| What is Rachel Reeves plotting? 09:11 - Oct 7 with 3102 views | portmanking |
Gilts have risen well over 50 basis points on 5-year gilts in the last week. I thought Labour were the party planning to stabilise living/mortgage costs?
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| What is Rachel Reeves plotting? on 09:37 - Oct 7 with 3000 views | Keno |
someone posted on link on here that they are planning to scrap the fiscal policy to enable them to borrow more to stimulate the economy |  |
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| What is Rachel Reeves plotting? on 09:43 - Oct 7 with 2947 views | Leaky |
| What is Rachel Reeves plotting? on 09:37 - Oct 7 by Keno |
someone posted on link on here that they are planning to scrap the fiscal policy to enable them to borrow more to stimulate the economy |
So the £22m black hole becomes a £50m black hole then |  | | |
| What is Rachel Reeves plotting? on 09:44 - Oct 7 with 2939 views | Zapers |
| What is Rachel Reeves plotting? on 09:37 - Oct 7 by Keno |
someone posted on link on here that they are planning to scrap the fiscal policy to enable them to borrow more to stimulate the economy |
Inflation in the UK is proving difficult to reduce, borrowing yet more money is likely to push interest rates up, increasing peoples mortgages | | | |
| What is Rachel Reeves plotting? on 09:46 - Oct 7 with 2913 views | portmanking |
| What is Rachel Reeves plotting? on 09:44 - Oct 7 by Zapers |
Inflation in the UK is proving difficult to reduce, borrowing yet more money is likely to push interest rates up, increasing peoples mortgages |
Indeed. Expanding borrowing now at a time when we should be maintaining QT to overcome Covid debt quicker would be as harmful (if not more so) than decisions taken post-2008. IMO, of course.
EDIT: Apols, this was meant for General section! | | | |
| What is Rachel Reeves plotting? on 09:47 - Oct 7 with 2909 views | Keno |
| What is Rachel Reeves plotting? on 09:43 - Oct 7 by Leaky |
So the £22m black hole becomes a £50m black hole then |
in fairness spending to stimulate an economy is a fairly will tried and tested economic approach (see Roosevelts New Deal) but only works if it does provide enough growth to increase tax revenues enough to repay the additional borrowing while you keep in top of interest rates and more importantly inflation
what doesnt work so well, if at all is 'austerity' | |
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| What is Rachel Reeves plotting? on 09:49 - Oct 7 with 2877 views | portmanking |
| What is Rachel Reeves plotting? on 09:47 - Oct 7 by Keno |
in fairness spending to stimulate an economy is a fairly will tried and tested economic approach (see Roosevelts New Deal) but only works if it does provide enough growth to increase tax revenues enough to repay the additional borrowing while you keep in top of interest rates and more importantly inflation
what doesnt work so well, if at all is 'austerity' |
But how do you generate the growth when people's mortgages are rising 40-50%? Dispensable income dries up, private sector dries up and we're left with what?
This is an economy which won't be able to function at 5%-6% mortgage rates for long, or the hard-working middle class will be extinguished. | | | |
| What is Rachel Reeves plotting? on 09:49 - Oct 7 with 2875 views | soupytwist |
| What is Rachel Reeves plotting? on 09:37 - Oct 7 by Keno |
someone posted on link on here that they are planning to scrap the fiscal policy to enable them to borrow more to stimulate the economy |
Probably wasn't this one, but here's an article on what she might do, why she might do it and why the world probably won't end as a result:
https://news.sky.com/story/budget-2024-how-fiscal-rules-are-impeding-long-term-i |  | | |
| What is Rachel Reeves plotting? on 09:52 - Oct 7 with 2857 views | Guthrum |
| What is Rachel Reeves plotting? on 09:43 - Oct 7 by Leaky |
So the £22m black hole becomes a £50m black hole then |
Depends whether you believe in Keynesian economics or not. Direct stimulus is a lot better than putting your government borrowing into tax cuts and vaguely hoping it ends up in the right places (rather than floating offshore with Amazon).
