Wednesday, 10 December 2008

Bad News, Darling


The Pre-Budget Report seems a long time ago even now. The UK Government promised to spend our way out of recession, pushing annual government debt to 8% next year (EU guidelines are for 3%, crazy says EU's Trichet).

This huge spending boom and a set of interest rate cuts would see of the worst of the recession (and set the stage for a 2009 election?).

Here we are, not quite a month later and the latest economic forecasts have the economy shrinking at 1% or more in Q4 2009. Why is this so bad; well Darling, my beloved badger of a Chancellor, had said growth for the UK would be .75% for 2009. Well, so far it looks like this:

Q1 at .3%

Q2 at 0%

Q3 at -.3%

Q4 at likely -1%.

Add those up (there are some technical issues that mean this does not quite work, but the gist is near enough) and you get to -1.3%.

That is a huge variance to .75%. It is over 200 basis points out. Each of those is a fall in tax revenue and means more borrowing for the Government.


And so, we will see whether the fiscal stimulus works by mid-2009. The issue is that even if it does, the Government's borrowing forecasts are already shot and we will be even more in debt next year that they planned for. Despite this Brown and Darling criticise the Tories for suggesting we live vaguely within our means. Appalling.

15 comments:

Sebastian Weetabix said...

The period September to November has already shown a 1% contraction of the economy. We just got our sales numbers out for the last month and they fell off a cliff; 30-35% down, across all industries we sell into.

I wrote here a while back that we were well positioned for the downturn & that provided we didn't see drops of 40% or so we should be ok. Hmmm... if the trend continues, even a well managed, debt free, highly positiive cashflow business like ours is going to be desperately in the shit.

Of course we have cut out all discretionary spending - next step is to lose heads. That'll happen at the end of January if the slide in Nov continues into Dec/Jan.

Dark times ahead for at least 18 months, I reckon. And it's going to be much worse in the UK than just about anywhere else, I would say.

CityUnslicker said...

seb - sorry to hear that news. Our position is that we are only doan about 8% yoy at the moment (miles of budget). However, waiting for the tsunami of inactivity in Jan....

Sebastian Weetabix said...

Although sales were down 30-35% in November (compared to the previous month), YoY we are down only 2%. The scary part is (as a materials manufacturer looking at order levels for the months ahead) we can see that we will be down ANOTHER 40% this month & probably 30% again in January, on a month-on-month basis! This is the worst I have ever seen. It isn't just automotive & consumer industry customers either, it's even in medical devices. Last time I looked sickness levels didn't decrease in a recession so this is particularly surprising - the medical business is usually very recession proof.

Ho hum. These twats commanding the heights of government are definitely condemning the UK to a longer deeper nastier recession than everyone else though...

CityUnslicker said...

They are. I hope the media stop listening to their blather too. can'tbelive a govt can have such an easy ride of it during the worst recession in recent memory. I guess we are only at the beginning though...

Bill Quango MP said...

The retail is bad as already posted. But December figures are very poor so far.
Still expecting a big "Sale" surge that will get headlines after Xmas but of a much shorter duration than 2007.
Then the stores will start going into administration and the start of some serious lay offs will begin.

Mark Wadsworth said...

I am sometimes pleasantly surprised that we are only contracting at 1% a quarter.

In theory, about a quarter of what we spend is hardly essential (like new cars, holidays, new clothes, white goods, fancy haircuts, eating out etc), so there's no natural reason why the economy won't contract by a quarter or so over the next year.

Or to flip that question round, how many people in the UK work in providing really essential stuff, like food, police, energy? A tenth of us? Sure, people still have to pay mortgages and rent and banks and landlords collect it, but that's not exactly economic activity, that's just shoving money round.

CityUnslicker said...

MW - very generous of you.

Even if you were right, )which is um, debateable) there is still a big problem.

The people losing their jobs are private sector who pay tax, the people keeping jobs are public sector who consume taxes.

All very bad for the public finances.

Anonymous said...

I work for a US engineering company that sells world-wide. We see a 30% reduction in volume at present, with a staggering 70% in automotive markets. Analysis suggests that a significant proportion of this reduction is inventory correction mainly by stocking distributors. We expect this inventory correction to come to an end within 6 months but perhaps earlier.

Worst-hit markets are the US and the Euro-zone. Some Euro-zone companies are suffering severely due to high value of Euro. However, we are taking market share in the Eurozone from our European competitors so we hope this will help us in the medium term.

Asia is the most solid market for us at present, but this is primarily due to US mega-manufacturers moving production into low-cost manufacturing sites while the Chinese continue to maintain a low-value for the Yuan. We have also participated in this shift. Profit continues to be taken in the US of course, so the choice of manufacturing site is of minor significance.

Our detailed analysis suggests that the market volume will decline in the medium-term by 10% once the short-term inventory correction is behind us. We then expect a price war to break out in the market place but we perceive that due to low value of the $ and certain other currencies where we have manufacturing sites we can compensate for this by taking market share from our European competitors that are already struggling financially and have no room to move to lower pricing. Since we have cash in the bank we also expect to aquire certain European competitors at low prices - this is likely to be a stripping operation since the Eurozone is likely to remain too overpriced for competitive design and manufacture.

