Economy Home Truths

[Magschoice]

Just read this article:

Former Chancellor Lord Hammond has said the government & the prime minister must risk unpopularity and tell "some difficult home truths" about the state of the economy.

“That (cost wise) it has been the equivalent of fighting a war. The effects of which are going to be with us for a very long time”

“There will continue to be a rise in unemployment post pandemic, which is already at the highest level it has been since 2015.”

The government are 2 trillion in debt. I fear massive job losses and spending cuts. I do think the housing market will hold up though, to a certain extent

What are everyone’s thoughts?

Last Spring, Boris in the garden of number 10, planted the seeds for the magic money trees. They should shoot up in no time.

That plus the money we saved not being in the EU.

We’re going to all be millionaires this time next year.

Unfortunately they have been printing money and handing it out like sweeties. The next step is either very high taxation or inflation. There isn't another solution. What do people prefer?

I can't understand why the government have taken a slash and burn approach to containing covid. It didn't ever need to be this way, but they keep doubling down and making the problem worse. It hasn't worked and will have catastrophic long-term effects politically, economically and particularly socially.

It is speculation at the moment but the stock markets are also bubbling, propped up by free money and debt. There could be very painful years ahead if things go pop while we are battling the covid aftermath.

It would be foolish to tax anyone more before we have had a strong recovery. It needs to be treated like a war, paid off over many, many years.
The elephant in the room needs to be addressed-

For me the elephant in the room is that this is clearly going to happen again, and it's probably not going to take many, many years.

So the risk is that we're still paying for the damage done by this pandemic when the next one hits...

The NHS was created 3 years after world war two ended. The biggest public spending programme ever. When we were in huge debt from the war.

@Malteser71

My MIL (76) is happy to report that she has £230,000 in the bank. She doesn’t need it - has a healthy pension, owns her own home. ‘Likes to know it’s there.’

Why is this ok when the economy is fucked?

Malteser71 What are you wanting her to do? Feel guilty because she's worked hard for it? Give it all away to soothe her conscience? Why is "the economy is fucked" her fault? Your post is the politics of envy - quasi Socialism at its best.

The MIL might need to go into nursing home, that money won’t last long.
Anyway my DP’s can do what they want with their own money.
No street lights where I live. I think the local library won’t reopen and more things centralised so costs more to get too/access, but cheaper for government/councils.
Life is going to be very hard/harder for the poor etc.

Mil pretty canny. She lives in a retirement flat with nursing and a warden. The sort of place where the level of care can be ‘stepped up’ as required. She pays a sort of management fee for it, she can well afford it without ever worrying about dipping into savings.

Thinks her TV licence should be free, too!

The stock markets are also bubbling, propped up by free money and debt

So are house prices, driven on by the stamp duty thing which is being extended. Quite how that'll help if prices crash is beyond me, given the number who could end up in negative equity

Gifting money would probably also have to be looked at at the same time to prevent people from trying to circumvent inheritance taxes

Good idea on the face of it, but I thought folk wanted to prioritise the young? Less chance of parents chipping in for a house deposit, first car or whatever if a load's been taken ...

People need to be very smart regarding their pensions. I think we’ll see huge reductions in the state pension, so people will need to have their own provision or face a very miserable old age.

Many may never be able to retire at all.

I’m worried my children might never be able to retire, they will probably be doing Logan’s Run at 75. It will be the responsible thing to do. Sarcasm

@Magschoice

I think we are well and truly up shit creek

Well and truly and without any paddles in sight.

I'm expecting unemployment to rise sharply over the next 12 to 18 months. Businesses will soon start to restructure and trim headcount. It's been done to a point where I am, but there are rumblings at our financial half year it will be done again. I may or may not survive it, who knows.

The public sector certainly aren't going to be immune to this either. I work with a lot of Local Authorities and they have all started to make redundancies.

When furlough ends, it will be a bloodbath.

Well that was cheerful.

