Cameron, Clegg and Osborne policies push UK closer to recession

[biotechpete]

And nothing changed under the Tories, in fact it was them who deregulated the banks in the fisrt place, and I don't see the Tories changing things even now. In fact, government borrowing is up and bankers are threatneing to sue over bonuses.

 

NO government borrowing is FALLING!! It fell by £2.2bn to £13.7bn in December topping off four months of falling borrowing.

http://www.ons.gov.uk/ons/rel/psa/public-sector-finances/december-2011/stb---december-2011.html

 

So the coalition is slowly turning the ship around and Labour supporters are burying their heads in the sand and ignoring the facts. Same old Labour party.

[Mecky]

Don't get me started on energy Co's.

 

[tinfoil hat on]It's getting to be exactly the same con as car insurances. Set up and promote 'comparison sites' for smoke and mirrors, and jack up premiums all the time for ever-less-risk/ever-less-value to insure[/tinfoil hat on]

 

Going to have a very interesting "chat" with EON tonight, about the (entirely unjustified acc. to my monthly meter reading history) 77.5% monthly debit increase they have just notified me about :rant:

 

I wonder if they'll be an increase in elderly deaths due to fuel poverty? Maybe they won't release the data.

[biotechpete]

How many times are you going to trot that line out, Mecky?

 

Will you ever consider that Labour are being criticised not for causing the global crash, but for failing to prepare the country for it?

It was eminently predictable, and duly predicted by noted and respected economists (the financiers' increasingly desperate interference at the time notwithstanding), years before it happened.

 

Riddle me this, riddle me that: why did politicians in positions of authority and responsibility (for years prior) fail entirely to act upon these predictions, in any meaningful way? I mean, beyond leaving a sarcastic note to the next Treasury incumbent?

 

I'd critisise them for exactly that! The lending of the likes of Lehman Brothers was held on the books of the UK arm of their banks. Why? Because the US regulator wouldn't allow it. So indeed a proporiton of the global credit crisis can be layed squarely at the feet of the failure of Gordon Brown's regulatory system.

 

I know this because it's what a senior member of the FSA said to an audience of about 50 people in 08/09.

[I1L2T3]

We are deep in the do do, that is a fact no one can deny. On telly the other day, Balls still persists that borrowing more money would be our salvation.

 

 

 

DOH!.

 

Angel.

 

Clegg and Balls are saying similar things right now. Balls wants a VAT cut. Clegg wants the 10k bottom tax band reform speeding up.

 

Both will stimulate the economy. But both have to be paid for somehow, or at least the balance sheets must be shown not to be any worse for them.

 

Unfortunately all the parties are wrong. The will do provide the big stimulus on projects and infrastructure that will be assets to the country for decades just isn't there.

[truman]

Clegg and Balls are saying similar things right now. Balls wants a VAT cut. Clegg wants the 10k bottom tax band reform speeding up.

 

Both will stimulate the economy. But both have to be paid for somehow, or at least the balance sheets must be shown not to be any worse for them.

 

Unfortunately all the parties are wrong. The will do provide the big stimulus on projects and infrastructure that will be assets to the country for decades just isn't there.

 

How big a VAT cut... if it's just back to 17.5% then to be a tenner better off you'd have to spend about £400..would that really make a difference? Or is my maths wrong?

[I1L2T3]

How big a VAT cut... if it's just back to 17.5% then to be a tenner better off you'd have to spend about £400..would that really make a difference? Or is my maths wrong?

 

It's about the aggregate demand impact on the economy. About potentially tens of millions of people with those extra tenners to spend.

[truman]

It's about the aggregate demand impact on the economy. About potentially tens of millions of people with those extra tenners to spend.

 

I appreciate that but it's peanuts in the big scheme of things..if I were a tenner better off every month I'd probably use it to pay down my existing debt rather than spend it on stuff I don't really need anyway.. ..that wouldn't help the GDP...

