UK Economy Bounces Back

I actually don't believe this news. The government has been printing money to pay for the Pandemic. The furlough etc has all to be paid for amongst other things.The economy in this country has tanked, or will do. My local council has a £70 million black hole. I honestly think we are in for rough times ahead and price rises are going to continue. The government can paint pretty pictures all it wants. I think a recession is coming, plus we have many folks who sadly bought houses that they cannot really afford, if interest rates rise many will struggle. Financial institutions don't seem to do the financial checks they did when we were first time buyers. My great grandchildren and beyond will be paying for this Pandemic.

I understand the definition of recession. If people want to use the term recession for a dip in growth, they are redefining it to suit themselves. If recession occurred after the recovery from the Credit Crunch, produce the quarterly evidence. I will accept the ONS evidence whatever it is.

I understand that taxation redistributes income. I also understand from my local council that my council tax goes to pay for local services. If there was no council tax, perhaps local assets could be sold or borrowings increased but ultimately, services would be cut. If you ask the government where taxes go, the answer is to fund spending. As we have seen, taxation is not the only source of funding but I would have thought it indisputable that taxes fund spending.

I have just read a simple explanation of inflation from the Bank of England. It lists the price rises which have contributed to increased prices, mainly energy prices (as, by coincidence, it was in the early 1970's). It states the main way it will combat inflation is raising interest rates; and it says the actions it takes to keep inflation low and stable is monetary policy. It reckons it will reduce inflation to much closer its 2% target in 2 years time. I hope so but I am doubtful. I don't think tiny increases in interest rates will work, especially as real interest rates are negative. I think we are still accommodating inflation rather than suppressing inflation; but we will see. Nobody, especially the Bak of England, has predicted the future lately.

Actually, Maisie, I try to see the world through clear glasses. I mentioned Starmer's 'contract' because it has about as much validity as those much derided messages on buses. Sadly, all politicians get away with outrageous claims which would be denounced as quackery, if judged by normal advertising standards. I was surprised that Starmer, a lawyer, used the terms 'contract' and 'guarantee' in creating his own hostage to fortune.

Incidentally, whatever your definition Cunco, the accepted definition of recession is a fall in GDP for two successive quarters, which there quite clearly was.

Cunco

MaizieD. I have had a look at the chart more closely. There was a dip in growth after the recovery in 2010 but not a dip into recession which I have always taken as negative growth.

I am not going to argue about what taxation is for. The definition and purpose of taxation is outlined in this link. I will make do with that definition.

www.britannica.com/topic/taxation

As for inflation. we'll see how the next few years turn out. Of course, if we accept Keir Starmer's recent contract with the British people, our security, prosperity and respect is guaranteed. We'll see how that turns out as well.

Did you read the whole entry Cunco, including the bits about resource allocation and redistribution of wealth? I would certainly have no argument with that.

You can quibble about 'recession', Cunco, but it is an indisputable fact that the economy was recovering from the GFC until the tories came to power and it then dipped. And has dipped again since 2014. It's not an impressive record...

But from your comments about Starmer I can see that you see the world through deep blue glasses.

Britannica is as wrong about taxation as you are, BTW.

MaizieD. I have had a look at the chart more closely. There was a dip in growth after the recovery in 2010 but not a dip into recession which I have always taken as negative growth.

I am not going to argue about what taxation is for. The definition and purpose of taxation is outlined in this link. I will make do with that definition.

www.britannica.com/topic/taxation

As for inflation. we'll see how the next few years turn out. Of course, if we accept Keir Starmer's recent contract with the British people, our security, prosperity and respect is guaranteed. We'll see how that turns out as well.

I care about elderly people more than I do pigs, but the principle is the same. Both are victims not – repeat not – of the UK’s decision to leave the European Union. They are victims of Boris Johnson’s subsequent decision, to aid him in toppling Theresa May, to interpret Brexit as requiring Britain to depart the world’s most efficient and benign economic entity, the single market. This had been in large part the creation in 1986 of the right’s hero, Margaret Thatcher, to honour her free-market principles.

Excellent article by Simon Jenkins

www.theguardian.com/commentisfree/2022/feb/17/brexit-life-outside-single-market-utter-disaster

Dickens

Deedaa

It's all very well talking about a growing economy and job creation, but if the jobs created don't pay a decent wage it's no good at all for the average worker.

... and if the cost of living consumes the decent wage - and many are still waiting for that 'decent wage' to materialise, or even be on the horizon - then the growing economy means bugger all to the millions of households struggling to make ends meet.

Of course, some worthwhile jobs will be created, but they will probably be for the highly-skilled - and the hospitality industry might have to pay slightly higher wages to attract staff, etc. But your average 'man in the street' is going to be hit hard with the huge rise in energy prices, NI contributions and the ever-increasing cost of food and transport.

I suppose we have to wait for the 'trickle down' effect? Again.

Waiting for the trickle down effect is like catching and collecting soap bubbles.

Of course a growth in GDP means there is more economic activity and that can lead to rising living standards for the majority, but the wealth needs to be relatively evenly distributed. There is solid evidence that inequality in the UK is growing, which means that most people aren't benefitting from increased GDP. We're going backwards in terms of the wealth of the "common man".

There's a fascinating little museum in Manchester called the People's History Museum. It has records of the declared wealth of some of the millowners and other worthies, which (even in today's terms) was eyewatering. Meanwhile, the workers lived in filth and squalor. Manchester was known as a rich city, but the majority of people who lived there didn't benefit. We're heading back to that kind of society.

Have a look more closely, Cunco. There's a drop after 2010, when the tories came to power. Just about recovered to pre 2008 levels by 2014.

