All those who deny that the economy is screwed please read

[MrsPear]

This is the Bank of England statement reprinted in the Independent

here

Now tell me I’m wrong again. We can carry on our quarantine lives and all is well. We need to start back to work. A fucked economy effects everyone from benefit claimants to the wealthy to state drawing pensioners. No one has a personal ni savings account - it is paid into the economy and paid out the same day. There is only a record but if it is not being paid in it won’t be paid out.

No one knows the outcome of this but things will be tough, many people on this site seem to have money and less worries but a life on UC or a low income is not fun forever. Being broke all the time leads to more issues. Those that can afford to stay at home because they have their savings / good careers and jobs are definitely in an ivory tower.

I am one. Again, is there anyone who isn’t very concerned about the economy? What does that have to do with who I vote for - Labour aren’t in government?

It's just very interesting that Labour voters are concerned about the economy now, yet are happy to vote for a party with a history of neglecting it, spending beyond the country's means, plunging us into the worst recession since WWII (prior to this one), etc.

I’m concerned about/interested in the economy all the time. In my opinion, everyone should be. People have different ideas about how an economy should be run, sure - I prefer it to be run in a way that benefits the largest possible number of people, with well-funded public services, a reasonable welfare state, a tax regime that’s as equitable as possible, etc. I prefer not to see taxpayer money going to private hands - although I accept that that’s what’s happening at the moment with the furlough scheme in some cases, with very wealthy businesses choosing to subsidise themselves from taxpayer money. I see that as a lesser evil than those companies simply laying off staff, though.

I have never heard a government being accused of ‘neglecting’ the economy before, can you expand on what you mean by that, and also perhaps provide some evidence that the last Labour government plunged us into the last recession?

I don’t think the coalition and Conservative governments have done much for the economy over the last ten years tbh. What do you think they’ve achieved that has benefitted the country economically? The Brexit debacle has been cripplingly expensive and led to the ‘end’ of austerity - which in my view confirmed that austerity was always an ideological and not a practical policy. Wholly down to the actions of Conservatives in government, in my view.

We weren’t in great shape economically to face this virus. That’s down to the government, isn’t it, because although a global crash is happening now, there wasn’t one before the virus?

Don’t get me wrong, I don’t necessarily think a Labour government would have handled the financial aspect of this crisis very differently from how the present govt has. But I resent the accusation that a Labour voter isn’t interested in the economy. What do you think I base my financial and political decisions on?!

Recessions also kill people.

Can someone tell me the death rate please? Because if it's less than covid I'm not interested.

And suicide is a choice. I say that as someone who has been suicidal twice. We can't make a whole country have a higher death rate from a virus because a few people might commit suicide.

Is anyway denying that the economy is screwed?

Is that really the point of contention? The debate is about balance between public health and economics, isn’t it? And about the best order of operations to apply when lifting restrictions?

Anyone^

@NiteFlights - The previous Labour government facilitated irresponsible levels of loans, so personal debt and house prices both skyrocketed, and then the bubble burst. That in turn caused lending decisions to go too far in the opposite direction and the economy shrunk.

Irresponsible borrowing is also why Labour governments have well-funded services and a welfare state, while the Conservatives have to resort to austerity. Labour are the reckless teenagers that spend money they don't have to make themselves popular. The Conservatives are the boring, responsible parents who have to clean up their financial mess. When David Cameron took over from Gordon Brown, the budget deficit was a staggering £103 billion. What have the Conservative government achieved? They've not only reduced that, they've reversed it. Prior to the current crisis, we'd finally reached the point that the country's debt was decreasing again, instead of spiralling out of control. So while I agree we're not in great shape economically now, things are much better than 10 years ago. And if we hadn't had to spend the past decade repairing damage, perhaps we would be in a reasonable position for weathering Brexit and COVID-19 now.

