…or does it seem that those who have actually benefited from the recent budget the one's who winge the most (nb. going off interviews in channel 4 news).

I'm going to get hammered. As a midl;e income earner I will get hammered …but it is a neccessary evil.

Mr Frodo

I'm going to get hammered as well, but I'm on the way to promotion and a bigger salary, so it won't feel like it…

I'm apparently £200 a year worse off, according to the calculator thing on the BBC. Not exactly a severe penalty.

Rachel

Yes it will feel only as though you never got that promotion 🙂

'cept for the additional work…

I also loved the bit about the single mother complaining that housing benefit was being cut …her benefit was more than my mortgage!

Ok I live in a slum in the north, but only a slum by comparison.

£168 worse off incidentally.

Cool I'm better off, but my wage is still shite!

Woo £86.75 better off! I am rich!!!!!!!!!

but it is a neccessary evil.

most of what I've read about the matter suggests that the "deficit" is a chimera that we should ignore and the measures supposed to correct it will merely worsen the recession. I certainly wonder why we should be bothered about the "markets" when they caused most of the trouble in the first place. Also I can't help feeling this has dropped into the cost-cutting Tories' laps like manna from heaven – a perfect excuse to do what they always want to do 🙁

but it is a neccessary evil.

And yet, as far as can figure out, every other political party in the general election last month, was arguing against immediate spending cuts 😕

💡 Maybe only the Tories were telling the truth – and all the other parties were lying ?

Well …err yes it is a neccessary evil. The public sector was simply unsustainable in its current form.

I do however wonder whether the ratio of spending cuts to tax rises needed to be so severe or indeed whether the pain could have been spread over a longer period.

…though anyone who says that spending cuts were not needed is clearly in cloud cuckoo land.

As for acting immediately I do very much agree with that ….we could have started slower but it definitely needed to be immediately. ….otherwise w could be another Greece.

. The public sector was simply unsustainable in its current form.

they would say that

otherwise w could be another Greece.

but the Greece situation was caused by the markets downgrading Greece's credit rating. Like I said the other week, why not just declare a jubilee and cancel all the national debts ? Who do we owe them to ?

anyone who says that spending cuts were not needed is clearly in cloud cuckoo land.

Well on May 6th only Tory politicians were arguing for immediate spending cuts. So I guess it means that the overwhelming majority of British voters were "clearly in cloud cuckoo land".

Well thank **** for George – eh ?

£155.60 better off. Get in. 😀

who do we owe them too??? FFS go back to school.

Frodo – Member

who do we owe them too??? FFS go back to school.

Probably best to go to a school capable of answering a question though.

Go on Frodo show us the value of your education.

C£400 worse off as a household. Plus whatever impact my frozen public sector salary has, I think more like £2k pa for each of the two frozen years.

STOP PRESS …………

I will be £10 better off…

Untill i start to buy stuff with the 2.5% tax i will be screwed, unless MTB bike stuff becomes tax free 😉

I reckon maybe £500 worse of in our household of 2, and that includes the VAT increase
not too bad

Ok who do we owe it too? Well lots of people/institutions/countries etc. We are however in a better poistion than Greece as our debt matures over much longer periods and hence any pain can be spread.

Government debt is bought by many different institutions, these include other countries who may have a surplus (at the time of purchase), equity firms and crucially pensions/ If the government simply turned round and said sod yeh! … then not only would our credit rating collapse (making it impossible to borrow in the future) but pension funds would also suffer significantly (thats your pension). Now I'm no economist so there are also probably more subtle consequences (as well as quite enourmous political ones).

Remember that the unsustainable investement in publiuc services was only unsustainable in the first place as much of it was paid for by borrowing.

Frodo

FFS go back to school.

Why would anyone need to go back to school ……….when you can learn so much on here ?

Tonight, I learnt that shafting the British people to pay for what the bankers did to the economy, due to their incompetence and greed, was a "necessary evil".

Besides, that sort of economic logic is best learnt on the playing fields of Eton. So I'm not sure that going back to my state comprehensive in Peckham would be much use.

who do we owe them too??? FFS go back to school.

does that mean you don't know either ??