[donkey]

You are right if the banks hadn't lent money to people in the first place, people wouldn’t be suffering now but they also wouldn't have enjoyed the good times of the debt fuelled economy. Banks created a feel good factor by lending money to almost anyone and now the banks can’t lend this easy credit they are being blamed for all the problems of the world, the problems were caused by people wanting something now that they couldn’t afford, the banks helped them achieve this unsustainable life style which is now over. The borrowers are just as much to blame as the lenders and the governments are to blame for alowing it to happen.

 

There is so much wrong with that It is hard to know where to start.

 

>The UK economic crisis is not caused by personal debts and mortgage defaults in the UK. The profit from interest on the vast majority of personal loans in this country - which are being paid back - far outstrips losses on the very small proprortion of defaults.

 

>Even if defaults on UK personal debt was the root of the problem, of course the professionals whose job it is to assess the risks on lending money would be responsiible if they lent billions to people who obviously couldn't afford to pay it back.

 

>The true root of the crisis is mostly swindling bankers - with direct connections to past and present US administrations - taking on bad debts and selling them 'hidden' in packages to other banks across the globe. That is not to say bankers in other parts of the world did not also make vast profits from similar fraudulent activities.

 

>The people at the heart of the credit crunch came out of it in a better position than before they caused it and are continuing to increment their wealth, while the majority see their standard of living eroded as a direct consequence.

 

Ever since the credit crunch kicked in, these swindlers have mounted a massive propaganda campaign (in the US the financial services industry has 10 lobbyists for every elected politician) to place the blame elswhere.

 

I think it was Gobbels who said something along the lines of: the bigger the lie, the easier it is to pass it off on the public. Whoever said it, our financial overlords certainly took the lesson on board.

 

The porkies they have been spinning have been taken up by others working in finance who are seeking to distance themselves from any involvement in the credit crunch, and by right wing ideologues who are still in denial that the sacred cow they mistakenly call 'free market' economics ('monopoly market' would be more apropriate) is a deeply flawed and corrupted system.

 

What you are repeating here is just a variation on the crude propaganda designed to bamboozle the economically illiterate. An invention of spin doctors designed to exonerate their con artist employers of all responsibility for the hardship and misery they are continuing to cause for billions of people across the globe.

[jez449]

The chicken are really coming home to roost now, they were warned by everybody that the economy was too fragile to withstand all the cuts in public spending, but Smarmy Dave, Lapdog Clegg and Gideon all knew best and the economy now seems to be teetering on the brink of yet another Tory recesion.

 

 

Blame game begins as Britain edges closer to another recession

 

David Cameron says there is 'not an ounce of complacency' in government after 0.2% decline in UK's economic output

 

 

 

reddit this Phillip Inman and Patrick Wintour

guardian.co.uk, Wednesday 25 January 2012 20.30 GMT Article history Cameron: slowdown in economy 'not unexpected' Link to this video Britain moved closer to its second recession in three years after official figures showed the UK economy contracted by more than expected in the last three months of 2011.

 

A severe drop in manufacturing and construction output in the runup to Christmas dented hopes the UK could avoid joining much of Europe in a slump expected to push up unemployment and see thousands of companies go bankrupt.

 

David Cameron said there was "not an ounce of complacency" as the government sought to get Britain back on track, but he admitted the 0.2% decline in output was disappointing and would make the job harder over the coming months.

 

He told MPs at prime minister's questions that most of the blame should be pinned on the "overhang of debt and deficit" from Labour, an unexpected rise in inflation and the crisis in the eurozone.

 

In advance of his appearance on Thursday at the World Economic Forum in Davos, Cameron urged world leaders to stop tinkering and drifting, and take bold action to boost competitiveness and increase world trade.

 

He warned Europe it could not go on promoting "unnecessary measures that impose burdens on businesses and governments, that can destroy jobs".

 

He said: "Europe's lack of competitiveness remains its achilles heel. For all the talk, the Lisbon strategy has failed to deliver the structural reforms we need."

 

George Osborne said the government would not change its fiscal plans, adding that Britain's economic problems were being made worse by the situation in the eurozone. "I think we've got the right plan, we've got to stick to it," he said.

 

He conceded the recovery would be bumpy and include periods of negative growth. But he is expected to come under intense pressure in parliament ahead of his budget in March to explain how he intends to foster confidence in the business community and kickstart growth.

