Is the Chancellor about to crash the economy?

[Startingagainandagain]

I will start by saying I voted Labour, but I am increasingly concerned about what the government has done so far.

Today there are warning that food prices could shoot up, the pound is going down, there were big jitters on the bonds market and government borrowing is higher than planned.

More generally Reeves seems to have spooked businesses and they have no will to expand or employ more people.

I agreed that the Tories left a total mess.

But Labour seems to just go from bad to worse and I am really starting to wish she could be replaced by someone more competent to restore some confidence.

Exactly! It is revolting people are blaming the Tories for what it is the Labours own doing since they got in. The ones who voted Labour will pay for it as well as the ones who were warning not to do this mass slaughter. The economy was doing much better when the Tories lost the elections. This is on the Labour Party and their ideologies. Tories are gone. Face the music.

Rachel from accounts has three options: borrowing more, taxing more or spending less. She needs to swallow her fiscal rules and borrow more, as raising NI for employers has destroyed industry trust in this government, and spending less is hard to explain to the public.

So, she must to borrow more in order to invest in our economy. The key is 'invest', not throw money away on unjustifiable pay rises for well-paid rail workers, etc. Investment means initiatives that encourage inward investment to the UK, and helps UK employers.

Economists and City experts are saying the Bond issue is a global one, with higher yields across all major economies, UK - 4.8% vs USA 4.7%

Germany has seen yields almost double, France and Italy all up by 50%

People are worried about Trump, when was the last time a President election said he would invade another NATO member or allow the Russians to take a democratic European state? and thats before we get to Trumps tax cutting, funded by borrowing promises....

However, she did borrow and introduced tighter fiscal rules, so that has put us in a worse position.

£/$ still reasonable high and £ has held its own against the Euro.

However, non Labour supporters will do all they can to blame Labour for ALL of it, just as they are trying to blame Labour for the NHS crisis.

But please put this in perspective, UK gilt yields have averaged 4.3% over the last 12months, they are now 4.8%

Under Truss, they went from 1.8% to 4.5%... and ruined many DC pensions.

Certainly don’t seem to have done anything to make it better

Judging by her appearance in the House of Commons at yesterday's debate she looks like she has aged 10 years over the past few weeks.
Starmer desperately needs to find a Minister who is also au fait with economics.

@jasjas3008
Yes, I understand that the upcoming Trump presidency is bringing some turmoil the financial markets. So that's a good point.

Yeah right. 7 dollars less for every 100 pounds since October. Historical lows against the dollar.

I bet a thicko would come next to say who cares no one needs a holiday to the US 🤣

Labour voters were warned what would happen if they got in, they took no notice and voted for them anyway

yes it’s a shit show, one that’s expected, buti have no idea how they are going to get out of the mess the chancellor has made

Yep. There will be a delay but those groups will see it after as the private sector is contracting

You should be quiet as you clearly have no idea what Historic lows means.

£/$ was 1.23 in May 2024

Of course you want me to be quiet. The pounds was much lower than 123 yesterday. Fact.

This !!!!!!!!

The same man who made the wonderful quote earlier " they have taxed employability not profitability : corporation tax is the way to tax *

He also said RR should have done nothing.
He said its hard but inflation was lower, things were good.
She should have left it.

@mumofoneAlonebutokay , they have only been in power a few months and the fiscal decisions Ms Reeves made in her budget have taken our economy from one which was reasonably stable to one which is in an increasingly poor state. They banged on about ‘growth’ but that was such an anti growth budget. Your mortgage repayments will rise, your utility bills will rise, your groceries will rise, unemployment will rise, your standard of living will drop. A pretty spectacular turn of events for a government who’ve only been in power a few months.

The economy has suffered massively since 2000 as a result of four big events: the financial crisis, covid, the Truss budget, and the war in Ukraine. People can sling mud, but only one of those events - Truss- was the result of UK government action.

Rachel Reeves knew (or should have known - everyone else did) that the public finances were in a parlous state and she should have allowed for this in budget forecasts. Her big mistake - she is not an experienced politician- was to back herself into a corner by promising,in the election campaign, no increases in income tax and VAT. That rookie error meant she had to impose hugely increased taxes on businesses - thus crushing the shoots of economic recovery. That was an own goal.

When Trump takes power and UK has to increase defence spending to defend Europe against Russian aggression, the minimal wriggle room she has will disappear. That is before the billions which will be needed to compensate the victims of the grooming gangs. She might as well bite the bullet now and announce a penny on the rate of income tax.

If she had done that during the election campaign Labour would still have won and she would not be in the ridiculous position she is in.

When looking at this graphic, it certainly seems that these bond fluctuations are global. Note how the U.K. tracks both US and Germany pretty closely.

The one stand out from this graph is the Truss mini budget- Uk and US effectively swapped places at that point.

Yes because where do they think the money comes from? Magic?

They have fundamentally fucked up here. They have taxed people out of employment, literally. Anyone in the private sector knows what’s going on. It’s really scary times right now. People are/will lose their jobs. No pay rises, restructuring, relocating. It’s a complete shit show and it’s terrifying.

Those groups that are shielded for now: good luck getting any kind of functioning public service or welfare payment. The employee in the private sector are being laid off.

It’s why you see some posts still saying how great Labour are doing, public sector and state funded won’t see it yet

But any contraction hits, as you say money needs to come from somewhere. We saw it post crash, post Covid and now bizarrely the gov are doing it without external pressure

Reading the FT survey of economists, it's fair to say that there are plenty who criticize the NI contributions rise.

They all, though, seem to be predicting growth this year, with the UK uniformly expected to outpace all other major European countries (but to lag behind the US and, possibly, Japan).

Various also explained that the negative impacts of the budget would be felt instantly but the positives would take longer to manifest (not that it's a guarantee that they will).

I'm not overly concerned. If growth projections start to be revised significantly downwards, I may feel differently at that point.

@Tlaloc999 why do we have to spend more to defend Europe? Surely we are already a pretty huge player in pumping every thing into Ukraine?IS Albania Romania, Hungary Italy on putins lips for interfering and threats??

This is what i came here to say. I doubt anyone could do as much damage as she did and Cameron before her with the Brexshit referendum.

Labour are trying to undo that damage, but it won't be easy. Nigh on impossible in fact.

One of my family members has been told by their employer that the lowest performing 30% of last year’s intake should start looking for another job asap as as the employer re shapes the work force in response to increased employment costs.

At the same time, their landlord has said he is selling up in response to increased taxes and proposals on Renters Rights.

Dismal does not really describe it.

You failed to mention Brexit.

Did anyone seriously think that getting us out of the mess we were left it would be anything other than painful and difficult?

But you can't expect 14 years of mismanagement to be sorted in less than a year.
We had austerity which ran down public services followed by Brexit which made business more difficult for many people, then on top of that we had Luz Truss.
Sadly all that will take years to fix nit months