Conservatives out there, what's the British economy like?

[Guest alex]

According to the Office for National Statistics, the weak GDP growth was influenced by one-off factors such as the Royal Wedding, Olympic ticket sales, record warm weather in April and the Japanese tsunami.

 

They actual said that too. It's like something off the Daily Mash.

[Christmas Tree 4729]

According to the Office for National Statistics, the weak GDP growth was influenced by one-off factors such as the Royal Wedding, Olympic ticket sales, record warm weather in April and the Japanese tsunami.

 

They actual said that too. It's like something off the Daily Mash.

 

 

Cold weather in winter and warm weather in spring......who'd have known.

[Kevin S. Assilleekunt 1]

According to the Office for National Statistics, the weak GDP growth was influenced by one-off factors such as the Royal Wedding, Olympic ticket sales, record warm weather in April and the Japanese tsunami.

 

They actual said that too. It's like something off the Daily Mash.

 

But the wedding will also have a big negative economic impact. Friday, normally a work day, is a national holiday, meaning a considerable output drop. How big? The Confederation of British Industry estimated in 2007 that each additional holiday costs the economy something like £6 billion. And that estimate might be low. The Kate-and-Wills special holiday happens to fall in between an official Easter holiday and the May bank holiday. The way the calendar works out, Britons can take an 11-day vacation using only three vacation days. And Pricewaterhouse Cooper estimates that as many as 6 million workers might do so. The result is an economy-wide productivity slowdown in the final two weeks of the month, cutting £5 billion or more from GDP this quarter—though the effect should quickly fade as Britons' bosses prod them to work harder once they get back.

 

Still, the argument that the wedding will be a net loss for the economy seems convincing: The low estimate of productivity-related costs swamps the high estimate of consumer-spending gains.

 

http://www.slate.com/id/2292499/

 

I remember reading that.

[ewerk 30677]

"The positive news is that the British economy is continuing to grow and is creating jobs," said Mr Osborne.

 

"And it is positive news too that at a time of real international instability we are a safe haven in the storm."

[Meenzer 15561]

Twitter's in a good mood:

 

Q. How many George Osbornes does it take to change a lightbulb?

A. "We should take comfort in the fact the room hasn't got any darker."

[CleeToonFan 1]

[Guest alex]

"The positive news is that the British economy is continuing to grow and is creating jobs," said Mr Osborne.

 

"And it is positive news too that at a time of real international instability we are a safe haven in the storm."

That's a negative and, right now, I need two positives.

[Happy Face 29]

I wrote a few days ago about the widespread belief here in the UK that there has somehow been a dramatic collapse in the economy’s potential. Martin Wolf has much more, plus a link to a very important paper by Martin and Rowthorn (pdf) that, as I read it (and Wolf too) very effectively debunks that belief.

 

There’s a lot of technical detail, but as I see it the main point is that we see a sharp drop in measured British productivity that could be the result either of some mysterious structural shift or the much more ordinary notion that many firms have held on to “overhead” labor in the face of what they expect to be only a temporary fall in sales. And the data just don’t support any of the proposed explanations of the supposed structural shift.

 

Specifically, the popular line here is that it’s the loss of all those high-value jobs in finance, which sounds plausible until you do the arithmetic and find that it’s way, way too small. This bears a strong family resemblance to stories about alleged structural unemployment in the US that focus on the shift out of construction; again, it sounds good until you do the numbers and find that it’s tiny.

 

This matters, a lot. If Britain has not experienced a mysterious productivity collapse, it is suffering much more than acknowledged from a lack of effective demand — and also has a much smaller underlying budget problem than the government claims. The British may be poor-mouthing their economy — and in so doing creating a self-fulfilling prophecy, in which excessive pessimism about potential leads to policies that in fact impoverish the nation.

 

Do I know for sure that this is the truth? No. But it looks more plausible than the official line. And surely policy should take into account not just the so far purely hypothetical risk of a loss of confidence by the bond market, but also the very real chance that vast amounts of potential production, not to mention the future, is being squandered through excessive pessimism.

