The Tipping Point

Margaret, Banks don't make money on savings. They make money by lending the money you save to other people, in other words, from other people's debts.

Margaret, The family members working in the pharmaceutical industry, the micro-biologist and the electronics engineer probably ARE involved in making something. All those industries are among the UK's biggest exports.

As for the deficit...Osborne has shrunk the deficit by increasing the debt, which is now about double what it was in 2010. It's an accountancy trick. Spending hasn't gone down, because the Treasury isn't collecting enough money to cover spending. This is partly because productivity is low and wages haven't increased in real terms.

I have to agree with a few of the points you have made MargaretinNorthant, ( although not all !). I think we should be pleased that we have moved on from the terrible grinding poverty that was the way of life for your grandparents' generation, but you are right that we should be doing the unthinkable, grasping the nettle and really looking into where the aid goes when the cash goes into overseas aid, especially some countries in Africa. Now, before anyone jumps on me for being rascist, I most certainly am not, I just despair about the money that goes to certain countries year after year, decade after decade with no discernible improvement in the life prospects of the majority of the citizens, other than some high profile, grasping thieving leaders. We can all see what is going on, I would be very happy to see my money, as a taxpayer, building a clinic, digging latrines and wells, building a school, but not funding arms and diamonds for corrupt tyrants. Sorry slightly off topic, but this budget is ring fenced and I dont think it is always spent wisely.

Good posts, Margaret.

I went back to read a bit more and thought I would post this

"In 2008, the UK entered a recession during the financial crisis of 2007–08, its first for nearly two decades, and initially experienced a deeper downturn than all of the G7 except Japan. However, since 2013 the UK has been in a nascent economic recovery and is firmly in expansion territory. The UK economy is now (Q4 2015) 6.7% bigger than its pre-crisis peak and 13.6% bigger than its lowest point in 2009.[44] Since 2010, the Government has been pursuing an austerity program aimed at cutting the budget deficit. In the financial year 2009–10 this was 11% of GDP, it was 3.9% in the financial year 2015–16.[45]"

If this isn't trying to balance the books, what is it?

sorry,makes not maked

"The United Kingdom has the fifth-largest national economy (and second-largest in EU) measured by nominal GDP and ninth-largest in the world (and second-largest in the EU)[23] measured by purchasing power parity (PPP). The UK has been the fastest growing economy in the G7 for three consecutive years as of October 2015. In 2014 the UK was the ninth-largest exporter in the world and the fifth-largest importer, and had the second largest stock of inward foreign direct investment and the second-largest stock of outward foreign direct investment.[24][25] The UK is one of the world's most globalised economies.[26] The UK economy comprises (in descending order of size) the economies of England, Scotland, Wales and Northern Ireland.

The service sector dominates the UK economy, contributing around 78% of GDP; the financial services industry is particularly important and London is the world's largest financial centre.[27] The British aerospace industry is the second- or third-largest national aerospace industry depending on the method of measurement.[28][29] The pharmaceutical industry plays an important role in the economy and the UK has the third-highest share of global pharmaceutical R&D.[30][31] The automotive industry is also a major employer and exporter. The British economy is boosted by North Sea oil and gas production; its reserves were valued at an estimated £120 billion in 2011.[32] There are significant regional variations in prosperity, with the South East of England and southern Scotland the richest areas per capita. The size of London's economy makes it the largest city by GDP in Europe.[33]"

I've just copied the above from Wikipedia, so according to them our economy
is based on 78 per cent of services, so we obviously do not physically "make" much. Much of what we buy in our shops is not made in the UK. If we are doing so well in global terms, why the dickens all these cuts? In my family I have someone who works in the pharmaceutical business, an electronics engineer, a micro-biologist, a teacher, a staff nurse, a global purchasing manager for an American company and a dinner lady. Quite a spread of interests. But none of them actually maked anything, unless you count printed plans. I am as confused as I ever was.

I am not saying I have answers but there is a lot of money wasted 9million for leaflets which I have read but it hasn't told me anything I haven't heard on television or radio etc . I know we have to help other countries but sometimes I think we should look after this country more . I know I may sound hard but some of the countries we help have corrupt governments who not attempt to help their own people. All we hear is we are in austerity but when government want to spend its available my husband always says to me never forget there's them and us and there always will be .

Margaret, doesn't the economy rely on people making things and other people buying them, not just on saving.?
The problem with the rich is that they save rather than spend in this country.
If there was a proper living wage, all that money would be spent on essentials and the economy would grow again.
It cannot grow if those at the bottom do not have enough to live on. There is no trickle down effect, whatever the rich say.

Today I received as letter from Shelter. Shelter is 50 years old, and is needed more now than when it started. I find that a frightening thought in this rich country.

I echo that!

I've lived in a very rich but sterile and in many respects frightening country and I've lived in one of the poorest countries on earth. Believe me, despite every problem there is, we should all thank our lucky stars that we live here (UK). Just saying.