In any case, the "black hole" is in public spending. Different budget. |  |
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| What is Rachel Reeves plotting? on 09:54 - Oct 7 with 2851 views | DJR |
A look back at the 5 year rates suggests they have been hovering around the current level since the Truss premiership, with small fluctuations up and down.
As it is, I believe one reason why the UK has suffered in recent years when it comes to debt repayments is that, compared to other Western countries, a higher percentage of its debt is tied to gilts with a variable rate of interest.
I am not sure whether any particular government is responsible for that but UK short termism may be the cause.
EDIT: here's an article which confirms what I say, and suggests it goes back to 1981.
https://uk.finance.yahoo.com/news/why-high-rates-affect-uk-060000075.html?guccou [Post edited 7 Oct 2024 10:00]
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| What is Rachel Reeves plotting? on 09:58 - Oct 7 with 2791 views | Guthrum |
| What is Rachel Reeves plotting? on 09:49 - Oct 7 by portmanking |
But how do you generate the growth when people's mortgages are rising 40-50%? Dispensable income dries up, private sector dries up and we're left with what?
This is an economy which won't be able to function at 5%-6% mortgage rates for long, or the hard-working middle class will be extinguished. |
However, as Keno said, what is the alternative? Public services have been cut for so long there is no margin left. An attempt to mildly trim one of the few even slightly fatty areas (pensioners) has been met with anger.
If you're not going to stimulate and are already in deficit, where are the revenues going to come from to service the debts you already have? Increasing taxes?? | |
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| What is Rachel Reeves plotting? on 10:01 - Oct 7 with 2762 views | portmanking |
| What is Rachel Reeves plotting? on 09:58 - Oct 7 by Guthrum |
However, as Keno said, what is the alternative? Public services have been cut for so long there is no margin left. An attempt to mildly trim one of the few even slightly fatty areas (pensioners) has been met with anger.
If you're not going to stimulate and are already in deficit, where are the revenues going to come from to service the debts you already have? Increasing taxes?? |
Increasing taxes? Er... yes? I thought the whole point of Labour was to take more from those with the broadest shoulders to support the working class? My fear is Reeves is going down a road where she won't do enough to stimulate the economy but will do enough to lose the confidence of the bond market. | | | |
| What is Rachel Reeves plotting? on 10:03 - Oct 7 with 2746 views | Keno |
| What is Rachel Reeves plotting? on 09:49 - Oct 7 by portmanking |
But how do you generate the growth when people's mortgages are rising 40-50%? Dispensable income dries up, private sector dries up and we're left with what?
This is an economy which won't be able to function at 5%-6% mortgage rates for long, or the hard-working middle class will be extinguished. |
the theory being that by spending money you create jobs & income and therefore people have more money.
The level which an economy can sustain interest rates depends in part on inflation. Again the theory being that if your interest rates are within 2/3% of inflation that should work. That said 2 factors affect that firstly the amount of fixed interest mortgage deals now give people perhaps a false security that what they are paying in relation to real costs.
Secondly since the financial crisis 16 years ago we have had a very 'controlled' economy which at some stage we have to go through the 'cold turkey' of coming off | |
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| What is Rachel Reeves plotting? on 10:20 - Oct 7 with 2656 views | Guthrum |
| What is Rachel Reeves plotting? on 10:01 - Oct 7 by portmanking |
Increasing taxes? Er... yes? I thought the whole point of Labour was to take more from those with the broadest shoulders to support the working class? My fear is Reeves is going down a road where she won't do enough to stimulate the economy but will do enough to lose the confidence of the bond market. |
You get a bit from doing that, but in order to have a real impact, the broad mass of taxpayers has to be tapped also.
If 1,000 people pay a £10,000 wealth tax every year, that's £10m.
If 35m earners pay £100 extra Income Tax, that's £3.5bn
And your 1,00 weathy individuals can afford to move themselves and their money out of your reach (if they haven't already)
On the second point, that comes down to how well designed the investment plan is and whether potential bond-holders think they can get a return. Economic and infratructure stimulus is not quite pouring money down the drain (compared to funding tax cuts, certainly), there is historical evidence of it working. | |
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| What is Rachel Reeves plotting? on 10:23 - Oct 7 with 2633 views | Guthrum |
| What is Rachel Reeves plotting? on 10:03 - Oct 7 by Keno |
the theory being that by spending money you create jobs & income and therefore people have more money.
