Crashing the economy

Uhtred said:
Isn't it surprising how quiet it has gone on the political scene lately. The lunatics have taken over the asylum. This country is finished.
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It’s done quiet because stability is boring, the chaos we previously had under people like Truss, did of course get everyone’s back up
 
Many in this country want good public services but don’t want to pay for them. The same folk who complain about pot holes and not being able to get a GP appointment are those who don’t want taxes or borrowing to go up. It’s a choice, but people are constantly fed the mantra of reform and efficiency as a panacea rather than the stark reality.
 
Laughing said:
This is b***ks.
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Yeah, and it's noticeable that I've asked a variation of that question to our cautious economic overlords who pop up on here from time to time to bemoan the recent economic performance of the ages old Labour government; and weirdly they've never bothered answering the question. "When is it OK to pay workers an honest wage" Must be too simple for them to bother with...
 
Acklam_Lad said:
Increased employers national insurance contributions forcing up costs.

Giving inflation busting pay rises to public sector workers that were no doubt justified, but were definitely the wrong place and the wrong time.

Created Uncertainty in an economy that was barely functioning as it was, strangling any hope of growth and investment

Borrowing yet more money to fund ridiculous civil projects focused once again in the South whilst pulling investment where it was needed in the North.

That Budget in October was wrong... it was clear to everyone the damage it would do yet Labour took the gamble. The gamble has failed and the Economy is tanking. best case scenario is we get a mild recession for this half of this year.

worse case scenario is that the markets smell blood like they are currently doing and force the debt gilds interest up, crash the markets and the currency.

If they do this we wont recover for years, Interest rates hit 1980s levels, taxes up to unprecedented levels, mass unemployment, mass repossessions etc, etc
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Pretty much all of that was already baked in.

Tories took us from 80% debt GDP at ~1%, to now being 100% at 5%, that has only been going in one direction before Labour came in, and will be a slow ship to turn. The difference alone there is ~100bn a year, just on debt payments, and that's just to stay stagnant with all the things the Tories drove through the floor. They could have brought in some tax or done something decent in that 14 years but did nothing but make rich peoples lives better, and poor peoples lives worse.

Tories took 10 year gilts from ~0.2% to 4.7%, and also increased debt massively since covid (some of that was inevitable due to covid, but no way all of it), and nobody was saying much, but Labour take it up 0.5% and not really increasing debt and people have a melt down.

Tax income had to go up, or we would be further into a debt spiral.

The nurses didn't get an inflation busting pay rise, it's still not parity to where it was when labour were last in power. Labour have just tried to restore some of that party, as if they don't we will lose even more healthcare staff. If we lose more healthcare staff we will have to rely on contractors more, it will probably put up the cost of wages if we don't increase the wages of our own experienced folk.

The uncertainty in the economy was baked in, it's baked in for the next decade basically. The only thing they could do to make it better is go back in the EU or SM, but they can't do that as it needs a mandate and would take time, and once the leavers get a sniff they would be out in force again to send us back to the dark ages again. This is rock and hard place scenario.

There's projects going on all over and removing the ban for onshore wind should bring in some investment. There's tons of jobs related to renewables in the Midlands, North, Scotland, never mind other projects. There is more investment in the south, sure, but the south drives the economy unfortunately, so the North basically ends up like the poor brother, I can't see much of a way around this. We kind of have to hope the improvements in the south can help the south and help it bail out the north. I hate it being this way, but we're kind of stuck with it with the Tories being in power 2/3rds of the time, who don't travel north of the M25. We're kind of forced to go along with the "south plan".

It's not a gamble as such, we have to do something, and doing nothing comes with even more risk. It hasn't failed, as we've only had two months since the budget, maybe you can say it's failed in 5,10,20 years as that's how long some things are going to take to play out.

It's also nothing compared to the Truss catastrophe, which was so bad that she got the boot almost immediately.

Sky explain it quite well:

news.sky.com

Plenty of concern about UK gilt yields and economic health but this isn't a Liz Truss moment

The big picture is the UK is being charged higher interest rates by international investors to compensate them for concerns about our economic future - about rising debt levels, about the threat of higher inflation and about fears of sub-par growth.
news.sky.com news.sky.com

Truss was so bad, after other bad tories that the debt markets actually recovered a bit as they were so sure she was going to get the boot.

Interest rate levels won't hit anywhere near 1980's levels, they're going to go down if anything.

