Why will the debt get worse despite the cuts?
Discussion
Firstly apologies for starting this thread - but this is a specific question about the numbers, rather than policies of the spending review.
I'm an educated bloke. There's mahoosive cuts a coming. However I must admit to being a tad confused - could someone enlighten me?
On Channel 4 News last night they showed that the debt would actually increase over the next 5 years from 800-odd billion to 1.3 trillion?
http://www.telegraph.co.uk/finance/comment/jeffran...
Yours,
Confused of Tunbridge Wells
I'm an educated bloke. There's mahoosive cuts a coming. However I must admit to being a tad confused - could someone enlighten me?
On Channel 4 News last night they showed that the debt would actually increase over the next 5 years from 800-odd billion to 1.3 trillion?
http://www.telegraph.co.uk/finance/comment/jeffran...
Telegraph said:
In terms of cash flowing out of the Treasury's coffers, there is no evidence of cutting back. Total government outlay is set to go up this year, next year and every year thereafter to 2014-15.
According to estimates from the Office for Budget Responsibility, the figures will be £696 billion in 2010-11 (up from £669 billion in 2009-10), then £699 billion, £711 billion, £722 billion and £737 billion.
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Worse still, there is the false notion that Mr Osborne's robust measures to narrow the gap between what we earn and what we spend will result in our total debt going down; they definitely will not.
The United Kingdom's public sector net debt is set to rise every year between now and 2014-15, from £932 billion to nearly £1.3 trillion. At that point, official debt (not including personal borrowings) will be almost twice the government's entire annual revenues. It seems like a paradox, but while the annual deficit is coming down – from £149 billion to £37 billion – total interest charges on accumulated debt will rise over the next five years from £44 billion to £63 billion.
Eeek! We're talking big bucks: £63 billion would cover half of our entire NHS bill and represents 50 per cent more than we currently spend on defence.
Now - if the interest charges are 'only' 40 odd billion a year, how come we're not paying down the debt if overall spending is going up, but big cuts are being made? I would have presumed the spending going up would be in part to pay down some of the 'capital'.According to estimates from the Office for Budget Responsibility, the figures will be £696 billion in 2010-11 (up from £669 billion in 2009-10), then £699 billion, £711 billion, £722 billion and £737 billion.
.
.
.
Worse still, there is the false notion that Mr Osborne's robust measures to narrow the gap between what we earn and what we spend will result in our total debt going down; they definitely will not.
The United Kingdom's public sector net debt is set to rise every year between now and 2014-15, from £932 billion to nearly £1.3 trillion. At that point, official debt (not including personal borrowings) will be almost twice the government's entire annual revenues. It seems like a paradox, but while the annual deficit is coming down – from £149 billion to £37 billion – total interest charges on accumulated debt will rise over the next five years from £44 billion to £63 billion.
Eeek! We're talking big bucks: £63 billion would cover half of our entire NHS bill and represents 50 per cent more than we currently spend on defence.
Yours,
Confused of Tunbridge Wells
The total annual deficit is in the region of 150 billion pounds. The spending cuts announced today are expected to be in the region of 80 billion pounds. There will still be an overspend so our total debt will continue to increase.
The reason for not cutting everything to balance the books now is down to:
1. the economy is too fragile to withstand a 150 billion cut
2. the economy moves in cycles so as it grows tax receipts will increase and the remaining gap will close - eventually we will move into a surplus and it is at this point we will be able to start reducing the total debt.
With regard to the total public expenditure increasing - whilst most areas of public spending are being cut some areas are either ring-fenced (NHS, overseas aid) others are impossible to cut. For example, the state pension is only being increased with inflation but at the same time the number of people claiming the state pension will increase so the total cost to the public purse will increase significantly.
The reason for not cutting everything to balance the books now is down to:
1. the economy is too fragile to withstand a 150 billion cut
2. the economy moves in cycles so as it grows tax receipts will increase and the remaining gap will close - eventually we will move into a surplus and it is at this point we will be able to start reducing the total debt.
With regard to the total public expenditure increasing - whilst most areas of public spending are being cut some areas are either ring-fenced (NHS, overseas aid) others are impossible to cut. For example, the state pension is only being increased with inflation but at the same time the number of people claiming the state pension will increase so the total cost to the public purse will increase significantly.
Right - structural defecit - just wiki'd it. I had thought that was the total debt mountain (ie 800 billion) but its actually income v expenditure? Tax receipts v Govt spending?
So.. we're still spending more than we're earning, despite mahoosive cuts? Is this because it'll take a long time to lay off the 500k public sector jobs? Notice periods, redundancy payoffs etc?
So.. we're still spending more than we're earning, despite mahoosive cuts? Is this because it'll take a long time to lay off the 500k public sector jobs? Notice periods, redundancy payoffs etc?
hornetrider said:
Right - structural defecit - just wiki'd it. I had thought that was the total debt mountain (ie 800 billion) but its actually income v expenditure? Tax receipts v Govt spending?
So.. we're still spending more than we're earning, despite mahoosive cuts? Is this because it'll take a long time to lay off the 500k public sector jobs? Notice periods, redundancy payoffs etc?
Nope its because the overspend created by labour pissing away all the UKs money is so so big that if we cut the overspend entirely schools would close, police would be laid off, we would hqve no military, foreign aid would stop (so it should), those in the public sector would stop spending as they would have no wages and the private sector would stop getting paid and mass redundancies there and basically our entire economy would collapse.So.. we're still spending more than we're earning, despite mahoosive cuts? Is this because it'll take a long time to lay off the 500k public sector jobs? Notice periods, redundancy payoffs etc?
I think that is what the conservatives should do to show just how bad a state labour left the country.
