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"UK needs extra spending cuts"


trousers

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It's an economic oddity that cutting VAT very rarely causes an increase in spending and most of the time does little to boost the economy. It seems logical that if people are getting a tax cut then they will have more money to pump back in to the shops, restaurants etc, weirdly though it just doesn't seem to happen.

 

Indeed and it is pretty easy to see why.

 

Most goods and services are priced inclusive of VAT. So if I sell a widget for £9.99 (inclusive of 20% VAT) am I going to reduce the price of my widget to £9.58 if the VAT is cut from 20% to 15%. Of course not. My widget will still cost you £9.99. So you won't have more to spend.

 

More money goes into the retailers so it does help to some extent, but our wallets won't be any fatter unless you are a shop keeper

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GDP down 0.7% in last quarter, what a disaster. Can we now agree that you can't cut your way out of a recession and that the government's economic policy is doing real damage?

 

Indeed - and construction output is down 5.2%! We should do what we did in the 30s (apparently) and build our way out. There's a shortage of housing and building housing not only gives employment to construction workers but has a significant knock-on effect in so many other areas.

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  • 3 weeks later...
Exactly, the world was the same yet everyone was happy.

 

I doubt many would care as much if the press did not headline every single detail of the powers at be

At the risk of being a left wing cliche (!), I doubt the 2.5million unemployed forgot their troubles during the Olympics. But because the middle classes and the newspaper reporters were having a jolly time we can assume that everyone was happy

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At the risk of being a left wing cliche (!), I doubt the 2.5million unemployed forgot their troubles during the Olympics. But because the middle classes and the newspaper reporters were having a jolly time we can assume that everyone was happy

 

So, you only enjoyed the Olympics if you are employed and/or middle class?

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So, you only enjoyed the Olympics if you are employed and/or middle class?

No, obviously its a generalisation. But you seemed to be suggesting that we should just ignore these problems and be happy, like we were in the Olympics. Probably you're right that most people wouldn't care about this stuff if it wasn't in the papers, but its important that we all do think about the economy and the effect Tory policies are having on others less fortunate than ourselves.

 

By the way, as a middle class person struggling with the increase in rents in London, I really didn't get this Olympic feelgood factor that everyone has apparently experienced. I enjoyed the opening ceremony and some of the sport but I'm quite glad it's over now and we can be free from the enforced jollity. I am much more excited about the start of the football season to be honest.

Edited by Ex Lion Tamer
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I'm quite glad it's over now and we can be free from the enforced jollity.

 

Nobody forced me to enjoy it. But I did. I know others who didn't enjoy it. And that was fine too.

 

I also know some unemployed people who enjoyed it too. Some of them found that it helped them to feel a part of something, gave them some pride in their country and motivated them to try and make more effort to find work (they've been unemployed some time and have found it hard to get out of the 'rut' at times). Credit to them.

 

Another unemployed mate was exactly as you suggest, and quite resentful of the fact that people were 'enjoying' it whilst he was struggling.

 

Takes all sorts - mostly it depends on the personal outlook of the individual, their own resolve to deal with situations good and bad, and taking whatever positives they can from a situation. A relative of mine has a steady job, no debt, a comfortable new flat, no heavy ties or commitments, and a healthy loving family but moans all the time about the fact he struggles for motivation to do stuff and that government are to blame for everything bad in the world, when he, more than most, is in control of his own destiny. He just chooses to let these things define him rather than grabbing his life by the bo!!ocks...

 

You mention that you're more excited about the football season... arguably that is an even bigger contrast between the wealth and enjoyment of a few, versus the problems of the rest of the country. Plenty of people hate football and think THAT money could be used to far greater effect in the country... these conflicts arise all the time. Mostly there's nowt we can do about it except to moderate our own response.

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