Dr Strangelove (how I learned to stop worrying and love Boris)

Smug in Boots said:

I remember Jeremy Hunt admitting he'd presided over the worst A&E waiting times for a decade and other NHS problems but claiming things were actually back on track ...

... he's at it again today with the economy.

'Chancellor Jeremy Hunt says Britain's economy is "back", and that his strategy for growth has been welcomed at the IMF.

Mr Hunt said the international lending body saw he was "putting the British economy back on the right track".

However, the latest figures show the UK economy failed to grow in February.

On Wednesday, the IMF said it expected the UK economy to shrink by 0.3% in 2023, which would make it one of the worst performing of the world's major economies.'

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Sunderpitt said:

A question that is not given enough air time, is did all those years of austerity the tories imposed, causing a huge drop in the real wages of the lower paid really help the economy or make it worse. You may recall it was a banking crisis, not caused by the millions of lower paid in this country which caused the crash in the first place.

Self-defeating Austerity

The situation where austerity policies – spending cuts and higher taxes fail to reduce budget deficits. This is because spending cuts have a large negative impact on real GDP. Government spending cuts lead to lower aggregate demand and hence lower real GDP. The fall in real GDP causes tax revenues to fall and spending on welfare to increase. Therefore, despite spending cuts, there is no improvement in the budget situation because the spending cuts are outweighed by the increase in recession related borrowing.

Austerity and the Multiplier Effect

The impact of austerity depends on the multiplier effect. If government spending is cut by £1bn and real GDP falls by £2bn, we say there is a fiscal multiplier of two, and austerity is likely to cause a deeper recession. If government spending falls by £1bn and real GDP only falls £0.5bn, we say there is a fiscal multiplier of 0.5 and the impact of austerity policies is smaller.

Austerity Bomb

A rapid period of fiscal consolidation causing a sharp fall in real GDP.

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FellTop said:

It is a good question. As always hindsight is great, but it is important I think to consider things like this to learn from them.

My own limited sense is some Austerity was absolutely needed when the tories came to power. Our national debt was way too high and was going to hamstring the country for years. There is a school if thought that states austerity should have been done sooner, and another that is should have been delayed. Whatever it was a brave decision to go down that route so quickly after coming in to power, but I tend to think we would have been worse off if they had kicked the can down the road.

I do think it was arguably too aggressive and arguably went on longer than was needed. The impact was likely worse than was warranted. Some infrastructure seems to have fared really badly.

I read a lot of economists, and really only understand a fraction of it. I do have scepticism over those who argue austerity was never needed at all. It feels a bit like saying there wasnt a problem to be solved when there clearly was. Like I say, I have the sense it was a necessary thing but they kept their foot on the gas too long. I suspect the answer is it stopped one economic bubble from bursting, but grew another one behind it.

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The Exile II said:

At the time the financial crisis hit we were faced with two choices- austerity or Brown's looney sounding plan of spending even more money and kicking the can down the road. It was like going into the Ferrari garage and trying to buy one with the Ferrari you're trying to buy as proof that you had the money to buy one.

We're still in danger of being the generation that left a financial time bomb to go off in our grandkid's faces because we couldn't put up with a bit of discomfort.

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FellTop said:

Browns 2010 election campaign was really daft. I remember thinking for a fella that had done a good job as chancellor, in my opinion, he had lost the plot. He said it was a choice between tory cuts or labour investment. At a point our budget deficit was the highest since the war. Apparently his own chancellor, and even Mandelson, were telling him he had to campaign on cuts but fairer ones. Labour front benchers were still blaming those Brown statements some years later for people not trusting them with the economy.

I agree about not wanting to leave a financial mess for my kids and theirs. We need to take our own medicine in my opinion. Imagine the state we would be in re budget deficit if we hadnt tackled it before covid. We need to clear the decks more yet. It will mean some ugly choices, whoever is in charge, in my opinion anyway.

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Sunderpitt said:

There is one theory of a general longer economic term, about governments spending during a downturn and holding back during a boom.

The cons did the opposite of this, hindsight now tells us it made our economy worse, than it could have been. Especially the lower paid, whose real earnings plummeted. If you were better off and had assets, ie house(s), investments, land etc you prospered.

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DH4 said:

The late Paul O'Grady summed those policies up so very well. He said they brought in the pasty tax and the bedroom tax, but not the champagne tax or the polo pony tax. They knew exactly what they were doing. "**** The Plebs" as Bonko, Cameron, Osborne and their Bullingdon Club chums used to sing whilst smashing up Oxford restaurants.

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gelders pie said:

If you want to raise a million in tax revenue , much easier to get 1000000 people to pay up , £1 each , than get 1 multi millionaire to pay up £1m

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Sunderpitt said:

According to tax watch, in 2019, Google Apple, Facebook, Amazon, Microsoft, ebay Adobe and Cisco avoided/evaded £1.5bn of tax.

Probably could give the nurses a pay rise, or tax the lower paid less if HMIT got its fingers out.

Nb HMIT have fewer staff and are on relatively poor wages, than they used to.

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gelders pie said:

If that’s a yearly figure , then approx it would give over 300.000 nurses on £30k a 15% rise

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• Boris Johnson defends the Leave Campaign's contentious claim that Brexit will create an extra £350 million a week to spend on the NHS.
• "We grossly underestimated the sum," Johnson told The Guardian.

Smug in Boots said:

Weren't the savings from Brexit going to do that

• Boris Johnson defends the Leave Campaign's contentious claim that Brexit will create an extra £350 million a week to spend on the NHS.
• "We grossly underestimated the sum," Johnson told The Guardian.

Perhaps paying for feasibility studies on building forty new hospitals is swallowing up that money.

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Smug in Boots said:

And now Sunak is being investigated

No doubt we'll be told he's 'cooperating fully with the enquiry and that he looks forward to clearing his name' etc ...

... you'd think that, out of three Prime Ministers, we'd get one who's honest or capable.

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DH4 said:

"Oh they're all the same" ... Tory Prime Ministers that is

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Daz said:

There is always another Tory scandal just around the corner and this is why I think the carry on over Labour's stupid gutter attack on Rishi will just be a bump on the road.

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Smug in Boots said:

Virtually forgotten already ...

... except on here

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FellTop said:

And amongst the labour MPs and front benchers it seems. Ask Angela, all based on facts apparently Lies, facts, all the same thing it seems.

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