I work with a lot of Local Authorities and they have all started to make redundancies

I'm genuinely surprised; despite colossal overmanning, ours has literally never made a compulsory redundancy
It's done by natural wastage and a few voluntary redundancies instead, and I don't expect that to change

Gifting money would probably also have to be looked at at the same time to prevent people from trying to circumvent inheritance taxes

Good idea on the face of it, but I thought folk wanted to prioritise the young? Less chance of parents chipping in for a house deposit, first car or whatever if a load's been taken ...
__-

True.

Change the inheritance tax 7 year rule for potentially exempt transfers.

Make it 25 years instead.

That way the money might be filtered down to younger generations rather than retained in the 50yr plus age group.

Have lower taxation for gifts given to recipients under a certain age...30?

But the gifting/ inheritance system is still inherently problematic (if you want to attempt to redress the inequality of wealth) as it perpetuates wealth within families. Some 20/30 year olds are very lucky to receive substantial gifts, and then when they turn 50/60 will receive substantial inheritance. And there are a load of other 20 year olds right now that will receive neither.

@blue25

People need to be very smart regarding their pensions. I think we’ll see huge reductions in the state pension, so people will need to have their own provision or face a very miserable old age.

Many may never be able to retire at all.

Hence why we have workplace pensions.

Triple lock pensions need to go. Double lock would be more than enough, and older people might be less likely to vote for economically disastrous policies like BREXIT if their pensions were coupled more strongly to the state of the economy.

@Puzzledandpissedoff

I work with a lot of Local Authorities and they have all started to make redundancies

I'm genuinely surprised; despite colossal overmanning, ours has literally never made a compulsory redundancy
It's done by natural wastage and a few voluntary redundancies instead, and I don't expect that to change

Blimey, you are lucky. I worked for one for years and jumped 12 years ago. For the last 5 years I was there, there was an annual cycle of redundancies. Up to that point, it pretty much felt you could be a "lifer" there if you wanted to be.

We need to watch out for the right wing media to start a campaign against people on benefits - well, up their current campaign. Sure as hell they will be blamed for it all. The poorest always bear the brunt of austerity while the rich get richer.

'I suspect we need to be ready to say goodbye to a lot of public services'

I agree and said it long ago. The awful irony is that the groups worst hit by Covid will be the ones to feel it the most :( I expect huge cuts in funding and provisions of health and social care services, due to increased waiting times those who can afford it will move towards private healthcare. Same for schooling and education.

Yes it's similar to a war. Does that mean we now have to cut public services?

Well what did we do right after World War 2??? Found the NHS.

He’s about to screw public sector pensions and not left time for people to take theirs before the budget.
As ever, it won’t be the very rich but the easy to attack public sector.

I agree with the above about significantly reduced public services. None of it will be overt, it’ll just be stuff you notice if you currently have it or when you need it in future. Grim for people who rely on those services.

I also think we’re going to see the start of a conversation about whether the NHS model is really fit for purpose in the 21st century. That’s not a reflection on anyone who works for it, but rather the model of tax-payer funded free at the point of demand public healthcare.

Currently, politicians are terrified of raising the possibility that the NHS might not be the best model in future; it’s akin to a religion amongst the public. However, we need to have a sensible, grown up discussion about it and look at other models from around the world (not just the US).

For far too long, the tax burden has been concentrated on "average" workers, middle England, etc., with increases to NIC (workers only), introduction of workplace pension deductions (workers only), student loan repayments (mostly younger workers), claw back of child benefits when income over £50k (mostly affecting working age adults). I think pensioners need to brace themselves for being asked to contribute more as on similar income levels, they're having a lot less deducted than workers on the same income.

Agree

Without sounding really dim, what does it mean if the house market crashes.. In real terms, to ordinary people. I have brought my house with a reasonably chunky mortgage, me and DH work in the utilities sector so are reasonably safe (please god I hope) but have two very young children. I just don't understand what this would mean for us, can someone explain it to me?

also we were a but fucked before covid. After a decade of wage stagnation we were only just seeing green shoots. Interest rates still low hence the stamp duty stimulus.