Most Tories and anti labour lot are just crying because inflation seems to be increasing again, but when you dig into the raw numbers it's largely just due to energy deflation stopping. Good months of deflation numbers are being replaced with flat or normal inflation numbers. The problem with inflation now is most of it is down to OOH (which won't reverse until base rates are cut significantly), and when interest rates come down (which they will) then the base rate will too, which will then bring OOH down, and possibly deflating when people get off these 2 year fixeds at 6-7% they're being forced on. It's all baked in and very laggy.

The base rates need to be cut significantly, and quickly, regardless of what we're paying for debt gilts etc, these gilt and BOE base rates don't need to correlate. That base rate also being high is stifling growth, it needs to go.

Most economists and the likes are saying we will end up cutting rates more than the BOE are forecasting. BOE will hopefully eventually realise it's the rates they're setting which are causing inflation, they're not bringing it down, they only really bring it down when inflation is not caused by the base rate.

There's next to zero chance base rates go back up above 5% after we had so long with rates at basically 0%. This would probably lead to a long crash in the housing markets, and if it went to like 10% it would put millions on the street, sat outside millions of empty houses, it's not going to happen. We could probably do with a housing market price crash though (the price to earnings is way too high), and it would help young folk get on the ladder, and the crash would largely get funded by the older/ richer folk who can afford a bit of an equity hit anyway.

Inflation and wage increase are eating house prices at the minute mind, and have been for a while now, especially in the least well of areas.
 
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Andy_W said:
Pretty much all of that was already baked in.

Tories took us from 80% debt GDP at ~1%, to now being 100% at 5%, that has only been going in one direction before Labour came in, and will be a slow ship to turn. The difference alone there is ~100bn a year, just on debt payments, and that's just to stay stagnant with all the things the Tories drove through the floor. They could have brought in some tax or done something decent in that 14 years but did nothing but make rich peoples lives better, and poor peoples lives worse.

Tories took 10 year gilts from ~0.2% to 4.7%, and also increased debt massively since covid (some of that was inevitable due to covid, but no way all of it), and nobody was saying much, but Labour take it up 0.5% and not really increasing debt and people have a melt down.

Tax income had to go up, or we would be further into a debt spiral.

The nurses didn't get an inflation busting pay rise, it's still not parity to where it was when labour were last in power. Labour have just tried to restore some of that party, as if they don't we will lose even more healthcare staff. If we lose more healthcare staff we will have to rely on contractors more, it will probably put up the cost of wages if we don't increase the wages of our own experienced folk.

The uncertainty in the economy was baked in, it's baked in for the next decade basically. The only thing they could do to make it better is go back in the EU or SM, but they can't do that as it needs a mandate and would take time, and once the leavers get a sniff they would be out in force again to send us back to the dark ages again. This is rock and hard place scenario.

There's projects going on all over and removing the ban for onshore wind should bring in some investment. There's tons of jobs related to renewables in the Midlands, North, Scotland, never mind other projects. There is more investment in the south, sure, but the south drives the economy unfortunately, so the North basically ends up like the poor brother, I can't see much of a way around this. We kind of have to hope the improvements in the south can help the south and help it bail out the north. I hate it being this way, but we're kind of stuck with it with the Tories being in power 2/3rds of the time, who don't travel north of the M25. We're kind of forced to go along with the "south plan".

It's not a gamble as such, we have to do something, and doing nothing comes with even more risk. It hasn't failed, as we've only had two months since the budget, maybe you can say it's failed in 5,10,20 years as that's how long some things are going to take to play out.

It's also nothing compared to the Truss catastrophe, which was so bad that she got the boot almost immediately.

Sky explain it quite well:

news.sky.com

Plenty of concern about UK gilt yields and economic health but this isn't a Liz Truss moment

The big picture is the UK is being charged higher interest rates by international investors to compensate them for concerns about our economic future - about rising debt levels, about the threat of higher inflation and about fears of sub-par growth.
news.sky.com news.sky.com

Truss was so bad, after other bad tories that the debt markets actually recovered a bit as they were so sure she was going to get the boot.

Interest rate levels won't hit anywhere near 1980's levels, they're going to go down if anything.

