The Budget

Who is exploiting Africa now?

Principally China, so that it can produce goods that we and the rest of the west demand, we are all guilty of exploitation. At COP 22 African nations asked for compensation caused by global warming, the response, very little firm commitment from anyone.

Nobody is serious all they do is kick the can down the road.

A reasonably good article by Labour MP Olivia Blake. There are other ways to deal with our cost of living crisis apart from Hunt's proposals to make already poorer people pay more tax.

labourlist.org/2022/11/its-time-to-ditch-the-austerity-agenda/

Katie59

We cannot maintain our present lifestyle without exploiting resources, there is no such thing as sustainable growth on a global level,
I’ve visited countries that live not exploiting resources, they get by with international aid and subsistent farming, a world away from our lifestyle.

Possibly sustainable means not relying on international aid from other countries.

Who is exploiting Africa now?

Why are parts of Africa so fertile but are not growing crops which could feed the whole continent? Even areas suffering severe drought.
Despots, rebels groups seizing food, war, genocide.

That photo reminded me, in a way, of when I was a child, riding on a seat behind Mum or Dad until I got my own bike.
We did, however, have a coal fire in winter adding to pollution.

This is what sustainable looks like

We cannot maintain our present lifestyle without exploiting resources, there is no such thing as sustainable growth on a global level,
I’ve visited countries that live not exploiting resources, they get by with international aid and subsistent farming, a world away from our lifestyle.

My definition of 'fine' is that everyone is healthy, housed, fed and clothed and has a bit over for recreational interests. That children, the elderly and those incapable of work are cared for according to their needs and the country produces enough to keep all the balls in the air. Japan seems to manage all that.

Growth is a debateable concept. If it means exhausting the planet's resources, which it always seems to, I don't think it's at all desirable. Sustainable growth is what we should be after, surely?

Maizie Japan is a low growth economy and probably is not doing fine at the moment. What is definition of fine?
What state interventions do you imagine will bring about economic growth?

But state borrowing and personal or company borrowing are entirely different things.

State 'borrowing' is other people's and conpanies' SAVINGS and INVESTMENTS, as it has been for hundreds of years. A large part of it ( a third) is money the state has 'lent' itself. In other words, created out of thin air with a few strokes on a keyboard. growstuff and I have both pointed this out only yesterday. The state can't run out of money. It doesn't have to 'balance its books', it is not a household or a company.

'Money' is a confidence trick, an illusion. It hardly, these days, even physically exists, it's just numbers being transferred electronically between accounts. It only has 'value' because we all believe in it, we need it to pay taxes with and it facilitates trade, both within and outside the country. While ever the flow of money round the economy is controlled to the extent that we don't have rampant demand led inflation to devalue it we will be fine. Japan has a far larger debt to gdp ratio than us and it's doing fine.

We won't be fine for long, though, if we don't get our fingers out and make the UK into an attractive market for business investment and entrepreneurs. In other words, put a bit of money in people's pockets by creating properly paid new employment and paying decent wages to people currently in employment. The first can only happen by way of state investment because the UK doesn't offer an attractive prospect to private entrepreneurs.

Mortgage and commercial debt mentioned just to indicate how how much borrowing there is in the UK.

If government returns a deficit years after year it must accumulate it doesn’t just get written off, how can the UK prosper if we are borrowing more year by year. If the borrowing was to increase growth, that’s fine but it isn't it’s just been giveaways to voters.

I strongly suspect that the £2.5 trillion figure is entirely spurious, Katie59 and I wouldn't worry about it in the slightest.Nobody is going to come knocking at the UK's door demanding repayment.

Commercial loans and mortgages aren't government debt, so I'm not clear why they are even mentioned.

We talk about “National Debt” the cumulative total is now around £2.5 Trillion, that is just government borrowing, it is thought that at least double that figure is borrowed with Commercial loans and Mortgages.

MaizieD

ronib

From the OBR, in the Uk we expect debt interest to total £83 billion that is 5 per cent of total public spending and £1900 cost per household. That’s without reducing the debt.

I wonder if that figure includes the interest on the £900billions of gilts the BoE bought for Quantitative Easing. Which is, in effect, interest which the Treasury will pay to itself, as the Treasury, via the BoE owns the bonds...

This £900billion is at least a third of the 'debt'. Take it off and it looks much smaller...

.And if you take the remaining interest payments away from the savers. investors and pension funds, how popular would you be?

Yes, it does.

From the OBR ... the £83 billion includes interest on gilts held by the Bank of England, so the Treasury is effectively paying the Bank of England. As both are part of the state, the money never leaves the public sector.

ronib

From the OBR, in the Uk we expect debt interest to total £83 billion that is 5 per cent of total public spending and £1900 cost per household. That’s without reducing the debt.