So to conclude we don't expect the US (and similarly the UK private sector) to be as badly hit in the medium term as one might expect. Devaluation of the currency is helping to re-balance trade in the US (and the UK). Short-term pain may be severe, however. We expect the Euro-zone to be worst hit due to high currency valuations and long-term problems in the business environment. We don't see a way out for the Euro-zone on their current path and expect many big name European manufacturers to run into cash-flow problems in mid-2009. We consider this an opportunity rather than a threat in the medium term since Euro-zone companies are more likely to be our competitors rather than our customers in the global market. The problems relating to high Euro valuation are likely to put enormous pressure on the ECB to relax existing rules to force a devaluation of the Euro to more competitive levels. In the longer term we have percieved that continental Europe has been overdue for a shake-out for at least 10 years if not longer and we anticipate that current economic conditions are likely to precipitate such a shake-out, leading to a radical re-structuring of the European business environment.

CityUnslicker said...

Anon, thanks.

I am amazed you think the $ is devalued....it is at record highs for the moment, except against the Yen and Swiss Franc.

I think you will be delighted when the Dollar really does devalue next year, sounds like it will work with your plans nicely.

Mark Wadsworth said...

CU, I wasn't making a forecast, so it's not a question of me being 'right' or 'wrong', I was just saying that things could be a lot worse.

Of course private businesses will suffer most, and the bloated public sector will continue expanding for the time being, but like a cartoon character running off a cliff, one day they will all come crashing down as well.

And the UK taxpayer will be hopelessly mired in debt. Question is, which countries aren't? And if there are some, will they take us all? And once all taxpayers have buggered off, what happens to those who are left? Can an entire country do a debt-for-equity swap?

Anonymous said...

w.r.t. last comment:

$ is 10% below its 2005 peak and average $ rate for 2008 is far lower than this again. We expect 2009 $ rates to be low again due to government reflation. We hedge against short-term currency fluctuations.

CityUnslicker said...

anon - quite right. I meant to say lows against yen and CHF. oops.

Dollar still has a lot further to fall though. hedging makes sense in this cae. good luck to you.

look said...

aaaa片, 免費聊天, 咆哮小老鼠影片分享區, 金瓶梅影片, av女優王國, 78論壇, 女同聊天室, 熟女貼圖, 1069壞朋友論壇gay, 淫蕩少女總部, 日本情色派, 平水相逢, 黑澀會美眉無名, 網路小說免費看, 999東洋成人, 免費視訊聊天, 情色電影分享區, 9k躺伯虎聊天室, 傑克論壇, 日本女星杉本彩寫真, 自拍電影免費下載, a片論壇, 情色短片試看, 素人自拍寫真, 免費成人影音, 彩虹自拍, 小魔女貼影片, 自拍裸體寫真, 禿頭俱樂部, 環球av影音城, 學生色情聊天室, 視訊美女, 辣妹情色圖, 性感卡通美女圖片, 影音, 情色照片 做愛, hilive tv , 忘年之交聊天室, 制服美女, 性感辣妹, ut 女同聊天室, 淫蕩自拍, 處女貼圖貼片區, 聊天ukiss tw, 亞亞成人館, 777成人, 秋瓷炫裸體寫真, 淫蕩天使貼圖, 十八禁成人影音, 禁地論壇, 洪爺淫蕩自拍, 秘書自拍圖片,

做愛的漫畫圖片, 情色電影分享區, 做愛ㄉ影片, 丁字褲美女寫真, 色美眉, 自拍俱樂部首頁, 日本偷自拍圖片, 色情做愛影片, 情色貼圖區, 八國聯軍情色網, 免費線上a片, 淫蕩女孩自拍, 美國a片, 都都成人站, 色情自拍, 本土自拍照片, 熊貓貼圖區, 色情影片, 5278影片網, 脫星寫真圖片, 粉喵聊天室, 金瓶梅18, sex888影片分享區, 1007視訊, 雙贏論壇, 爆爆爽a片免費看, 天堂私服論壇, 情色電影下載, 成人短片, 麗的線上情色小遊戲, 情色動畫免費下載, 日本女優, 小說論壇, 777成人區, showlive影音聊天網, 聊天室尋夢園, 義大利女星寫真集, 韓國a片, 熟女人妻援交, 0204成人, 性感內衣模特兒, 影片, 情色卡通, 85cc免費影城85cc, 本土自拍照片, 成人漫畫區, 18禁, 情人節阿性,

uhfdf said...

