Viewing 40 posts - 1 through 40 (of 71 total)
  • Who's feeling rich then? UK economy grows 0.8% in quarter
  • brooess
    Free Member

    There seems to be a host of postive news about the economy – GDP growing, one of the few Western economies which is, and the economy is now as large as it was before the 2008 crash…

    Retail sales are buoyant, car sales increasing, consumer confidence growing, unemployment falling…

    But even living in London I’m not sure people are feeling it…
    Houses are unaffordable to even wealthy middle class dual-income first time buyers
    A fifth of people in UK struggling to pay their mortgages (rates forecast to be at 2.5% by end 2016 so this can only get worse)
    Wages aren’t even keeping up with inflation – and haven’t been since pre-crash
    Falling living standards
    Record levels of personal debt
    Food banks/pay-day loans, which haven’t been so popular for as long as I’ve been alive (born 1973)
    National debt is still increasing, with more cuts yet to come
    Strengthening pound making UK exports expensive and therefore hitting UK exporters
    Dire savings rates (2 weeks after opening my ISA, First Direct dropped the interest rate from 2% to 1.5% with no explanation and no move in the Bank Base rate…)

    Official forecasts suggest the outlook is positive, albeit not booming but I can’t see where it can come from…

    So what’s the general feeling out there?

    teamhurtmore
    Free Member

    No doubt that things are picking up, the questions are how sustainable is the footing* (ish) and what is happening to productivity (still poor). Plus the output gap is still wide so no wonder wages are not responding! Low productivity rates and spare capacity is not good for the pay in our pockets.

    *You are correct to point out the debt stats – austerity what austerity? GO took the foot of the gas on that one. Plus overall debt levels are still too high across most sectors. This will remain a constraint on future growth.

    And IR too low – off course that is a deliberate policy. Take from the savers and give to the debtors. This will continue for some time. How else will they shrink the debt burden – a UK default? (We did it in the past!)

    binners
    Full Member

    They said they were going to restructure the economy. And fair play to ’em, they have. Except in the opposite direction from the one it needed to go in

    Its a ‘recovery’ built on exactly the same house of cards as that got us into this mess in the first place. Cheap consumer credit, bonkers housing market increases. The same short-termist Financial markets having a bonanza, and paying themselves the proceeds

    Theres been no increase in productivity, business investment is at all time low

    Add to that falling living standards, zero hours contracts etc, and you’ve successfully sown the seeds for the next economic shit-storm. And it really is when, not if.

    But… and this is the bit that counts… the richest in society were not only not effected by the crash, they’ve done really really really well out of it. The top 1% has seen their wealth go into the stratosphere. The ones who caused the whole debacle have walked away scott free (instead of being strung from ****ing lamp-posts!) and its snouts in the trough, business as usual

    So from the Tory perspective…. ker-****ing-ching!!!! Mission accomplished!!!!

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    peterfile
    Free Member

    Funnily enough, I was promoted last week and had a pay rise (first above inflation for quite some time), despite a profit warning from my employer…and just found out 10 minutes ago that mrs pf has been made redundant. So mixed feelings about economic recovery at the moment.

    zippykona
    Full Member

    Our village had no empty shops at Christmas. We now have 5.
    Something is still a bit wrong even in a very affluent area.

    teamhurtmore
    Free Member

    Consumer credit has not really taken off, Housing recovery patchy to say the least, financial players had really crap 1H results and income inequality has reduced. So not quite Binners!

    Look on the bright side, the IMF predict that the UK will grow faster than any other leading economy.

    The funny thing will be how GO spins this in relation to ‘his’ policies. The gap between rhetoric (and criticism) and reality in Econ policy is pretty wide

    So from the Tory perspective…. ker-****ing-ching!!!! Mission accomplished!!!!