Banks also make money on what people save. I have savings in the bank. It does not just sit there, an inert lump. The bank invests it and makes money on it. True with low interest rates I do not get a very good return on my money, but the bank is certainly doing better than I am. My late husband was financial director of the firm he worked for, and he used to put money on the international over night markets and make money on it for his firm when they had cash in hand. So surely if we saved more instead of spending it like there is no tomorrow, the economy would not take a nose dive? Sometimes I think I am glad I am the age I am, as if things go on as they are doing I fear for future generations

Margaret,
The economy RELIES for economic growth on people buying stuff they don't really need. Unfortunately much of the money goes to producers overseas, but some of it stays on the mainland and provides jobs for people working in Costa Coffee, McDonalds, Starbucks etc. Nearly 80% of UK GDP comes from service industries. The way the economy is structured also relies on people being in debt, which is how banks make their money.

The big difference in prices is for property, which has risen in value far more than average prices or wages.

The teenage pregnancy rate in the UK is falling and the average age of first-time mothers is rising.

Anniebach, yes there was poverty during after and before the war, probably has been since we got chucked out of the garden of Eden!! My Mum was one of 10, nine survived to adulthood, then two died of TB aged 18 and 19.....there was a year between them. Gran had ulcers on her legs and had to beg the neighbours for rags to bandage them with. We lived in a two up two down fishermans cottage with an outside loo. The back bedroom was wringing wet in winter so all four of us, mum, dad [when he was home on leave], brother and me slept in the front one.

As you say no media coverage, so has the media any part in this constant want/need to have the latest and greatest all singing and dancing whatever? Have we no will power these days to withstand the constant bombardment of you must have this, that or the other? I can remember desperatly wanting things when I started work ....for 17/6 a week..... but would never have dreamed of going into debt for it. Now they seem to spend everything they have and more with no thought for tomorrow. It truly frightens me watching my grandsons.

As for living cheaply, in comparison to wages was it as cheap as all that? I don't remember dairy farmers going out of business because they couldn't make the farm pay then.Take the average wage then and the average wage now and honestly, was it cheaper then?

Another thing that worries me is the unmarried mother and baby scenario. Don't get me wrong I am not about morals here, but why does no-one ever talk about the waste of it all? Young girls of 16, living on benefits with a child or two in tow.....what a waste of an education and more importantly a young life. Most never do get back into education and make anything of their lives, and I think to myself you could have done so much, much more than was possible for preceeding generations. Why just because you CAN do these things, and know you can rely on being housed and fed by the taxes paid by other people, do you have to DO them without thinking!!! Why don't they take responsibility for their actions? Have we nannied them too much? it is not as if there is no contraception these days.

If Emerald 888 is right, and the government is spending more than it is taking in, then why do we just let them get away with it? Why isn't there public outcry that we are propping up corrupt govenments in Africa to the detriment of out own people? Now I am going to be shot down in flames for my lack of compassion, but do we need to hand over actual cash? If they need infrastrucure building, can we not say, we will build you that and just do that, send English engineers and workmen and build it so that we KNOW where the money goes? This would create jobs for our own people. Who, in their right minds, hands over billions of pounds without making sure it is spent on what it was intended for, and if it is our government why aren't WE the people, doing something about it? This goes for Labour and Conservative alike. I have heard it said that you get the government you deserve, if that is so, maybe the electorate ought to get a bit more involved and create a fuss [ I was going to put Hell's delight] about the things we want changed and not just accept what is done.

But if we are going to be marching for anything, can I use my mobility scooter?
Vive la revolution!

Yes, the country's finances are in a parlous state because there is a gap between public spending and taxation, but it's an absolute myth that a national economy is like a household budget.

If a family is short of money, it can cut back on inessentials. If it's just one family which needs to save, it won't have much of an effect on anybody else. It doesn't matter to the family that local shops are no longer selling them stuff, because there are other families who will still keep buying.

However, if all families are feeling the pinch, some shops and businesses will go bankrupt, which means job losses and less money being paid in taxes. A vicious circle is set in motion with less cash in circulation and less tax being paid. Incidentally, low interest rates are supposed to discourage people from hoarding their money and encourage them to spend.

Meanwhile, people with money see property as a better investment, which is why buy to let landlords are on to a winner. This then sets off its own vicious circle with people on low and average incomes having to pay rent for property they will never own. Additionally, asset strippers buy up businesses in trouble at knock down prices, save the profitable bits and close down the rest, which means higher employment and less income tax being collected by the governement. The asset strippers and landlords don't care, because at least they're making money. The government, however, is supposed to balance the needs of EVERYBODY, but it isn't. Economic measures favour the rich, who just get richer.

PS. Emerald, the country IS paying billions in benefits - to pensioners. A very small percentage is paid to the unemployed and most of those have at some time contributed via NI and tax. How would you feel if your state pension were to be reduced?

