The budget

[River Don]

Good news for drinkers of Asti, Tia Maria and Malibu then.

It gets more like the 70s all the time.

[BillyStubbsTears]

The GDP growth projections were quickly glossed over, but they are horrific.

Once the immediate bounce back is out of the way, growth for 2023-2025 is projected to be 2.1%, 1.2% and 1.6%.

That compares with the long term average from 1950, right up until Austerity f**ked us over, of 2.3%.

We've just given up and accepted that sluggish economic growth is the norm now. By 2025, we will have had 15 years of below trend growth. The result is that by then, the economy will be producing £200bn per year less than it would have done if the earlier growth rate had continued.

The scale of these mistakes is so big, it's almost impossible to take in.

All that despite very high spending I'd say which is what you called for.  It will be interesting to see the remainder of the full details but seamt very high spending for a Tory chancellor.

The point is it is NOT very high spending. here have been many things announced but you  have to look at the big picture. Look at the amount being taken out of the economy by the reduction in UC, the increases in NI and the increase in Corporation Tax. Put together, they mean that the deficit will be back to effectively zero in real terms by 23/24, possibly a year earlier.

THAT is why the longer term growth predictions are so awful. Because Sunak is prioritising the deficit, not growth.

Compare that to America where Biden is pouring money into the economy to get it firing. And watch the divergence over the next few years.

[big fat yorkshire pudding]

Is he?  I haven't read the documents or figures but it's widely being reported that isn't the case?  (Weirdly just came up on my twitter feed).

https://twitter.com/tnewtondunn/status/1453400804765970441?t=0nGwyHuvpS6grs-RkTXIJw&s=19

[BillyStubbsTears]

BFYP
Those numbers are exactly the point I was making. You can't look at the deficit in isolation. You have to consider the macroeconomic circumstances.

Here are the predicted deficit figures in £bn
22/23 - 83
23/24 - 61
24/25 - 46
25/26 - 44

GDP is currently about £2000bn.

Growth is forecast at:

22/23 - 6.6% - £130bn
23/24 - 2.1% - £40bn
24/25 - 1.2% - £25bn
25/26 - 1.6% - £35bn

And then there's inflation which is likely to be 3-4% over that period. Which means GDP will grow by another £60-80bn per year over that period.

So in every year from next year, the deficit is going to be much less than GDP growth. In other words, they are planning for the overall debt/GDP ratio to start falling from next year. With the result being that GDP growth returns to pitifully low rates.

Compare that to America where they are turbocharging growth by more deficit spending.

I don't expect Newton-Dunn to point that out. Because his employer is invested in telling the story that the Tories are doing the right thing. He doesn't even properly contextualise the figures he shows without the analysis above. In 23/24, the projected deficit will be LOWER than it was forecast to be before COVID. That is frankly insane, in an economy that will still be recovering from COVID.

It's Austerity all over again, but skilfully presented as Not Austerity.

[selby]

Going back to your opening post Syd, more than enough, sort out the shift patterns  four on four off to keep the equipment going twenty four hours, get rid of layers of management., sort out the buyers especially the brown envelope brigade, and reward GP's on a similar wage structure to that of other countries such as France.

[BillyStubbsTears]

Other concern of course is that there was very little in the Budget about the scale of investment needed for decarbonising the economy.

[SydneyRover]

Going back to your opening post Syd, more than enough, sort out the shift patterns  four on four off to keep the equipment going twenty four hours, get rid of layers of management., sort out the buyers especially the brown envelope brigade, and reward GP's on a similar wage structure to that of other countries such as France.

When politicians talk about a 24 hour economy selby, they usually mean a 24 hour economy for others, certainly not them (look at the regular weeks off that johnson takes to get his beauty sleep) those higher up the food chain certainly don't volunteer.

As for the brown envelope, that was recycled long ago, now it is done right in front of your face look at the PPE contracts, look at advantages given to developer mates.

[BigH]

Good news for drinkers of Asti, Tia Maria and Malibu then.

It gets more like the 70s all the time.

You know how we used to take the p*ss out of East Germany. A country that believed it was living the dream - because it's leader told everyone it was - even though everyone in the West looked on it as some kind of freak show.

I think we're in for a spell of that now.

[BillyStubbsTears]

Interesting times in the Tory party. Here's the Big Picture of the Budget.

1) Govt spending is high. That's mainly inevitable due to an aging population and higher health and care costs. It's added to slightly by Johnson's desire to spend and the need to roll back some of the worst effects of Osborne's Austerity [1]

2) But Sunak is a deficit hawk. So he's pairing this with massive tax rises. Get this. By 2024, this Govt will be taking more in tax as a % of GDP than any Govt since Clement Attlee's.[2]

3) But the Tory backwoodsmen want tax cuts. Apparently Sunak got an ear bashing from the backbenchers last night about tax. Which might explain his frankly bizarre interview on R4 this morning, where he repeatedly insisted that his (very good) cut in the UC taper rate was a tax cut, when it is of course a benefit increase.

There's going to be some serious tension in the Tory ranks.

[1] There was one truly disgusting moment yesterday. Tory MPs cheering when Sunak announced that by 2025, education spending would finally get back to 2010 levels. No apology from the party that has cut £1500 per pupil per year while also cutting the top rate of tax, effectively subsidising rich families who send their kids to private schools.

[2] And this is why the Budget is a disaster on a macroeconomic level. Until we recover fully from the effect of COVID, we need to be spending and NOT taxing. Instead, the big tax rises will suck demand out of the economy, which basically puts us on a long term low growth path. This is a choice by Sunak. It doesn't have to be that way.