    Have you been watching the labour policy reviews over the past week? You could have out any party in that first sentence as the policies were broadly the same and largely pre-determined by external events and necessity than any political imperative. Govs mainly react to events in front of them.

    binners
    Full Member

    Repeat after me:

    An increase in house prices is not economic growth

    andytherocketeer
    Full Member

    much better to run an economy by saying the word ‘prudent’ in every sentence for 10 years, and if you say it enough times you’ll convince yourself it must be true. then dump it on a guy with grey hair and black eyebrows just at the point that the excrement is about to hit the aircon.

    shame all the political parties last time out were trying to make the other side have to run the economy while it was fscked up, cos they didn’t want to have to have the negative PR for 5 years.

    teamhurtmore
    Free Member

    binners – Member
    Repeat after me:

    An increase in house prices is not economic growth

    No but an increase in the wealth effect is a well known and obvious way of stimulating consumption

    Agg Demand = C + I + G + X – M

    With C being consumption. Rising asset prices stimulates C as we have just seen as do IR (low), confidence (recovering) etc

    olddog
    Full Member

    THM – there is a growing understanding that economics isn’t driven by formulas as people do not act rationally – rationally as defined by economists…

    An alternative interpretation of the impact of rising property prices is that it hovers up increasing amounts of income on non-economic activity that otherwise would be used for consumption that drives the economy.

    All these are theories and essentially impossible to test as there is always so much else going on in an economy at any given time. Economist build models and draw graphs that self fulfil their theories – its enough to make natural scientists weep.

    thestabiliser
    Free Member

    Olddog – beat me to it

    took me fricking ages to type out all that pap i was giong to post too.

    THM did you hear Laffer on R4 this week – neo-liberal BS at its finest

    MrSmith
    Free Member

    I’m a freelance adverting/design/editorial photographer. I didn’t get a whole 2 day weekend off from Jan-June and only this month have I had weekends off and although it’s usually quiet due to holidays/schools I have still been shooting/retouching and banked what I call a decent month when previously I wouldn’t have done much at all in July.
    I think I have earned a yearly salary that I’m comfortable with already so with 5 months to go its definitely been a good year, some of the work I do is in high-end luxury markets so I guess that’s where a lot of the growth is.

    I know one person out of work but I don’t think he’s desperate to find another job as his payout was a good one, I’m not seeing much in the way of belt tightening here in London

    teamhurtmore
    Free Member

    It’s an identity not a formula, so wrong thing to weep about. Scientists should know the difference 😉

    But what the dismal science (sic) does show is that indeed there is no such thing as a free lunch. Rising asset prices are all very well if you own the asset. Not good if you are looking to buy. But if governments want to distort the free market in housing – even capitalist Tories (?), then that is the range of outcomes in practice (as well as theory)

    binners
    Full Member

    An alternative interpretation of the impact of rising property prices is that it hovers up increasing amounts of income on non-economic activity that otherwise would be used for consumption that drives the economy.

    Indeed. Another example of this nonsense is ‘Funding for Lending’. Government make billions of public money available to the banks specifically to fund lending to business, and support growth

    What did they do with it?

    They leant it all out in mortgages instead, as it was lower risk, and more profitable for themselves. The result: another out of control housing bubble. Its the economics of the madhouse. And its only going to end in the same depressingly familiar fashion as the last time

    brooess
    Free Member

    But if governments want to distort the free market in housing – even capitalist Tories (?)

    That Gideon is playing games with the housing market to me is a massive warning sign – if there was a real, sustainable recovery feeding through to the electorate – and likely to be that way by the time of the election – then he wouldn’t have had to do it would he?

    It strikes me as a lack of confidence in his own policies. And if Tories feel the need to manipulate free markets to get themselves re-elected we really are in trouble!

    Can anyone else see a pattern in this graph?

    thestabiliser
    Free Member

    OP no – got a promotion this month but paypacket today says no more cash in it. So no but on the upside it’s all HRs fault and the economy is in sparkling* shape. Frickin HR.

    *until all the oligarchs disappear to switzeralnd with their respective cuts of Russia’s former sovereign wealth.

    teamhurtmore
    Free Member

    Well when IR finally start to rise, the indebted will be hit hard and the Tories will have another problem to address. Debt was the cause of the crisis, and remains the shadow over the economy now.

    brooess
    Free Member

    got a promotion this month but paypacket today says no more cash in it.

    I’m a contractor so this doesn’t affect me but there’s been a reorg in my place over the last couple of months and apparently pay rises have not accompanied promotions and increases in responsibility – suggests there’s not a lot of cash around.