And please don't give me that 'printing money causes inflation' story.

Here are two of the most common 'examples' explained

positivemoney.org/2015/12/hyperinflation-how-the-wrong-lessons-were-learned-from-weimar-and-zimbabwe-a-history-of-pqe-part-2-of-8/

Japan has been running a deficit for years and years. No sign of runaway inflation.

And taxation does not fund spending. It's a myth, myth, myth.

Traditionally, economists, politicians and media have seen growing GDP as positive. Generally speaking, it reflects higher activity and more taxation to finance more spending. Not everyone necessarily immediately benefits but, over time, growth produces better living standards, certainly better than recession.

I suppose governments of any party could continue to print money to spend but this policy is generally associated with inflation. Once inflation becomes entrenched, it is difficult to combat. Inflation and low interest rates benefits borrowers rather than savers, hurting people on fixed incomes or incomes not adjusted for inflation. In my view, we have been fortunate to escape inflation until now. It has been made possible in some degree because we have sourced goods and materials from low wage economies in Asia.

MaisieD said that we fell back into recession after the set back in 2009. Actually, ONS figures show that we didn't. Growth continued until 2020 when the pandemic hit.

www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihyp/pn2

Deedaa

It's all very well talking about a growing economy and job creation, but if the jobs created don't pay a decent wage it's no good at all for the average worker.

... and if the cost of living consumes the decent wage - and many are still waiting for that 'decent wage' to materialise, or even be on the horizon - then the growing economy means bugger all to the millions of households struggling to make ends meet.

Of course, some worthwhile jobs will be created, but they will probably be for the highly-skilled - and the hospitality industry might have to pay slightly higher wages to attract staff, etc. But your average 'man in the street' is going to be hit hard with the huge rise in energy prices, NI contributions and the ever-increasing cost of food and transport.

I suppose we have to wait for the 'trickle down' effect? Again.

What qualifications has Johnson got - 2nd rate journalist sacked twice. Just the qualifications needed to run the country.

It's all very well talking about a growing economy and job creation, but if the jobs created don't pay a decent wage it's no good at all for the average worker.

Germanshepherdsmum

Investment by a government for economic growth is of course a good thing if it can be afforded without driving away private investment through high taxation wwm.

The government doesn't need private investment for economic growth. Government investment becomes a virtuous circle because the money being circulated increases productivity and growth and, crucially, tax income.

Grantanow

Yes, economic growth is generally good but from an individual perspective the key issue is the cost of living which is rising fast with inflation, energy prices, transport costs and some extra red tape as a result of Brexit. Remember inflation in the 1970s hit over 14% (perhaps as much as a 22% spike) which impacted badly on fixed income pensioners.

Exactly! Economic growth is irrelevant, unless the wealth it engenders is shared, which it isn't.

Don't forget that, according the ONS itself, the bulk of economic growth in recent months has come from increases in spending on Covid PPE, testing and Covid-related activities, which has benefitted a handful of people.

Richard Branson and Lord Sugar both who I admire are running their own companies not Britain there is the difference, surely you would want someone with at least some qualifications to be running the country.

Oh, Lordy, Lordy.

Because all our 'educated' tories are making such a good job of it

11:04BlueBelle

^^My goodness maudi what a horrendous thing to say rather someone with no qualifications who went to a state school than a lying, conniving, Etonian who will ruin the country for his own importance and greed You ve just written off so many people including the BIG businessmen like Richard Branson , lord sugar etc etc
But what else would we expect^^

Richard Branson and Lord Sugar both who I admire are running their own companies not Britain there is the difference, surely you would want someone with at least some qualifications to be running the country.

It can't be very widely known that those notes are a 'joke', either. Byrne's note is widely held to be an admission that the economy was doing badly and Cameron even used it to condemn the Labour government. Surely such a wonderful politician as Cameron would have known that he was perpetrating a lie if it was 'widely known'?

And so many people fell for the lie...

Germanshepherdsmum

It’s surely widely known that these notes are always left as a joke. What wasn’t a joke was the appalling state of the economy which Labour left behind.

The Labour government did not leave the economy in an appalling state. The economy was actually recovering from the depression caused by the GFC. Osbourne's economically illiterate 'austerity' policy dropped it straight back into recession from which it took years to recover. Even the IMF said that austerity was wrong.

It’s surely widely known that these notes are always left as a joke. What wasn’t a joke was the appalling state of the economy which Labour left behind.

Whitewavemark2

That is a myth put out by the Tories. Once this established propaganda is understood for what it is, the voter will begin to understand the facts.

In fact the economy performs no better under the Tories than Labour, and by some measurements it performs much better.

Unfortunately, understanding government spending by both Labour and Conservatives requires research into boring facts and figures.

Relying on the media - from whatever perspective - is not an education on how the economy functions, but mostly political point scoring.

Liam Byrne's letter "I'm afraid to tell you there's no money left" was meant as a joke between one chief secretary and another but instead has been used as proof-positive that Labour did / will again, ruin the economy.

Doesn't anyone remember a similar note left by Tory Reginald Maudling to his Labour successor (Callaghan in 1964)... "Good luck, old cock ... Sorry to leave it in such a mess."

No, of course not. It would be inconvenient.

Germanshepherdsmum

Well unless you borrow or print the money or you have Corbyn’s magic money tree …

Oh no! it is the Tory’s magic money tree, Corbyn has never been in power.

They found countless billions to give to their donors and friends, or hadn’t you noticed?

Well unless you borrow or print the money or you have Corbyn’s magic money tree …