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?

It does rather depend where they are going! Anywhere in the Eurozone will be the same as here!

Who’s savings are getting interest on them? I don’t know anyone in that situation.

Just seen the situation in China. This is beginning to look like a global issue, not just Europe.

Who’s savings are getting interest on them? I don’t know anyone in that situation.

mine but it's not 6%!

We’re getting 6.75% on ours - Lloyds Club monthly saver.

The thing is there was some hardship in the early 90s and things did improve by the mid 90s.
However, even back in those tough time’s public services weren’t in the state they are in now. In the 90s, you could get a doctors appointment, see a dentist, get a police officer if you needed one.

That was bloody 30 years ago and things have gone backwards. Because there isn’t the funds to pay for it now.

The trouble is, even when interest rates were at a normal rate (5-7%) in the 2000s, houses were much cheaper.

Now people are being hit with higher interest rates and higher house prices. It’s a double whammy, and I don’t think you can have both.

It will also kill off the housing market for first time buyers which affects anyone that wants to move.

And push up rent prices everywhere.

Are we fucked ?

From the Bank of England website;

The future is uncertain, so we can’t be precise about what will happen to Bank Rate in future. That will depend on what happens in the economy and what we think will happen to the rate of inflation over the next few years.
We will continue to review how the economy is doing and whether a change in interest rates is needed every six weeks or so. If it looks like higher inflation is going to be more persistent, then we may need to increase interest rates further to make sure it comes back down.
We will make our next interest rate decision on Thursday 3 August 2023.

Many economists believe we are reaching the peak, so it might be worthwhile considering.

They will then have to try and re inflate the economy.

Bailey should be sacked

They will then have to try and re inflate the economy.

With the fullest of respect, read the room and smell the coffee.

There is no more reflating of the UK economy. QE is dead. We owe too much. We owe £2.6 Trillion. There is no more Truss / Kwarteng economics. We are never going to be a Singapore. We were once, briefly and inside the EU, but those days are over. Ireland is a 'Singapore' and Luxembourg is a 'Singapore' and they will sap the financial services out of the UK no doubt other financial centres in the EU will pop up and my bet is Poland and Romania.

The UK is overvalued. We have believed in the value of residential property too much to prop the economy up for 30 years. It is like a soap opera.

We do have some amazing industries, but the more we try to align personal wealth as a measure of our interest in the housing market the weaker we have become.

A crash is coming. This time we are alone.

I work for a reinsurer - global company, based out of the UK. Very high turnover, would have been a high tax income for HMRC.

After Brexit threatened the global trading model the HQ was moved to Bermuda and I image a lot of tax income with it.

Surely if interest rates are going up then savers should be benefitting? I'm not in the UK but my savings are getting interest in the region of 5/6%, every time interest rates rise I get (a little bit) more.

I think it's shit everywhere. But different flavours.

Most reinsurers had been in Bermuda for decades. It is a major reinsurance hub. Brexit would have had an effect for sure. Trussenomics also has sent the jitters round.

Truss and Kwarteng 'Ratnered' the UK sadly.

Obviously I realise that. But we weren't....and only moved because of Brexit.

Previous employers were insurers, EMEA head office was in London which employed hundreds of people. Due to Brexit the EMEA region ceased to exist. The Head Office closed. All European business is now run from Luxembourg.

Truss and Kwarteng are convenient scapegoats. They sped up the trajectory, but we were going down this road way before they came into play. Inflation was skyrocketing before she became PM, and productivity had stalled way before. In fact they hit the nail on the head that the issue was productivity, it’s just they were Brextemists so had fantasy solutions to fix this.

Sunak (the more presentable Brextemist) can’t fix this, nor can Andrew Bailey. I would never trust a Bank of England governor, who was a Brexiter , with the countries finances as they’ve already proven they don’t understand trade, markets or money.

Truss and Kwarteng are convenient scapegoats😂😂😂

Yeah, ok👌🏻

No they really are. If you genuinely think we are in this mess only because of them, then I have a bridge to sell you. They sped up the decline, but we were already declining and still are.

Why do you think Sunak is reluctant to throw them under the bus? He lost more than they did when he was Chancellor. We’ve had poor economic management for some time. It didn’t only start last year.

I agree we’re in a mess. But they made it worse.

They were the Emperor's Clothes for sure. Still devalued us by a few %.

It's the global economy, not just the UK, but yes it is pretty bad. We may have a sovereign debt crisis, but so will other countries. Some have defaulted already.

I think the last few years have been partially by design (I think people made the most of a crisis) and has been about the transfer of wealth and creating an economic crisis where CBDCs are the only viable option. Sadly this means people will suffer, just so this can happen.

So yeah, it is shit, but the system we currently have has made the average person feel wealthy when in fact they aren't. I think some people are in for a shock.

We are a sovereign country. It’s all a smokescreen, including austerity. I wish people would learn about Modern Monetary Theory. Those in power could fund everything properly and fix the mess but they don’t want to. Remember the magic billions suddenly produced for the DUP ‘partnership’ or the millions for track & trace etc! But they want to keep the minions and plebs poor. It’s been the same throughout history.

Surely it’s not economically sound to have high house prices and high interest rates?

This will kill off first time buyers and many people will want to sell to move into cheaper houses, cheaper areas. But they’ll struggle to sell because people won’t be able to buy the houses.

An economist on Talk TV said yesterday that these interest rate rises could actually be worse than the high interest rates of the late 80s and early 90s because house prices are soon much higher.

Interest rates of 13% on a house worth £60k or 5% on a house worth £350k.

A very similar problem. People’s mortgages are going to go up an average of 3-4 k per year. And people don’t have it.

The Bank of England has already said they could go up again in August.

It is a lot but I’d say more people were on variable rates back then so these will hit people hard, but quite a few will be protected - either fixed, or older and no mortgage

Which makes it a difficult tool to use