To think the UK economy is utterly broken…

[Paul2023]

Things were never the same after the crash of 2007/2008. Austerity was imposed with the Conservatives in 2010 and things never really recovered after that.

Of course we had Brexit and the pandemic.

We’ve had best part of 15 years of cuts to public services, of which we saw services decimated. We’re now seeing the results.

The Bank of England continues to raise interest rates, yet inflation still ain’t coming down fast enough. Yet, most people with mortgages and who privately rent ( which is most of the population) will be poorer as a result of this.

I think the county is in denial. The economy is in a poor state and I don’t think anyone in government ( who ever it is) has the answer. It’s just a case of sticking plasters over the wounds to fight another day.

Here’s an email a poster got from his father , from another forum I’m on;

“I hate to be the bearer of bad news, but someone must point out the grim truth facing the UK; we're going bust.

The UK has just hit a new and totally unwanted milestone, as the country now owes more money than its entire economy is worth - and it’s only going to grow as government borrowing continues to soar. The UK is particularly vulnerable because much of our debt is linked to inflation, and the cost of it rises with prices. Inflation is not stabilising because of wage demands, pension and supply chain increases.

It's a major symbolic moment but one that is in danger of getting lost, as the cost-of-living crisis rages unchecked

and homeowners panic over how they're going to pay their soaring mortgage bills.

The government continues to spend a lot more than the nation collectively earns, forcing it to fund everyday spending by borrowing money.

Taxes may be at a 70-year high – and set to rise even higher – but it's still not enough. As the nation gets sicker and older, the shortfall will grow.

We’re a nation in denial. So are France, Italy and even the US, but that doesn't make it right!”

Im just so scared for the future of our kids that I really can’t see how things will ever really get better. There’s going to be a bigger population of older people and less people paying tax. It explains why the government is so keen to get older people back into work!

Does anyone else really worry about the state of the UK?

In which case why won’t the government call a general election and put itself and us out of our misery? They’re hanging on for grim death.

The government are probably lining their own pockets too much at the moment to want to call an election.

I listened aghast this morning to a government minister pretty much salivating about being the closest ally to Ukraine and expecting to boost our economy through rebuilding it (whilst it’s being bombed). Fuck it made us sound so mercenary. Couldn’t believe the brass neck of it.

So anyway that’s going to sort it out all out. Stop worrying.

I agree with you on many of those points. Everything has to be looked at in current context.

Neither party could answer on what the short term fix was this morning beyond interest rates, because it’ll be painful, otherwise it’s inflation which is worse

This is true.

I thought that Rishi sunak told Russia to re build Ukraine. I remember reading that last week thinking what ?

The problem is that most of the population aren't educated on how the economy of a country works and continue to believe Thatcher's statement that running the country's economy is like a household budget.

This means that time and again they fall for the Tories imposing austerity and spending cuts which impact the poorest while the rich get richer.

And they continue to worry about "paying for furlough" or any other scheme which costs money.

Austerity isn't working we need to look at alternatives.

The USA didn't escape the Great Depression with Austerity. We should consider a more Keynesian approach and trickle up rather than trickle down, but rich Tory donors don't want the working and middle classes to be more comfortable they want to continue to hoard wealth.

But that's just not true. It's much more difficult for young people to afford a mortgage/rent etc nowadays. House prices rises have far outstripped wage rises over the last 30 years.

I'm a similar age to you. 30 years ago DH and I bought our first house, a two bedroom house with garden in the South East, which we could comfortably afford on our wages (both working in our first jobs at less than the average wage). 5 years later we bought a four bedroom detached, also in the South East, and I was able to vastly reduce my working hours to have children, without the worry of how we were going to pay the bills. My DH at that time earned a little over the national average.

My eldest son, at 22, now earns close to the average wage, as does his partner. They would even get close to a mortgage now for that first house we bought, let alone a four bedroom detached in the nice area that we lived in then.

My middle son, 21, is moving out with his girlfriend, their rent alone is over double what we pay on our mortgage, and they can just about afford a one bedroom flat.

The younger generation are struggling with mortgages/rent in a way that we never had to. I'm not saying it was easy for us, but it was nothing like it is now.

Isn't 'trickle up ' economics the thing that Liz truss tried and failed to do last year ?

Agree with the comments below about the young. They have it a lot harder and I say that as someone who also struggled financially and we nearly lost a house in early 90s , high interest rates etc etc.
It is much much harder now and I feel sorry for them.

I might be getting trickle up or down economy wrong there , sorry !
Ignore one of my posts.

Problem with the Keynesian approach is that people are all for the government spending in the recession to balance out the economic cycle, but aren't up for the reduction in spending when the economy does well.

Funny one that.

I would be more convinced by people suggesting Keynesian economics if they suggested full Keynesian, rather than just maxing out government spending all the time.

Anyway, there is a slight problem with upping government spending in the respect that we have maxed out our borrowing. So all the money has actually got to come from somewhere - or more specifically someone this time.

We've had recessions before, and eventually recovered. People lost their homes in the 80's and 90's with interest rates - it's nothing new.

Young people have always struggled to buy homes.

We used to be called Boom and Bust Britain. It'll all pass, sooner or later.

But we have had very cheap food and interest rates for years - those days are gone.

We will all have to adjust.

US interest rate 5%-5.25% with 2 rises expected by the end of the year. Inflation rate 4%

UK interest rate 4.5% Inflation rate 8.7%

I think it's inevitable that we will have interest rates that are at least equal to the US and that we should be keeping an eye on the US number to predict what may happen in the future.

They don't want to go down as the Party that bankrupted Britain. Sunak and Hunt have been shovelling the shit since Trussterfuck economics.

Agree with this. We’ve maxed out borrowing so the going back to Thatcher line isn’t so relevant as a point to use

Further debt isn’t the answer

Was talking to an American last week. It seems things are much the same there from what he was saying. Can't get staff for hospitality, struggling to get teachers, public services going down the drain. No one wants to leave the house to go to work and want to work from home which is just not possible for so many jobs.

Raising interests rates hasn’t worked and isn’t working! Doesn’t this just make the banks richer ?

I find it kind of mad that in a discussion about our current economic problems no one mentons the fact that we shut the country down and flooded it with free money for two years. What exactly did people think was going to happen?

I was just thinking that on the everyone wants to wfh post just below

Pensioners pay tax too you know...
I recently turned 62. I thought I'd be comfortably retired by now. I have a Barclays pension which kicked in at 60 but I'm still working and will be for the forseeable I think. The state of the economy scares me. Our energy bills are terrifying.
The downside of working from home is having to power and heat the house.
One of the main parties needs to address the elephant in the room which is Brexit. The Tories are still pretending that it's 'done' and a fantastic idea and the Labour party are sticking their fingers in their ears and going 'la la la'.

So I am not an economist nor am I a political animal. I'm simply an observer.

Why doesn't the government impose a tax on the energy companies and either pass the money back to the consumer, thus bringing the cost of energy down so food suppliers do not have to pass the cost of energy onto the supermarket.. and ultimately the shopper.. or pass the money directly to anyone paying an energy bill which would surely have the same effect?

Just listening to radio 5 a lady made a really good point in saying increase VAT to curb spending rather than squeeze a reliably small number of people who are coming off fixed rate mortgages

Yes, Brexit too, which like lockdown and furlough, the electorate said it wanted.
maybe the problem is us, eh? Maybe time we realised the things we bayed and shrieked at the government to do have some adverse consequences.

But this would push prices even higher in the shops. And also, you can bet you’re bottom dollar ( or pound!) that the vat rate would never be reduced again.