Tuesday 7 October 2014

Euro Crisis: Round 2

The papers today and tomorrow will be full of the story of the IMF reporting that Europe needs to follow the UK's lead on austerity and how wrong that have been to criticise the Government in the past.

However, they are all missing or will miss the two really key issues:

1) The UK has not undergone real austerity. The cuts in some areas have been made up by tax cuts and increases in other areas of spending such as Foreign Aid and the NHS. The IMF say the UK has obtained fiscal credibility - oddly, this is because the UK has engaged in a massive exercise in money printing. This could not have happened in the eurozone as the central bank will not do this.

2) Germany is rapidly falling towards recession, driven by a drop of exports to Russia and the continued downturn in its export markets around Europe and in China. With France and Italy not really out of recession, this means the Eurozone is heading back towards trouble. No growth and huge debts leave many of the Countries in the eurozone very exposed indeed.

2011 was not a pretty year, if 2015 repeats it then the UK is in for a tough time given our own debt dynamics.

15 comments:

Electro-Kevin said...

Not undergone real austerity ?

Yup.

An inflation/low interesty default. Which altered the change in my own instinctive behavior. ( I thought we had a conservative majority.)

If it goes wrong henceforth then I'm playing the "it wasn't my fault" game.

Diogenes said...

So it is a race to the bottom of the polls - to see who is left holding the debt 2015-2020. Ed seems to be doing a good job

dearieme said...

"( I thought we had a conservative majority.)" If we had we wouldn't have got a coalition.

andrew said...

Providing another hostage to fortune:-

The cons will win a full majority in '15.

Not because they are any use, but because the others are even worse.

Given the way things are going in the EU it might not be that we leave the EU, but that the northern countries leave the EU - and we are one of them.


andrew said...

whether you consider France to be a norther country is unclear.

CityUnslicker said...

Andrew - France is Northern, but socialism runs deep there. Always have, after all France had a communist government (in part) in the 1930's.

Once they have their 1970's denoument they will be back. france has a lot of culture and social capital -more so than the UK. it is also a very productive economy on any measurement. A French thatcher would be able to perform miracles.

Elby the Beserk said...

B-b-b-baby you ain't seen nothing yet. Labour have promised to balance the books should they be elected. This, given the fact that we are running deficits from small to large most months, and given that we have a declared national debt of £1.5 trillion (i.e. in reality c £4 trillion), means that only be removing almost all public services can the books be balanced.

Watching a Labour government do this could be huge fun; marry them and the climate Jihadis rampant on the Left and that agrarian economy we all so mourn living in will be back with a vengeance.

Nick Drew said...

@ Andrew: whether you consider France to be a norther country is unclear

I read that as 'nuclear' for a second there

they are certainly nuclear

Anonymous said...

Will today see the "Clacton" effect on Sterling?

Will it go up - or down?

Anonymous said...

"A French thatcher would be able to perform miracles."

I see they're planning to scrap the French Sunday - one of the first things Mrs Thatcher did in the UK. No conservative she.

Can you tell me what miracles Mrs Thatcher performed for the British economy, once you take into account North Sea Oil ? I seem to recall that state spending as a proportion of GDP was around the same when she left as when she arrived - amazing when you think of all the things the state no longer did (electricity, gas, water, oil, phones).

As for British society, Britain in 1992 was a lot closer to Blair's New Britain than Alderman Roberts' Grantham. The British underclass expanded hugely in the Thatcher years, which mark the change from council estates being full of working people to them being full of non-working people).

The Thatcher years were the start of the world we live in today. Her Premiership saw:

a) The start of the debt-fuelled culture which crashed in 2008 - remember "takes the waiting out of wanting" ?
b) The rise of the UK underclass, bastardy and drug use
c) The rise of the deregulated financial “economy” and decline of manufacturing
d) The rise in house prices
e) a collapse in the birth rate as
f) more women participated in the workforce (so they could afford a house!)
g) a dramatic rise in crime – linked to b)
h) the sell-off of vital infrastructure – power generation and distribution being the most important

Laban

Elby the Beserk said...

Anon ... what did she do? She destroyed the baleful influence of the unions over industry in the UK, for starters, which alone will have saved the taxpayer billions. She provided for me a three month TOPS retraining course turning me from a milkman (own choice!) into a tip top IT professional helping to grease the wheels of the economy.

And she completely pissed off the Socialists, which in itself was worth the price of admission

Elby the Beserk said...

Anon ... what did she do? She destroyed the baleful influence of the unions over industry in the UK, for starters, which alone will have saved the taxpayer billions. She provided for me a three month TOPS retraining course turning me from a milkman (own choice!) into a tip top IT professional helping to grease the wheels of the economy.

And she completely pissed off the Socialists, which in itself was worth the price of admission

Thud said...

Elby...agreed!

Anonymous said...

Elby - funny, my career trajectory pretty well matches yours - but that doesn't alter the fact that the Blair/Brown years were in many ways the continuation of the Thatcher years, not their antithesis.

While there's an argument that union power was too great (it was certainly being used ridiculously by the far left), its destruction when twinned with mass immigration on the Blair scale was an invitation to grind the faces of the poor. Who are now not just the unfortunate with a low-IQ, but the guy with a Russell-group 2.1 working in the call centre for £6.50 an hour.

Laban

Ryan said...

Thatcher reduced public expenditure as a % of GDP by about 10%, but that was quite an achievement as in the previous 20 years it had risen steadily by 50% and clearly had hit the end-stops.

By the time Major left power it was down to just 35%. Under Labour it rose steadily back up to 45%.

I would say 40% is the maximum that can be sustained, but in good times public spending should be lower, to allow us to buy our way through the bad times (recessions typically resolve themselves after 2 years)