It is undeniable that the markets and Tory MPs had a negative reaction to the mini-budget. Only a person with serious case of denial would say otherwise.
Kwasi Kwarteng has been sacked..
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It is undeniable that the markets and Tory MPs had a negative reaction to the mini-budget. Only a person with serious case of denial would say otherwise.
No one is denying a negative reaction. I'm saying the emotionally response is totally blown out of proportion.
The NIESR have gilt market trackers for risk. The risk in the gilt market was higher in August and July than what happened after the mini bugdet
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They chose mainly to help the already wealthy though. I don't see many people arguing against fairer tax cuts to stimulate the economy.
45% rate thing was tiny compared to the whole. It was 2/3b out of the 45b
Danlightbulb.
The media love this stuff, they're falling over themselves about it.
From what I can see, the emotional reaction is a reaction to the fact they're pandering to their funders and also using terms such as the 'anti-growth coalition'. Delaying the OBR report etc. The Britannia Unchained piece they wrote etc.
But a very emotionally impacting one because it set the tone and sent out a horrendous message.
Alright, Liz, nice sound bite, but it ignores the fact that we have the lowest growth in the G20 (apart from Russia) and we’re the only G7 economy yet to recover to pre-pandemic levels.
Eh? No. I want well-funded services and I’d be happy to pay for them via higher taxes if I thought the government could be trusted to spend the money wisely. What we’ve currently got is most definitely not what I want.
As above, people won’t complain because those other countries will have more capacity to service those debts with stronger economies. Maybe if we hadn’t detached ourselves from the single market, we would have similar potential for growth.
They've all used QE at the same time for the same reasons I'd argue. This last intervention is an outlier, I think the money came from reserves so not strict QE either but still, not good. BOJ is a big outlier of course as far as central banks and debt goes. Imo the west could never manage what they have.
Its not true though, the BIS put out these stats and UK has very low debt service ratio's, its in decent shape because of the last 10 years. We have the leeway to provide that support.
Pretending that any of these countries are going to grow their way out of the debt which has been accumulated over the past 50 years is absolute fairyland stuff.
Here..
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Top-level I agree, the point was more that each are reacting to situations and events specific to their own economies within the broader context of QE as a tool.
And we’re going to need it to counter the years of stagflation that are looming if we continue with the current Tory fiscal policy.
Who says they’re going to grow their way out of 50-years of debt? Why do they even need to? As long as they maintain manageable levels of debt and high enough growth rates, they will carry on ok.
The point is, while we might have lower debt:GDP ratios than most (but not all I might add), we’ve got worse growth and little chance of improving things on our current trajectory.
If you think we're going to have higher inflation over the next decade compared to the previous, which i agree with. Why is it just the UK that'll experience that? Reshoring, ESG and UBI are worldwide developed country problems. How is it just the UK and the Tories?
And we have manageable levels of debt. A couple tenths difference in growth doesn't make a huge amount of difference. The developed world is a low growth arena, no is going to be getting 6/7 percent growth ever again. Its going to be 1/2 percent, around that area. So whats the point in doing austerity over the last 10 years if they can't provide a bit more support compared to our peers in the G7 when the whole environment is a bit tougher.
It’s obviously not just a UK problem.
But our response to the global situation is our choice.
We can make things better or worse depending on the fiscal policy of the government of the day. At the moment, the government of the day thinks it prudent to announce billions of pounds of unfunded tax cuts at a time when the cost of borrowing is increasing — all because they are ideologically wedded to trickle-down economics despite 30 years of evidence that it doesn’t work.
That is a UK/Tory problem and that is precisely what this entire thread is about — or have you forgotten?
Ah, you’re so close to getting it. Yet I fear it’s going to pass you by.
Tory austerity is a complete failure of a policy. It’s crippled public services and accelerated the wealth inequality gap. None of our closest neighbours cut as far, or as deep, for as long as we did and we have nothing to show for it apart from a slightly healthier debt:GDP ratio compared to some of them.
There’s another one of those unnecessary Tory-inflicted acts of economic self-harm — it can’t be a coincidence.
So if it's not just a UK problem. Then the countries with higher debt service ratio's are in a worse position, they have less leeway of providing support in the form of tax cuts across the board or direct payments to households, correct? And this decade is going to be harder for workers than the previous. Credit is going to be more expensive and people's standard of living is going to reduce.
So when exactly do we take advantage?
Soldato
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It’s not so much a revolving door at the Treasury these days, but at this pace, a centrifuge!
I get the feeling you maybe comparing apples with oranges, a few pages back you posted charts of how much debt central banks hold and now you're comparing government debt. The main reason central banks had to take on so much debt is because some governments refused to do it themselves, from a financial and technical perspective that central bank debt should really be on the governments books, looking at each in isolation will lead you to the wrong conclusion.
For some countries, the UK included, fiscal and monetary policies have been at odd with each other ever since the 08 global financial crash, QE was only ever meant to be an short-term emergency measure to return liquidity to the markets until such a time as the effects of a loosened fiscal policy took over. Unfortunately the idea of austerity took over and instead of governments borrowing to spend they did everything they could to reduce spending, *forcing central banks to carry on with QE. (Of course who benefits most from QE and government spending is a whole other subject).
*Once you pop you just can't stop, what were central banks to do? They'd demonstrated that they could and would step in to stabilise markets so they couldn't really do nothing now just because central governments were making a poop show of things.
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Soldato
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“Libertarian jihadis” is my favourite quote from the morning rounds. That was from a Tory MP. They are toast.
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