To ask where has all the money gone/where does it go

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DH and I are late forties.

It feels like the country is crumbling around us and there is just no money for anything.

I've just seen something showing the tax thresholds that have been frozen for decades and this got me thinking where does all the tax go.

Why does the country feel so poor these days? Is it a slow.decline due to Brexit or it is world wide events wars etc that are biting.

The ridiculous summer savings scheme is hardly going to help but what can the govt actually do to get the wheels of the economy turning again.

There must some money but where has it all gone?

This isn't political just a genuine puzzlement that we are paying more tax than ever but the country and lots of people in it are skint.

I asked myself exactly the same thing during austerity. Public services were cut to the bone to repay the deficit yet it was higher in 2015 than in 2010. What the fuck did they do with the money? It mystifies me.

There are also factors like the cost of borrowing which is currently high for the U.K. vs other countries for long-term debt. The more indebted you are the higher the cost of borrowing will typically be - not always as we’ve seen historically with the US - but as a general rule for most countries.

There ws no austerity. Some sort of collective belt tightening for the greater good. A complete myth.

A sort of cull? It could work I suppose?

Well the government who did it said it was austerity. What good did it do? We were more in debt after five years of it and it wasn’t supported by any economist.

Public services were not cut to the bone by Cameron, but the country could have borrowed more whilst interest rates were low. We’ve had numerous economic shocks since 2008 and our productivity is dire. The ifs says had the productivity of 2007 had continued, everyone would be £11,000 a year better off.

Well if this isn’t cutting public services to the bone I’d like to see your definition.

https://blogs.lse.ac.uk/inequalities/2024/06/19/the-cost-of-austerity-how-spending-cuts-led-to-190000-excess-deaths/

As well as all of that the societal shift of people living alone, old age, divorce or just never coupling up. At the start of the 1970’s single households accounted for 10% of all housing stock it’s now about 33%.

Society is very much more about the individual, it’s crept in to all parts of society in a myriad of ways and it all costs money.

80% of our council’s money (Wiltshire) goes on SEND provision and adult social care. 80%!

it’s no wonder the potholes aren’t dealt with.

Op we have been hit by a succession of awful events ! Tony Blair allowing eastern Europeans to come here in their millions right before a global credit crisis hit us at the wrong time and put a massive strain on every service you can think of.
Then the EU wanted us to do austerity and then we have shared government / Brexit /COVID global pandemic.

It's a lot of upheaval and we are fairing the worse but also other EU countries are suffering.
And G7 seven countries which is a more accurate comparison for us.

Where does the money go?

Government corruption. Think HS2, Covid, NHS and defence procurement where they spend thousands to buy a paperclip.

Salaries of massive incompetent civil service. There’s hundreds of thousands of these pen pushers stealing a living off the taxpayer. And yes I mean the taxpayers who actually produce real value for the economy. Not these low rate bureaucrats.

Benefits. Enough said. Millions have made a a lifestyle choice. At the expense of mugs paying for this largesse.

Successive governments and the bloated civil service are literally taking the piss and laughing at the people of this country.

Austerity was nothing to do with the EU. It was a Tory ideological choice.

All the public services were sold off. We don’t do things that make money in comparison to ye old days. The welfare state doesn’t encourage people to work. Lots of reasons.

to add - taxation actively discourages people to work or work more across the entire spectrum. Lower paid are better of on benefits, high earners are better off working less. So less money in, much more money out, results in significant deficit and high interest on debt

This, plus massive debt interest.

The way to fix the former is to fire non or lazy performers.

The way to reduce debt interest bills is to cut spending or increase tax receipts or both.

The Govt had a massive rebellion when it tried to cut spending.

It has increased taxes but wasted the money (see attached post) instead of repaying debt, and now that option has maxed out.

When it increased taxes, it did so in unconstructive ways and prioritised political changes over those which will boost growth.
An example of this is the increase in employer NI (political decision) which disincentivised employers from expanding and put people out of work, a dreadful idea that we are all paying for.

So there you have it - difficult times and a Govt without the economic understanding of how to grow an economy but lots of knowledge about how to spend.

It’s very depressing

@GlobalTravellerbutespeciallyBognor You do understand how our debt payments rise and fall don’t you? I agree we need to cut spending but Truss and now Burnham are now deststabilising the bond markets. What we pay is dependent on many factors.

Take water companies as an example. When they were privatised, they were debt free. They've paid out in dividends and bonuses but borrowed the money to do this. Taxpayers are now repaying that debt whilst the infrastructure crumbles.

We creates a load of billionaires, think the likes of Baroness Mone through covid, selling cheap below standard equipment at inflated prices to the NHS thanks to the then Tory (now jumped ship to reform) cabinet.

Taxpayers have been robbed.

equalitytrust.org.uk/evidence-base/billionaire-britain-0/

Trouble is the money borrowed is still debt when interest rates rise, unless it's paid off (which has happened only 2 or 3 years in the last 30 or so), so you suffer the higher interest rate when the borrowing needs to be renewed/refinanced after x number of years. Borrowing at low interest rates only works if you are planning to repay the debt at the end of the fixed term.

I hope the following is useful 👍🏽

The main thing that influences debt interest payments for any entity is generally capital borrowed. (I didn’t state this in my original post but in light of your comment perhaps I should have.) This has increased under this Govt.

The second is the spread the market demands from the borrower, influenced by perceived risk. So for example the US would borrow more cheaply than a small state with a civil war going on, to take extremes. A bank will charge someone with 60pc equity in her house less on her mortgage than someone with 20pc equity. The risk of not being repaid is lower.

When you hear expressions like ‘spreads blowing out’, ‘yields increasing’ or the much discussed ‘Truss effect’ a few years ago, what commentators are talking about is that many holders of UK gilts (govt debt) eg funds, have sold those bonds, so more are available to buy, the price of those bonds drops, and given gilts generally have a fixed rate of interest the yield (return) on them therefore increases.

This happens when there is vol (volatility, instability) in the system and one example was briefly under Truss when the market didn’t like some of her fiscal proposals and sold bonds leading to spreads blowing right out.
This effect was temporary but, lucky us, the current Govt has surpassed it and the UK now pays more to borrow any given amount of money than under the Conservatives (a statement of fact, not that I am massively keen on them).

So here we are - we are in a parlous state and need to cut borrowing and generate more tax receipts by boosting the economy.

The question in my mind is whether any party has the bx to do it.

Agreed and also people working less means lower economic output, longer waiting lists for public services (such as NHS) etc., so the economic detriments are multiplied more than just lower tax revenue and higher benefits.

Didn't Ed Miliband also agree with austerity??

Care of the elderly, NHS, SEND.

Ok, stupid question but… where is actually all the money kept? I know there is the world bank. Does the UK have a bank account? And when the UK borrows, which bank account does it go into? Can someone see our balance and the ‘overdraft’?

Possibly. He’s hardly an economist.

They are and it is starting to make a difference.

They are not doing it at the levels they need to make a difference quickly because the press already have the knives out because the current system of wealth extraction suits those who run the press. There are people in and around the current government faction that it also suits.

It also suits the markets who have got used to making extraordinary amounts of money from non-investment borrowing and they don't want their gravy train to end.

The public don't understand the issue enough to call out the bullshit because of the years of lies they've been fed about the economy being like a houshold budget - it is a concept which makes sense to people as they live it, so it was an easy lie to sell. Also the levels of money we are talking about, most people can't even begin to conceptualise.