Most Tories and anti labour lot are just crying because inflation seems to be increasing again, but when you dig into the raw numbers it's largely just due to energy deflation stopping. Good months of deflation numbers are being replaced with flat or normal inflation numbers. The problem with inflation now is most of it is down to OOH (which won't reverse until base rates are cut significantly), and when interest rates come down (which they will) then the base rate will too, which will then bring OOH down, and possibly deflating when people get off these 2 year fixeds at 6-7% they're being forced on. It's all baked in and very laggy.

The base rates need to be cut significantly, and quickly, regardless of what we're paying for debt gilts etc, these gilt and BOE base rates don't need to correlate. That base rate also being high is stifling growth, it needs to go.

Most economists and the likes are saying we will end up cutting rates more than the BOE are forecasting. BOE will hopefully eventually realise it's the rates they're setting which are causing inflation, they're not bringing it down, they only really bring it down when inflation is not caused by the base rate.

There's next to zero chance base rates go back up above 5% after we had so long with rates at basically 0%. This would probably lead to a long crash in the housing markets, and if it went to like 10% it would put millions on the street, sat outside millions of empty houses, it's not going to happen. We could probably do with a housing market price crash though (the price to earnings is way too high), and it would help young folk get on the ladder, and the crash would largely get funded by the older/ richer folk who can afford a bit of an equity hit anyway.

Inflation and wage increase are eating house prices at the minute mind, and have been for a while now, especially in the least well of areas.
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Facts
 
theboydom said:
Yeah, and it's noticeable that I've asked a variation of that question to our cautious economic overlords who pop up on here from time to time to bemoan the recent economic performance of the ages old Labour government; and weirdly they've never bothered answering the question. "When is it OK to pay workers an honest wage" Must be too simple for them to bother with...
Click to expand...
Could we also ask why it's better to let wages fall so far behind in the first place too?

The Public Sector pay-freeze was always going to need reversing and - due to maths - it was always going to require above inflation increases. What was the longer-term Tory plan - presumably a public sector without a work-force?

Andy_W said:
Labour have just tried to restore some of that party, as if they don't we will lose even more healthcare staff. If we lose more healthcare staff we will have to rely on contractors more, it will probably put up the cost of wages if we don't increase the wages of our own experienced folk.
Click to expand...
It's also the loss of knowledge that can only be gained on the job from working with experienced practitioners. Once you've lost the expertise you can't easily replace it.
 
Scrote said:
It's also the loss of knowledge that can only be gained on the job from working with experienced practitioners. Once you've lost the expertise you can't easily replace it.
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100% (y) Even if you can replace it you won't get it for the same price you could have paid to retain it.

What we seem to be doing is reducing pay in relative terms, despite them actually gaining more experience over those 10-14 years or whatever. Even if pay goes up 20% and matches inflation (it hasn't), it's still not a pay rise if you're now two levels of experience up the ladder or whatever, we shouldn't be getting free upgrades, never mind abusing people into being cheaper, when they were never expensive to start with.

So they quit to go do something else or work in another country if they can. Quitting to do something else is probably the better option for the older folk, going abroad better for the younger folk, but they both have an option. I wouldn't begrudge people doing what is best for them, but too many in healthcare seem to just do it for the love of the job (not love of circumstance), I get that, it's admirable, but they shouldn't do it. They will love the job when they're being paid better. Some people seem to want to take advantage of healthcare staff's good nature, it's not right, it's abuse of them, and those who enact it are in abuse of power.

Some folk won't quit of course, but these are the ones who are basically trapped, and they know it. Working when feeling trapped is an absolutely terrible scenario. Loads of these end up on the sick etc, so then we end up paying something and not even getting anything in return.

That leads to a few main scenarios:
1 - Try and replace these staff who left, who we wouldn't pay at the fair rate, and bring in agency contractors (often foreign) and pay them more.

2 - Don't replace the staff and it all falls apart, this ends up costing the economy elsewhere. The UK would end up much worse than the US with a fully private model.

3 - Outsource the duties to private firms, who employ the contractors, so they scalp on top of the contractors, which end up costing a hell of a lot more in tow ways.

Staff aren't just about pay, keeping that continuity and experience is worth it's weight in gold. Someone on £20 an hour doing a 100% job is way better than someone on £18 an hour doing a 60% job. An external contractor for £30 doing a 80-100% job is not good either.

The problems we have over and over are just compounding, when something compounds for 14 years it's practically impossible to reverse, and Labour have to deal with that in practically every area, it's tough.
 
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