A possible sticky ? - All you need to know on UK spending
Discussion
http://www.telegraph.co.uk/finance/comment/jeffran...
Mr Randall eloquently summarises the facts on UK public spending, borrowing, debt and deficit. Perhaps PH could sticky this and introduce something like an end user licence click-through, so that you are not allowed to start a new thread on this topic without having read this primer.
The problem is not the current debt level or the current deficit. These (in isolation) are at least peceived to be managable. This is backed by our AAA bond rating.
The real problem is that having got ourselves into this mess, no-one has either the political will or a mandate to make the deep structural cuts needed. What was it Osbourne said? "Can't build if you can't get planning permission"?
The Turkeys will keep voting to postpone christmas until a new voting system is introduced that excludes people who don't pay in...and how would that ever be allowed to happen???
I don't see an easy way out.
The real problem is that having got ourselves into this mess, no-one has either the political will or a mandate to make the deep structural cuts needed. What was it Osbourne said? "Can't build if you can't get planning permission"?
The Turkeys will keep voting to postpone christmas until a new voting system is introduced that excludes people who don't pay in...and how would that ever be allowed to happen???
I don't see an easy way out.
Goes well until the end.
It's a misunderstanding of economics at a basic level to say that you could simply slash back at spending to solve this problem. There will need to be some cuts but if cutting starts a reduction in GDP, damages the ability of the UK to repay in the long term or shifts costs between departments then they are false savings.
Total UK tax revenues are 35% of GDP (and have been for a long time) which is on the low end for a highly developed European country. You'd only need to increase taxes about 10% of GDP to break even on budget which would put you into the same area of taxes as other highly developed European countries (Austria, Denmark, Finland, France and Italy). Then any additional funds found from spending cuts could be used to reduce debt debts.This is by no means unachievable and would bring you into line with many other countries running better balanced budgets.
No country in the OECD as economically developed as the UK really runs a tax budget as low as you'd have to run if you tried to cut spending rather than raising taxes, you'd be way off the curve. The UK isn't exceptional and already runs a very low tax rate given it's level of economic development.
It's a misunderstanding of economics at a basic level to say that you could simply slash back at spending to solve this problem. There will need to be some cuts but if cutting starts a reduction in GDP, damages the ability of the UK to repay in the long term or shifts costs between departments then they are false savings.
Total UK tax revenues are 35% of GDP (and have been for a long time) which is on the low end for a highly developed European country. You'd only need to increase taxes about 10% of GDP to break even on budget which would put you into the same area of taxes as other highly developed European countries (Austria, Denmark, Finland, France and Italy). Then any additional funds found from spending cuts could be used to reduce debt debts.This is by no means unachievable and would bring you into line with many other countries running better balanced budgets.
No country in the OECD as economically developed as the UK really runs a tax budget as low as you'd have to run if you tried to cut spending rather than raising taxes, you'd be way off the curve. The UK isn't exceptional and already runs a very low tax rate given it's level of economic development.
speedy_thrills said:
..
. You'd only need to increase taxes about 10% of GDP to break even on budget which would put you into the same area of taxes as other highly developed European countries (Austria, Denmark, Finland, France and Italy). Then any additional funds found from spending cuts could be used to reduce debt debts.This is by no means unachievable and would bring you into line with many other countries running better balanced budgets.
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I'm assuming you weren't really meaning to include Italy or France in the "better balanced budget" camps? Or you are being ironic (forgive me if so).. You'd only need to increase taxes about 10% of GDP to break even on budget which would put you into the same area of taxes as other highly developed European countries (Austria, Denmark, Finland, France and Italy). Then any additional funds found from spending cuts could be used to reduce debt debts.This is by no means unachievable and would bring you into line with many other countries running better balanced budgets.
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As for the other economic powerhouses you mention....
Out of interest, how much would be needed on PAYE to add 10% of GDP to the tax take? And aren't we in the 40s now?
Murph7355 said:
I'm assuming you weren't really meaning to include Italy or France in the "better balanced budget" camps? Or you are being ironic (forgive me if so).
The French deficit will be about 4.5% of GDP in 2012, down from 5.7% last year. Italy ran a deficit of 3.6% of GDP last year (2011) and they are aiming for 1.6% this year with budget measures.The major Eurozone economies have a good grasp on their deficits and are making rapid progress in getting their books balanced which is very positive after the last few years.
Murph7355 said:
As for the other economic powerhouses you mention....
Out of interest, how much would be needed on PAYE to add 10% of GDP to the tax take? And aren't we in the 40s now?
I don't know but broadly it would mean raising tax revenues about 28% over existing levels, I doubt there is much more to squeeze from income tax, maybe a little on consumption but your corporate tax scheme extremely attractive so perhaps you could raise that to a comparable level with other large European countries?Out of interest, how much would be needed on PAYE to add 10% of GDP to the tax take? And aren't we in the 40s now?
Excellent article!!!
As long as the great unwashed are told they MUST have a 50" TV or their absolutely irreplaceable iPhone 4 or other such useless gimmick, and are able to buy it on tick; and politicians also live with the same mentality, there is NO WAY OUT.
You have to work hard, save and only when you can afford it i.e.you have the money in hand, buy the gimmick.
