the uk seems to be stuck between a rock and a hard place. we lack the manufacturing base to be able to spend our way out of the recession and instead have to cut deep into the public sector while raising taxes. this means that consumption should drop as people have less disposable income and many are laid off, in turn resulting in a growth slow down at the very least.
It is clear that in the autumn statement, Osbourne is adopting a devil they know attitude by sticking to his initial plan of attempting to improving the budget deficit. Although it is obvious that this plan is not going as Osbourne had hoped, it is yet to bring recession; and as the economy is clearly very fragile and unstable, he is unprepared to attempt any other plan such as cutting tax or increasing spending as it may ‘tip us into recession’. He simply isn’t tackling low growth though. As it has already fallen below the previous forecasts, it is unlikely to improve in the foreseeable future. This could prove a fatal flaw as the eurozone crisis plays out.
George Osbourne says that GDP is only expected to grow by 0.9 % this year and by 0.7% next year rising to 3% by 2015. Firstly, the state pension age is set to increase from 66 to 67 from 2026-2028, which is 8 years before expected, with the hope of the government saving around £60bn so the working force will have to work another year, before they get their state pensions. With that, state pensions are set to rise by £5.30 in April meaning that people will be required to pay more towards their pensions. Another point is that the cost of fuel is set to increase by 3.2p per-litre in January 2012, but has been delayed until August, which means that eventually the cost for travelling will increase.
we face two years of very little growth; and osbourne's prediction for the following years seem optimistic. although businesses and the housing market will be stimulated by schemes and funds, revenues from them will take time to affect the GDP. in the mean time inflation will rise and we will all face economic hardship.
since the government is not investing ennough in businesses and retaining money rather than using it to boost our economy we are likely to see less growth than we have been expecting. The govermnet are deviding to use an austerity budget when really they should be encouraging borrowing and spending to increase consumption.
Osborne appears to be so focused on reducing the Budget Deficit, he is neglecting to tackle the decline in Economic growth for the UK. He should make it easier for banks to borrow money cheaply, which would then encourage jobs creation and productivity. If people are more secure in their jobs, they are more likely to spend, therefore consumption increases, filled by small businesses.
Too much optimism backed up by failing stats will not help the UK, in a way it's good that they've admitted the predicted growth is now lower, as it'll be less of a shock. The global events will have a massive impact on the UK's economy because we rely on them for trade, but there's probably something we can do in order to make said impact less severe, especially as we now have more of an idea of how the financial crisis is hitting the UK, as well as a model (the recession of the 20s-30s.The fact that they've raised the pension age is better I think, if people are able to work then it'll be better for the economy as they'll be doing something productive. However, I also think the government should invest in more businesses and possibly sustainable resources, as we're pretty certain that the future will lie there, so we'll be turning to more UK-made things and lose less on the balance of trade and such.
The big news of the budget was the growth figures which had been revised down from 1.7% to 0.9%. This , in part, caused the big news of the budget, that the structural deficit wouldn’t be removed by the next election. The forecast is that the government will borrow an extra £111 billion by the next election. The high profile discussions on public sector pensions are still unfinished however, the current pay freeze will be followed by a 1% cap on public sector pay increases for two further years. The government in the light of the low predictions for growth have been keen to be seen promoting growth. The £1 billion “youth contract” is aimed to get the young unemployed into work. Although the youth contract has taken the headlines the £40 billion to underwrite loans to small and medium sized businesses as well as the ambitious plans for £30 billion worth of investment in infrastructure may have a larger impact.
The Autumn Statement lived up to expectations. Potential output and growth were slashed, and more importantly the government would continue to borrow large amount of sums for the next four years - £111bn to be exact. In a nut shell, 710,000 public sector workers will lose their jobs, and those who will stay, will be expected to work to 67 before they could claim a state pension. But the question ringing in everyone's ears - is it time for plan B?
What is made immediately apparent is the miscalculations conducted by the government and the ungrounded optimism in the predictions for economic growth. This will result in a false sense of hope and it may be time to consider plan B if we wish to save our pensions and reduce spending cuts in unnecessary areas. It may also be necessary to focus more on other sectors such as banking for the financial aid which is needed to reduce the national debt instead of public services.
in my opinion the goverment need to stimulate large growth and get the economy flowing in all areas and focus more on the short term not the long term. because the people need change now!
1) stop welfare entitlements for migrant labour – free health care, education , pensions 3) Cut VAT to zero - money in pockets, business profit margins increased
Economic Growth has fallen from 1.7% to 0.9%. The GDP represents Gross National Product, when the GDP decreases it is likely we will experience lower exports, hence lower national income. This will provide means to borrow/import more; this had been demonstrated by the £111bn extra borrowing over the next 5 years.
A lower GDP represents lower national output and could lead to a higher unemployment. Public Sector workers have been striking after the rise in state pension to 67 is brought forward; this costs the government money due to the many national closures as a result of the strike. In addition the rise in unemployment is likely to result in the Government paying more money towards benefits, (Claimant Count & Jobseekers Allowance). This will contribute to the deficit as this will need to be paid for via extra funds which the government does not have; hence increased borrowing. Credit Easing is also acting as an incentive to businesses to borrow, the government hope that making it easier to borrow will possibly increase enterprise and therefore stimulate growth.
the uk seems to be stuck between a rock and a hard place. we lack the manufacturing base to be able to spend our way out of the recession and instead have to cut deep into the public sector while raising taxes. this means that consumption should drop as people have less disposable income and many are laid off, in turn resulting in a growth slow down at the very least.