The benefit and tax changes that have drawn the most headlines are the tip of the iceberg. The big number is 25% cut in public spending over four years. That is a lot of people's jobs, a lot of people who won't be able to find work immediately, and will reduce their spending dramatically.

We'll only know where and how cuts will be made in full detail in October at the comprehensive spending review.

I'm actually nearly £200 better off according to the BBC which I was quite suprised by. Still when you factor in an extra 2.5% VAT I think I'll be more than £200 worse off.

I think Gideon was doing a lot of expectation management. Leaking information and press releases that it was going to hurt a lot and then it only hurts a bit for a lot of people. Civil servants and benefit receivers excepted but even then a pay freeze is better than a cut/round of redundacies which I was half expecting.

Maybe only the Tories were telling the truth – and all the other parties were lying ?

Well it's certainly plausible – lying might be going a bit far though – being economical with the truth seems to fit the circumstances quite neatly.

but the Greece situation was caused by the markets downgrading Greece's credit rating

Which was downgraded because of the level of debt and the lack of an obvious plan to deal with it…

Who do we owe them to ?

Me for one – I can't say I'd be too impressed at the money I have in National Savings being cancelled. Of course to come back to this credit rating, cancelling the debt would be a shortcut to getting ours downgraded and so becoming another Greece. Though I'm not sure you understand the basics of the situation at all, Simon – the main problem isn't our existing debt (though interest payments on that don't help), but the amount we need to borrow each year, therefore absolutely nothing at all to do with the bank bail out. I can't see unilaterally cancelling our current debt doing us a lot of good when we go looking to borrow more money to balance the books next year.

Untill i start to buy stuff with the 2.5% tax i will be screwed

Unless of course the measures being taken by the Tories improve the exchange rate by better than 2.5% – they have after all moved the other way by far more than that in the last couple of years. I suppose that won't help much if you want to buy Hope bits, but most other MTB stuff is imported.

. Though I'm not sure you understand the basics of the situation at all, Simon

my theory is that no one else does either – economics appears to slightly shadier than astrology 🙁

I can't see unilaterally cancelling our current debt doing us a lot of good when we go looking to borrow more money to balance the books next year.

I said "jubilee" – that's for everyone, not unilateral!

Can't get my head round it. They want to save £X billion or whatever & if the justice system gets any more 'managers' it'll f***ing topple over!

jonb – Member
I'm actually nearly £200 better off according to the BBC which I was quite suprised by. Still when you factor in an extra 2.5% VAT I think I'll be more than £200 worse off.

I think Gideon was doing a lot of expectation management. Leaking information and press releases that it was going to hurt a lot and then it only hurts a bit for a lot of people. Civil servants and benefit receivers excepted but even then a pay freeze is better than a cut/round of redundacies which I was half expecting.

But job losses were announced. A cut of 25% of govt spending is a huge number of people losing their jobs.

I can't see unilaterally cancelling our current debt doing us a lot of good when we go looking to borrow more money to balance the books next year.

It did quite a lot of good for Argentina – it slashed poverty and unemployment.

Guess what year it happened ?

And yes, Argentina is still reaping the rewards of ditching neo-liberalism…..first quarter of this year the economy grew 6.4%

I will be £170 a year better off as a result of the £1000 hike in the basic rate threshold. I hear there may be an increase in NI which may make me worse off

I will be worse off as a result of the 2.5% increase in VAT

the cut in benefits & tax credits for those that have offspring will not affect me as I have no offspring.
cuts in any other benefits & tax credits will not affect me as I have not received any benefit or tax credit of any kind since mid 1987

Capital Gains Tax will not affect me

Public Sector pay freezes will not affect me (directly) as I work in industry and have already had a pay freeze or two in the last 5 years; I am expecting a pay increase this year, but am not holding my breath…

so all I can say is: meh

Well I looked at mine on the BBC site and I'll be about £700 worse off. To be honest though when spread over a year it's not something I'm likely to notice that much.