Most of country seem to be confused about this.
It's only when you clearly explain what the deficit and national debt are, then that the we have a £150 billion deficit, a £800 billion national debt, and that the £50 billion in cuts only scratch the surface of the deficit, that the penny drops about how much s
t we're in 
It's only when you clearly explain what the deficit and national debt are, then that the we have a £150 billion deficit, a £800 billion national debt, and that the £50 billion in cuts only scratch the surface of the deficit, that the penny drops about how much s
t we're in Sonic said:
Most of country seem to be confused about this.
It's only when you clearly explain what the deficit and national debt are, then that the we have a £150 billion deficit, a £800 billion national debt, and that the £50 billion in cuts only scratch the surface of the deficit, that the penny drops about how much st we're in
Indeed since many on PH don't get it (and I rate PH'ers intelligence above the UK norm), then we truly are knackered.It's only when you clearly explain what the deficit and national debt are, then that the we have a £150 billion deficit, a £800 billion national debt, and that the £50 billion in cuts only scratch the surface of the deficit, that the penny drops about how much s
t we're in Reminds of the lack of understanding of the difference between tax avoidance and tax evasion.
hornetrider said:
There's mahoosive cuts a coming.
Wrong assumption.According to this year’s budget plans, public current spending will rise from £600.6 billion in 2009-10, the last Labour year, to £692.7 billion in 2014-15, the last planned year of the Coalition government in this Parliament. That’s a rise of £92.7 billion, or more than 15%: a rise of £1500 for every man,woman and child in the UK.
Total spending including capital will rise from £669.3 billion in 2009-10 to £737.5 billion, a rise of £68.2 billion. This shows that capital spending will be cut, according to the plans inherited from the last Labour government which the Coalition government has accepted.
http://www.johnredwoodsdiary.com/2010/08/12/the-cu...
Fittster said:
hornetrider said:
There's mahoosive cuts a coming.
Wrong assumption.According to this year’s budget plans, public current spending will rise from £600.6 billion in 2009-10, the last Labour year, to £692.7 billion in 2014-15, the last planned year of the Coalition government in this Parliament. That’s a rise of £92.7 billion, or more than 15%: a rise of £1500 for every man,woman and child in the UK.
Sonic said:
Fittster said:
hornetrider said:
There's mahoosive cuts a coming.
Wrong assumption.According to this year’s budget plans, public current spending will rise from £600.6 billion in 2009-10, the last Labour year, to £692.7 billion in 2014-15, the last planned year of the Coalition government in this Parliament. That’s a rise of £92.7 billion, or more than 15%: a rise of £1500 for every man,woman and child in the UK.
Digga said:
Sonic said:
Fittster said:
hornetrider said:
There's mahoosive cuts a coming.
Wrong assumption.According to this year’s budget plans, public current spending will rise from £600.6 billion in 2009-10, the last Labour year, to £692.7 billion in 2014-15, the last planned year of the Coalition government in this Parliament. That’s a rise of £92.7 billion, or more than 15%: a rise of £1500 for every man,woman and child in the UK.
How am i going to manage that when the BOE don't have a clue?August 2010 CPI projection
Sonic said:
Digga said:
Sonic said:
Fittster said:
hornetrider said:
There's mahoosive cuts a coming.
Wrong assumption.According to this year’s budget plans, public current spending will rise from £600.6 billion in 2009-10, the last Labour year, to £692.7 billion in 2014-15, the last planned year of the Coalition government in this Parliament. That’s a rise of £92.7 billion, or more than 15%: a rise of £1500 for every man,woman and child in the UK.
How am i going to manage that when the BOE don't have a clue?August 2010 CPI projection
te" springs immediately to mind.As ever with Politicians - take a look at what is not being cut.
NHS - it's clearly unaffordable. Cut it
Europe - Tony Blair made a decision to put more in, cut it back again.
Foriegn Aid - A NO BRAINER, Cut it or put it into disaster contingency.
Council, Local Government, Regions, European Parliament, Lords, Commons - WAYYYY too many levels - cut out the Regional authorities, trim the commons to 400, and the HOL to a similar number.
Benefits - Tough one this, but basically JSA/IS for six months - then NO MORE until another two years of NIC have been paid.
NHS - it's clearly unaffordable. Cut it
Europe - Tony Blair made a decision to put more in, cut it back again.
Foriegn Aid - A NO BRAINER, Cut it or put it into disaster contingency.
Council, Local Government, Regions, European Parliament, Lords, Commons - WAYYYY too many levels - cut out the Regional authorities, trim the commons to 400, and the HOL to a similar number.
Benefits - Tough one this, but basically JSA/IS for six months - then NO MORE until another two years of NIC have been paid.
BoRED S2upid said:
How does our 800 bill or so add up to other developed countries? then we will see how bad the situation really is. Germany, France, Italy etc... Forget the USA, China etc.... they are far too big to compare us to.
To compare the scale of debt from country to country the usual measure is debt as a percentage of gross domestic product.http://en.wikipedia.org/wiki/List_of_countries_by_...
1. Zimababwe 282.6%
6. Italy 115.2%
16. France 77.5%
19. Germany 72.1%
22. UK 68.1%
47. USA 52.9%
109. China 16.9%
Elroy Blue said:
ralphrj said:
1. Zimababwe 282.6%
6. Italy 115.2%
16. France 77.5%
19. Germany 72.1%
22. UK 68.1%
47. USA 52.9%
109. China 16.9%
But we can be proud. We give aid to China 6. Italy 115.2%
16. France 77.5%
19. Germany 72.1%
22. UK 68.1%
47. USA 52.9%
109. China 16.9%
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