GDP drop of 0.7% in the second quarter.

[crankedup]

anonymous said:

[redacted]

I'm not intending to get into a debate, we will just have to disagree on this one.

[Ozzie Osmond]

anonymous said:

[redacted]

John Egan was the supposed hero who saved Jaguar. Dealt with him once in a business situation - that was a real eye-opener.

Indeed, I'll see your Euan Blair and raise you a Mark Thatcher!

[martin84]

ukwill said:

Wow. You swing from Guardianista to Daily Wail reader so easily.

Is the idea of someone who forms their own opinion on each subject themselves rather than adhering to tribal rhetoric too complicated to understand?

[Xtype]

can they not experiment and lower taxes and VAT to encourage more spending....everything else don't seem to be working.


I heard on the BBC, that in the last 1/4 the amount of money the government has borrowed has increased.

[martin84]

Xtype said:

can they not experiment and lower taxes and VAT to encourage more spending....everything else don't seem to be working.


I heard on the BBC, that in the last 1/4 the amount of money the government has borrowed has increased.

I'm sure they've thought of it but the problem is they'd have to borrow even more to plug the short term gap - even if it was short term, which is a gamble in itself.

The Government are in a sticky spot because the usual three ways of doing these things are not open to them; They can't grow the economy by spending money because they haven't got any, they can't lower taxes to stimulate spending because they'd have to borrow more to plug the gap and they can't raise taxes because the country isn't generating enough growth - and therefore money - to tax.

[ukwill]

martin84 said:

Is the idea of someone who forms their own opinion on each subject themselves rather than adhering to tribal rhetoric too complicated to understand?

When your rhetoric swings so violently from left to right, it certainly makes for interesting reading. I'd say amusing was a more fitting adjective than complicated.

[tinman0]

martin84 said:

The Government are in a sticky spot because the usual three ways of doing these things are not open to them; They can't grow the economy by spending money because they haven't got any, they can't lower taxes to stimulate spending because they'd have to borrow more to plug the gap and they can't raise taxes because the country isn't generating enough growth - and therefore money - to tax.

Well said! Been thinking this for ages. The last Government utterly screwed up every path out of this. But heaven forbid that our media put the blame exactly where it is due. Seriously, how are the Labour Party not banged up in the Tower?

The only thing the current Govt can do is bring down borrowing, work out how to live within it's tax receipts, and wait for the economy to grow by growth in the private sector (after trimming public sector growth).

And the economy will only start growing when people start spending, which they haven't yet. Haven't seen the last couple of quarters, but for something like 13 consecutive quarters, the UK public was paying down debt faster than it was rising (much faster in fact). Until people are comfortable spending money again, the economy won't recover.

[turbobloke]

martin84 said:

they can't lower taxes to stimulate spending because they'd have to borrow more to plug the gap

They could if lowering the rate of a particular tax would lead to increased receipts as there would be no gap to plug. CGT is a potential area to look at, also corptax.

Separate issue - they could also actually spend less rather than talk about it.

[johnfm]

martin84 said:

johnfm said:

Was any of the 'growth' real?

If I borrow a million quid and buy stuff with it, has my worth grown?

I don't think so - most of the decade+ of growth was illusory.

Tell that to the people who are now lining up at the Job Centre.

Tell what to them?

That economic prosperity, growth and expansion should not be based upon credit?

[ukwill]

tinman0 said:

Well said! Been thinking this for ages. The last Government utterly screwed up every path out of this. But heaven forbid that our media put the blame exactly where it is due. Seriously, how are the Labour Party not banged up in the Tower?

The only thing the current Govt can do is bring down borrowing, work out how to live within it's tax receipts, and wait for the economy to grow by growth in the private sector (after trimming public sector growth).

And the economy will only start growing when people start spending, which they haven't yet. Haven't seen the last couple of quarters, but for something like 13 consecutive quarters, the UK public was paying down debt faster than it was rising (much faster in fact). Until people are comfortable spending money again, the economy won't recover.

And given the levels of personal debt, I don't see a consumer-led recovery happening anytime soon. In yesterdays Graun the next incoming TUC general secretary (a doris comrades, a bloody doris!) was effectively saying we should be using massive amounts of stimulus to pull us out of recession because we can borrow at such low rates of interest.

Without seemingly understanding (or more likely, conveniently disreguarding) why our bond yields are low.

Our current economic malaise was always on the table. I just don't understand how some can imagine that we wouldn't be experiencing this pain if <another party was in power / another chancellor had his hands on the purse strings>. It seems to me that it's just politically convenient that Labour have yet again walked away from a crumbling economy (after over a decade of growth...) and have the gall to whine about the medicine; which people are blaming the Coalition for administering! Cameron has played his hand feebly.

[tinman0]

ukwill said:

And given the levels of personal debt, I don't see a consumer-led recovery happening anytime soon. In yesterdays Graun the next incoming TUC general secretary (a doris comrades, a bloody doris!) was effectively saying we should be using massive amounts of stimulus to pull us out of recession because we can borrow at such low rates of interest.

