economic situation is dire

[markavfc40]

Yes its a nightmare waiting to happen. "The current, extraordinarily low levels of Bank interest rates, combined with quantitative easing and subsidies for credit, are an aberration. At some point, they will be replaced by more normal conditions, something for which millions of households are still not ready."

 

 

You are spot on. There is certainly a shit storm approaching. It may not be for another 3,4 or 5 years but it's coming. There are people who are mortgaged to the hilt at rates of 2.5% to 3.5%. Those rates will inevitably rise in the next handful of years and even a rise of 1% will tip many over the edge. As soon as rates go back to 5 or 6% the shit really will hit the fan.

Edited October 4, 2013 by markavfc40

[tonyh29]

Do you think the libdems are going to do much in the next election. I think a lot of normal labour voters voted for them and felt let down by the coalition the Tories. So they will loose their votes. Hopefully the UKIP will split the Tory vote and Labour will get a majority.

Sky have an interesting survey on their news page that suggest UKIP could appeal to lots of labour voters so I wouldn't throw the stereo type voting intent around too much tbh What is interesting for me is I would put myself more centre than left or right ... And I think a fair majority of voters are the same Labour seem to be noticeable shifting left and the Tory party further right ... The libs could take that centre ground but are probably damaged goods and need a rebrand for 2015 Edited October 4, 2013 by tonyh29

[peterms]

 

Do you think the libdems are going to do much in the next election. I think a lot of normal labour voters voted for them and felt let down by the coalition the Tories. So they will loose their votes. Hopefully the UKIP will split the Tory vote and Labour will get a majority.

Sky have an interesting survey on their news page that suggest UKIP could appeal to lots of labour voters so I wouldn't throw the stereo type voting intent around too much tbh

What is interesting for me is I would put myself more centre than left or right ... And I think a fair majority of voters are the same

Labour seem to be noticeable shifting left and the Tory party further right ...

The libs could take that centre ground but are probably damaged goods and need a rebrand for 2015

 

 

Labour are so far from being "left" it's laughable, and they have lost a lot of members and supporters for that reason.

 

Most people would seem to support far more radical intervention in the economy than Labour are proposing, and most people are bemused and misled by Labour failing to pin the recession on bankers, deregulation, and global capitalism.  If they don't aggressively challenge this unending bollocks about "the mess we inherited", "Labour's financial crisis", then why on earth would people not start to accept tory lies?  It's quite pathetic.

 

The tories are trying to suggest policies which their vile gnome Crosby suggests will play well with the deranged faction of tory voters who will vote Ukip because it feels more like the expression of their rabid hostility to most other people.  They will try to row back from these (like the electorally - and socially, and economically - mad idea of refusing benefits to under-25s).  They are gradually sinking under the weight of their own collapsing support, like a posher version of Branson's Balloon.  Lost direction, lost buoyancy, lost altitude.  Just lost.  Party membership average age 68, over a third of people at conference were lobbyists, over half of party funds come from hedge funds and other City sleazebags.  A fatal combination.  But it will be a lingering death, over about 20 years.

 

Labour's ineptitude will prolong the walking death of the zombie party, a cause of much regret.

[tonyh29]

Well 1997 to 2010 shows labour actually won more support as a result of not being left

When you say most people though , do you mean people in front of your PC as you type ?

It's just most surveys I've seen say people trust the Tories on the economy more than Labour for example which suggests most people don't agree with you

The second part of your post arguably covers the above but as it's more of a rant I don't think I need reply to it specifically

[Davkaus]

It's just most surveys I've seen say people trust the Tories on the economy more than Labour for example which suggests most people don't agree with you

 

 

Was there a 'none of the above' option?

[tonyh29]

It's just most surveys I've seen say people trust the Tories on the economy more than Labour for example which suggests most people don't agree with you

Was there a 'none of the above' option?

Bloke on email from Nigeria was trusted more than both parties

[peterms]

Well 1997 to 2010 shows labour actually won more support as a result of not being left

When you say most people though , do you mean people in front of your PC as you type ?

It's just most surveys I've seen say people trust the Tories on the economy more than Labour for example which suggests most people don't agree with you

The second part of your post arguably covers the above but as it's more of a rant I don't think I need reply to it specifically

 

Most people means the largest category expressing an opinion.  The trend at the moment seems to be for more intervention.  Economically, that means support for capping prices, increasing wages, cutting bonuses.  Socially, it seems to be anti-immigration, being nastier to people who can't get a job, throw someone off the liferaft as long as it's not me.

