Sunday, October 11, 2015

Britain is among a handful of shining lights in the global economy this year as the world sees the slowest period of growth since the depths of the financial crisis, according to the International Monetary Fund. The IMF edged up its forecast for UK growth in 2015 amid downgrades "across the board" for advanced and emerging economies. It said China's slowdown, falling commodity prices and an expected increase in US interest rates would all weigh on output.   "Britain is among a handful of shining lights in the global economy this year"  I think someone must be holding this shining light in your eyes. I'd recommend a read of the Whole of Government Accounts for 2013-14, and of course for 2014-15 when they finally come out.  Here's a quick extract from 2013-14 WGA for you. "Assets have increased by £39.8 billion (3.1%) from £1,297.5 billion in 2012-13 to £1,337.3 billion in 2013-14. Property, plant and equipment (PPE) increased by £15.8 billion due to increased assets under construction and new academies; financial assets increased by £17.6 billion due to increased loans and advances to banks (repos) and trade receivables increased by £10.2 billion due to increases in taxation due.  Liabilities have increased by £263.7 billion (9%) from £2,925.4 billion in 2012-13 to £3,189.1 billion in 2013-14. The key factors behind this increase were an increase in the pension liability of £130 billion (11.1%), followed by an increase in government borrowing of £99.9 billion (10%) and financial liabilities of £17.8 billion (3.8%)."  Assets up by 39.8bn and liabilities up by 263.7bn, that's a net worsening of position of 224bn or so in a single year. Then of course we have the private pension sector whose recognised deficits have increased, according to the PPF, by 320bn over the last two years, primarily thanks to emergency low rates. They are going to need to suck that money out of the wider economy over perhaps the next ten years, as indeed many major companies are already doing.  As to GDP, well we have 8.9% of our GDP being provided by imputed rents, the rent that you'd theoretically have to pay yourself if you didn't already own your property, though it generates no real additional economic activity. Another large chunk of nominal GDP growth come from importing 330,000 people a year that we make no provision in terms of infrastructure or services for, we simply degrade existing ones with the extra load. And the remainder? Well we borrow three or four times the actual organic GDP growth to support it.
I'm not sure we can afford things being this good much longer.


Anonymous said...

Thousands of people have gathered near the scene of Saturday’s twin bomb explosions that killed more than 100 people at a peace rally in the Turkish capital, Ankara.

Brief scuffles broke out as police used teargas to prevent people from laying red carnations at the site of the attack, the deadliest terrorist strike on Turkish soil in recent history. The pro-Kurdish People’s Democratic party (HDP) said said some members of its delegation sustained injuries.

Later, a group of about 70 people was allowed to enter the cordoned-off area in front of the Ankara’s main train station.

Anonymous said...

I wonder if any of these smart asses have ever given a thought to what will happen, if we have another recession when the interest rates are at rock bottom and with no room for financial manoeuvre.
They daren't raise the interest rates anytime soon or millions of people on mortgages will become homeless and the housing market will be saturated with repossessed houses.