Quote:
Originally Posted by nomadking
If the economy is supposed to be doing well and you are still have to borrow to cover your spending, you are spending too much. If the borrowing was a sign of the economy being bad, then Labour screwed the economy up by around 2000. If there wasn't excessive spending back then, what would there be to cut back?
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Hate to break it to you but government deficit's are a normal thing, as far back as records have been done which is a 100+ years the vast majority of years have all the rich countries running a deficit.
There is nothing wrong with deficit's (and borrowing) providing there is economical growth.
Like the same in modern day to day business, even large corporates like BT borrow money to fund investments, they even borrowed to give out payments to shareholders.
Sadly the current government have brainwashed a lot of people into thinking it is some kind of unsustainable situation to have a deficit.
---------- Post added at 11:07 ---------- Previous post was at 11:02 ----------
Quote:
Originally Posted by Ignitionnet
How many times has the budget been in surplus in the past 30 years?
Deficit versus growth and what the deficit is being spent on are key. Not making essential investment shifts bills onto the following generations too, and potentially at higher interest rates.
Debt to GDP ratio matters, not nominal debt.
Simply saying surplus good, deficits bad is a gross oversimplification. A fair amount of the relaxation of austerity the Chancellor has done has actually been the right kind - they went after the 'easy' and expedient savings and quickly realised this was a bad idea.
Some of it, however, the more cynically politically motivated cuts and short-termist sales of assets, is nuts.
The ongoing shifting of more activities onto local authorities while continuing to cut their budgets so that they rather than central government will take blame for example is repugnant.
---------- Post added 01-03-2016 at 00:05 ---------- Previous post was 29-02-2016 at 23:55 ----------
Incidentally the major issue is that ridiculous requirement to be running a surplus in 'normal' times.
The Chancellor is hoist on his own petard, has robbed himself of flexibility, and has run the economy for political and ideological ends way too much.
The OBR predicted that private debt would be the substitute for public borrowing and that is, with interest, what is happening.
The economy is more dependent on services than ever before after it became politically expedient to ignore rebalancing attempts.
We have had a big asset price boom that's led to huge amounts of capital not generating any economic growth. Employment is high but productivity is still in the toilet - the jobs don't seem to have been much good.
The economy is very precarious indeed and this is nothing to do with Labour but a Chancellor whose long term economic plan is more like a long term plan to try and become the Prime Minister.
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agree with all of that.
The most devious is probably the shifting of costs to councils, as most people are completely unaware of what is happening there.