 

And mistaking the second part of what I wrote as a rant that doesn't need to be addressed is excellent.  Carry on. 

[PaulC]

 

 

Do you think the libdems are going to do much in the next election. I think a lot of normal labour voters voted for them and felt let down by the coalition the Tories. So they will loose their votes. Hopefully the UKIP will split the Tory vote and Labour will get a majority.

Sky have an interesting survey on their news page that suggest UKIP could appeal to lots of labour voters so I wouldn't throw the stereo type voting intent around too much tbh

What is interesting for me is I would put myself more centre than left or right ... And I think a fair majority of voters are the same

Labour seem to be noticeable shifting left and the Tory party further right ...

The libs could take that centre ground but are probably damaged goods and need a rebrand for 2015

 

 

Labour are so far from being "left" it's laughable, and they have lost a lot of members and supporters for that reason.

 

Most people would seem to support far more radical intervention in the economy than Labour are proposing, and most people are bemused and misled by Labour failing to pin the recession on bankers, deregulation, and global capitalism.  If they don't aggressively challenge this unending bollocks about "the mess we inherited", "Labour's financial crisis", then why on earth would people not start to accept tory lies?  It's quite pathetic.

 

The tories are trying to suggest policies which their vile gnome Crosby suggests will play well with the deranged faction of tory voters who will vote Ukip because it feels more like the expression of their rabid hostility to most other people.  They will try to row back from these (like the electorally - and socially, and economically - mad idea of refusing benefits to under-25s).  They are gradually sinking under the weight of their own collapsing support, like a posher version of Branson's Balloon.  Lost direction, lost buoyancy, lost altitude.  Just lost.  Party membership average age 68, over a third of people at conference were lobbyists, over half of party funds come from hedge funds and other City sleazebags.  A fatal combination.  But it will be a lingering death, over about 20 years.

 

Labour's ineptitude will prolong the walking death of the zombie party, a cause of much regret.

 

 

 

Labour under Blair were more right than Conservatives under Heath. Its is laughable when people suggest labour are going left. At most they are centre. It hard to relate to them anymore. The conservatives are more right than even under Thatcher.

[drat01]

 

 

 

 

Labour under Blair were more right than Conservatives under Heath. Its is laughable when people suggest labour are going left. At most they are centre. It hard to relate to them anymore. The conservatives are more right than even under Thatcher.

 

 

I know this is going slightly off topic but is relevant in a way. Is the world moving more toward the centre political way of thinking? With the capitalist views that seem to dictate a lot of countries now, multi nationals, global economies etc, is there any real place for radical left or right wing thinking. Possibly the latter would exploit this move more?

 

Also country politics make me smile. It's all part of this artificial state wide thinking that some cling onto. What I mean by that is the you are country A so therefore you are only influenced and affected by country A etc. I wonder if in future years you will see more alliances between political parties across these "borders" ?

[tonyh29]

Do you think the libdems are going to do much in the next election. I think a lot of normal labour voters voted for them and felt let down by the coalition the Tories. So they will loose their votes. Hopefully the UKIP will split the Tory vote and Labour will get a majority.

Sky have an interesting survey on their news page that suggest UKIP could appeal to lots of labour voters so I wouldn't throw the stereo type voting intent around too much tbh

What is interesting for me is I would put myself more centre than left or right ... And I think a fair majority of voters are the same

Labour seem to be noticeable shifting left and the Tory party further right ...

The libs could take that centre ground but are probably damaged goods and need a rebrand for 2015

Labour are so far from being "left" it's laughable, and they have lost a lot of members and supporters for that reason.

Most people would seem to support far more radical intervention in the economy than Labour are proposing, and most people are bemused and misled by Labour failing to pin the recession on bankers, deregulation, and global capitalism. If they don't aggressively challenge this unending bollocks about "the mess we inherited", "Labour's financial crisis", then why on earth would people not start to accept tory lies? It's quite pathetic.

The tories are trying to suggest policies which their vile gnome Crosby suggests will play well with the deranged faction of tory voters who will vote Ukip because it feels more like the expression of their rabid hostility to most other people. They will try to row back from these (like the electorally - and socially, and economically - mad idea of refusing benefits to under-25s). They are gradually sinking under the weight of their own collapsing support, like a posher version of Branson's Balloon. Lost direction, lost buoyancy, lost altitude. Just lost. Party membership average age 68, over a third of people at conference were lobbyists, over half of party funds come from hedge funds and other City sleazebags. A fatal combination. But it will be a lingering death, over about 20 years.

