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Outlook for the economy in 2010 and beyond

Discussion in 'Speaker's Corner' started by dirtydog, Jan 3, 2010.

  1. Slam62

    Soldato

    Joined: Jan 3, 2006

    Posts: 7,295

    Location: Monaco

    Inflation wont fix anything if it exceeds wage rises.

    A strong pound results in cheaper imports, hence lower inflation, but eventually an inability to pay for anything as all money will have to be borrowed.
     
  2. StriderX

    Capodecina

    Joined: Mar 18, 2008

    Posts: 21,539

    I wonder what the solution is for the low supply of houses?
     
  3. Meridian

    Man of Honour

    Joined: Oct 18, 2002

    Posts: 11,861

    Location: Vvardenfell


    The isn't "the solution" because it will require a lot of different things. Many of which are outside government control. For example: the biggest problem is that the largest requirement for houses is in the areas where the housing density is already highest, and where political backlash from attempts at building more is highest as well. So for a start, the country needs to learn to spread out a bit, and not treat everything outside the London and the South-East as the Land of the Barbarians. But that would only half fix the problem, because the basic part would remain: wherever people want houses, is too expensive and too politically unpopular; and wherever the houses can go without issue is an area no-on wants to live.

    However, there are a couple of things which would help:

    1) Stop subsidising buy-to-let, and instead at least neutrally tax it.
    2) Abolish right-to-buy at anything other than market rates.
     
  4. El Pew

    Wise Guy

    Joined: Sep 1, 2009

    Posts: 1,053

    There are more unoccupied homes in Britain (700,000) than there are homeless people (estimate at between 50-100,000 families in temporary accommodation). So you could do something like give incentives or tax breaks for developers who take unoccupied homes and re-introduce them to the housing market.

    Or simply compulsory purchase homes that remain vacant for 12 months and add them to the social housing stock.
     
  5. Meridian

    Man of Honour

    Joined: Oct 18, 2002

    Posts: 11,861

    Location: Vvardenfell

    The homeless issue is unrelated to the housing market except for the lack of council houses, because homeless people can't afford to buy or rent by a very large margin. However it is done, they will need to be heavily subsidised.

    Yes, of course it's not good for homes to stay empty, but you don't seem to be following that thought through, even though I've already mentioned why it happens. Aside from a few houses which are owned but left empty as investment vehicles, the majority are empty because either a) no-one wants to live there, and/or b) they would cost far to much to repair for their final worth. But it's a) which is the main one: even the reason they are not economic to repair is because local house prices are so poor - because no-one wants to buy into that area. Hence endless rows of terraced houses in the North lying empty, often for sale at nominal prices. It's not the price that's the problem, it's that even if you do them up they will stay empty.

    As I said, you need to think of ways to move work out of the South. One idea I've heard mooted: move Parliament north. The current building is in urgent need of billions of pounds of repairs, which would only restore it to the current already overcrowded state. There no reason why parliament has to be in London in this day and age, so why not move it to (say) Manchester? (bias declaration: I live near Mancs). Companies who wanted to be near the centre of power (I'll gloss over whether true power actually rests in the City) would start relocating pretty sharpish, bringing money with them, and local companies would also prosper. Rather than all the money falling to the SE, it would spread out a bit more.
     
  6. elmarko

    Capodecina

    Joined: Sep 22, 2011

    Posts: 10,425

    Location: Portsmouth (Southsea)

    I was thinking recently about the issue regarding wealth centralisation & what could be a theoretical solution which would benefit the local communities, the government (in the long term) & the businesses in question.

    The best I could think of was a "regional corporation tax rate" given on a licence basis to new business start ups/relocation & expansion basis (all business types), essentially a business has the option to start-up up north/in an area in need of jobs, who would not only benefit from greatly reduced rental costs - but also reduced corporation tax rates.

    Ideally it would be joined with intelligent job-centre training courses (not that I'd trust them with this) to train up the local population to give them a chance (as part of the conditional employment they would have to hire a certain percentage locally/have a set amount of staff based locally). In theory they would take into account the unemployment rate when selecting areas helping us reduce our total unemployment/helping getting more people into work)

    With a final aspect of a wide ranging house building scheme (government built & sold with the intention of being a revenue stream for the state) to provide desirable houses these aspects could work well in tandem (as the government would indirectly have a hand in the demand for houses via pushing business into certain specific areas based off potential corporation tax benefits).
     
  7. Judgeneo

    Capodecina

    Joined: May 15, 2010

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    Location: Out of Coventry

    Potentially a blinder for winning votes in the north too. "We care so much, we're all moving closer to understand and help you better"
    The ideas got legs.
     