 

Ed Balls, the shadow chancellor, blamed Osborne for putting the economy into reverse. He said: "Far from the eurozone crisis being to blame, it is only rising exports that kept us out of recession last year. By clobbering the economy with spending cuts and tax rises that go too far and too fast, the government has left us badly exposed if the eurozone crisis deepens this year."

 

The TUC s leader Brendan Barber added: "The grand austerity plan is failing to tackle the deficit, causing unemployment to spiral out of control, and is dragging the country back towards recession."

 

The Treasury has faced a barrage of criticism from opposition MPs and business leaders that it has failed to put forward a growth strategy to support businesses and keep the economy from falling back into recession – defined as two consecutive quarters of negative growth.

 

Lord Oakeshott, a former Liberal Democrat Treasury spokesman, said the government needed to act to spur lending to small and medium-sized businesses. "Our economy won't grow while our biggest bank, RBS, won't lend. Starving sound small businesses of vital working capital is a recipe for recession," he said.

 

A spate of shop closures after Christmas and a collapse in consumer confidence is expected to propel unemployment to new heights in the spring.

 

Capital Economics, a leading firm of economic analysts, said it was likely the UK was already in recession.

 

The prospect of a recession into the spring reinforced expectations that the Bank of England will inject more stimulus into the economy next month. The governor, Mervyn King, who has warned of an arduous recovery ahead, hinted the Bank may extend its programme of quantitative easing that has already pumped £275bn into the financial system.

 

Figures from the British Bankers Association underscored the government's difficulties after revealing revealed a further contraction in bank lending to the manufacturing and construction sectors. The 0.2% fall in gross domestic product during the final quarter of 2011 came after the economy grew by 0.6% in the third quarter of 2011. The result, which was worse than economists' forecasts for a 0.1% contraction, means the economy has flatlined since the autumn of 2010.

 

The industrial sector suffered a especially tough quarter, with the Office for National Statistics reporting that factory output dropped by 0.9%. Activity in the construction industry fell, by 0.5%, while the dominant services sector was flat.

 

The ONS figures also showed a bigger fall than expected by the Bank of England and the independent Office for Budget Responsibility, which assesses whether the government's fiscal plans are sustainable.

 

Economists are generally split as to whether the economy will continue to contract in early 2012, but all stress that any decline will be modest compared to the record 7.1% fall in output in the last recession in 2008-9.

 

Ian Kernohan, economist at Royal London Asset Management, said: "The economy seems close to stall speed, although during any fragile recovery from a major financial crisis, this is not a huge surprise." For 2011 as a whole, GDP expanded by 0.9%, less than half the pace in 2010.

 

Compared with the previous year, fourth-quarter output was 0.8% higher, flattered by a sharp fall in output in the year-ago quarter due to heavy snow.

 

Output in the services sector, which accounts for three quarters of GDP, was flat on the quarter, its weakest outturn since the final quarter of 2010. The effect of a 0.4% rise in government and other services was cancelled out by a 0.5% decline in the distribution, hotels and restaurants sector, which includes retail.

 

The downturn in the UK follows a 0.25% decline in German GDP and the prospect of falls in France and Italy over the winter months. Spain has already entered recession and several other EU nations are expected to follow suit.

 

A slowdown in continental economies and the continued deleveraging by businesses and households as they pay back their debts is expected to intensify efforts to protect spiralling debts in Greece, Portugal, Ireland and Spain from damaging the eurozone recovery.

 

http://www.guardian.co.uk/business/2012/jan/25/blame-game-britain-closer-recession

 

Suppose we could ask Ed 'sorry seems to be the hardest word' Balls and Liam Byrne where all the money went under Labours astute financial stewardship?

[I1L2T3]

I appreciate that but it's peanuts in the big scheme of things..if I were a tenner better off every month I'd probably use it to pay down my existing debt rather than spend it on stuff I don't really need anyway.. ..that wouldn't help the GDP...

 

I agree it's ridiculous and I'm not defending it. We need big stimulus spend done properly on things that will provide proven ongoing benefit.