Labour's ineptitude will prolong the walking death of the zombie party, a cause of much regret.

Labour under Blair were more right than Conservatives under Heath. Its is laughable when people suggest labour are going left. At most they are centre. It hard to relate to them anymore. The conservatives are more right than even under Thatcher.

Well people like John McDonnell from the Labour Party are the ones saying labour are moving towards the left so don't shoot me shoot him

[peterms]

 

 

 

 

Do you think the libdems are going to do much in the next election. I think a lot of normal labour voters voted for them and felt let down by the coalition the Tories. So they will loose their votes. Hopefully the UKIP will split the Tory vote and Labour will get a majority.

Sky have an interesting survey on their news page that suggest UKIP could appeal to lots of labour voters so I wouldn't throw the stereo type voting intent around too much tbh

What is interesting for me is I would put myself more centre than left or right ... And I think a fair majority of voters are the same

Labour seem to be noticeable shifting left and the Tory party further right ...

The libs could take that centre ground but are probably damaged goods and need a rebrand for 2015

 

Labour are so far from being "left" it's laughable, and they have lost a lot of members and supporters for that reason.

Most people would seem to support far more radical intervention in the economy than Labour are proposing, and most people are bemused and misled by Labour failing to pin the recession on bankers, deregulation, and global capitalism. If they don't aggressively challenge this unending bollocks about "the mess we inherited", "Labour's financial crisis", then why on earth would people not start to accept tory lies? It's quite pathetic.

The tories are trying to suggest policies which their vile gnome Crosby suggests will play well with the deranged faction of tory voters who will vote Ukip because it feels more like the expression of their rabid hostility to most other people. They will try to row back from these (like the electorally - and socially, and economically - mad idea of refusing benefits to under-25s). They are gradually sinking under the weight of their own collapsing support, like a posher version of Branson's Balloon. Lost direction, lost buoyancy, lost altitude. Just lost. Party membership average age 68, over a third of people at conference were lobbyists, over half of party funds come from hedge funds and other City sleazebags. A fatal combination. But it will be a lingering death, over about 20 years.

Labour's ineptitude will prolong the walking death of the zombie party, a cause of much regret.

 

Labour under Blair were more right than Conservatives under Heath. Its is laughable when people suggest labour are going left. At most they are centre. It hard to relate to them anymore. The conservatives are more right than even under Thatcher.

 

Well people like John McDonnell from the Labour Party are the ones saying labour are moving towards the left so don't shoot me shoot him

 

 

And Australia is moving towards Greenland, or Japan, or something.

 

It's movement, Jim, but not as we know it.

[drat01]

Ex Lax - that helps movements

[peterms]

new car sales high....

 

 

New car sales hit the highest level in more than five years

The Ford Fiesta is the UK's bestselling car

New car sales hit the highest level in September for five and a half years as the latest 63-plate attracted buyers.

The Society for Motor Manufacturers and Traders (SMMT) said 403,136 new cars were registered, a rise of 12.1% on 2012.

That is still below the average for September before the credit crisis of 416,000.

September sales are typically strong as it is one of the two months when new registration plates are issued.

One in seven cars sold in the UK are made in the country.

Ford remains the UK's top selling make of car, with 20,600 of its Fiesta model sold in the month, Vauxhall's Corsa was in second place with 14,500 vehicles sold.

The SMMT's chief executive, Mike Hawes, said: "The UK market is reflecting growing economic confidence."

"Robust private demand has played a major role in this growth, with customers attracted by exciting, increasingly fuel-efficient new models which offer savings in the cost of ownership."

Richard Lowe, an analyst from Barclays said: "Attractive finance packages are offering consumers more clarity on running costs, which even with a more promising economic outlook is an important factor for those on a budget."

But he added that the UK car market was likely to remain strong: "As we head into the quieter months, I suspect we'll see sales hold firm, keeping the UK market zooming ahead of our European counterparts."

 

I haven't seen many 63 plates myself but hey ho,  a sign of confidence perhaps

 

 

This is not a good news story.  It's the opposite.  Take off the blinkers.  Read past the headlines.  It's another **** Ponzi scheme, like house prices.

 

http://www.ft.com/cms/s/0/3feb1ce6-2cde-11e3-8281-00144feab7de.html  My highlighting.

