Re: It's a Double dip : Wed Apr 25, 2012 9:49 am  

Drunk George Osborne on twitter:

"Totally baffled. We've aggressively attacked the disabled, kids, women & the North and we've still gone into recession! It makes no sense!"

Re: It's a Double dip : Wed Apr 25, 2012 9:49 am  

DaveO wrote:

You don't half write some rubbish at times ...

Oh, he never does it by halves.

[DaveO]

Re: It's a Double dip : Wed Apr 25, 2012 9:52 am  

Dally wrote:

Says the man who puts 3 full stops at the end of a sentence.

Well I suppose that is one way to admit your original post was indeed rubbish.

Re: It's a Double dip : Wed Apr 25, 2012 9:54 am  

Durham Giant wrote:

Surely even you can recognise that pay freezes, masive job cuts, and reductions in spending by the Government is going to contribute to squeezed real incomes

Yep. Which leads to less consumer spending & lower consumer confidence, which leads to lower business confidence & lower production, which leads to higher inflation & lower GDP, which leads to...
The government have created a vicious circle through virtually no infrastructure investment and excessive cuts.

Re: It's a Double dip : Wed Apr 25, 2012 9:57 am  

DaveO wrote:

You don't half write some rubbish at times. When a government stops spending it has a huge effect on the economy. Period.

It was only last week it was on the radio that we were in fact likely to avoid a double dip recession because the panic buying of fuel induced by the government had increased economic activity sufficiently to keep the growth figure positive!

I thought then I couldn't believe my ears that they needed this "false" demand in the economy to keep things positive and would no doubt be singing the news from the hills that they had avoided the double dip as a result. As the BBC article points out the extra fuel buying is not in these figures so if they were relying on this false demand in the domestic economy to keep things positive it stands to reason it there wasn't enough demand in the domestic economy without it to avoid a recession. Why is domestic economic activity so weak that it needs panic fuel buying to keep it out of recession? Because things like the construction industry are in recession (as the figures show) and they rely heavily on government contracts.

Demand will weaken further as government policy on benefit cuts come in to force this month and with more job cuts to come.

The idea public spending cuts have not contributed to these figures in a big was is ridiculous.

They may have contributed but they are not the principal reason.

People have become fixated with public spending being an economic driver. It is not. It is something that can only be done out of the wealth created from other economic activities. It can have a place in simulating construction, etc - but the government are chucking loads of money at building acadamies, etc, etc. Also, through the BoE's QE huge amounts of extra money have been put into the economy.

The real problem, as I said, is more fundamental - debt, falling real incomes, EZ, etc. Until personal debt and fear as to incomes are reduced the problems will persist (with short-term ups and downs along the way). As predicted in 2008 it would take 10 years to sort out and still believe it will (but now I would suggest that is the best outcome). As a country we need to get used to falling living standards due to competition rom the developing world. People talk about British companies not investing - the top UK listed companies do invest but not much in the UK - because returns are smaller here than on a factory in a deveolping country.

Re: It's a Double dip : Wed Apr 25, 2012 10:10 am  

Dally wrote:

Why does it show the Coalition got it wrong by cutting spending too quickly? It simply doesn't. It shows we may be in recession, but that's more likely as a result of debt, sqeezed real incomes, the Eurozone, etc, etc and probably little to do with public spending cuts.

Upto half a million people on ESA will completely lose their benefit starting from this Monday (30th April). They will literally have no money to spend on anything, essentials or otherwise. Your ignorance astounds me sometimes

Re: It's a Double dip : Wed Apr 25, 2012 10:12 am  

The government are spending sod all on new academies etc
Why do you think consumer purchasing power or confidence has fallen? It's got sod all to do with personal debt, it's got to do with inflation and real income decreases. These have happened because of excessive public spending cuts which have led to higher unemployment & lower wages ontop of higher VAT (which is just crazy). As I said its a vicious circle. Lower spending power leads to lower consumption leads to lower production leads to higher inflation & unemployment/lower wages leads to lower spending power.
The government have done nothing to alleviate that situation. Lower public spending, especially on infrastructure (the construction industry is in tatters), & higher non-progressive taxes only reduce consumer spending & confidence.
The BoE's QE isn't really working yet and won't work fully until confidence increases and businesses feel confident enough to invest. Then they can take advantage of the cheaper money that QE provides.

Re: It's a Double dip : Wed Apr 25, 2012 10:15 am  

Gideon's wondering what all the fuss is about, he quite likes double-dip

[DaveO]

Re: It's a Double dip : Wed Apr 25, 2012 10:34 am  

Dally wrote:

They may have contributed but they are not the principal reason.

People have become fixated with public spending being an economic driver. It is not. It is something that can only be done out of the wealth created from other economic activities. It can have a place in simulating construction, etc - but the government are chucking loads of money at building acadamies, etc, etc. Also, through the BoE's QE huge amounts of extra money have been put into the economy.

The real problem, as I said, is more fundamental - debt, falling real incomes, EZ, etc. Until personal debt and fear as to incomes are reduced the problems will persist (with short-term ups and downs along the way). As predicted in 2008 it would take 10 years to sort out and still believe it will (but now I would suggest that is the best outcome). As a country we need to get used to falling living standards due to competition rom the developing world. People talk about British companies not investing - the top UK listed companies do invest but not much in the UK - because returns are smaller here than on a factory in a deveolping country.

"Austerity policies are driving us towards a double-dip recession" and "politics is at the root of the problem". Krugman and Stiglitz. Economics Nobel prize winners.

What was predicted by Ed Balls was that the shallow economic recovery that was under way two years ago when he took office could not stand the level of austerity policies added to the tax increases the government has made. He has been saying this ever since he got the shadow chancellors job and it looks like he was right and he has some of the worlds most respected economists on his side. Even before today bodies like the IMF have also stepped away from austerity policies as the solution and now we know why.

However the real reason why you are wrong is that you clearly have no idea of how big the public sector is relative to our economy. It is currently over 45% of out GDP figure. Anyone who suggesting you can make big cuts to that and not affect the economy in a big way is nuts.

Some will say that is too high a percentage but that is not the debate here. You can't hack huge chunks off public spending and not expect a recession when the private sector hasn't taken up the difference when there was next to no growth in the first place.

Re: It's a Double dip : Wed Apr 25, 2012 10:35 am  

Graph showing UK growth since The Comprehensive Spending Review

Graph showing UK growth since The Comprehensive Spending Review