ReplyDeleteIt is clear that in the autumn statement, Osbourne is adopting a devil they know attitude by sticking to his initial plan of attempting to improving the budget deficit. Although it is obvious that this plan is not going as Osbourne had hoped, it is yet to bring recession; and as the economy is clearly very fragile and unstable, he is unprepared to attempt any other plan such as cutting tax or increasing spending as it may ‘tip us into recession’. He simply isn’t tackling low growth though. As it has already fallen below the previous forecasts, it is unlikely to improve in the foreseeable future. This could prove a fatal flaw as the eurozone crisis plays out.
ReplyDeleteGeorge Osbourne says that GDP is only expected to grow by 0.9 % this year and by 0.7% next year rising to 3% by 2015.
ReplyDeleteFirstly, the state pension age is set to increase from 66 to 67 from 2026-2028, which is 8 years before expected, with the hope of the government saving around £60bn so the working force will have to work another year, before they get their state pensions. With that, state pensions are set to rise by £5.30 in April meaning that people will be required to pay more towards their pensions.
Another point is that the cost of fuel is set to increase by 3.2p per-litre in January 2012, but has been delayed until August, which means that eventually the cost for travelling will increase.
we face two years of very little growth; and osbourne's prediction for the following years seem optimistic. although businesses and the housing market will be stimulated by schemes and funds, revenues from them will take time to affect the GDP. in the mean time inflation will rise and we will all face economic hardship.
ReplyDeletesince the government is not investing ennough in businesses and retaining money rather than using it to boost our economy we are likely to see less growth than we have been expecting. The govermnet are deviding to use an austerity budget when really they should be encouraging borrowing and spending to increase consumption.
ReplyDeleteOsborne appears to be so focused on reducing the Budget Deficit, he is neglecting to tackle the decline in Economic growth for the UK. He should make it easier for banks to borrow money cheaply, which would then encourage jobs creation and productivity. If people are more secure in their jobs, they are more likely to spend, therefore consumption increases, filled by small businesses.
ReplyDeleteToo much optimism backed up by failing stats will not help the UK, in a way it's good that they've admitted the predicted growth is now lower, as it'll be less of a shock. The global events will have a massive impact on the UK's economy because we rely on them for trade, but there's probably something we can do in order to make said impact less severe, especially as we now have more of an idea of how the financial crisis is hitting the UK, as well as a model (the recession of the 20s-30s.The fact that they've raised the pension age is better I think, if people are able to work then it'll be better for the economy as they'll be doing something productive. However, I also think the government should invest in more businesses and possibly sustainable resources, as we're pretty certain that the future will lie there, so we'll be turning to more UK-made things and lose less on the balance of trade and such.
ReplyDeleteThe big news of the budget was the growth figures which had been revised down from 1.7% to 0.9%. This , in part, caused the big news of the budget, that the structural deficit wouldn’t be removed by the next election. The forecast is that the government will borrow an extra £111 billion by the next election.
ReplyDeleteThe high profile discussions on public sector pensions are still unfinished however, the current pay freeze will be followed by a 1% cap on public sector pay increases for two further years. The government in the light of the low predictions for growth have been keen to be seen promoting growth. The £1 billion “youth contract” is aimed to get the young unemployed into work. Although the youth contract has taken the headlines the £40 billion to underwrite loans to small and medium sized businesses as well as the ambitious plans for £30 billion worth of investment in infrastructure may have a larger impact.
The Autumn Statement lived up to expectations. Potential output and growth were slashed, and more importantly the government would continue to borrow large amount of sums for the next four years - £111bn to be exact. In a nut shell, 710,000 public sector workers will lose their jobs, and those who will stay, will be expected to work to 67 before they could claim a state pension. But the question ringing in everyone's ears - is it time for plan B?
ReplyDeleteWhat is made immediately apparent is the miscalculations conducted by the government and the ungrounded optimism in the predictions for economic growth. This will result in a false sense of hope and it may be time to consider plan B if we wish to save our pensions and reduce spending cuts in unnecessary areas. It may also be necessary to focus more on other sectors such as banking for the financial aid which is needed to reduce the national debt instead of public services.
ReplyDeletein my opinion the goverment need to stimulate large growth and get the economy flowing in all areas and focus more on the short term not the long term. because the people need change now!
ReplyDeleteWhat could Osbourne have done?
ReplyDelete1) stop welfare entitlements for migrant labour – free health care, education , pensions
3) Cut VAT to zero - money in pockets, business profit margins increased
Economic Growth has fallen from 1.7% to 0.9%. The GDP represents Gross National Product, when the GDP decreases it is likely we will experience lower exports, hence lower national income. This will provide means to borrow/import more; this had been demonstrated by the £111bn extra borrowing over the next 5 years.
ReplyDeleteA lower GDP represents lower national output and could lead to a higher unemployment. Public Sector workers have been striking after the rise in state pension to 67 is brought forward; this costs the government money due to the many national closures as a result of the strike. In addition the rise in unemployment is likely to result in the Government paying more money towards benefits, (Claimant Count & Jobseekers Allowance). This will contribute to the deficit as this will need to be paid for via extra funds which the government does not have; hence increased borrowing.
Credit Easing is also acting as an incentive to businesses to borrow, the government hope that making it easier to borrow will possibly increase enterprise and therefore stimulate growth.