There was poverty during and after the war, no media coverage of those who made much money

MargaretinNorthant. I really really don't know! I was born 16months before the end of WW2 to a widowed mother. Widows pensions didn't go far in those days and obviously no state help; however there were day nurseries a plenty, and I was duly enrolled and my mother worked. We see sawed between my maternal grandparents home and living with friends till eventually after the war my mother remarried a wonderful chap, so ours was a happy ending, many weren't! When I married in the 1960's my DH was in the Fleet airarm in a very junior way, so furnished flats were where we lived for a number of years. When we did aspire to a tiny cottage of our own(!) we thought we'd arrived!! Like you we had other family members cast off furniture, cut down curtains, and ancient carpets! everything was second hand or even third, children's clothes, toys, (parents some times provided new for Xmas, and birthdays) looking back, it was one of the happiest period of our married life as most of our friends were in the same boat, and simple pleasures were the order of the day. Thing was you could live pretty cheaply, particularly if you were fond of herrings and potatoes!!! My pressure cooker was my 'must have' cooking pot, together with my Hoover twosome (an Xmas/birthday gift from my parents!) Fast forward to our children!! A different story all together! Let's just say the second hand market/make do and mend was not for them from day one of.their independent lives. Our Grandchildren had enough toys to fill a shop!!! Could this be a contributory factor for constant austerity? I used to think that politicians went into politics for the best of reasons, now I'm not so sure! Foreign aid? Yes, but there again, so much money has been wasted, lost, hijacked by dictators, and probably still is, who knows! Finally of course, war is expensive in every respect, and to be avoided unless absolutely necessary. There you sort of have it - maybe!!!!

Isn't the country's finances in a parlous state because the government is spending more than it takes in taxation. This gap is the defecit each year which is added to the nations debt now in trillions of pounds. Yet we borrow billions to give away in foreign aid to rich african countries, india and china. Pay billions in benefits to people who haven't paid a penny in. Bailedout the banks.

PMQ would be fine if the PM answered the Q's

Unfortunately with the labour party being so useless Call Me Dave can do what he likes. PMQs is a disgrace with a spluttering Corbyn being bounced around.

Margaretinnorthants raises a good point, why are we in such a state? Maybe we are not in a mess, maybe it is more political dogma which is driving the decisions about education, health etc which are affecting us all, rather than necessity due to austerity. There is little doubt that the problems of 2008 did occur, and also little doubt that there have been bad decisions made by governments of both parties ( such as the PFI for example which is proving ruinous), but....we are told that things are improving, so why doesnt it feel that way? The shortage of funds could be, at least partly, sorted by more aggressive tax collection from large companies. I think we need to grasp the nettle and raise more funds for education and health, two very basics rights, by increased taxation. I know that this is likely to be unpopular with a Conservative government. I do despair of the lack of effective strong opposition in the Commons, we can all see what is going on and nobody is doing anything effective to stop it.

I read all the comments with interest, but can anyone tell me WHY we are in such a parlous state? Leaving party politics aside for a moment, why are we so short of money in this country that we are facing cut back after cut back? I am not being facetious here, Is it because for years we have all lived above our means, or is it because we waste what we have, or do we give too much away in aid or to the Eu? WHAT? I am not starting an in/out arguments here, I just do not understand why we are in all this mess, and I would like to. Possibly I am naive, but do our politicians really go into politics with no thought but to further their own careers and finances? Surely most if not all had/have some idea of making this country a better place to live, so why isn't it? I am a pre-war baby, lived through it, the austerity period after it, married and had my kids in the sixties, and I can assure you there was no "swinging" in the sixties where I was! It was a case of more month than money! What has gone wrong since then? I am nearly 80 now, I see kids setting up home amd wanting everything their parents have got to start with, whereas we furnished our first home with cast offs from family and the local sale room/junk store. Do we have too much expectation that things will go on getting better and better for ever and ever? Where is all the money going? Why can we not balance our books in the same way that most households do?

My question was for some suggestions as to how the NHS and Education is to be paid for bearing in mind they're financial bottomless pits, taxation? Apart from trisher no one seems to have any ideas. Closing loopholes will only be partially successful unless it's universal which I can't see happening in a hurry, therefore the super wealthy will always transfer into dollars or? use a foreign bank or whatever, and neatly avoid tax. Money speaks all languages, and that's the reality. So we're left with raising the taxes of the general population? Would that ever raise enough? Some posters are full of criticism, but never seem to have any answers.

"SIGH".JC doesn't put his foot down enough.That's why the Tories are getting away with things they do.I don't know enough about politics or mandates or whatever.What I do know is my gut feeling.There is no one strong enough to stand up to Dave and his cronies.Unless some one stands up to them..We are DOOMED DOOMbED I tell you
.That last bit was a joke
but you have to laugh else you'd cry.