Public sector borrowing falls again!

[I1L2T3]

Income tax rose according to the HMRC link I posted, that must mean more people in work because personal tax as dropped.

 

The level of employment has risen according to official figures so that could be possible.

 

The flipside of that is that GDP has not grown much. That means we've become less productive.

 

It's a puzzle that economists are trying to understand.

[maxmaximus]

The level of employment has risen according to official figures so that could be possible.

 

The flipside of that is that GDP has not grown much. That means we've become less productive.

 

It's a puzzle that economists are trying to understand.

 

Consumer spending had been rising in the years leading up to the crisis thanks to a buoyant housing market and cheap and easy credit.

 

But the credit crunch and job fears meant consumers cut spending, deciding to pay off debt and save instead.

 

So one would expect GDP to drop now we don't have an housing bubble with cheap easy credit to support the economy.

[retrogo]

Consumer spending had been rising in the years leading up to the crisis thanks to a buoyant housing market and cheap and easy credit.

 

But the credit crunch and job fears meant consumers cut spending, deciding to pay off debt and save instead.

 

So one would expect GDP to drop now we don't have an housing bubble with cheap easy credit to support the economy.

 

Agreed. At least the money that is changing hands is hard earned cash in exchange for goods and services. So its money been made in real terms rather than borrowed money on a merry go round.

[I1L2T3]

Agreed. At least the money that is changing hands is hard earned cash in exchange for goods and services. So its money been made in real terms rather than borrowed money on a merry go round.

 

Most of the money supply is lent into existence by banks. They are still lending to an extent and less of it is easy credit for sure. But the banks are really focusing on recapitalising and have reduced the flow of credit, much to the dismay of Osborne and the Bank of England. Osborne and the BofE have tried several things now to get credit flowing and nothing has really worked. People have become more debt-averse anyway which isn't a bad thing.

 

The downside is that there a lot of businesses out there struggling and they need one thing - customers. That situation isn't going to get any easier when more money is siphoned out of the economy by Osborne. It won't get any easier either while he insists on continuously talking down the economy, emphasising the dangers and creating a persistent climate of fear. He needs to be cautious for sure but he also needs to create an environment for growth - without that we are stuck.

[tinfoilhat]

Most of the money supply is lent into existence by banks. They are still lending to an extent and less of it is easy credit for sure. But the banks are really focusing on recapitalising and have reduced the flow of credit, much to the dismay of Osborne and the Bank of England. Osborne and the BofE have tried several things now to get credit flowing and nothing has really worked. People have become more debt-averse anyway which isn't a bad thing.

 

The downside is that there a lot of businesses out there struggling and they need one thing - customers. That situation isn't going to get any easier when more money is siphoned out of the economy by Osborne. It won't get any easier either while he insists on continuously talking down the economy, emphasising the dangers and creating a persistent climate of fear. He needs to be cautious for sure but he also needs to create an environment for growth - without that we are stuck.

 

Post crash I've certainly become debt averse - who wants to be holding a load of credit when interest rates go up. In many respects it might be best for businesses not to borrow in the hope that consumers will spend.

[maxmaximus]

Most of the money supply is lent into existence by banks. They are still lending to an extent and less of it is easy credit for sure. But the banks are really focusing on recapitalising and have reduced the flow of credit, much to the dismay of Osborne and the Bank of England. Osborne and the BofE have tried several things now to get credit flowing and nothing has really worked. People have become more debt-averse anyway which isn't a bad thing.

 

The downside is that there a lot of businesses out there struggling and they need one thing - customers. That situation isn't going to get any easier when more money is siphoned out of the economy by Osborne. It won't get any easier either while he insists on continuously talking down the economy, emphasising the dangers and creating a persistent climate of fear. He needs to be cautious for sure but he also needs to create an environment for growth - without that we are stuck.

 

It sounds like you are saying debts got us into the perceived mess we are in and only debt will get us out of it.

 

That’s like trying to get out of a hole by digging it deeper.

[gnvqsos]

The level of employment has risen according to official figures so that could be possible.

 

The flipside of that is that GDP has not grown much. That means we've become less productive.

 

It's a puzzle that economists are trying to understand.

 

The employment growth is in part-time work,whereas output is related to total hours worked which may have shrunk.

[maxmaximus]

The employment growth is in part-time work,whereas output is related to total hours worked which may have shrunk.

 

I doubt growth in part time work would account for the increase in total income tax, there are either more people in work and earning over the tax threshold or the people already in work are earning more and paying more tax.

[I1L2T3]

It sounds like you are saying debts got us into the perceived mess we are in and only debt will get us out of it.

 

That’s like trying to get out of a hole by digging it deeper.

 

Not necessarily. It really depends what the extra borrowing is for. How cheap the borrowing is too. It depends how successful cuts and efficiency savings are too.

 

We have a once in a lifetime opportunity to borrow at cheap rates for the right kind of projects. We will still have that chance with an AA rating. Hopefully Osborne will take it.

[maxmaximus]

Not necessarily. It really depends what the extra borrowing is for. How cheap the borrowing is too. It depends how successful cuts and efficiency savings are too.

 

We have a once in a lifetime opportunity to borrow at cheap rates for the right kind of projects. We will still have that chance with an AA rating. Hopefully Osborne will take it.

 

Does the government get fixed rate loans for the duration of the loan or do they increase as base rates go up?