情色電影, aio交友愛情館, 言情小說, 愛情小說, 色情A片, 情色論壇, 色情影片, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊美女, 視訊交友, ut聊天室, 視訊聊天, 免費視訊聊天室, a片下載, av片, A漫, av dvd, av成人網, 聊天室, 成人論壇, 本土自拍, 自拍, A片, 愛情公寓, 情色, 舊情人, 情色貼圖, 情色文學, 情色交友, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 色情遊戲, 情色視訊, 情色電影, aio交友愛情館, 色情a片, 一夜情, 辣妹視訊, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊, 視訊美女, 美女視訊, 視訊交友, 視訊聊天, 免費視訊聊天室, 情人視訊網, 影音視訊聊天室, 視訊交友90739, 成人影片, 成人交友,

免費A片, 本土自拍, AV女優, 美女視訊, 情色交友, 免費AV, 色情網站, 辣妹視訊, 美女交友, 色情影片, 成人影片, 成人網站, A片,H漫, 18成人, 成人圖片, 成人漫畫, 情色網, 日本A片, 免費A片下載, 性愛, 成人交友, 嘟嘟成人網, 成人電影, 成人, 成人貼圖, 成人小說, 成人文章, 成人圖片區, 免費成人影片, 成人遊戲, 微風成人, 愛情公寓, 情色, 情色貼圖, 情色文學, 做愛, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 寄情築園小遊戲, 色情遊戲, 情色視訊,

will said...

A片,A片,A片,A片,A片,A片情趣用品,情趣,A片,AIO,AV,AV女優,A漫,免費A片,AIO交友愛情館,愛情公寓,情色,情色貼圖,色情小說,情色小說,情色文學,色情,寄情築園小遊戲,色情遊戲,嘟嘟情人色網,一葉情貼圖片區,情色論壇,色情影片,微風成人,嘟嘟成人網,成人,18成人,成人影城,成人圖片區,成人圖片,成人貼圖,UT聊天室,聊天室,豆豆聊天室,哈啦聊天室,尋夢園聊天室,聊天室尋夢園,視訊聊天室,視訊聊天

麻將,台灣彩卷,六合彩開獎號碼,運動彩卷,六合彩,線上遊戲,矽谷麻將,明星3缺一,橘子町,麻將大悶鍋,台客麻將,公博,game,,中華職棒,麗的線上小遊戲,國士無雙麻將,麻將館,賭博遊戲,威力彩,威力彩開獎號碼,龍龍運動網,史萊姆,史萊姆好玩遊戲,史萊姆第一個家,史萊姆好玩遊戲區,樂透彩開獎號碼,遊戲天堂,好玩遊戲,遊戲基地,無料遊戲王,好玩遊戲區,麻將遊戲,好玩遊戲區,小遊戲,遊戲區,電玩快打,cs online情趣用品,情趣,情趣商品,A片,AIO交友愛情館,AIOAV女優,AV,A漫,免費A片,本土自拍,自拍,愛情公寓,情色,情色貼圖,色情小說,情色小說,情色文學,色情,寄情築園小遊戲,色情遊戲,色情影片,情色網,色情網站,微風成人區,微風成人,嘟嘟成人網,成人,18成人,成人影城,成人圖片區,成人圖片,成人貼圖,成人文章,成人小說,UT聊天室,聊天室,豆豆聊天室,哈啦聊天室,尋夢園聊天室,聊天室尋夢園,080中部人聊天室,080聊天室,中部人聊天室,080苗栗人聊天室,苗栗人聊天室,免費視訊聊天,免費視訊,視訊聊天室,視訊聊天情趣用品,情趣,情趣商品,愛情公寓,情色,情色貼圖,色情小說,情色小說,情色文學,色情,寄情築園小遊戲,色情遊戲,AIO交友愛情館,一葉情貼圖片區,情色論壇,色情影片,色情網站,微風成人區,微風成人,嘟嘟成人網,成人,18成人,成人影城,成人圖片,成人貼圖,成人圖片區,成人文章,成人小說,A片,AV女優,AV,A漫,免費A片,自拍,UT聊天室,聊天室,豆豆聊天室,哈啦聊天室,尋夢園聊天室,聊天室尋夢園,080中部人聊天室,080聊天室,080苗栗人聊天室情趣用品,情趣,情趣商品,愛情公寓,情色,情色貼圖,色情小說,情色小說,情色文學,色情,做愛,寄情築園小遊戲,色情遊戲,AIO交友愛情館,AIO,色情影片,情色網,微風成人,嘟嘟成人網,成人,18成人,成人影城,成人圖片,成人貼圖,成人圖片區,成人文章,成人小說,成人電影,麗的色遊戲,自拍,A片,AV女優,AV,A漫,視訊交友網,視訊,視訊交友,免費視訊聊天室,免費視訊,視訊聊天,視訊聊天室,UT聊天室,聊天室,豆豆聊天室,哈啦聊天室,尋夢園聊天室,聊天室尋夢園,中古車,二手車情色貼圖,日本A片,A片下載,情色A片,AV女優,A漫,免費A片,微風成人,成人網站,成人光碟,嘟嘟成人網,成人,成人影城A片,A片,A片下載,做愛,成人電影,18成人,日本A片,情色小說,情色電影,成人影城,自拍,情色論壇,成人論壇,情色貼圖,情色,免費A片,成人,成人光碟