 

The share of new cars being purchased with credit has hit a record high of 75 per cent, underscoring how cheap finance is fuelling booming sales and raising fresh questions about the consumer recovery.

 

Credit accounted for 74.5 per cent of new car purchases in the 12 months to August, a sharp rise on historic pre-recession levels of about 50 per cent, helping to push sales to levels not seen for five-and-a-half years.

 

UK car sales grew for the 19th month in a row to over 400,000 in September, -– the best month since March 2008 – according to figures released on Friday by the Society of Motor Manufacturers and Traders.

 

The jump in car financing reflects a rapid recovery in consumer credit, which is now growing at rates last seen in 2008. Non-credit card consumer lending grew 3.7 per cent in the year to August, Bank of England figures show, a growth rate that has been on a steady upward trend for over two years.

 

Lending growth remains lower than the 10 per cent plus rates of the 1990s and early 2000s and concerns about lending have not yet surfaced at the BoE’s Financial Policy Committee. But with incomes falling, it would not take much more borrowing for cars and other large household purchases to make policy makers worry that families were stretching themselves too far.

 

In the year to August, more than £11bn of credit was advanced to new car buyers, an increase of a third on a year earlier, according to data from the Finance & Leasing Association seen by the FT. The average loan was £14,622.

 

Other forms of finance such as unsecured personal loans, which are not collated by the FLA, are also being used to fund purchases, meaning the proportion of cars being bought using credit is probably even higher, officials at the trade association said.

 

The windfall from refund claims made against mis-sold payment protection policies, or PPIs, has also been cited by industry analysts as a factor, because the average payout of more than £2,700 can serve as a downpayment.

 

With high unemployment and sluggish growth in Italy, Spain and France dragging demand to levels not seen for two decades, car manufacturers have turned to the UK for salvation by offering bargain-basement finance deals through financing arms and banks.

 

“Manufacturers are desperate to shift cars . . . and credit is the mechanism through which they can do that,” said Paul Harrison, head of motor finance at the.

 

Almost every mainstream car brand is offering UK customers a new small hatchback for less than £100 a month, while ever-increasing numbers of dealers are offering zero-deposit deals secured to the vehicle.

 

Increasingly popular deals see drivers never actually own the vehicle, but merely rent it over a period of monthly payments before trading it in as a deposit on a new model.

 

Sales rising to above 2.4m cars a year would be signs of a bubble that would spook lenders, two FLA members told the Financial Times. Sales are expected to top 2.2m cars in 2013, according to industry forecasters.

 

“At some point we will start seeing interest rates going up, and so yes, we should be worried about this. Are these levels of finance really sustainable?,” said Anil Valsan, head of automotive at EY. “Manufacturers need to come up with other ways to keep sales going rather than finance.”

 

“The other big worry is that it isn’t just the volume brands, but the premium players are having to resort to some of these tactics,” said Mr Valsan.

 

Deloitte’s UK automotive head David Raistrick describes the market as one “that many have viewed as defying gravity over the past 12 months, and suggested cannot continue to do so indefinitely.”

 

Car executives and industry analysts have frequently cautioned on the sustainability of the growth, citing the high proportion of financing packages, large price discounts and so-called car dealer “dark arts” such as registering new vehicles to a non-existent buyer in order to sell them on soon as a lower-priced used car.

 

“It is unquestionable that finance is helping people to buy cars,” said Richard Lowe, head of retail & wholesale at Barclays. “It might not carry on exactly in this form forever, but the market evolves. Nothing is forever.”

 

Comments

 

Sorted by newest first | Sort by oldest first

• Report disillusionedquant | October 4 9:57pm | Permalink

  When this era of pathological money printing and easy money finally comes to an end (and it won't be in a good way), I really, really hope the FT will make it absolutely clear the damage the prevailing central bank orthodoxy has done. Debt is not growth. It really is that simple. Of course the only way we will learn is when we're in the position to cause the maximum amount of damage to the most number of people. Given the size of some of the mortgages I hear about and articles like this, we must be close.

   

   

• Report kelesis | October 4 9:28pm | Permalink

  Britain has already - by far - one of the highest private debt in the world. The BoE is printing fake money to make people getting more in debt. For sure this is not recovery, this is just preparing the next crisis.

   

   

• Report Malachi Magrowther | October 4 8:44pm | Permalink

  The BBC radio news in Scotland today painted the record car sales as a good news story. It shows how desperate they are to grab anything that can appear as a "recovery" in the non-recovery. The reality is it is just another debt binge.

