Caporegime
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Trying to kick start the economy is all very well, but the next proper recession will bite even deeper.
VAT to be cut by at least 2%!
- Thread starter Hen_Dawg
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Soldato
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I'm split on this, whilst it will have some effect personally I'm not sure if it's sufficient to kick start retail spending.
I agree with the problems with implementation, it's not going to be instant, but saying that at least it's something. As someone has already pointed out most people should have a disposable income of around £1k PCM so we're likely to save what about £25 a month - I mean that's not terrible it's like giving you free t'internet or mobile I guess? At the shame time it's hardly going to get us all rushing out spending loads this xmas. If they would have slashed it to 10% then I think I'd be a lot more positive about it, and it would be much more likely to get people out spending.
Those of you going off an anti labour rant should remember that it was the American economy that caused this problem, and of course the over paid and un-education morons that we call investment bankers (I'd probably replace the b with a w to describe them better though).
The economists are playing this like it was straight from a textbook - stimulate demand by lowering interest rates and cutting taxes, the problem is, as anyone with a brain will tell you is that interest rate and tax cuts do jack all if people don't think it'll work. Most (if not all) recessions are caused by a combination of hysteria and non-rationality - not anything fundamental like a declining manufacturing sector.
I agree with the problems with implementation, it's not going to be instant, but saying that at least it's something. As someone has already pointed out most people should have a disposable income of around £1k PCM so we're likely to save what about £25 a month - I mean that's not terrible it's like giving you free t'internet or mobile I guess? At the shame time it's hardly going to get us all rushing out spending loads this xmas. If they would have slashed it to 10% then I think I'd be a lot more positive about it, and it would be much more likely to get people out spending.
Those of you going off an anti labour rant should remember that it was the American economy that caused this problem, and of course the over paid and un-education morons that we call investment bankers (I'd probably replace the b with a w to describe them better though).
The economists are playing this like it was straight from a textbook - stimulate demand by lowering interest rates and cutting taxes, the problem is, as anyone with a brain will tell you is that interest rate and tax cuts do jack all if people don't think it'll work. Most (if not all) recessions are caused by a combination of hysteria and non-rationality - not anything fundamental like a declining manufacturing sector.
Indeed, but they need to be affordable, not just storing up a timebomb we have to pay back later.
The increase in borrowing that is characteristic of a Labour government showing it's face again...
Yes, but this plan could well be worse than nothing. Keynesian economics is not the only answer, and many would argue it's far from the best answer. But that's the path our government is heading down.
They do, but this isn't the response the country needs. If this was a person, we'd all be criticisng them for going mental maxing out the credit cards in the hope of making money later... Why does the government get a by on the same stupid behaviour?
No american made the labour government run defecit spending when the economy was good (a fundamentally bad idea), nor did they make them constantly raise tax take while doing so, nor did they make them spend inefficiently on unnecessary programs, civil servants and so on...
All those things are classic labour, and happen every time the country is stupid enough to vote them into power. The worst part is that they've had three terms to make it happen this time, and so the results are worse than they've been previously.
Then we'll vote the tories in and blame them for having to pay back labour's spending splurge...
This isn't the time for recriminations but for action.
Oh and by the way Dolph: http://www.elearnenglishlanguage.com/difficulties/its.html
(I'd be more inclined to believe that you could grasp complex economic issues, if you could grasp simple punctuation.)
Oh and by the way Dolph: http://www.elearnenglishlanguage.com/difficulties/its.html
(I'd be more inclined to believe that you could grasp complex economic issues, if you could grasp simple punctuation.)
Wow, argumentum ad hominem, that's incredibly convincing. I'd have more belief that you understood complex economic issues if you could make a coherant post supporting or opposing my viewpoint rather than resorting to fallacy attacks.
Associate
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Well, I will be ensuring Christmas is kept well within my means, continue saving hard and grow as much of my own food as possible. What will others be doing to get us out of this pickle.
It's just that I know it's been pointed out to you before yet you refuse to write it correctly. This suggests a willful stubbornness to believe you can be wrong about anything, which means debating economic issues, or indeed anything with you is pointless.
