From the FT headlines, this:
And this
People aren't spending. And companies aren't spending. And government is not spending.
Welcome to the economy of 2016.
Now we need to learn three things.
First, how to live with this: the slower growth society is here, which may be a good thing if, second, we learn that we do not need to constrain government spending as a result and, third, realise that all these savers need somewhere to put their money - which is ultra-low interest paying government gilts created by running a deficit to supply what people really want, which is government services.
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As you have noted before, the ‘improvement in household wealth’ is probably being killed because it is paying off debt accrued because of insanely rushed through austerity measures in 2010-12 and thus not being spent in the economy.
Anyone with any sense who has debt now is surely paying down that debt as quickly as possible before the economy goes into a steep nosedive again, wages are slashed or jobs tossed over board etc.
All I can see that has happened is that Debt is being moved from Central Govt onto Consumers/households. So as they become more squeezed they cannot afford the goodies they want, well not at the rate households were previously consuming.
Debt paid down is not a bad idea, but it not necessary for the Govt to shift everything onto households or off the books by increased use of PFI’s.
This shift is at the heart of George Osborne’s Long Term Economic Plan
In fact, it is what the Plan is
I’ve never actually seen a definition for what the LTEP is.
Have you a link?
In many ways, the Osborne plan reminds me of another ghastly chancellor
“The basic feature of our economic theory is that we have no theory at all”
It’s a lie
It’s not long term
It’s not economic
And it’s not a plan
I can assure you that I do not approve of what is happening but as Richard (and others) has pointed out before, debt kills the value of real money – there is less to spend in the real economy unless the spend comes from – guess what – more (private) debt.
The risk for the economy is that people may not take that step and spend less which means everyone who depends on selling something (goods or services) will suffer. There may well be another slump.
This is the system that the Tories seem to want lock people into. It’s a great way of getting people to have to service debt by having to have a crappy job, bad pay, less working conditions and no rights without them having to have a mortgage (also a debt) which the market won’t let them enter anyway because its overpriced for increasing numbers of people.
Debt is being used to discipline people – to get them to accept certain negative conditions because of the fear of not being able to pay of debt.
It’s just plain nasty.