The 2010 Emergency Budget thread

[Tony]

at the minute, once the market has had enough of savaging the euro they will turn their attention to sterling.

 

has harsh as it was, this weeks budget was, to some extent, aimed at trying to prevent this.

 

That in itself is true but a Tobin tax is not really designed to address that. The € has troubles that appear to be increasingly structural and THAT is why Sarkozy and Merkel are still dragging up the idea of a Tobin tax... even though nobody else that matters is listening now that Brown's plans has been euthanased.

 

Don't you get the feeling that the people who espouse its introduction don't care much about the implications and reasoning because they only care about fat cats getting a bloody nose?

[andyofborg]

It is going to come to fruition, the cogs are already turning. It's mind blowing to even think that potentially, another 1.75 million people could lose their jobs, at a time the government is making it unacceptable to be unemployed. This doesn't just affect civil servants, it's all public sector workers (except those in the NHS and international aid). 25-30% cuts (to compensate for the ring fencing) across the police, frontline services and the arms length government bodies is likely to be catastrophic.

 

i would point out that its not 25% cuts in one year, its over the life of the parliament.

 

those sorts of cuts, while slightly harsh, are achievable and as the economy grows there will be many opportunities in the private sector. of course, new labour's answer was to encourage immigrants to do all the work in the private sector with the indigenous people totally dependent on the state by either working in the public sector or on benefits.

[onetwo07]

The 21st century Geddes Axe. It didn't work then and I have a feeling it will not work now. People are scared by exaggerated metaphors about credit cards and debt junkies, but the fact is we cut during the 20s and 30s - only recovering when governments began spending in a sustained way (through choice in the US, and through re-arnament in Britain).

 

We tried to cut during the 70s and 80s, but in reality the state was spending comfortably more (in real terms) at the end of Thatcher's premiership than it was at the beginning.

 

On both of these ocassions unemployment topped 3 million and the burden of dole payments stifled economic dynamism.

 

I think the thing that is never considered in today's situation is the relativity. The UK's economy is not in a particularly good way. But:

 

a) as above, cuts (particularly if over-agressive, rapidly implemented) in themselves probably will not help.

 

b) the whole world economy is pretty bummed, and everyone is doing the same (fiscal retrenchment). Thus, unless China is going to start importing suddenly, where are all our recovering manufacturing goods going to go? Are we going to give them away?

 

c) (b) means that the markets aren't as much of a threat as everyone thinks. They, at the end of the day, know where their bread is buttered and would have tonked the UK completely by now if we were Greece (which we're patently not). If the markets were to pan the UK, then they would be panning a fair few others too (including the US).

 

d) UK sovereign debt: net exporters (China, India etc) in the short term will not let western economies fail, so we have breathing space. Government debt will continue to be eaten up, because those who buy it have a vested interest in seeing western economies through rough times. If the UK, US, EU etc. stop buying things, then, ironically, the fast developing nations are probably more stuffed than everyone else: their economies are completely and inflexibly geared toward one thing: mass export.

 

A few thoughts. Not the ideal medium for their expression, but I think there is quite a lot going unquestioned at the minute in favour of cliches: 'they don't get it', 'we can't go on like this', 'we're all in it together', which only serve to fog the situation and patronise people.

 

*For ref, the Geddes Axe (Lloyd George saw the error of his ways later but, ironically given toda's situation, was a Liberal PM propped up by a Tory parliament who craved a cut in government intervention/spending).

 

http://en.wikipedia.org/wiki/Geddes_Axe

[Wildcat]

That in itself is true but a Tobin tax is not really designed to address that. The € has troubles that appear to be increasingly structural and THAT is why Sarkozy and Merkel are still dragging up the idea of a Tobin tax... even though nobody else that matters is listening now that Brown's plans has been euthanased.

 

Don't you get the feeling that the people who espouse its introduction don't care much about the implications and reasoning because they only care about fat cats getting a bloody nose?

 

Its not about fat cats getting a bloody nose it is about dealing with the structural problems that caused the recession in the first place. It is a one off levy that is the bloody nose, a levy that will in the short term discourage lending but do nothing about the culture of bonuses or the risk taking that led to the crisis. A transaction tax is a structural tax who's impact occurs over time and since it is on transactions is unavoidable and will only discourage the high frequency trading that has encouraged the volatility in the markets that has been a part of the cause of this crisis.

[Wildcat]

i would point out that its not 25% cuts in one year, its over the life of the parliament.

 

those sorts of cuts, while slightly harsh, are achievable and as the economy grows there will be many opportunities in the private sector. of course, new labour's answer was to encourage immigrants to do all the work in the private sector with the indigenous people totally dependent on the state by either working in the public sector or on benefits.

 

What makes you so sure they are achievable? and even if they are achievable the cuts in immigration officials, tax inspectors, social workers etc is neither desireable nor necessary. Indeed it is in most cases counter productive.

 

Here is a pretty damning assessment from Forbes. Not only will this budget move us in to a double dip recession, it seems designed to create a depression.

 

http://www.forbes.com/2010/06/22/george-osborne-emergency-budget-markets-united-kingdom.html?boxes=marketschannelnews

[Tony]

Its not about fat cats getting a bloody nose it is about dealing with the structural problems that caused the recession in the first place.

 

The general election already did that. All that is needed now is a steady hand and a good eye, not digit amputation. Don't worry, it's being taken care of.

[Wildcat]

The general election already did that. All that is needed now is a steady hand and a good eye, not digit amputation. Don't worry, it's being taken care of.

 

25% cuts amounts to a digit amputation, on each hand.

[artisan]

The general election already did that. All that is needed now is a steady hand and a good eye, not digit amputation. Don't worry, it's being taken care of.

 

By who?

Has there been a coup overnight that we are not yet privy to?

Because this lot couldn't organise an orgy in a brothel.

[Tony]

25% cuts amounts to a digit amputation, on each hand.

 

Does it? Are you privy to what 25% represents?

[Wildcat]

Does it? Are you privy to what 25% represents?

 

I know how many digits there are on a hand.

 

Considering Cleggeron sent a message to all Civil Servants asking them for ideas on how to make cuts, doesn't inspire any confidence they know what they have promised to do either.