The Uk economy

Louella12

I think Reeves might get moved from her position sooner or later

No. That was Tory tactic to be constantly swapping around ministerial posts and no one had a clue what they were doing.

What we need is stability now and I certainly hope she stays where she is.

And , finally. For MOnica with reference to earlier posts about 'happiness'.

I was reading Thomas Pikety's 'Capital in the 21st Century' last night, the section on the structure of inequality. He looks at income data and how it is distributed among a country's earners. (The book was published in 2012 so the figures may be a bit out of date.)

In Sweden, the top 10% of earners receive 20% of the total wages; the bottom 50% receive about 35% of the total wages.

In countries like France, Germany and the UK the top 10% receives 25 - 30% of total wages.

In the US the top group gets 35% The bottom US 50% gets 25%.

He says that Sweden's is the most equable distribution of wages of the countries he had data for.

Which probably does account for its position on the 'happiness' scale

I think Reeves might get moved from her position sooner or later

This is quite an old video which explains how governments create money for the economy and shows why taxation can't be funding spending.

It's US made, but can be applied to any country with a secure sovereign currency.

It's a bit clunky, but I think it's the best of the few videos around which explain the concept and use of fiat money.

www.youtube.com/watch?v=bHQCjFebIf8

Doodledog asks

*but money must come from somewhere, as if it were really just a case of countries creating their own money why would people in Malawi (to use the above example) be struggling along on £2 a day, when all their government needed to do was print some for them?

Malawi definitely has its own currency. Unless it was given to them or created by someone or thing outside Malawi the only way it could have been acquired is by the government creating it at some period during its history. From what I can see it is a poor developing country which will have to buy a great deal of the goods and services it needs because it can't provide them themselves. This means that they have to have foreign currency with which to buy them. 'Printing' their own currency for this would be no use because it wouldn't be accepted in payment.
It also has foreign loans for development which will need to be serviced and repayments made in the currency of the country which made the loan. I didn't go far enough into details of its economy to discover if any loans were interest free, some might be but I somehow doubt that they all are.
It will also have very little demand for its currency (to pay for its exports) so it won't be traded much on the foreign exchanges and won't be valued particularly highly. Repayment of foreign debt helps to keep the country poor.

So, apart from for use, within their own domestic markets, there isn't much that the government could buy with it should they 'print' more. It would be inflationary.

There must be a point at which a country could be well enough developed to be able to expand its money supply, but I don't think there is a formula for achieving this. That's the thing about money, it can't be straitjacketed by 'economic rules' because its usage and effects depend on the people using it, whose actions can't be predicted.

And at the very base, money is almost an abstract rather than a concrete phenomenon, based on trust and a common understanding.

This is the Bank of England's take on it

Money is a social institution that provides a solution to the problem of a lack of trust.(5) It is useful in exchange because it is a special kind of IOU: in particular, money in the modern economy is an IOU that everyone in the economy trusts. Because everyone trusts in money, they are happy to accept it in exchange for goods and services — it can become universally acceptable as the medium of exchange.

Basically, it's a bit like believing in fairies in a pantomime. We all believe in it so it exists and has utility and value for us.

www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

M0nica

David49 they cannot afford to look any further, they may well be voted out of office after the next election.

Reeves to her credit is certainly looking further ahead, but in the budget she did not go far enough, not enough tax changes were made, the NI increase will probably do as much damage as it does good to the economy most of the rest were idealogical.

fancythat

Is it in current bad shape?

Or is it just newspaper headlines?

Yes the economy is in bad shape. No it's not just headlines.

Fancythat, a good plan could be to set up a four year research and investigation plan, the outcomes of which will be acted upon after that if the government is still in power, or passed on to the next government if the electorate so chooses.

There is that.
Plus, so many things change nowadays, in the space of 5 years.

In an organisation I volunteer with, we used to do 1 year, 5 year and 10 year plans.
It is not done any longer!
The 10 year ones didnt last past 6 months.
The 5 year ones looked rather silly even after 2 years.

Having said all that, I do think with things like energy health, and maybe defence, a 10 year plan at least, is still needed.

David49 they cannot afford to look any further, they may well be voted out of office after the next election.