    My client/employer’s revenues are very closely linked to UK consumer expenditure…

    MoreCashThanDash
    Full Member

    Eldest about to start secondary school, so suddenly lots of extra costs to find. For the first time we have had to say “no” to a day out for him proposed by some friends as we didn’t feel it was worth the relatively small cost. I’ve had to turn down a weekend away with mates, just not got £100 or whatever to spend on that rather than other priorities.

    The joys of both of us being in tbe public sector. Still, MrsMC may have chance to work extra hours after September, mortgage will be off by Christmas, at which point the main car will be ready to shuffle off this mortal coil.

    However, a couple of mates have just landed better paid jobs, there is some movement in some sectors for those with the right skills and experience.

    Would have been just as bad whoever won the last election, really wasn’t the one to win. Labours saving grace is we will never know if it would have been any worse with them in charge.

    MrSmith
    Free Member

    They leant it all out in mortgages instead, as it was lower risk, and more profitable for themselves. The result: another out of control housing bubble. Its the economics of the madhouse. And its only going to end in the same depressingly familiar fashion as the last time

    I was a bit taken aback by the stupidity of that, all they needed to do was to keep manipulating the interest rates so a very gradual low growth or (flat growth with inflation) of house prices with no crash or boom and we would all have been better off. Not a finance expert but I was hoping the governor would let the chancellor know how stupid this was and try to act accordingly. But as has been already pointed out they just want an election winning growth headline and worry about the time bomb later.

    teamhurtmore
    Free Member

    Remember when CMD said, you can’t solve a debt crisis, by adding more debt (words to that effect)……!?!?

    mudshark
    Free Member

    A bike cafe opened in my village, a good sign…?!

    binners
    Full Member

    Not a finance expert but I was hoping the governor would let the chancellor know how stupid this was and try to act accordingly.

    Mark Carney was a politically appointed place-man for Osbourne. He was never, and will never, go against the wishes of his master. No matter how short-termist and idiotic they are

    teamhurtmore
    Free Member

    Why would any employee wilfully ignore the mandate given to him by his boss?

    But Carney is hardly a muppet

    Given the speed of the recent economic revival, the Bank of England has been inching closer to raising interest rates from their record low of 0.5 per cent. In a speech this week Mark Carney, BoE governor, said the economy “is starting to head back to normal” and as it does so, “[the] bank rate will need to start to rise in order to achieve the inflation target”.

    But the bank is worried that any rise in interest rates might hit Britain’s fragile recovery if households cut spending rather than risk getting into trouble with their mortgage lenders.

    The double edged sword I was talking about

    olddog
    Full Member

    I was a bit taken aback by the stupidity of that, all they needed to do was to keep manipulating the interest rates so a very gradual low growth or (flat growth with inflation) of house prices with no crash or boom and we would all have been better off. Not a finance expert but I was hoping the governor would let the chancellor know how stupid this was and try to act accordingly. But as has been already pointed out they just want an election winning growth headline and worry about the time bomb later

    BoE interest rates do a lot more than determine mortgage rates – if that was the only function it would be a much easier job. More important is the need to set a rate that allows sufficient lending into business that stimulates growth but does not drive inflation. Low rates, in theory, should encourage people to spend rather than save – but in practice that spending seems to be having an inflationary effect on property.

    I have no real idea on how you solve all this – if wage increases are low consumption growth will be low and if consumer debt isn’t rising then GDP growth is affected. But do we really want to go down the road of debt driven consumption?

    olddog
    Full Member

    back to the OP – I think it depends a lot where you live. I live outside Leeds and in the city the shiny new shopping centre, packed restaurants and bars etc would suggest good times are back – then take a 15 minute train ride to Bradford (or out to East or South Leeds for that matter) and see the other side of the recovery…

    ti_pin_man
    Free Member

    you asked how we felt…

    I feel about the same, not having a party but keeping head above water, have been pleasantly surprised I’ve managed to more or less tread water but dont believe the underlying financial structure is solid, just not about to fall over. I guess thats a little improvement.

    teamhurtmore
    Free Member

    Back to the OP – more confident indeed might finally buy a decent bike – especially as there is now £400 off in the sale!

