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?

I’d support vat increases on somethings but not food. Do we pay vat on food?

The BOE control interest rates and the government control VAT. And they are nominally independent of each other.

VAT as a cost will fall on all of us, so if it was increased, then it would effectively be a bailout from non mortgage holders to mortgage holders. Not sure I am up for bailing out someone who bought a house bigger than they could afford while I continue to be prudent and live well within my means.

YANBU OP. The next government has its work cut out for them.

Yes. Did anyone expect anything different after nearly three years of purposeful destruction of the economy and the society to appease entitled and easily led health anxious individuals scared of enduring a mild illness and too thick to understand statistics or curiosity free to never find out any for themselves.

Weren’t the lockdowns to save the NHS from being overwhelmed? Not pandering to health anxieties?

Really can't get worked up about this, there always has been problems and always will be. Throw climate change into the mix and it's all doom and gloom, but humans will sadly continue to cock things up especially in the natural world.

Oh no apparently we’re doing it. With all our surplus tradesman that we don’t have I guess.

Although silly me it’s going to be UK based companies farming out other Eastern European labourers I suspect and just making money off other peoples graft. Like the golden olden days.

I'm not a Brexiteer but please don't insult anyone's intelligence by bringing Brexit into it. This shitshow started in March 2020. The country borrowed more than in the two world wars to lock up its whole population for a number of years to combat a cold-like illness that nhs described as "typically mild". Try to remember and may be even try to think about the effect of this. You'll feel it for many years.

Well not really as mortgage payers will pay increased VAT too, it would be a fairer way to help address the issue of inflation as clearly what they are going now is not working. Not everyone who will struggle has taken on massive mortgages beyond their means, the COL and stagnating wages has impacted everyone including modest mortgage holders

The government locked us down, not the people. They had to save the NHS because it would have collapsed otherwise.
It's a handy scape goat for the Tories to blame it on though , that and the war in Ukraine too.

We all bail each other out all the time. It's literally how the welfare state works.
Why should (almost exclusively young) homeowners be left to deal with the consequences of decades of mismanagement alone? What about landlords with mortgages? Do we help renters when those mortgages increase? Why should my taxes bail out landlords? In fact they already are, we spend millions on housing benefits that goes straight into the pockets of private landlords. Why is that different?

Yep, this. People who own outright are unaffected. Those in social housing aren't necessarily getting rent rises that match interest rates, and lots of people with mortgages either have a long time to go or don't owe that much. So even an increase from say 1% to 6% isn't always a big deal. The groups affected are those who have fixed/will fix soon, owe enough for the interest rates to make a substantial difference and of course private renters. That's a minority of the population.

It's just too blunt a tool for it to work how they want it to work. I realise the BOE don't have many at their disposal, but just because you only have a few options doesn't mean one of them is going to be effective.

It isn't.

The government shouldn't bail out anyone.

That way markets find their own level, house prices will fall and people won't have to pay stupid money for houses in the first place - and need bailing out in the process.

Endless bailouts just make markets dsyfunctional. That and the combination of having life essentials (housing) used as speculative assets.

The government won't bail out anyone.
I doubt they can afford it for starters

I'd just like to add my perspective as someone who runs a retail business. I am pretty sure that the UK is on a downward trajectory that is not cyclical. It is going to get worse.
As we all know, a lot of the infrastructure we see around us (lovely buildings etc.) was funded through colonialism. Despite the ending of slavery, we continued (and still do to an extent) to exploit poorer countries to fund our lifestyles. So people in China, for example, were working under awful conditions to make our goods and we were paying them pence to do it.
What happened to change everything was the internet. People in other countries were able to fully see what was happening for the first time and they got fed up of it. They also realised that instead of selling to UK businesses and retailers for pence they could just sell directly themselves and make a hundred times more profit (Shein, Amazon etc.). So that's what they did - no more vast profits for UK businesses and the public's spending money is siphoned out of the country with very little tax paid to support services hence the collapse of the NHS etc.
And nowadays my business gets many Chinese customers as well as customers from other developing countries; these customers are rich, enjoying their new wealth and good on them. They have worked for it. Many have a lot more disposable income than the average UK citizen.
We now have to stand on our own feet. Can we though? I'm not sure. We are used to a certain lifestyle and feel entitled to it but we are not earning it. The world has changed for good - it won't be going back to how it was before. Just my view.

Don't forget the UK total debt doesn't include things such as public sector pension liabilities, student debt or PFI outstanding so in reality it is much, much more. We have two massive money pits in the NHS and DWP. Both will inevitably have to be curtailed
The NHS by a big reduction in services offered and the DWP by the introduction of means testing of the State Retirement Pension and so on. UC remains poorly designed and implemented, some people are receiving very high levels of benefit indeed without adequate checks, and others suffering unduly
The enormous grey economy also needs to be addressed, unfortunately the only way is the introduction of ID cards. And HMRC actually doing their job.This might help the Government arrive at a true figure for our population which is millions more than the ONS suggests, and allow local authorities, schools, doctors surgeries etc to receive workable budgets based on reality

We can’t afford it. It’s taxpayer money

But agree we can’t

Also bailing people out just prolongs the inflation issue

I seem to recall someone saying it will hit 800k homeowners coming off fixed rate. Changing the spending patterns of 800k will do diddly squat in the grand scheme of things. Just focusing higher pain on a few

Other solutions seem to be slim from all parties though

We also have an aging population too
That is something else they kick along the road.

