Labour needing help from IMF according to economists

[CarCostingMe]

Labour may need help from the IMF, economists warn

Headlines like this seem to be popping up more and more. Is there anyone out there who still thinks that benefits don't need to be cut or is everyone now pretty accepting of the fact that big change is coming whether we like it or not.
All welfare benefits need to be cut (inc the triple lock) and the NHS needs made into an insurance based system too.

I have to admit I have started to make loose plans of how I will cope. I'm not on any benefits but I'm due to get my state pension in about 15years and it's fully paid up already. I hope I will still be getting it but am thinking it might be deliberately frozen and eroded in the future so worth less than it currently is.

I am actually ok (ish) with an insurance based health system as this one is not working now and I am fed up with the stress of trying to navigate it/wait for things.
It's not that I want to pay for healthcare but vast parts of it just don't work anymore.

For everyone else (assuming no-one is burying their heads in the sand still) how will you manage. Any tips gratefully received as I have no family to fall back on.

For now my plans are sell house and live in flat to release equity or stay in house and take out equity release (no kids to leave an inheritance to).

If this is not enough have a lodger as well (I will buy a 2 bed flat min). Not ideal but if needs must.
I have private pensions so they will be getting spent carefully and I have to admit I have already started to be very careful with my spending as I feel change is imminent.

I watched an interesting but depressing podcast about how the rest of the world was watching the UK as an example of what not to do (ie we used to be a great nation and now we are paying more to borrow on the bond market than Greece who the IMF bailed out in 2010.

Britain’s national debt is growing at a faster pace than any country in the world except Botswana, as Labour’s warring factions grapple with how to control public spending.

The UK’s debt as a share of GDP has tripled over the past 25 years, piling pressure on the Government’s finances, according to data from the International Monetary Fund (IMF).

That was a bigger increase than any other country over the same period bar Botswana, an unusual outlier.

Or you can look at the fact that debt to GDP is lower than France, Italy, Spain and not that far above the EU average.

Also US (always going to be large due to the USD being the reserve currency), China and Japan.

That's not to say the UK is in a great state re debt, but it is nowhere near as bad as some people claim it is.

The bond markets can and will act as a natural brake on UK debt expansion - this is currently happening.

I'm fairly confident government spending would be a lot higher than it is at the moment if it wasn't for the bond markets holding the cosh.

The only real way for the government to increase overall spending is through growth/increased taxation.

I strongly feel it is not cricket to selectively quote from an article and not say where it is from or provide a link. Especially when it is the Telegraph, which seems to have changed for the worse. I am considering cancelling my subscription.

Here is the rest of the article.

Economists and politicians warned the “crippling” debt levels were piling unnecessary pressure on families and risked triggering a bond market meltdown.

The IMF measures net government debt by calculating what a country owes, minus what it owns.

According to its data, the UK’s debt as a share of GDP shot up from 30.4pc in 2001 to 95.5pc today – a rise of 65 percentage points.

Only Botswana saw its debts rise more quickly, rising from a budget surplus of -121.9pc in 2001 to 45.2pc this year, an increase of 167 percentage points. Britain has not run a budget surplus since 2000.

However, Botswana is seen as an unusual case. At the turn of the century, the former British colony was awash with cash from the roaring diamond trade.

Under the fiscal rules set out by Rachel Reeves, the Chancellor, the Government must show that debt is falling as a share of GDP by the fifth year of any Budget forecast.

But critics say this represents a moving target that can be too easily gamed.

Sir Mel Stride, the shadow chancellor, said: “It’s ordinary families who end up paying the price for high debt and crippling interest bills.

“A combination of global crises and profligate Labour governments have left the national debt far too high.

“The response to that should be to urgently balance the books and get debt falling – but Rachel Reeves has done the opposite. Debt is set to rise every year of this parliament.”

Paul Johnson, an economist and former head of the Institute for Fiscal Studies, added: “The current Government ignored the issue [debt] in their manifesto, knowing that they’d have to raise taxes and spending, and then shocking everyone with it afterwards.

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“There’s a danger we keep repeating that, so long as parties are understandably too scared to confront the electorate with what’s really happening.”

It underlines the dangers hanging over Britain’s public finances, as Labour’s Sir Keir Starmer faces challenges to his premiership from within his own party and calls to loosen the purse strings even further.