Okay. I don’t accept that the Labour govt caused the last financial crisis. It was global, and I don’t believe a Conservative govt would have acted differently regarding lending. It was under Thatcher that the house price escalation started, and I don’t think any UK govt since has or would do anything about it. Lenders tightened up in reaction to the crisis but that’s how markets work. So I disagree that that’s a party political issue.

My view on austerity and reducing the budget deficit is that the deficit reduction could have been achieved without plunging people into poverty and misery as happened due to austerity. There is little point in ‘balancing the books’ if it ultimately leaves public services struggling, and society more unequal. The austerity project was ghastly in the way it was implemented, disproportionately targeting the poorest and leaving us all worse off in terms of public services. And for what, really? An NHS without enough staff, a police force without enough officers, to name just two examples, when a global pandemic came along.

Do you think you, personally, have benefited from Conservative economic policies? Because to my mind that’s what it’s about - making things fairer and raising standards of living. There have been years and years of pay freezes etc. Endless rhetoric about scroungers. ‘No magic money tree’. But the economy is about you and me and the money in our pocket, how we spend it or don’t spend it. It’s not some numbers on a spreadsheet somewhere.

Also, I don’t believe the recent Conservative governments would have done much public spending anyway. That’s the right-wing way and that’s how it is - and plenty of people agree with that, which is fine - but they used the state if the economy after the financial crash as a way of creating a narrative around it, which was very convenient because it allowed them to blame Labour for their harsh policies.

I’ve seen many times on MN that Labour spend to ‘make themselves popular’ but it doesn’t seem to work - plenty of people seem to want to vote for a party that will take money away from them and give it to rich people! I believe that Labour spend to try to make life better - improve public services etc - for everyone, and that’s something I believe in.

Naturally there were things the last Labour govt did economically that I disagreed with, off the top of my head PFI, gambling deregulation, and to some extent tax credits (paying private employers from the public purse). But people were better off under them.

Apologies for the essay. I’m not an economist and I’m just trying to be clear about how I see things. I think the idea that right-wing governments are better economically than left-wing governments is a big lie, but it’s interesting to look at the nuances of people’s beliefs around this stuff.

It's just very interesting that Labour voters are concerned about the economy now, yet are happy to vote for a party with a history of neglecting it, spending beyond the country's means, plunging us into the worst recession since WWII (prior to this one), etc.

And yet economists rated Labour spending plans higher than the Conservatives' - almost like Conservatives are just making sound bites than play well with people who don't know about economics? Old hat now, but from the FT last year - link

Yes the economy is screwed either way, even the article says:

..but what would be worse for the economy would be to ease these measures too soon and have a second spike. That is not only the view of the government, it’s the view of the governor of the Bank of England.

So with the woolly message sent out last night by our incompetent PM, expect it to be even more fucked soon.

Lock down needs to be lifted at the right time and with "exemplar" testing, tracking and tracing strategies which this government is incapable of coordinating. Lock down is not the main issue, our governments criminal incompetence at getting us out of it safely, for the sake of public health AND the economy is.

PowerslidePanda, the 2007-8 global financial crisis was caused by bank crashes in the USA.

Not only did Cameron not rescue the UK from it, but under Tory austerity the UK had the worst double-dip recession for 50 years. Don't take my word for it; here's that bastion of lefty socialism, The Daily Telegraph:

George Osborne under attack as Britain's recession deepens
www.telegraph.co.uk/news/politics/9427864/George-Osborne-under-attack-as-Britains-recession-deepens.html

The economy shrank by 0.7 per cent between April and June, the Office for National Statistics said. It is now smaller than when the Coalition came to power in 2010.
Since then, the Chancellor has pursued a strict policy of austerity – “Plan A” – in an attempt to bring down the deficit, leading to accusations that he has not done enough to stimulate growth.

Far from causing the recovery, it's more that Cameron and Osborne failed to prevent the recovery.

They had a good go, though, and by 2012 had managed to shrink the economy further...

almost like Conservatives are just making sound bites that play well with people who don't know about economics?