It did quite a lot of good for Argentina – it slashed poverty and unemployment.

Yes, but we're not Argentina, and it's not 2003.

Oh, personally I'll be slightly better off according to the calculator thingy – we earn little enough, and salary sacrifice enough to take us below the threshold at which child tax credit reductions kick in. Will gain on the tax threshold. That of course is always assuming I don't lose out big time due to reduction in government spending – something my company gets a lot of it's income from – though I believe we have already factored in expected cuts and personally I've spent the vast majority of my time recently working on non-government stuff.

Yes, but we're not Argentina, and it's not 2003.

You're not paying attention. It's 2010 and the Argentine economy is very healthy. Look :

Argentina's economic rebound solidifies in Q1

So how did they do it ? By cutting public spending ? No, the complete opposite ……massive public spending. Two years ago :

Argentina unveils 21 billion USD in infrastructure megaplan

Quote : "President Cristina Kirchner on Tuesday unveiled a massive public spending plan to pump more than 21 billion dollars into Argentina's infrastructure and counter effects of the global cash crunch."

💡 But maybe the laws of economics is the opposite in the southern hemisphere ?

gonefishin – Member
Well I looked at mine on the BBC site and I'll be about £700 worse off. To be honest though when spread over a year it's not something I'm likely to notice that much.

Month and a bit of rent/mortgage?

But maybe the laws of economics is the opposite in the southern hemisphere ?

Looks pretty similar to me – if you run with a budget surplus most of the time (which you have to do if defaulting on debt prevents you from borrowing) then you have something left to spend when a recession comes:

Argentine President Cristina Fernandez de Kirchner has consistently argued that maintaining a budget surplus and a cheap peso has helped Argentina recover from a financial crisis in late 2001, when South America's second-largest economy defaulted on about $95 billion of bonds.

so it looks like you're suggesting a rapid reduction in the deficit is the right thing to do?

Well, apart from gonefishin who must be on a decent wedge fiddling around with calculator, most folks on here don't seem to be out of pocket by as much as I would have thought in an immediate sense. Our household will be a couple of hundred down.

However…. when you add the 2.5% VAT and the fact that whilst my wife and I don't work in the public sector but my job has had it's salary linked to the public sector equiv in the past and my wife works for a charity that gets the majority of its cash from the public sector so are both expecting a pay freeze for the foreseeable future it looks a bit different. A quick bit of back of fag packet maths working on previously expecting say a 2% pay rise and looking at our monthly CC bill for the VAT impact and we will be about £1800 of take home worse off a year. Not to be sneezed at.

It seems a reasonable hit and in many ways I'd take a bit more if it saved a few others the proper hardship of unemployment. I'd been even happier if I was confident that those that profited so spectacularly from the sort of excesses that got the globe in this pickle were contributing equivalently or more so.

However, I'll throw into the mix – how does a government that has to make this sort of nation changing proposals to balance the books justify future spending of £100bn on a new nuclear deterrent. Bonkers!

But maybe the laws of economics is the opposite in the southern hemisphere ?

You don't think a South American country with a totally different basis to its economy might be able to do things a bit differently to us? I note their total national debt is less than our deficit. Do you seriously think doing what they did in 2001 is a realistic option for us? It seems from that article that they don't reckon it a particularly clever idea right now either.

so it looks like you're suggesting a rapid reduction in the deficit is the right thing to do?

That's hardly what Cristina Kirchner is saying should be the priority right now. But of course the aim should be to reduce the deficit. It doesn't however follow that this should be done by cutting back government spending. And it's certainly not the advise that Cristina Kirchner is giving to Greece – which she claims is an identical situation as Argentina was in 2001 :

Argentine president warns Greece against austerity measures

I'll just add that a pay freeze has a very long term saving.

Say you gave a rate of inflation pay rise (3.4% this year?) in year 1 and same again in year 2 (lots of assumptions there I know) the actual saving is 6.9% in year 2. But unless in year 3 you give a big catch up pay rise you will continue to make that saving in perpetuity.