The data will fuel concerns that Britain is living beyond its means at a time when Labour MPs are pressuring leadership hopefuls such as Andy Burnham to raise spending further.

As the UK has become more indebted, investors have demanded ever-higher returns in exchange for lending the Government money through bonds known as gilts.

However, Mr Burnham, who is seen as Sir Keir’s main rival, previously caused market jitters when he suggested the UK must “get beyond this thing of being in hock to the bond markets”.

(Continued)

Mr Burnham has since backtracked and insisted he will stick to Ms Reeves’s fiscal rules.

Colin Ellis, of Moody’s Analytics, said: “We now find ourselves with a very high debt load that is making gilt markets nervous, even before you start talking about who the next prime minister is.”

The UK’s overall debt levels are healthier than those of other large countries such as France and the US, but they have more than tripled in a quarter-century and are soon expected to blow past £3tn for the first time.

The rapid rise reflects a series of shocks, including the financial crisis, Covid and the energy crunch.

The storing up of such problems comes at a difficult time, as growth risks faltering amid the war in Iran and ministers must find billions of pounds to fund greater defence spending.

It has occurred despite a painful programme of austerity in the 2010s, which Labour MPs often blame for Britain’s many ills.

However, as far as deficit reduction goes, such efforts have fallen short, Mr Johnson said.

He said: “Despite the talk about austerity, we’ve actually in general terms been less focused on deficit reduction than other countries.

“The problem is, it’s not as if our public services look wonderful.

“It’s quite hard to see where you cut spending, and it’s equally hard to see how you increase taxes in a way that isn’t damaging.”

I don't think it is that bad an article.

The comparison with Botswana to me is not that relevant, even if it is factually/technically correct.

The greater value/insight is more in the rest of the stuff that is written, which i largely the stuff after that.

The comparison with Botswana to me is not that relevant, even if it is factually/technically correct
The greater value/insight is more in the rest of the stuff that is written, which i largely the stuff after that

Agree. Which is why I feel it can be disingenuous to quote selectively from articles and not provide links to complete version.

No, it’s in terrible shape and getting worse.

But then, you know this - even if you don’t want to contemplate it.

Rachel Reeves has compared the economy to a Beyoncé song about a woman celebrating her achievements.

The Chancellor said she would pick the US singer’s 2006 track Upgrade U to describe Britain’s finances.

Ms Reeves made the comparison in a video published to social media on Monday morning, in which she was interviewed by an AI large language model (LLM).

Asked which song best characterised the UK economy, she said: “If you have done your homework, LLM, then you would know that my favourite singer is Beyoncé.

“And I would pick Upgrade U. The UK economy growth has been upgraded most recently by the IMF, but I would like a few more upgrades.”

As dumb as a rock…

It must really sting that Reeves is still the Chancellor of the Exchequer

Imagine celebrating a woman's achievement.

A lot of the healthcare system is already private and my experience of those systems is they are even harder and more frustrating to navigate, and in a lot of cases the doctors and nurses are downright incompetent. Lab work, dermatology, MRI and ultrasound scans, and even some routine operations are now done by private companies and paid for by the NHS. To cut some rather long stories short, without a lot of complaints and intervention I would have come to serious harm in most of these services over the last few years.

Stop saying private is better. Just look at dentists and opticians. Everything is slower, more expensive and often standards are dangerously slack.

Odd that you exclude men’s achievements, too. Personally, I celebrate both.

Reeves has ‘stung’ many of us - fortunately, I expect she will depart with, or soon after, Starmer.

Unlikely. The markets like her.

I am sure you have been saying that for quite a while now @Paravion011

First female Chancellor of the Exchequer, why not celebrate that achievement?

Poor men, not being celebrated enough. £5m?

I like Patrick Boyle, but he has done other videos eg "why Canada is a warning to the rest of the world", "why New Zealand is a warning to the rest of the world". It's a title format he uses quite a bit. So it's not just the UK that is being singled out. Even sensible podcasts have to use very dramatic titles to actually get views. If you watch one video, you get lots of similar videos recommended. Also, you are based in the UK and an English speaker so will get UK targeted content. I speak Dutch as well as English and a lot of the Dutch language channels will focus on the Netherlands woes. And there are corners of the internet focused on why China is doomed, why the US is doomed, why Japan is doomed etc.