[Richard]

The IMF raise the UK growth forecast

 

IMF cuts global growth outlook but raises UK forecast

The IMF is upbeat on the UK's growth prospects

Continue reading the main story Related Stories

• IMF raises its UK growth forecast
• Dubai warned of property bubbleWatch
• Is the emerging market growth story over?

The International Monetary Fund (IMF) has trimmed its forecast for global economic growth at the same time as lifting its UK growth projection.

It now expects global growth of 2.9% this year, a cut of 0.3% from July's estimate. In 2014 it expects global growth of 3.6%, down 0.2%.

It cited weakness in emerging economies for the cut.

The forecast for UK growth this year received a significant upgrade to 1.4%, up from July's estimate of 0.9%.

And next year UK growth of 1.9% is now forecast up from July's projection of 1.5%.

"Global growth is still weak, its underlying dynamics are changing, and the risks to the forecast remain to the downside," it warned in its World Economic Outlook - its biannual assessment of the global economy.

It said despite an improvement in growth in advanced economies such as the UK and US, a slower pace of expansion in emerging economies such as Brazil, China and India, was holding back global expansion.

It expects growth in Russia, China, India and Mexico to be slower than it forecast in July.

In part, it says this is due to expectations of a change in policy by US central bank the Federal Reserve. Simply the expectation that the US could trim back its efforts to stimulate the US economy has already had an impact on interest rates in emerging economies, the IMF said.

It said an increasing belief that China's growth rate would slow would also hit global growth.

The IMF expects the US to drive global growth.

But it warns that the political standoff over raising the US government's borrowing limit, if it results in the US defaulting on its debt payments, "could seriously damage the global economy".

It expects growth of 1.6% in the US this year and 2.6% next year, down 0.1% and 0.2% from its July forecast.

In the Euro area, the IMF says business confidence indicators suggest activity is close to stabilising in periphery economies such as Italy and Spain and already recovering in core economies such as Germany.

Overall, it predicts growth will fall 0.4% this year, an improvement of 0.1% on its July prediction, and grow 1% next year.

"In short, the recovery from the crisis continues, albeit too slowly ... the architecture of the financial system is evolving, and its future shape is still unclear. These issues will continue to shape the evolution of the world economy for many years to come," said Olivier Blanchard, economic counsellor at the IMF.

[mockingbird_franklin]

A Recent report on growth indicates the majority of UK growth has been down to real increases in government spending, other reports have placed some of the Ecomonic growth on the £11.5billion put back into peoples pockets through PPI compensation payments. More growth has been attributed to this £11.5billion than the near £200billion of quantitative easing through the banking system, which is credited with next to nothing of the growth, seems we got a pretty poor return on that £200 billion, unlike the banks.

Edited October 8, 2013 by mockingbird_franklin

[mockingbird_franklin]

 

Yes its a nightmare waiting to happen. "The current, extraordinarily low levels of Bank interest rates, combined with quantitative easing and subsidies for credit, are an aberration. At some point, they will be replaced by more normal conditions, something for which millions of households are still not ready."

 

 

You are spot on. There is certainly a shit storm approaching. It may not be for another 3,4 or 5 years but it's coming. There are people who are mortgaged to the hilt at rates of 2.5% to 3.5%. Those rates will inevitably rise in the next handful of years and even a rise of 1% will tip many over the edge. As soon as rates go back to 5 or 6% the shit really will hit the fan.

 

There are all sorts of possible shit storms which could hit us, all of which have debt as the main problem, but when money is created as interest bearing debt not interest free money, ever increasing, un-payable and ever more expensive to service debt is the inevitable road that leads to financial meltdown,

[maqroll]

US Congress have to agree to raise the debt limit or risk default in about two weeks time...and considering they are the most useless pack of whores and stooges ever to occupy seats in that building, it is quite conceivable that default can happen.

 

Nothing but fun times ahead

[mockingbird_franklin]

US Congress have to agree to raise the debt limit or risk default in about two weeks time...and considering they are the most useless pack of whores and stooges ever to occupy seats in that building, it is quite conceivable that default can happen.

 

Nothing but fun times ahead

Unfortunately it isn't going to happen, but the best thing the USA could do is repeal the act that gives the privately owned federal reserve the power over the country's currency and economy. Even then, so much damage has been done in the 100 years of the fed, it might be too late,

[snowychap]

Read this in the Torygraph today:

 

In economics, there is an item of the national accounts known as “gross fixed capital formation”. What this essentially tells us is how much of a country’s output is being invested, rather than consumed. It’s a measure of what’s being put back into the system from earnings to support future growth in production and wealth.