BTW the majority of the world can live without an iPod, iPad or IPhone, farcebook, tw@tter or any such idiotic rubbish....
I hear my grandparents speaking!
As long as the great unwashed are told they MUST have a 50" TV or their absolutely irreplaceable iPhone 4 or other such useless gimmick, and are able to buy it on tick; and politicians also live with the same mentality, there is NO WAY OUT.
You have to work hard, save and only when you can afford it i.e.you have the money in hand, buy the gimmick.
BTW the majority of the world can live without an iPod, iPad or IPhone, farcebook, tw@tter or any such idiotic rubbish....
I hear my grandparents speaking!
JMGS4 said:
Excellent article!!!
Agreed.JMGS4 said:
BTW the majority of the world can live without an iPod, iPad or IPhone, farcebook, tw@tter or any such idiotic rubbish....
I hear my grandparents speaking!
Hmmm I resemble that remark. If all that carp was to disappear tomorrow...my less iconic but perfectly functional mobile phone would still phone people send texts and take pics and I can email or call a mate to see if they're on the bog having a sI hear my grandparents speaking!
t rather than check tw@tter or their farcebook status, the latter two being tricky anyway as many friends and colleagues have the status 'wtf do I want that for' in both regards.Nevertheless I do appreciate the inside out design quality of most Apple products and that the farcebook and tw@tter generation really do desperately need to know instantly whatever minor or major happenings have happened and to tell each other about self-important and boringly insignificant s
t on a regular basis. They have my sympathy.Not sure how social networking will cure the UK of its deficit and debt or the eurozone of its particular ills though.
turbobloke said:
Nevertheless I do appreciate the inside out design quality of most Apple products and that the farcebook and tw@tter generation really do desperately need to know instantly whatever minor or major happenings have happened and to tell each other about self-important and boringly insignificant st on a regular basis. They have my sympathy.
No particular manfacturer was meant, just the product types (i.e. gadgets or widgets)t on a regular basis. They have my sympathy.turbobloke said:
Not sure how social networking will cure the UK of its deficit and debt or the eurozone of its particular ills though.
It won't...... it's just all that money and time which is wasted on such a useless and moronic pastime!JMGS4 said:
turbobloke said:
Nevertheless I do appreciate the inside out design quality of most Apple products and that the farcebook and tw@tter generation really do desperately need to know instantly whatever minor or major happenings have happened and to tell each other about self-important and boringly insignificant st on a regular basis. They have my sympathy.
No particular manfacturer was meant, just the product types (i.e. gadgets or widgets)t on a regular basis. They have my sympathy.turbobloke said:
Not sure how social networking will cure the UK of its deficit and debt or the eurozone of its particular ills though.
It won't...... it's just all that money and time which is wasted on such a useless and moronic pastime!
CHIEF said:
JMGS4 said:
BTW the majority of the world can live without an iPod, iPad or IPhone, farcebook, tw@tter or any such idiotic rubbish....
I hear my grandparents speaking!
I could live without all of the above but not Pistonheads I hear my grandparents speaking!
What's more we can sort national debt, GDP and unemployment in seconds on here.
speedy_thrills said:
Goes well until the end.
It's a misunderstanding of economics at a basic level to say that you could simply slash back at spending to solve this problem. There will need to be some cuts but if cutting starts a reduction in GDP, damages the ability of the UK to repay in the long term or shifts costs between departments then they are false savings.
Explain to me how you think spending through borrowing 10%+ of GDP annually to fund around 1% of 'Growth' annually is mathematically sustainable?It's a misunderstanding of economics at a basic level to say that you could simply slash back at spending to solve this problem. There will need to be some cuts but if cutting starts a reduction in GDP, damages the ability of the UK to repay in the long term or shifts costs between departments then they are false savings.
12gauge said:
Explain to me how you think spending through borrowing 10%+ of GDP annually to fund around 1% of 'Growth' annually is mathematically sustainable?
I think my answer, if I've understood the question, is that GDP can go lower than 0% if you where to cut budgets too fast (unfortunately 
). There is not indication that without borrowing the UK's GDP wouldn't quite possibly be contracting.speedy_thrills said:
I think my answer, if I've understood the question, is that GDP can go lower than 0% if you where to cut budgets too fast (unfortunately ). There is not indication that without borrowing the UK's GDP wouldn't quite possibly be contracting.
This is why politicians love GDP so much. Its absolutely bogus. ). There is not indication that without borrowing the UK's GDP wouldn't quite possibly be contracting.If i earn £30k one year, and earn £30k the next, but also take out a £10k loan, has my earnings power/salary increased by 1/3rd?
GDP would say one thing, but when I ask my bank manager for a mortgage, he would say quite another...
speedy_thrills said:
Murph7355 said:
I'm assuming you weren't really meaning to include Italy or France in the "better balanced budget" camps? Or you are being ironic (forgive me if so).
The French deficit will be about 4.5% of GDP in 2012, down from 5.7% last year. Italy ran a deficit of 3.6% of GDP last year (2011) and they are aiming for 1.6% this year with budget measures.Also, how's their exposure to the Euro issues at large? Are they looking falsely healthy?
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