[bpoolrover]

The GDP growth projections were quickly glossed over, but they are horrific.

Once the immediate bounce back is out of the way, growth for 2023-2025 is projected to be 2.1%, 1.2% and 1.6%.

That compares with the long term average from 1950, right up until Austerity f**ked us over, of 2.3%.

We've just given up and accepted that sluggish economic growth is the norm now. By 2025, we will have had 15 years of below trend growth. The result is that by then, the economy will be producing £200bn per year less than it would have done if the earlier growth rate had continued.

The scale of these mistakes is so big, it's almost impossible to take in.

All that despite very high spending I'd say which is what you called for.  It will be interesting to see the remainder of the full details but seamt very high spending for a Tory chancellor.

The point is it is NOT very high spending. here have been many things announced but you  have to look at the big picture. Look at the amount being taken out of the economy by the reduction in UC, the increases in NI and the increase in Corporation Tax. Put together, they mean that the deficit will be back to effectively zero in real terms by 23/24, possibly a year earlier.

THAT is why the longer term growth predictions are so awful. Because Sunak is prioritising the deficit, not growth.

Compare that to America where Biden is pouring money into the economy to get it firing. And watch the divergence over the next few years.

has Biden not had to more than half what he was going to spend?

[SydneyRover]

strewth ..............

''This is actually awful. Yet more years of real incomes barely growing. High inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half a decade''

says Paul Johnson Director of the Institute for Fiscal Studies.

https://twitter.com/PJTheEconomist/status/1453350780124160007?s=20

[normal rules]

strewth ..............

''This is actually awful. Yet more years of real incomes barely growing. High inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half a decade''

says Paul Johnson Director of the Institute for Fiscal Studies.

https://twitter.com/PJTheEconomist/status/1453350780124160007?s=20

It’s almost like the conservatives have gone all socialist.
Some will be happy with this.

[big fat yorkshire pudding]

strewth ..............

''This is actually awful. Yet more years of real incomes barely growing. High inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half a decade''

says Paul Johnson Director of the Institute for Fiscal Studies.

https://twitter.com/PJTheEconomist/status/1453350780124160007?s=20

It’s almost like the conservatives have gone all socialist.
Some will be happy with this.

I think some will be yes and would be delighted if this was a red budget not a blue one.  Some parts of this just don't sit comfortably to me, there are real question marks around the size of the state and the lack of efficiency in using public funds.  They say it's a squeeze on the middle incomes, I'm not sure what that covers right now, it's a squeeze on everyone.

The inflation problem is not unique to us (Germany already at 5% and with less levers than us to control it).

BST your point on growth is fair, but after the brexit we have this is massively higher than the post brexit predictions isn't it?

[SydneyRover]

But a country in private hands has led nothing being done about shit pouring into rivers, train transport chaos and the biggie the underfunding and selling off of parts of the NHS and absolute mayhem of a response to covid resulting in 10s of thousands of excess deaths etc.

[BillyStubbsTears]

strewth ..............

''This is actually awful. Yet more years of real incomes barely growing. High inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half a decade''

says Paul Johnson Director of the Institute for Fiscal Studies.

https://twitter.com/PJTheEconomist/status/1453350780124160007?s=20

It’s almost like the conservatives have gone all socialist.
Some will be happy with this.

I think some will be yes and would be delighted if this was a red budget not a blue one.  Some parts of this just don't sit comfortably to me, there are real question marks around the size of the state and the lack of efficiency in using public funds.  They say it's a squeeze on the middle incomes, I'm not sure what that covers right now, it's a squeeze on everyone.

The inflation problem is not unique to us (Germany already at 5% and with less levers than us to control it).

BST your point on growth is fair, but after the brexit we have this is massively higher than the post brexit predictions isn't it?

No BFYP, it isn't massively higher than the post-Brexit predictions. It's about on par with them, actually a little lower, once the post-COVID bounce back has ended.

In 2019, the OBR had a prediction of long-term growth of 1.5% per year. At this Budget, the predictions for 2025 and 26 were 1.2% and 1.6%.

[BillyStubbsTears]

This is the thing about Brexit by the way. Assuming we left without a catastrophic No Deal scenario, absolutely no-one said that there'd be immediate disaster. What we said was that there would be a long, slow, grinding reduction in growth and therefore in wealth and living standards. You wouldn't notice it overnight, but you damn well would over 15 years.

Brexit  supporters meanwhile have crowed about the fact that nothing feels different in their pockets, so all the doom and gloom predictions must have been wrong.

Re-visit this in 5, 10 and 15 years and see how people are feeling then.

[foxbat]

bang on there,  they are cheering  ' it doesn’t seem much worse ' after less than a year as some sort of victory. Still waiting to hear of even one verifiable benefit.
Mugdoch and the rest off the right wing non domicile,  non tax paying  off shore billionaires that own most of our media have a lot to answer for. 
Not to mention  the Brexit Broadcasting Corporation.

[Bentley Bullet]

This is the thing about Brexit by the way. Assuming we left without a catastrophic No Deal scenario, absolutely no-one said that there'd be immediate disaster. What we said was that there would be a long, slow, grinding reduction in growth and therefore in wealth and living standards. You wouldn't notice it overnight, but you damn well would over 15 years.

Brexit  supporters meanwhile have crowed about the fact that nothing feels different in their pockets, so all the doom and gloom predictions must have been wrong.

Re-visit this in 5, 10 and 15 years and see how people are feeling then.

BST, with your incomparable foresight, do you ever feel guilty about wasting your invaluable time on a third division off-topic football forum?

Doesn't your country need you far more than we do?