The level which an economy can sustain interest rates depends in part on inflation. Again the theory being that if your interest rates are within 2/3% of inflation that should work. That said 2 factors affect that firstly the amount of fixed interest mortgage deals now give people perhaps a false security that what they are paying in relation to real costs.
Secondly since the financial crisis 16 years ago we have had a very 'controlled' economy which at some stage we have to go through the 'cold turkey' of coming off |
All not helped by the fact we've driven off the edge of an energy price cliff as well, with the ending of artificially cheap Russian gas. Very similar to the Oil Crisis of the 1970s and the economic struggles which followed on from that. | |
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| What is Rachel Reeves plotting? on 18:25 - Oct 7 with 2069 views | Scuzzer |
Probably fiddling around with something related to football.
Not like this post.
Move to general please. |  |
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| What is Rachel Reeves plotting? on 18:51 - Oct 7 with 1979 views | backwaywhen |
| What is Rachel Reeves plotting? on 09:43 - Oct 7 by Leaky |
So the £22m black hole becomes a £50m black hole then |
Vote change ….vote disaster, you were warned ! | | | |
| What is Rachel Reeves plotting? on 19:46 - Oct 7 with 1859 views | Whos_blue |
| What is Rachel Reeves plotting? on 18:51 - Oct 7 by backwaywhen |
Vote change ….vote disaster, you were warned ! |
Should we have stuck with the tories then? |  |
| Distortion becomes somehow pure in its wildness. |
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| What is Rachel Reeves plotting? on 19:50 - Oct 7 with 1823 views | BanksterDebtSlave |
| What is Rachel Reeves plotting? on 19:46 - Oct 7 by Whos_blue |
Should we have stuck with the tories then? |
Every passing day confirms that we did so I have no idea what his problem is. |  |
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| What is Rachel Reeves plotting? on 19:51 - Oct 7 with 1801 views | bournemouthblue |
| What is Rachel Reeves plotting? on 19:46 - Oct 7 by Whos_blue |
Should we have stuck with the tories then? |
Imagine wanting more of the Tories! |  |
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| What is Rachel Reeves plotting? on 08:02 - Oct 8 with 1528 views | SuperKieranMcKenna |
| What is Rachel Reeves plotting? on 09:49 - Oct 7 by portmanking |
But how do you generate the growth when people's mortgages are rising 40-50%? Dispensable income dries up, private sector dries up and we're left with what?
This is an economy which won't be able to function at 5%-6% mortgage rates for long, or the hard-working middle class will be extinguished. |
There’s a balance to be struck though, many economists believe Biden’s infrastructure stimulus overheated the US economy and directly contributed to inflation in the US (which is why the Fed were behind the rest of the West in dropping rates).
People are likely to be disappointed, most of Western Europe has had stronger government spending over the last few years and delivered anemic growth. You need a strong private sector too which is why Germany is heading into recession, there are global headwinds which are weighing on growth. Sticky inflation, volatile commodity prices, supply chains impacted (Middle East) are all going to impact private sector growth. We’ll likely have some better public services, but it’s not going to stimulate any meaningful economic growth (on the scale of current plans). It’s not going to tackle our productivity crisis, or the fact we are still projected to get poorer (on a per capita basis). | | | |
| What is Rachel Reeves plotting? on 08:03 - Oct 8 with 1527 views | Edmundo |
| What is Rachel Reeves plotting? on 19:51 - Oct 7 by bournemouthblue |
Imagine wanting more of the Tories! |
Imagine if we had a 3rd party that actually listened to people..... |  |
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| What is Rachel Reeves plotting? on 08:20 - Oct 8 with 1476 views | DJR |
The FT is reporting today that the spread between UK and German benchmark 10-year gilt yields has reached 1.95 percentage points, its highest since August 2023.
This is put down to concerns over the Budget as well as expectations that the ECB will cut interest rates quicker than the Bank of England. [Post edited 8 Oct 2024 8:21]
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