"Farewell to the mother of all depressions" - BBC article

[AdvocatusD]

http://www.bbc.co.uk/news/business-28480145

Apparently. I'm not convinced. I think we've kicked the can down the road but this is likely to happen again. The underlying issue is still there? When's all that debt going to be paid? Or is this simply the new normal?

[Puggit]

AdvocatusD said:

http://www.bbc.co.uk/news/business-28480145

Apparently. I'm not convinced. I think we've kicked the can down the road but this is likely to happen again. The underlying issue is still there? When's all that debt going to be paid? Or is this simply the new normal?

Absolutely, the debt is still there. However we must cheer the fact the UK economy is growing faster than any other major economy, and that we aren't in the Euro.

We must also cheer the fact that we have avoided Ed Balls and Labour for the past 4 years although a better chancellor than Osborne would have simplified the tax code and have us far above the 0.8% growth rate.

[ralphrj]

AdvocatusD said:

When's all that debt going to be paid? Or is this simply the new normal?

Unlikely that the national debt will ever be repaid - just the scale of it will diminish as GDP increases.

[Camoradi]

ralphrj said:

Unlikely that the national debt will ever be repaid - just the scale of it will diminish as GDP increases.

GDP growth circa 3% per annum

Growth in National Debt circa 10% per annum at present

oops!

[Otispunkmeyer]

Do we actually want the debt to be fully repaid?

Does having this debt not sort of keep various things ticking over with repayments flowing money around the place?

[Eric Mc]

There will ALLWAYS be another recession further down the road.

[ralphrj]

Camoradi said:

ralphrj said:

Unlikely that the national debt will ever be repaid - just the scale of it will diminish as GDP increases.

GDP growth circa 3% per annum

Growth in National Debt circa 10% per annum at present

oops!

But GDP is a bigger figure than National Debt. Growth in National Debt as a percentage of GDP would be more relevant.


To illustrate my earlier point:

Assume that at year X GDP is £1,500bn, national debt is £1,000bn, GDP growth is 3% and you are going to borrow an additional £100bn in year X+1, £80bn in year X+2, £50bn in year X+3, £30bn in year X+4 and then keep to a balanced budget.

National debt as a percentage of GDP in year X is 67%.

This will rise to a peak of 75% by years X+3 and X+4.

Then it will fall each year until by year X+10 national debt as a percentage of GDP is 63%.

If you can keep it up by year X+20 the figure will be 47% and by X+30 it will be 35%.



Those figures are illustrative but not a million miles away from the real UK ones.


In summary, it will take 30 years of constant GDP growth of 3% and restricted public spending to gets the public finances back to the position they were in before the recession.

[Fotic]

Eric Mc said:

There will ALLWAYS(sic) be another recession further down the road.

Cheerful post.

[Puggit]

Eric Mc said:

There will ALLWAYS be another recession further down the road.

Not if we vote Labour, they ended boom and bust

[Guybrush]

Camoradi said:

ralphrj said:

Unlikely that the national debt will ever be repaid - just the scale of it will diminish as GDP increases.

GDP growth circa 3% per annum

Growth in National Debt circa 10% per annum at present

oops!

That's not bad considering Labour's open door immigration policy (denied at the time) which of course lowers GDP and Labour's spend like no tomorrow scorched earth policy.

[loafer123]

Guybrush said:

Camoradi said:

ralphrj said:

Unlikely that the national debt will ever be repaid - just the scale of it will diminish as GDP increases.

GDP growth circa 3% per annum

Growth in National Debt circa 10% per annum at present

oops!

That's not bad considering Labour's open door immigration policy (denied at the time) which of course lowers GDP and Labour's spend like no tomorrow scorched earth policy.

I certainly agree with your criticism of Labour overspending, which is taking years to reverse, but why does immigration reduce GDP?

[Dr Jekyll]

AdvocatusD said:

http://www.bbc.co.uk/news/business-28480145

Apparently. I'm not convinced. I think we've kicked the can down the road but this is likely to happen again. The underlying issue is still there? When's all that debt going to be paid? Or is this simply the new normal?

What would you say is the underlying problem?

[anonymous-user]

loafer123 said:

I certainly agree with your criticism of Labour overspending, which is taking years to reverse, but why does immigration reduce GDP?

It doesn't but unskilled/uneducated/poor immigration certainly reduces gdp per capita which is what really matters

[loafer123]

fblm said:

loafer123 said:

I certainly agree with your criticism of Labour overspending, which is taking years to reverse, but why does immigration reduce GDP?

It doesn't but unskilled/uneducated/poor immigration certainly reduces gdp per capita which is what really matters

True, especially in the short term, but we don't have the same scale of ageing population problem that many other developed countries have, so are in a better position to sustain our economy in the long term.

[anonymous-user]

loafer123 said:

fblm said:

loafer123 said:

I certainly agree with your criticism of Labour overspending, which is taking years to reverse, but why does immigration reduce GDP?

It doesn't but unskilled/uneducated/poor immigration certainly reduces gdp per capita which is what really matters

True, especially in the short term, but we don't have the same scale of ageing population problem that many other developed countries have, so are in a better position to sustain our economy in the long term.

That is true but the demographics turn against you eventually when you run out of space!

[loafer123]

fblm said:

loafer123 said:

fblm said:

loafer123 said:

I certainly agree with your criticism of Labour overspending, which is taking years to reverse, but why does immigration reduce GDP?

It doesn't but unskilled/uneducated/poor immigration certainly reduces gdp per capita which is what really matters

True, especially in the short term, but we don't have the same scale of ageing population problem that many other developed countries have, so are in a better position to sustain our economy in the long term.

That is true but the demographics turn against you eventually when you run out of space!

I agree and support controlled immigration for that reason.

For example, I read in the paper that a material proportion of marriages are sham - I think that residency rights should only be gained after the husband and wife have lived together for 5 years before and/or after the marriage.

[Thankyou4calling]

Over the 6 years inflation (compounded) would be circa 20%.

Does that mean we are producing the same as six years ago and are actually 20% worse off in real terms?

[anonymous-user]

Thankyou4calling said:

Over the 6 years inflation (compounded) would be circa 20%.

Does that mean we are producing the same as six years ago and are actually 20% worse off in real terms?

Reported cpi/rpi numbers are already 'real', ie inflation adjusted

Over the last 5 years UK population has grown something like 5% though so GDP pre capita is still down.

[croyde]

Can someone explain to me why this 'past' recession is worse than the one that hit the US in the 1930's. I certainly have not seen the scenes of poverty and misery that pictures of that terrible time show.

I realise that poverty in the UK these days is not being able to buy a Plasma TV or an X-Box.

[Dr Jekyll]

I think the extent of a recession of measured by how much poorer we get compared with the peak, not by how poor we get in absolute terms.