Bye Bye AAA rating

[MrSmith]

The downgrade is related to government debt.

 

Personal debt is too high as well of course. It's a major factor dragging back the economy. If people didn't have so much debt to service or pay down they could be spending that money in the wider economy.

 

I agree, but people do have debt and many people have cut spending in order to pay back those debts. The economy was fuelled by excessive debt for years making a crash inevitable, borrowing caused the problems and more borrowing can only make it worse.

 

If wages are not growing or benefits are frozen (at 1% remember) in an inflationary environment then the social impact would require a response from government. It could uprate benefits, increase public sector pay, introduce controls on fuel prices through regulatory moves etc...

 

Normally the government could respond by borrowing more, but that’s not possible because labour borrowed excessively prior to the crash and any further borrowing will only make the situation worse. The government is already borrowing more that it should just to stay afloat. Hence the down grade, we simply cannot borrow our way out of this mess.

[I1L2T3]

Normally the government could respond by borrowing more, but that’s not possible

 

Yes it is. Osborne is borrowing like there's no tomorrow.

[ricgem2002]

I agree, but people do have debt and many people have cut spending in order to pay back those debts. The economy was fuelled by excessive debt for years making a crash inevitable, borrowing caused the problems and more borrowing can only make it worse.

 

 

 

Normally the government could respond by borrowing more, but that’s not possible because labour borrowed excessively prior to the crash and any further borrowing will only make the situation worse. The government is already borrowing more that it should just to stay afloat. Hence the down grade, we simply cannot borrow our way out of this mess.

you should have a read here mate http://www.rftexpresscouriers.co.uk/UK%20deficit%20The%20Truth.htm

[MrSmith]

Yes it is. Osborne is borrowing like there's no tomorrow.

 

And you want him to borrow even more, he's borrowing to stay afloat because the last government left a dirty great hole in the boat, but I am sure that the deficit is lower than it was and going in the right direction.

[I1L2T3]

And you want him to borrow even more, he's borrowing to stay afloat because the last government left a dirty great hole in the boat, but I am sure that the deficit is lower than it was and going in the right direction.

 

The deficit is only lower because of one-off factors that steal from future generations. The underlying deficit is increasing.

[MrSmith]

The deficit is only lower because of one-off factors that steal from future generations. The underlying deficit is increasing.

 

It’s a bit of a problem they inherited isn't it, and fixing it was never going to be easy or painless, quite simply the government needs to cut spending further but that will create more pain and lead to another labour government. Bit of a catch 22, they are damped if they do and damped if they don't.

[I1L2T3]

It’s a bit of a problem they inherited isn't it, and fixing it was never going to be easy or painless, quite simply the government needs to cut spending further but that will create more pain and lead to another labour government. Bit of a catch 22, they are damped if they do and damped if they don't.

 

Cutting further risks sucking more demand out of the economy, meaning more stalled growth and increased government borrowing.

 

We had the chance to grow our way out of this (growth was a cornerstone of Osborne's plan) but the economic growth we were enjoying was snuffed out within 6 months of the Tories taking power. We've had virtually no growth since and we're still borrowing at record levels.

 

I won't disagree that the coalition inherited a very difficult situation but their actions have worsened it.

 

All I can say is that we've been extremely unlucky to have probably the two most economically inept governments at the helm for one of the greatest financial crises the world has ever seen.

[andygardener]

Cutting further risks sucking more demand out of the economy, meaning more stalled growth and increased government borrowing.

 

We had the chance to grow our way out of this (growth was a cornerstone of Osborne's plan) but the economic growth we were enjoying was snuffed out within 6 months of the Tories taking power. We've had virtually no growth since and we're still borrowing at record levels.

 

I won't disagree that the coalition inherited a very difficult situation but their actions have worsened it.

 

All I can say is that we've been extremely unlucky to have probably the two most economically inept governments at the helm for one of the greatest financial crises the world has ever seen.

I don't see how thei actions have made it worse. Cut public spending and cut taxes to encourage growth seem their main plans. What is wrong with them?

[ricgem2002]

I don't see how thei actions have made it worse. Cut public spending and cut taxes to encourage growth seem their main plans. What is wrong with them?

:hihi: its not working is it

[MrSmith]

Cutting further risks sucking more demand out of the economy, meaning more stalled growth and increased government borrowing.

 

We had the chance to grow our way out of this (growth was a cornerstone of Osborne's plan) but the economic growth we were enjoying was snuffed out within 6 months of the Tories taking power. We've had virtually no growth since and we're still borrowing at record levels.

 

I won't disagree that the coalition inherited a very difficult situation but their actions have worsened it.

 

All I can say is that we've been extremely unlucky to have probably the two most economically inept governments at the helm for one of the greatest financial crises the world has ever seen.

 

The growth of the past decade was stimulated by excessive debt which lead to the global financial crisis, people are now paying back some of this debt, they aren’t borrowing as much as before, so can’t spend as much as before, so how do you expect the economy to grow.

The growth we saw just after the financial crisis was also stimulated by debt, and debt caused the financial collapse. Bit of a catch 22 again, if you want growth then we need more debt, more debts will just lead to another crash, one can’t borrow excessively forever, sooner or later borrowing as the slow to manageable levels but as it slows the economy will shrink, it unavoidable.