I wonder if that figure includes the interest on the £900billions of gilts the BoE bought for Quantitative Easing. Which is, in effect, interest which the Treasury will pay to itself, as the Treasury, via the BoE owns the bonds...

This £900billion is at least a third of the 'debt'. Take it off and it looks much smaller...

.And if you take the remaining interest payments away from the savers. investors and pension funds, how popular would you be?

From the OBR, in the Uk we expect debt interest to total £83 billion that is 5 per cent of total public spending and £1900 cost per household. That’s without reducing the debt.

MaizieD

She's Katy 59

The age is increasing for people born in 1961.

It's understandable that pensioners and those on benefits were relieved that the increases would be in line with inflation but let's not forget the decade of austerity which cut deeply into services for the poorest. The inflation increase does not make up for a decade of public spending cuts leading to an explosion in food bank use and a punitive benefits system that fails to meet people's basic needs. Job opportunities will decline in a recession while the benefits system 'encourages' people to find work. Inflation will bear down heaviest on the poorest. The budget is not good news for anyone.

She's Katy 59

Katy if you were born in 1957 you will get pension on your 66 birthday

Katie59

growstuff

The loans don't need to be paid back in the conventional sense, certainly not through austerity now.

In the past, it's sometimes taken hundreds of years to pay back government debts.

www.theguardian.com/business/2014/oct/31/uk-first-world-war-bonds-redeemed

In the last 50 yrs there have been very few where the national debt has been repaid when the loans have expired they have been replaced by new borrowing. It’s been interest only loans, or in the case of QE interest free loans, the amount borrowed has been increasing year by year.

Wether Hunt actually intends to reduce borrowing was not clear at the budget, he certainly did nothing that would increase growth.

The 'National Debt' has existed for centuries.

It doesn't need to be paid back because it is a valued investment and savings facility. Ever read Jane Austen where characters have a regular income from money invested in the '5 percents'? That is, money invested in government bonds paying 5% interest and giving a regular income. And what about all those pension funds holding government bonds because they're a safe source of income? Not to mention all those premium bond holders and people with National Savings accounts. All this is labelled 'borrowing'. But paying down the 'National Debt' only leaves them with risky alternatives. What's the point of that?

The 'deficit' is another animal altogether. It's the difference between government spending and government revenue. The 'National debt' aka 'borrowing' is a source of government revenue. Reducing borrowing' will not enable growth. Only investment by the government and private enterprises can do that by creating opportunities for jobs and businesses to circulate more money in the economy. Given our current economic climate of inflation, rising interest rates and growing poverty the UK is not an attractive proposition for private investors. That leaves state investment to provide the needed stimulus.

When the government is ideologically opposed to state investment, perpetuates the 'household budget myth that the UK has a finite amount of money, and is fixated on reducing the deficit by making people even more poor there seems to be little hope for the economy.

growstuff

GillJames

No. I pay tax and I'll not be paying more. BUT other taxes are coming in e.g. electric cars and council tax is losing its cap.

You will be paying more indirectly because tax thresholds have been frozen, while inflation is still high, so any increases in your pension/income won't be keeping up with price rises.

With inflation high the frozen thresholds will really bite, particularly towards the end of the 5 yr planned freeze. Unless of course whoever is in government decides to change that.

GillJames

No. I pay tax and I'll not be paying more. BUT other taxes are coming in e.g. electric cars and council tax is losing its cap.

You will be paying more indirectly because tax thresholds have been frozen, while inflation is still high, so any increases in your pension/income won't be keeping up with price rises.

I think that just about sums it up Katie59. That budget won't increase growth and it's doubtful it will reduce debt, which isn't a priority anyway. After the Kwarteng/Truss fiasco, it might give financial markets some security, but the price is going to be felt in most people's pockets.

growstuff

The loans don't need to be paid back in the conventional sense, certainly not through austerity now.

In the past, it's sometimes taken hundreds of years to pay back government debts.

www.theguardian.com/business/2014/oct/31/uk-first-world-war-bonds-redeemed

In the last 50 yrs there have been very few where the national debt has been repaid when the loans have expired they have been replaced by new borrowing. It’s been interest only loans, or in the case of QE interest free loans, the amount borrowed has been increasing year by year.

Wether Hunt actually intends to reduce borrowing was not clear at the budget, he certainly did nothing that would increase growth.

No. I pay tax and I'll not be paying more. BUT other taxes are coming in e.g. electric cars and council tax is losing its cap.

The loans don't need to be paid back in the conventional sense, certainly not through austerity now.

In the past, it's sometimes taken hundreds of years to pay back government debts.

www.theguardian.com/business/2014/oct/31/uk-first-world-war-bonds-redeemed