How do you feel about China's very determined efforts to essentially colonise much of Africa and the Caribbean? They are profiteering off other people's backs. Hardly admirable
Also for some reason China has been designated a developing country and we subsidise their shipping costs so Chinese producers pay the equivalent of around half a pence to ship to the UK? This is a nonsense as we are encouraging the competition to our own detriment
You're quite right to say that this all seems to be an inevitable collapse, maybe of Western civilisation and not just the UK? That's rentier capitalism for you

How do you feel about China's very determined efforts to essentially colonise much of Africa and the Caribbean? They are profiteering off other people's backs. Hardly admirable
Also for some reason China has been designated a developing country and we subsidise their shipping costs so Chinese producers pay the equivalent of around half a pence to ship to the UK? This is a nonsense as we are encouraging the competition to our own detriment
You're quite right to say that this all seems to be an inevitable collapse, maybe of Western civilisation and not just the UK? That's rentier capitalism for you

Not sure if I am replying correctly here - these are my first posts! Yes I completely agree with you and I am not trying to big up China in any way; just pointing out the predicament I feel we are in. I actually took the issue you mention of the subsidised postage to my MP and they raised it in debate but of course nothing changed.
And yes, the EU and USA have similar problems to our own.
What I am saying is I think people who are saying, "Oh, it's just a blip." are wrong. Changing the Government/tinkering with interest rates/rejoining the EU will not address our fundamental problem which is that we can't keep on exploiting people indefinitely and we don't have a lot to offer that anybody wants.

That ship’s sailed.

This « exploiting people » thing is odd. When this country was at the height of its economic and political power was when it was at its most exploitative, as our betters at the bbc and the guardian ceaselessly remind us. Our problem is not that. We have an aging population and a large number of people who are not employed productively. Those are surely our fundamental problems.

I'm not a Brexiteer but please don't insult anyone's intelligence by bringing Brexit into it

And yet, Brexit is part of the problem. It's not insulting anyone's intelligence to say so. Many economic experts agree with this. Brexit may not be the only problem, but it's certainly a contributing factor, and it's naive to think otherwise.

It could be better and I do think for younger people it is hard to buy or rent in many areas. However personal experience has shown me that when it comes right down to it many people make poor choices about money and where to live.

About 8 years ago when me and my now husband were emerging from our 20's spent in city flatshares we had to decide what to do next. Most of our friends went on to rent really nice flats in very hip or expensive parts of town because all their friends were there, those area's had the nice cafe's and shops which was all true. I'd have liked to live there too but I knew I couldn't afford to buy there. We made the decision to buy outside the city, its a nice house, nothing fancy but we've just paid the mortgage off this month and its all ours. We have no debt now and decent savings that are starting to benefit from rises in interest rates.

Most of my friends are still renting in nice parts of town that they can no longer afford and will have to leave as rents increase yet again this august. Worse than that they have no savings for a house deposit in their late 30's - early 40's. Some will be ok due to eventual inheritance but for many like us they don't have wealthy parents and were probably foolish to follow the lead of those who do.

Of course there are lots of people struggling on low incomes, in expensive but grotty rented accommodation who don't deserve any of this and should be helped but there are also many people who did have the means to make different choices but didn't who put lifestyle ahead of securing a home they could afford.

I don't want anyone to be homeless but I do feel a bit annoyed that irresponsible are now looking to bailed out at my expense.

Having wrenched the leadership role for himself from Truss who took much of the blame for the BoE screw up last year, Sunak and his economic textbook friends thought they would apply their ‘formula’ to our economy without stopping to consider the unique aspects that are now present. It was a gamble at the time but they thought they knew best.

It has blown up spectacularly.

No one is pleased to see this, except for perhaps Boris Johnson, God pays his dues in strange ways - and now the infighting that will ensue will make the last two years look like a teddy bears tea party. The idiotic MPs ignored the grassroots and rammed through Rishi expecting him to deliver fiscal competence, and then maybe an election win and he has now delivered the exact opposite. A disastrous outcome for the mortgage paying conservative voters, a new recession and all the rest that will come with that.

Look to the left, utter befuddled radio silence. They don’t have any answers either. I fear we have no grown ups left to run this country.

The worst thing about this is it could have been avoided ( look up Patrick Minford if you are interested)

The whole of the Eurozone is in the same or a worse position. Yes for those that have deep pockets it will be cyclical but for others….

Deep breath folks will