FT.com / Europe - Berlin prepares for €10bn yearly cuts.
From the FT:
The German government is to begin a drastic budget austerity programme next year to set an example to the rest of the eurozone, and comply with a “debt guillotine” that has been written into the German constitution.
The cuts are expected to total at least €10bn ($13bn, £9bn) a year until 2016, ¬?government officials said.
When every government is cutting there's no hope whatsoever that the UK will have export led growth.
Which means that the private sector in this country will not be picking up anyone made unemployed by George Osborne this morning.
Which means the £6bn of cuts announced this morning are a farce. This is simply an announcement of a planned increase in unemployment.
And as I have shown - the result will be reduced government income and increased benefits spending which will in combination match the savings made whilst leaving a pile more people unemployed with all the resulting social costs.
Down this path lies double dip recession and depression, with no cut in the state deficit at the same time.
And that's the path Osborne is choosing to follow.
It's an economic suicide note.
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“Led” not “lead”.
It might be a good idea if you learned to spell – it would make your pontifications more credible.
@The Welsh Jacobite
Haste is my usual cause of error
And yes, I just sometimes make mistakes
I guess you’re perfect?
We export services to the German government? Well I never.
The Germans manage to balance their budget, which means more money in the hands of German tax payers, who are more likely to buy our luxury cars, aero engines, car windscreens, chemicals and whatever else we still manage to export.
The Germans realise that mkuch government spending can be unproductive. For example, how badly will the economy be impacted because of the decision to make civil servants travel in second class? probably not very much.
Absolutely and completely – the definition of perfection.
@Alex
That’s just not true
German states are massively in deficit
@The Welsh Jacobite
Seriously? A Jacobite? Anyone who believes the descendant of James Stuart II (VII to you Scots out there), a man who contrived to be both a fool and a coward, should be brought back as king is far from any desirable form of perfection!
Seems as good a political point of view as any other. They’re all manifest nonsense anyway. Why not have nonsense that is picturesque and a little less humdrum?
Well I never Richard; I actually agree with something you’ve actually written. The economy needs to get moving again and cuts like these will, as you say, lead to a double dip recession.
@Richard Murphy
Not so, their state deficits average less than 3% of tax revenues (and they get further revenue from the Federal government), and the German federal deficit is less that 4% of Federal tax revenues. Some states (e.g. Berlin and NRW both left wing states) run larger deficits but most others run very sound fiscal policies.
http://www.bertelsmann-stiftung.de/cps/rde/xbcr/SID-9B119DF2-52AFCC88/bst/xcms_bst_dms_22068_22069_2.pdf
Overall the German public sector deficit is around 3.5% of Federal and state tax revenues.
@Alex
No doubt why the FT noted the financial crisis in German states and cities recently.noting about 20 might go bust