    footflaps
    Full Member

    GDP is up but GDP per capita is still below the 2008 peak.

    teamhurtmore
    Free Member

    Binners you may or may not be interested in some of the detail today

    Financial services weak -14% – so much for feeding the boys in the City
    Consumption is flat versus 1Q2008
    Correct, investment is weak, very weak in fact 🙁
    So where is the growth coming from?
    The main drivers – government (under the Tories???) and net trade (in cash terms gov spending has tailed off more recently accepted)

    GDP should be considered on a per capita basis at the very least. In this case it is 4% below the peak – there are almost 3m more people in UK pop. Of course, politicians don’t use this stat!!

    But the job market – stronger in every segment!!! The flip side, dreadful picture in terms if productivity and hence wages

    Household debt hardly changed in relation to GDP, we still have too much debt!!!

    So not really the picture presented in the media!!!

    BiscuitPowered
    Free Member

    Lets not forget that a sizable contributor to this great news GDP is ‘imputed rent’. Laughable.

    binners
    Full Member

    Financial services weak -14% – so much for feeding the boys in the City

    Since when did the performance of any company in the financial sector bear the slightest link with what ‘the boys in the city’ pay themselves? Thats the whole problem! Theres been a total disconnect for decades. Somewhat unbelievably this seems to have got worse! since the crash. You really couldn’t make it up!

    Barclays condemned over £2.4bn bonuses – Payouts up 10% despite profits fall and job cuts. Bank’s boss says he cannot control market-led pay

    That serves as a perfect illustration of who exactly is benefitting from the so-called recovery.

    As I said earlier. They’ve got away scot free. Trousered all the cash, then just walked away from the chaos they created. Yet incredibly, they remain totally unreformed, and they’re using the same bankrupt, totally discredited neo-liberal claptrap to justify their continued mind-boggling greed, and begger the rest of the country, and the ‘real’ economy!

    Like I also said earlier – They should be hanging from ****ing lamp-posts!!!

    failedengineer
    Full Member

    Binners is spot-on IMHO.

    ohnohesback
    Free Member

    If it sounds to good to be true it usually is.

    BiscuitPowered
    Free Member

    But… and this is the bit that counts… the richest in society were not only not effected by the crash, they’ve done really really really well out of it. The top 1% has seen their wealth go into the stratosphere. The ones who caused the whole debacle have walked away scott free (instead of being strung from ****ing lamp-posts!) and its snouts in the trough, business as usual

    So from the Tory perspective…. ker-****ing-ching!!!! Mission accomplished!!!!

    The Tories must have been rubbing their hands with glee at the possibilities for furthering their own interests under the pretence of ‘restructuring’ when they came to office in the aftermath of Labour’s economic calamity.

    After all, you never let a good crisis go to waste.

    slowoldman
    Full Member

    Well I think if my income rose by 0.8% I wouldn’t notice a thing.

    KINGTUT
    Free Member

    Me, my business has made more gross profit in the first 17 weeks of this fiscal year than the whole of 2010.

    **burns £50 note**

    brooess
    Free Member

    I think the Tories might have gone mad. There’s clearly a whole big mess sitting underneath the patina of good news stories.
    They’re putting a positive spin on the situation so they can win the election. But it’ll be after the election, when interest rates go up and growth slows that the debt and weaknesses will crystalise.
    And who’ll be in power? The Tories… so they’re just setting themselves up for 3 terms out of office again…

    Surely they’d be better off admitting it’s not great but pointing out they’ve kept things from getting worse than the mess they inherited. They should let Labour win the election, who will then screw up the economy completely, and allow the Tories to walk back into Downing St for another 3 term session! Worked for Maggie 🙂

    Then again I see people at work create massive screw ups for themselves without apparently being aware they;re setting themselves up – and then seem genuinely shocked when they finally get called on it. I guess power makes people’s heads go funny…

    stever
    Free Member

    Well I know the job market continues to ask for the moon on a stick but want to pay lukewarm salaries.

    footflaps
    Full Member

    We’ve still got the brunt of the Austerity cuts in public spending to come, they were all back loaded…..

Viewing 40 posts - 1 through 40 (of 71 total)

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