  8. Meridian

    Man of Honour

    Joined: Oct 18, 2002

    Posts: 11,861

    Location: Vvardenfell



    This just sounds like "Enterprise Zones", which successive governments have tried under various names. They are pretty much a complete waste of money: they only work when set up in an area companies want to move to for other reasons, usually things like links, the market etc. If you put the new zone where no-one wants to go then it fails, even if the government hands out money to move there. As the right-wingers (for once) correctly point out: you can't buck the market. And business rates are pretty low down the list for why a company wants to be in a particular place. Even with millions handed out in other grants, the system still achieves nothing.
     
  9. Jokester

    Don

    Joined: Aug 7, 2003

    Posts: 38,843

    Location: Aberdeenshire

    Indeed, it's more likely to be an issue with local infrastructure or skills availability that prevents companies going to the likes of unemployment hotspots. Everything else trends to be cheap in these areas already such as wages, rental and land costs.
     
  10. Meridian

    Man of Honour

    Joined: Oct 18, 2002

    Posts: 11,861

    Location: Vvardenfell


    No, it's not. It's that money goes where money already is. For instance, technology tends to gravitate towards areas where there is rich university (or more than one). The important bit is not the university as such, but the fact that it's a rich one. And companies flood into the south-east because that's where the money is. And very little floods to the poor areas. It's also why HS2 won't do what it is supposed to do: instead of drawing money North, it will drain it South. As someone once said, money has gravity.
     
  11. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,763

    Location: Stanley Hotel, Colorado

    Circa 1998
    [​IMG]

    It'll most likely allow people to commute more easily ? Probably not a bad thing but if its so viable why cant it be done with private money
     
    Last edited: Apr 18, 2014
  12. Jokester

    Don

    Joined: Aug 7, 2003

    Posts: 38,843

    Location: Aberdeenshire

    Why is the money there....

    It's because companies are going to those areas, because of the infrastructure that's already in place, the local population is skilled making recruitment easier, other businesses are already there to provide services to them.

    Give the NE a trillion pounds and companies just won't move there because they suddenly have lots of money. The money is a byproduct of everything else.
     
  13. silversurfer

    Capodecina

    Joined: Jul 13, 2004

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    Location: Stanley Hotel, Colorado

    thin edge of the wedge

    [​IMG]
    [​IMG]
     
  14. Freakbro

    Capodecina

    Joined: Jul 29, 2010

    Posts: 15,566

    Location: Lincs

    So the CBI have brought forward their prediction of interest rate rises to the first quarter of 2015

    http://www.bbc.co.uk/news/business-27361169

    Now this is obviously the business outlook of what to do, as raising interest rates is the 'correct' economic level to pull with a growing economy and falling inflation.

    It would maybe help a little to curb house price inflation, by making money more expensive, but what about the level of debt the public has already in mortgages.

    We seem to have stored up this huge problem by keeping interest rates artificially low for so long, facilitating such huge mortgages, I do wonder how we can go back to any level of meaningful interest rate fluctuation without causing massive levels of defaulting and repossessions.
     
  15. SKILL

    Soldato

    Joined: Oct 18, 2002

    Posts: 5,689

    Location: Melksham

    I'm not sure they'll increase the rate until after the election, they're not supposed to be politically motivated but they kind of are, and either to 'help' the tories, or simply to appear unbiased, I think they'll hold off.

    But I agree, the measures both the BoE and Treasury/Government have put in place over the past few years, including the low base rate seems to have created/propped up the 'house of cards', especially in respect to house prices. Can they raise the rates without it falling down, I'm not sure they can which as a non-homeowner sounds like it could be 'fun' :p
     
  16. Bear

    Capodecina

    Joined: Oct 24, 2002

    Posts: 12,336

    Location: Bucks and Edinburgh

    Its worrying that during times of low interest rates my plan was to keep the payments the same thus over paying my mortgage at the rate it was before the drop. After all im used to paying out that much so I wont miss it, but the amount of people I know used it as extra spending money. Couple that with the news 13k people reported to the ombudsmen to say they were struggling to meet repayments in the current climate, its going to be hell for some when the rates start to creep up
     
  17. kitch9

    Soldato

    Joined: Aug 13, 2008

    Posts: 6,453

    There's a housing shortage, simple economics dictate that prices are only going one way.
     
  18. Meridian

    Man of Honour

    Joined: Oct 18, 2002

    Posts: 11,861

    Location: Vvardenfell


    Strictly speaking there is a housing shortage in certain areas. There are many areas where they are all but giving houses away, with no takers. The current rise in house prices is only in London and the South East, with very minor gains in the east and a few small areas elsewhere. But since the press, and parliament, are based in London, then this is reported as if it were universal.
     
  19. JaWalks

    Gangster

    Joined: Dec 19, 2011

    Posts: 420

    If only it was that simple.
     
  20. Duke

    Man of Honour

    Joined: Jun 29, 2003

    Posts: 33,208

    Location: Wiltshire

    Some good results on tax - http://www.bbc.co.uk/news/business-27576626.