“Have you just become aware of these economic inequalities?
Were you aware of them when you supported Thatcher.
She ruined millions of lives.”

It wasn’t just Thatcher, Blair did nothing to reverse Thatchers damage, then promoted deregulation which was a great free for all, “ loads of money” we even had a surplus for a couple of years. Then the bubble burst and we still havn’t recovered, I’ve a great disdain for polititians who don’t look further than the next election.

petra

fancythat

^I’m sorry, fancythat but fretting over the waste of a few £million here and there isn’t worth the mental effort involved.
^

Oh but I think it very much is.

It is symptomatic of how far us in the Uk have come from prioritising humans.

If there was plenty of money to splash around on bat tunnels, then ok, fair enough.

But there is not.
People are turning down or off, their heating. etc etc.

£100 million here, and many simlar projects there, and guess what, not enough to pay for life's essentials for human beings.

Have you just become aware of these economic inequalities?
Were you aware of them when you supported Thatcher.
She ruined millions of lives.

I will agree to differ on that.

^and that too many of our politicians are more interested in performing on the international stage and how highly they rate in the international stakes, than being seen to be good domestic managers.

^

I think you are right. I tend to forget this.
It is only when a Leader says "we will be the best in such or such" or "the top country in the world for.." or "a world leader in..", I think uh oh. That is not what most people are most interested in. But Leaders manage to expose themselves by saying such things.

fancythat

^I’m sorry, fancythat but fretting over the waste of a few £million here and there isn’t worth the mental effort involved.
^

Oh but I think it very much is.

It is symptomatic of how far us in the Uk have come from prioritising humans.

If there was plenty of money to splash around on bat tunnels, then ok, fair enough.

But there is not.
People are turning down or off, their heating. etc etc.

£100 million here, and many simlar projects there, and guess what, not enough to pay for life's essentials for human beings.

Top 10 Best Performing Countries in Nature Conservation Index...

Luxembourg. (Source: Nature Conservation Index (NCI) 2024 | Image: Canva)
Estonia. (Source: Nature Conservation Index (NCI) 2024 | Image: Canva) ...
Denmark. ...
Finland ...
United Kingdom. ...
Zimbabwe. ...
Australia. ...
Switzerland. ...

Only eight countries, sorry as I cannot access the rest of the information.

As you can see Finland is ahead of the UK in nature conservation.

MaizieD

I suspect thatvthe higher taxation in the ‘happier’ countries is a correlation rather than a cause, MOnica. I suspect that these countries have a more equable distribution of wealth and access to resources and that this is more conducive to ‘happiness’

I am sure you are right Maizie. but I also think they are better managed and run, although I do know they have their problems.

I often think the problem with this country is that we are now a small country batting above our level internationally and that too many of our politicians are more interested in performing on the international stage and how highly they rate in the international stakes, than being seen to be good domestic managers.

fancythat

^I’m sorry, fancythat but fretting over the waste of a few £million here and there isn’t worth the mental effort involved.
^

Oh but I think it very much is.

It is symptomatic of how far us in the Uk have come from prioritising humans.

If there was plenty of money to splash around on bat tunnels, then ok, fair enough.

But there is not.
People are turning down or off, their heating. etc etc.

£100 million here, and many simlar projects there, and guess what, not enough to pay for life's essentials for human beings.

Have you just become aware of these economic inequalities?
Were you aware of them when you supported Thatcher.
She ruined millions of lives.

The way I see it, whatever the source of our money*, it is how it is distributed that affects our lives. In order to function, society needs goods and services - essentials such as food and transport systems, and luxuries such as TVs and - I don't know - hairdressers? People need to be paid to provide these goods and services, or we can buy them in from abroad, losing money from the economy. That is relatively easy, as people are taxed on the income they earn for providing them, which is taxed again when they buy or pay for the goods and services produced by others, which have resulted in the others' own income being taxed, so it's all about circulation. Round and round it goes.

Depending on the political will of the time, some groups earn more than others, and government policies mean that some pay less tax than others, and therefore those people can take money out of the economy and keep it in the bank (or under the mattress, or in offshore accounts to avoid being taxed on the interest). The extent to which this is allowed depends on the government of the day, but there is often little to choose between the options, as political philosophy has to be balanced with the pragmatics of getting voted in.

