :T

Erm...ok.

It certainly has been a topic of conversation on this board for a long time. Austerity commence in 2010..........

Graham_Devon

mayonnaise wrote: »

Erm...ok.

The article is about the negative impact of Brexit on public finances and the negative impact on the country's demographics due to lower immigration resulting in a depleted tax base combined with an aging population.
But if you prophesied all this, way before the brexit vote, than all I can say is "Well done, Graham!" :T

It's actually about the trajectory of british debt.

That didn't start with Brexit. And the article goes way back further than that for the reasons as to where we are now.

As I say, many of us have been talking about these issues for a while (take a look at the Greece thread for instance, where these exact issues are raised). Only we got told we were being negative, but the same people now using it for negative spin against brexit.

Search my posts and you will find lots of posts from me commenting on the size of the UK debt. This isn't a new thing due to brexit.

mayonnaise

Graham_Devon wrote: »

Search my posts and you will find lots of posts from me commenting on the size of the UK debt. This isn't a new thing due to brexit.

It's not a new thing due to brexit.
Much exacerbated due to brexit though.
As per the article.