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Saving and growing your own food won't do anything to help the economy though, that's the point. If everyone saves rather than spends then we'll end up with a situation like they had in Japan where interest rates were 0% and the economy was flat or in deflation for years.
Soldato
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What formal training do you have in economics Dolph?
Man of Honour
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I hope it is an up front cut on mainstream taxation and not a typical Labour credit by form filling type of red tape rebate.
I made a mistake, whoopee-do... Don't confuse stubbornness regarding being wrong with you failing to present a good enough argument to change my mind. Plenty of people have managed to alter my views over the years, through solid, fact based discussion and carefully considered viewpoints.
Let's get back on topic. On what basis do you support the expected economic policy from the government (tax cuts, spending increases, borrowing increases)? What makes you think it's the best solution for dealing with this downturn? What benefits do you think it will provide that other policies will not, and do you think it will lead to a sustainable economy afterwards? Tell me why I'm wrong to oppose the plan?
I don't think it was a mistake because you'll keep doing it because you believe you are right regardless of any evidence to the contrary - about that, or anything else
Oh as for the economics debate, I'll let others take that up with you if they can be bothered; I can't.
If we have to have formal economics training, that's pretty much all of us out of this thread...
Associate
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But my point is.....what will you be doing......This is surely OUR mess.
My pension depends in growth too but is now damaged because of OUR greed.
Our greed collectively perhaps, but not mine personally; I never overstretched myself in terms of loans or mortgages and I have no debts.
Caporegime
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What i think would happen is -
Lawyers, Accountants, Professional fees that has VAT added on top - you will see a change
McDonalds, Burger King - No chance. that Whopper meal is not going to go from £4.99 with a 2.5% cut.
Shops where prices are already fixed in the system or ticket - it'll costs hundreds at least or thousands on manpower to re-enter or re-print all labels for the prices and they simply won't bother, why would they? They make more money by nothing doing something, so there is no incentive to go cheaper.
What happen in a year's time when they put the VAT back to 17.5% ? Shops will see it as a price hike and put all their prices up, add inflation, then everything will seem twice as expensive !
Associate
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I have no debt at all. I paid off my mortgate because we worked and saved hard. We live on one good income and have a happy life.
I dont believe in avoiding personal responsibility just because it isnt my fault....
What are you going to do about it?
Dont worry, I wont ask again. I feel my point is made.
Soldato
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I respect (and your quite right) that any tax cuts must be funded at some point in the future, there's no free money right. But ask yourself what's worse [A] A high cost now, but the result is to stimulate the economy and avoid a severe recession or Allow the economy to fall into a steep recession.
More times that not action [A] is preferable, because in totality will actually be far far more costly. Secondly even if the total cost of both programs are throughly equal, the repayment of the costs of [A] can be spread out depending on how the government chooses to borrow. So [A] is achievable even if it is expensive without "a huge time bomb". How do they do it? Well they'd issue government bonds I'd guess at a range of different maturity dates, so there's no one big hit like you seem to fear.
The task for the Labour at the moment is to boost demand. Now how do you do that? Well there aren't that many things you can do on a macro scale - we've already cut interest rates (Well the MPC have who are independent of the government anyhow), they can cut taxes (which is actually what they're doing now).
What else could they do? Well spend huge amounts on public projects (bridges, roads, general infrastructure). The time for that to take an effect is slow, very slow and in it's early stages it's a targeted mesaure - I.e. initially it'll impact on the construction sector then it'll feed through to the entire economy etc.
The strange thing about economics (and people) is they often ignore reality. Now the government could cut income tax to 15% and VAT to 5% but unless people actually believe that'll make the economy avoid recession - it's essentially useless! Why? Because people would tend to save the extra money (in case the economy did fall into recession) rather than spend the extra money they have. In essence the government (obviously) have to try and avoid a severe recession, they are doing what they can. The only thing (and none of us know this yet) that will enable us to know if this tax cut is a good plan is how the market reacts to it, and in turn how the public respond to it. If consumer confidence increases significantly due to the tax cut, it will, without doubt been a great move (people'll be off spending again), but if the markets and the public don't increase in confidence it'll have just been a waste of money.