Then we have to sell our goods and services abroad, aiming to sell more than we buy. Losing trading partners in the EU, and faced with tariffs from the US hasn't put us in a great position, but it seems that talks and diplomacy are in place to try to make the best of that.

As well as all of that, we need to look after the old, the young, the sick and the poor - often described as 'economically inactive'. If there is more money circulating than being spent on this, life is good, as there is enough surplus to pay for their welfare. If, however, more of the surplus is in people's banks and not available for circulation, life is less good for those who rely on public services as they are cut back, and if fewer people are 'active' economically than 'inactive' we are in trouble.

As we have an ageing population, and have had many years when wages have been low (so for many people there is no financial incentive to work), and many people are sick and unable to work, that is the situation in which we find ourselves now. The benefit system makes things worse, as means-tests can mean that people are better off not working than working, particularly when rents and childcare are so expensive. The end result is that we have fewer workers paying tax, and fewer gods and services produced 'in-house'. The government is trying to rectify that, by increasing wages, directing public spending to where it is needed, making a start on a housebuilding programme, and by encouraging those who can work to do so. Obviously this can't happen overnight.

*but money must come from somewhere, as if it were really just a case of countries creating their own money why would people in Malawi (to use the above example) be struggling along on £2 a day, when all their government needed to do was print some for them?

@fancythat

Do you know that every single ‘project like that’ contributed to growth in the economy by providing employment and purchasing materials and equipment from private sector businesses?

You may not like what has been done (and, TBH, I agree that someone has been taken for a mug somewhere along the line), but part of the responsibility of government is to enable economic activity, leading to growth. So they’ve fulfilled that bit…

This is what I mean by the Uk having lost financial perspective.

Only 10 "projects like that" make £1billion.

Is that not worth bothering about either?

^I’m sorry, fancythat but fretting over the waste of a few £million here and there isn’t worth the mental effort involved.
^

Oh but I think it very much is.

It is symptomatic of how far us in the Uk have come from prioritising humans.

If there was plenty of money to splash around on bat tunnels, then ok, fair enough.

But there is not.
People are turning down or off, their heating. etc etc.

£100 million here, and many simlar projects there, and guess what, not enough to pay for life's essentials for human beings.

I suspect thatvthe higher taxation in the ‘happier’ countries is a correlation rather than a cause, MOnica. I suspect that these countries have a more equable distribution of wealth and access to resources and that this is more conducive to ‘happiness’

As an aside[but I started the thread so that is ok!], when a relative of mine lived in Finland for a few months, he came back saying many were "suicidal", where he was.
Dalight was for about 7 hours a day, which I dont think helped[he was quite far north of the country and it was winter months].

But Finland managed to turn things around since then.

www.theguardian.com/world/2024/feb/22/the-finnish-miracle-how-the-country-halved-its-suicide-rate-and-saved-countless-lives

I’m sorry, fancythat but fretting over the waste of a few £million here and there isn’t worth the mental effort involved.

What is more to the point is that the current economic beliefs of our chancellor and the current actions of the Bank of England are going to mean less economic activity in the country, increasingly worse (even worse😱 than now) public services, notably the NHS which appears to be at the point of complete breakdown and increasing poverty.

The countries of the world where people are happiest are, starting with the happiest are: Finland, Denmark, Iceland,
Sweden, Israel, Netherlands, Norway, Luxembourg, Australia, Switzerland worldpopulationreview.com/country-rankings/happiest-countries-in-the-world

The 10 highest taxed countries are Finland, Japan, Denmark,
Austria, Sweden, Aruba, Belgium, Israel, Slovenia, Netherlands

Notice the overlap. I would be my happiest living in a happy high tax country where the money is well managed and spent effectively to provide a high level of services and alleviate poverty.

Perhaps we should have a Royal Commission looking in detail at how the Scandinavian countries manage their economies and have high taxation and welfare standards - and a happy population and learn something from them.
The UK is equal 13th in the list of most highly taxed countries together with 7 other countries including Germany, China, South Korea, France and Australia, all of them pretty main stream develope economies.

Britain was 20th on the happiness list. Perhaps what this country needs is better effective management of its resources, and even higher taxation!