 

 

http://krugman.blogs.nytimes.com/2012/06/01/poor-mouthing-britain/?smid=tw-NytimesKrugman&seid=auto

[Happy Face 29]

Martin Wolf nails it: the Cameron government made a terrible mistake by going all in for austerity doctrine — and now cannot change course, because to do so would be to admit its mistake.

 

It may be humiliating for the government to offer such a speech now. But there is no reason why the people of the UK should suffer for its mistake, indefinitely.

 

But there is a reason, of course: the ambition and vanity of politicians. Hello, Mr. Clegg.

 

http://krugman.blogs.nytimes.com/2012/05/28/britains-trap/?smid=tw-NytimesKrugman&seid=auto

[Park Life 71]

Highest living and travel costs in Europe.

[Park Life 71]

Martin Wolf nails it: the Cameron government made a terrible mistake by going all in for austerity doctrine — and now cannot change course, because to do so would be to admit its mistake.

 

It may be humiliating for the government to offer such a speech now. But there is no reason why the people of the UK should suffer for its mistake, indefinitely.

 

But there is a reason, of course: the ambition and vanity of politicians. Hello, Mr. Clegg.

 

http://krugman.blogs...ugman&seid=auto

 

Austerity doctrine is to protect the rich and their money.

[Happy Face 29]

You'll love Krugman tearing this stupid Tory bitch a New arsehole on Newsnight parky

 

[PaddockLad 17290]

Am I right in saying the previously very pro-UK-austerity IMF have started to express a few doubts as well?...

 

No one's spending anything to speak of, banks are sitting on billions that the BoE has printed with no intention of lending it to the few who want it, and the rest are too scared to spend anything at all. All because of the dogs breakfast that is Euroland. Germany will take responsiblity and bail everyone out, because in the long term its the cheapest option by far. Its just a matter of waiting till they give in. Until then we're all fucked, I fail to see what Cameron or any other fucker could do about the situation in this country in isolation other than token gestures. He knows this and probably thinks "well whats the point in losing face now?" Anything he does will be an irrelevence anyway when faced with the big picture. So dont count on petrol duty going anytime soon folks

[Gemmill 44995]

Not specifically related to this thread, but I watched the documentary Collapse early this morning. Which was scary.

[JawD 99]

Krugman is spot on there imo. I run a small-medium business. Less employment red tape would be nice, less corporation tax would be nice, but what drives the business is demand. I am linked through supply to the construction industry. For that it needs funding and confidence (to build or renew). The banks are encouraged to lend but they are not (much). Everyone is banging on about austerity and private business is largely holding on to its cash. the knock on effect is less demand and so on.

 

I was wrong. I thought short term austerity would work. But right now I think what the country needs to a boost in confidence to spend. Get the wheels turning again.

[CleeToonFan 1]

Guess there's no Austrians on TT then.

[Matt 0]

When the economy shrinks by 0.3% y-o-y, that means there is still 99.7% of it out there. Yet we seem to be driving major policies based on relatively small shifts in economic output, because one side see a minute positive number as a ringing endorsement for their approach, the other side see a minute negative number. And surely there is a reasonable margin of error on GDP figures?

 

QE is pointless when at the same time the government is imposing increased capital ratios on banks. The outcome is inevitable- banks hold more cash and become less profitable but more stable, net impact on ex-financial money supply is largely wiped out. I do think there is a general misconception that banks sitting on cash makes them more money, when its actually the opposite.

 

When you print money, it needs to be backed by 'gold or growth' and most countries have had niether of those to offer. So the outs are: economic Lazarus recovery, persistant deleveraging and money destruction or erosion of monetary value through high inflation.

[The Fish 10876]

When the economy shrinks by 0.3% y-o-y, that means there is still 99.7% of it out there. Yet we seem to be driving major policies based on relatively small shifts in economic output, because one side see a minute positive number as a ringing endorsement for their approach, the other side see a minute negative number. And surely there is a reasonable margin of error on GDP figures?