That's not to say there aren't serious issues. Both on a global scale, and issues that effect the UK specifically. E.g. the aging population and growing welfare and health bill is affecting almost every country. As is the Iran war. The after shock of Brexit affects us the most, as do our high electricity prices. But in some areas we are doing better than other countries.

On the subject of the Netherlands there is a huge amount of disatisfaction with the Dutch health care system (I think it's fine) and a general idea moving to a privatised insurance based model was a mistake. So I'm not sure insurance based healthcare is a panacea. I would move to an insurance based model for older social care (care homes etc). Burnham's ideas on this were good. But it's tempting to kick the can down the road there as well.

Where do you think they got the money from to build Council houses post WW2, etc etc? We were massively in debt to the US. Gordon Brown finally paid it off in Dec 2006 60 years after the end of WW2.

Did they just find it at the bottom of Clement Attlee's garden?

It was a political decision to borrow to fund them, knowing that eg the rents on council houses would be put to pay off the debt and indeed fund further building.
We could do the same sort of thing today. Borrow to invest in eg our Utilities, our NHS, our Rail etc etc. Use the sale of gilts eg. If people, UK or foreign, think it is a good investment they will buy.

Compare the Thatcher idea. Sell off our industries and leave us with criminal people running our Water (£1.4 million CEO of Southern Water paid himself last year eg), charging a fortune for very poor ' service'. and plans to pollute the beaches of the Isle of Wight! Sell off our council houses at a discount, forbid using the money to build more, force already financially stressed people to pay exorbitant rents. A predicable way to impoverish the country. but further enrich the already very rich millionaires or indeed billionaires. The numbers of the latter have risen hugely the UK while the employees have had the lowest rise in incomes for the last 200 years ie 0.3% pa.

Impoverishing our people in this way is not only criminal it is very short sighted. The more you squeeze people to fund your billionaires' wealth the less they can buy so eventually you have a financial crash and huge unemployment caused by over production of goods no one can afford to buy.

The cleverer billionaires in the UK know this. After a recent survey 75% wanted to pay more tax to fund the UK. BTW they do not want to emigrate : they like it here.

No, the markets fear who or what might potentially come after her - not quite a glowing endorsement for our Rachel.

Nonetheless moving her would detrimentally affect the economy.

They are quite right. The last time we had a REAL Labour Gov (and no Blair was not true labour). WE needed a bailout from the IMF, interest rates were 15%, Gov imposed a 3 day week, there were fuel and food shortages, electricity consumption was restricted. This labour government is taking us down the same path.

But its not just Labour, the Tories screwed up as well, we've sold off everything and mothballed the rest. We should be a nation of food producers but we screwed over the farmers. We've got significant oil and gas deposits but we are so focused on net zero. We don't invest in manufacturing, we finance immigrants instead of carding them and telling them to go find a job. And we have created a whole underclass that believes being on benefits is a career choice.

Unfortunately politics is a beauty parade and who ever offers up the most gets in. The countries screwed unless it starts making hard decisions and if we dont, welcome to the new banana republic.

sorry you are confusing me. You said 'print money' which does raise inflation and devalue the currency. Then you talk about raising it on the bond market (debt). That is a different thing. We already do that (every month) to pay among other things debt interest. Technically yes we could borrow to invest if we were strict about it. However there would be a lag before you got payback and in the meantime you would have higher costs and higher interest which might be difficult.

Much less than a Burnham ‘bond-market denier’ PM….

The White House has told Sir Keir Starmer not to ban social media for under-16s.

The Trump administration criticised plans for Australian-style age restrictions, arguing that they could harm freedom of speech and that parents should be mainly responsible for regulating their children’s social media use.
It threatens to open a fresh rift between Downing Street and the US following a week of tension over the death of the 18-year-old British student Henry Nowak.

Trump clearly doesn’t understand that the UK isn’t the 51st state. I really hope Starmer tells him to piss off.

The White House 😂

The US really is in no positition to criticise the UK on anything.

Iran, Epstein, ICE

I'm afraid nothing changes and its is a waste of time discussing it until someone in government admits immigration is having an absolutely massive detrimental affect on the country .
Even basic maths tells you if you allow a family of 2 adults and 2 children into the country, they need immediate access to all services including NHS and schools. They also need a house etc etc. So in the adults life time they will never pay enough tax into the system before they then reach pension age. It's impossible. So they are a burden on society.
Cost of living is also going to go up as more demand for things like food means the supermarkets can afford to charge more as they no they have unlimited customer numbers.