No! Surely not!

But ignoring the poster who for some reason took this as an opportunity to spew quite bonkersly false party political shite...

Yes, of course we're in a for a recession. We've known that since this started.

We can't get out of the situation by just lifting lockdown and accepting high levels of deaths, even if we wanted to, because the virus doesn't merely kill. It makes huge swathes of the workforce too ill to work, in some cases for an extended period. And that hits the economy too.

It also hits food security and transport.

And suicide is a choice. I say that as someone who has been suicidal twice.

Wow, well aren't you just a wonderfully empathetic human being. Really, you think suicide was a choice for the disabled people who were wrongly taken off ESA and DLA and then weren't able to claim JSA, because you've guessed it, they weren't fit for work. You think that's a choice? Seriously fuck you.
You do realise most people who commit suicide are mentally ill right? They don't choose to be ill anymore than a sick person chooses to be sick. But according to you suicide is "a choice" and because you've been suicidal you're a fucking expert.
Do you know what it's like to have no money, no help and nowhere to turn? Not like you'd give a fuck anyway.

the reason this has been such a shit show economically is the ineffective CONSERVATIVE austerity crippling the country. You people dont understand basic investment.

Labour did not cause the worldwide financial crises as you lot have been told over and over but are too slow or ideologically blind to get.

If the economic system is not working to serve people then maybe it is the economic system the needs to change.

Certainly the consumerist capitalist economy is unsustainable. Covid is an opportunity to demand change.

Tories never understand that a stitch in time saves nine. Invest in public services and you save money down the line.

I wonder how much lack of PPE stockpiling is costing in terms of lives, sick leave and the cost of trying to procure enough now compared to the cost of stockpiling in the first case.

And as PPs have said lifting lockdown too soon won't help your precious economy but make all the things you're worried about worse.

I don't think we can avoid a recession now whatever we do. Too many people will be ill, too many will lack the confidence to spend. The economy can't be healthy while the nation is sick. This was acknowledged at the government briefing only a week or so ago. Now pressure from businesses and individuals has made them cave. Cases and deaths will go up and we will have to either accept this or go back into lockdown. Neither will do anything positive for the economy.

The countries taking stricter measures to tackle Covid will see faster and easier economic recovery than us

How does the economy not suffer when the people who keep it running are dying or off sick?

It's all very well for the more comfortably off to push for ignoring the deadly virus. They don't face the same risks as those with less money. It's lower paid people who are dying in the largest numbers. And whilst many don't seem to care about that, it's worth bearing in mind we don't have a healthy economy without these people.

I suspect (and I hope I'm wrong) that if this disease was affecting the white middle class the worst we wouldn't be seeing quite such a clamour to ignore the danger - both in terms of avoidable deaths and to the long-term economic recovery.

Well, we could avoid a recession if the govt extended the quantative easing measures mentioned in the article.

Like they did for the banking sector in 2008.

They won't for the same reasons that they pursued the ideology of austerity, despite the suffering it caused millions (not them or their friends of course).

We could've avoided a recession had we taken very strict measures at the start. Short term pain, long term gain.

All we can do now is mitigate the damage. That doesn't mean pretending the infectious deadly disease has gone away. Because that will only further postpone any hope of economic recovery.

No, we could have avoided the virus spreading as much as it has if there had been strict measures taken at the start.

A recession could be avoided by quantative easing measures.

Is quantitative easing just another way of saying:
"print money but we can get away with it (without harming most people) if inflation is low"

will inflation stay low?

Not really.

QE creates money so that banks can buy safe assets like bonds from commercial banks in return for interest payments. The value of the bonds should rise and push interest rates down, making it easier for governments and the wider to borrow money thus stimulating the economy and hopefully offsetting a recession.

Just printing money and distributing it would push up inflation.

The Bank of England are using quantitative easing measures it seems, although they're keeping fairly quiet about it.