 

QE is pointless when at the same time the government is imposing increased capital ratios on banks. The outcome is inevitable- banks hold more cash and become less profitable but more stable, net impact on ex-financial money supply is largely wiped out. I do think there is a general misconception that banks sitting on cash makes them more money, when its actually the opposite.

 

When you print money, it needs to be backed by 'gold or growth' and most countries have had niether of those to offer. So the outs are: economic Lazarus recovery, persistant deleveraging and money destruction or erosion of monetary value through high inflation.

It reduces the risk of them losing sums that they're not comfortable losing though, right?

[Park Life 71]

When the economy shrinks by 0.3% y-o-y, that means there is still 99.7% of it out there. Yet we seem to be driving major policies based on relatively small shifts in economic output, because one side see a minute positive number as a ringing endorsement for their approach, the other side see a minute negative number. And surely there is a reasonable margin of error on GDP figures?

 

QE is pointless when at the same time the government is imposing increased capital ratios on banks. The outcome is inevitable- banks hold more cash and become less profitable but more stable, net impact on ex-financial money supply is largely wiped out. I do think there is a general misconception that banks sitting on cash makes them more money, when its actually the opposite.

 

When you print money, it needs to be backed by 'gold or growth' and most countries have had niether of those to offer. So the outs are: economic Lazarus recovery, persistant deleveraging and money destruction or erosion of monetary value through high inflation.

 

Good post.

[Park Life 71]

You'll love Krugman tearing this stupid Tory bitch a New arsehole on Newsnight parky

 

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Krugman is pretty clever and I agree with him on some things (apart from the fact that the base model needs changing).

 

The private sector isn't growing, infact it's now syphoning money in many different ways away from the Govt pot (tax evasion, subsidies and so on..)..The permanent growth model is broken and that is primarily because the private sector has moved to low wage environments and discarded their responsabilities in the home market, thus creating umemployment amongst their primary customers...The workers...The bridge the state has built (creating jobs) and lending and quantative easing (lending banks) is only a temporary measure. ( I would tax anything made outside the EU at 12% import duty and put that into the Govt pot and reduce VAT to 7.5% across the board).

 

2nd homes and landlords with property chains should be taxed into oblivion (rental income taxed at 60%) Within a few years the vultures will decamp and affordable housing will return.

 

All Nato wars should be billed to the EU or we're not interested (stop wasting money and lives on other peoples wars). If BP want a new pipeline or annex new fields let them raise and army and fight for it.

 

Remove corporation tax and comapany taxes completely on companies with a turnover of less than £1m (for the first 3 years) and give tax credits to companies employing people in the UK. Docklands and parts of Wales should be designated free trade zones open to all across Europe carrying grants and reduced tax environments.

 

The idea of responsible capitalism is a chimera. We are at war with the banks and markets and make no mistake that they will lose. It will start this year with Spain and it is going to be bloody. The Spanish don't fuck about when they get angry. The workers haven't quite caught up with the new 'moral environment' but they will.

 

Let the next big greedy fraudulant bank fail and jail the directors. Let's get real.

Edited June 2, 2012 by Park Life

[Matt 0]

The permanent growth model is broken

 

It isn't broken, it's over.

 

Take all those economic formulae and set g=0. Then we'll see a real rebasing of expectations to something more realistic.

[Happy Face 29]

Would it not be ok if g=i?

[Meenzer 15561]

Would it not be ok if g=i?

 

[Matt 0]

Would it not be ok if g=i?

 

Most growth assumptions have long been imaginary numbers.

[Kevin Carr's Gloves 3905]

It isn't broken, it's over.

 

Take all those economic formulae and set g=0. Then we'll see a real rebasing of expectations to something more realistic.

 

Broken? Over? It never existed it was self delusion on a massive scale.