Depends what sort of recovery you want. If you want a change in attitude to borrowing money, then a longer recovery is going to happen, if you want a short term recovery, then lets get lending and spending again!!

Personally, I would prefer to see a longer more stable recovery that is led by the consumer and not Government lending. No good being back in this place in 15 years time when I'm starting to look at retiring.

As for listening to anyone in the TUC give any sort of economic advice, I would rather insert a rusty knife into my ears. TUC giving advice on the economy is rather like Freddy Krueger explaining your dreams.

[turbobloke]

"The dire GDP figures which showed Britain's recession was worsening and had extended from six months to nine months, merely reinforced the gloom and cemented the chances of a rate cut."

"Money markets today (25 July) imply rates will be cut from 0.50% to 0.25% in November and then rise back to 0.50% in February 2016. A rise to 0.75% is not forecast until October 2017 with an increase to 1% in February 2019."

http://www.thisismoney.co.uk/money/news/article-16...

[XCP]

We see lots of figures being bandied about but how accurate are they?

How sure are we that 0.7% is not really 0.6% or 0.8% ?

What is the margin for error?

[RYH64E]

People talk of lowering VAT to stimulate spending, but does it really make that much difference? I can't say I noticed any change in my spending when VAT was 15%, 17.5% or 20%. Shopping around will make far more difference to the price you pay than a few percent difference in VAT rates.

[turbobloke]

Whatever the dip figures are in reality, apparently British Chambers of Commerce are urging the Bank of England to take immediate action to slash the cost of borrowing (Base rate) as far as zero and sooner rather than later. Economists at the Ernst & Young Item Club have backed the call, saying an interest rate cut was ‘not the only answer, but it would help’.

http://www.telegraph.co.uk/finance/economics/94344...

[johnfm]

If government's could actually invest some of the borrowing, instead of merely 'spending' it, I'd be all in favour of some Keynsian intervention.

Clearly, the current QE isn't leading to the massive inflation usually associated with printing money - because (I assume) there is still enough counter-inflationary capacity in the economy.

Interesting times ahead - and with no 'control experiment' available to compare and contrast the current plan, it really is going to be interesting to see if the U-turn coalition can weather the storm of poor GDP figures.

[stinkysteve]

XCP said:

We see lots of figures being bandied about but how accurate are they?

How sure are we that 0.7% is not really 0.6% or 0.8% ?

What is the margin for error?

I'd guess the margin of error on these figures is +/- 0.2%. (i.e, i wouldn't be surprised if the actual figures once properly calculated is either 0.5 or 0.9)


My opinion, is that these figures are often manipulated, and misrepresented so they can be adjusted favorably later to give 'good news'.


For example, this quarters figures may be -0.5%. But stated to be -0.7%. 0.2% is therefore 'over adjusted'. The news is bad anyway, so why not make it a little worse...

If next quarters figures are -0.2%, they can wipe out the -0.2% 'error' from the previous quarter and say "Growth is now zero, Woohoo, we're no longer in recession"


I'm sure to be shot down by some 'Real economists' for this cynical view, who will tell me that the figures are collated 'independently'. I know, so don't bother....

[Digga]

turbobloke said:

Whatever the dip figures are in reality, apparently British Chambers of Commerce are urging the Bank of England to take immediate action to slash the cost of borrowing (Base rate) as far as zero and sooner rather than later. Economists at the Ernst & Young Item Club have backed the call, saying an interest rate cut was ‘not the only answer, but it would help’.

http://www.telegraph.co.uk/finance/economics/94344...

Rates are already at record lows and have been for some time.

It's about time these idiot mouthpiece organisations got a clue and found another tree to bark up. Cutting taxes and (very targeted) infrastructure spending are the only moves left, but I'm pretty certain the cancellor will not get off his arse and take any risk this side of his comfortable holiday break.

[RYH64E]

turbobloke said:

Whatever the dip figures are in reality, apparently British Chambers of Commerce are urging the Bank of England to take immediate action to slash the cost of borrowing (Base rate) as far as zero and sooner rather than later. Economists at the Ernst & Young Item Club have backed the call, saying an interest rate cut was ‘not the only answer, but it would help’.

http://www.telegraph.co.uk/finance/economics/94344...

Will it actually make any difference to the interest rates that people actually pay? From what I can see, most new mortgages are already priced at a significant premium to the base rate, a lot of old mortgages have a lower limit below which they won't fall, and the cost of loans to business is laughable anyway - far higher than base last time I investigated (6 or 7% from Barclays if I remember correctly).

What loans are actually linked to the base rate now?

[sidicks]

RYH64E said:

Will it actually make any difference to the interest rates that people actually pay? From what I can see, most new mortgages are already priced at a significant premium to the base rate, a lot of old mortgages have a lower limit below which they won't fall, and the cost of loans to business is laughable anyway - far higher than base last time I investigated (6 or 7% from Barclays if I remember correctly).

What loans are actually linked to the base rate now?

Loans 'linked to base rate' does not mean loans are actually set at base rate!!