Lets work together...!
Discussion
I've been thinking that I'd like to understand the economic trauma we're in a bit better. I'm pretty up to speed on the why's and how's of our current situation. What I can't quite grasp is how we're going to pull out of this in one or two years as the Guvment tell us we will. So how about a bit of joint reasoning here?
The way I see it and according to our friends in Westminster we have 'over ten years of unprecedented growth'. Okay so how does that translate to numbers? Well Over the last ten years the UK economy as a whole has performed as follows:
Now if I'm reading this right the bars are snapshots of the quarterly growth and the heavy blue line is the cumulative growth over the 4 qtrs. So 3%PA if we're lucky then!
BBC chart
The BBC chart is interesting because it shows that in previous recessions GDP shrinkage was followed quite quickly by an upturn. This seems to be what the government are predicting again.
So on simplistic terms from my own financial management I know that any growth in earnings is offset by any debt I run up when things aren't so good. So how's our debt?
As we heard last week it's estimated by Gordo and fiends to top out at nearly 60% of GDP or £1 trillion. That's up from the government target of 40% (gearing right?) and looking likely to overtake the levels we saw in the 70's.
So if we want to get back to 40% which surely we do, by my reckoning even if we make an optimistic average of 3% GDP growth which is presumably adjusted for inflation it'll take us 6 or 7 years before we make actual progress against that debt. That's assuming that GDP growth directly ties to tax take and debt repayment which it doesn't and given that the tax take is going to nose dive over the next few years it's not looking good is it?
So what am I missing? No doubt I've looked at this far too simplistically and if anyone out there knows or can fill in some gaps I'd be interested.
The way I see it and according to our friends in Westminster we have 'over ten years of unprecedented growth'. Okay so how does that translate to numbers? Well Over the last ten years the UK economy as a whole has performed as follows:
Now if I'm reading this right the bars are snapshots of the quarterly growth and the heavy blue line is the cumulative growth over the 4 qtrs. So 3%PA if we're lucky then!
BBC chart
The BBC chart is interesting because it shows that in previous recessions GDP shrinkage was followed quite quickly by an upturn. This seems to be what the government are predicting again.
So on simplistic terms from my own financial management I know that any growth in earnings is offset by any debt I run up when things aren't so good. So how's our debt?
As we heard last week it's estimated by Gordo and fiends to top out at nearly 60% of GDP or £1 trillion. That's up from the government target of 40% (gearing right?) and looking likely to overtake the levels we saw in the 70's.
So if we want to get back to 40% which surely we do, by my reckoning even if we make an optimistic average of 3% GDP growth which is presumably adjusted for inflation it'll take us 6 or 7 years before we make actual progress against that debt. That's assuming that GDP growth directly ties to tax take and debt repayment which it doesn't and given that the tax take is going to nose dive over the next few years it's not looking good is it?
So what am I missing? No doubt I've looked at this far too simplistically and if anyone out there knows or can fill in some gaps I'd be interested.
Edited by Olf on Monday 1st December 20:23
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