Few would be surprised to learn that, for Britain, it is quite low. Just how low is, however, something of a shock. Last year, the UK had the smallest gross fixed capital formation as a share of GDP of any OECD country. Even the United States, temple of consumerism, was higher at 19pc. For the UK it was a miserable 14pc.

For evidence of what’s gone wrong with the UK economy there is no more telling statistic than this. Britain is simply not saving and investing enough to ensure a prosperous future.

This is not a new, post-crisis phenomenon. It’s been going on for decades. Structurally, the UK economy is more unbalanced than just about anywhere else, yet successive governments have proved quite incapable of doing anything about it.

Are things about to change? Virtually all the data now point to a fairly robust economic recovery. Indeed, the latest surveys indicate the fastest rate of growth in the G7.

One wonders what Olivier Blanchard, chief economist of the International Monetary Fund, is going to make of that when he publishes the fund’s latest World Economic Outlook in Washington this week.

Six months ago, he said the Chancellor was “playing with fire” by sticking to an austerity agenda and, despite Britain’s still-burgeoning budget deficit, he urged him to deliver more fiscal stimulus.

Yet without any apparent change in approach, the economy has come steaming back. Both consumer and business confidence is reviving.

Consumer credit is growing at its fastest rate since 2008, helping push car sales back to pre-recession highs. House prices are surging and job vacancies are at their most buoyant in four years. Even construction and housebuilding is picking up markedly.

So the economy is firing on all cylinders again? Unfortunately, it is not. Amid all the celebration, there are two notable absentees from the party – investment and exports. These have failed to come bouncing back in the same way.

True enough, there was a little bit of growth in gross fixed capital formation in the second quarter, but recent revisions to the data show it was not nearly as big as originally thought.

In any case, it puts barely a dent in the overall deficiency. What’s more, to the extent that it is growing again, it seems to be largely down to government spending. Business investment fell a further 2.7pc in the second quarter.

After more than a year of exerting a negative drag on the economy, there was also a contribution from net trade, but again it was too small to be of any long-run significance. The current account deficit remains worryingly large.

Meanwhile, both households and government are again spending more than they can afford. Consumers are countering the squeeze in disposable incomes by either eating into savings or borrowing more.

After a short, post-crisis improvement, the household saving ratio is once more on the decline. Structurally, the UK economy seems little different from its pre-crisis shape, when growth was driven almost entirely by government and household consumption, much of it debt-sustained.

Recent CBI surveys on investment intentions point to some improvement in prospect, but only back to a relatively low long-run average. Merely returning to where we were won’t make up for Britain’s deficiency in investment, and there is some doubt that we will do even that.

Some businesses have recently issued thinly-veiled threats not to invest – the energy companies because of Labour’s pledge to freeze prices, and Heathrow’s Colin Marshall in response to an adverse price adjudication from the Civil Aviation Authority.

Regulated utilities, whose investment plans are essentially determined by the Government and its willingness to tolerate the price rises to pay for them, may be something of a special case, but their reluctance is indicative of a much wider problem.

It’s not so much can’t invest; it’s won’t invest. The overall corporate surplus at the last count was still a gigantic £284bn. Companies prefer to sit on their hands and do nothing. Some of the causes of this deficiency were recently explored in a report for Vince Cable, the Business Secretary, by the economist John Kay.

City pay structures, the tyranny of quarterly reporting, and a tax system that favours debt over equity encourages a “short-termist approach” to investment decisions. Pursuit of immediate “shareholder value” can often act as a deterrent to risk taking and long-term thinking.

There are also myriad regulatory barriers to investment, particularly in the planning system. The Government has largely ducked the supply side reform necessary to bring about real change.

This is not to argue that ministers have done nothing at all. Corporation tax has been reduced –- though the tax burden on SMEs needs to come down a lot more – and the destructive tax grab on companies’ overseas profits has been stemmed.

Patent box tax reform has significantly increased the incentives for research and development. Britain is once more a relatively attractive place to locate an international business.

But none of it is deep enough to encourage a genuine renaissance in British enterprise. Infrastructure and regulatory constraints leave many foreign executives pulling their hair out in frustration.

What’s more, major structural change in the UK economy may be next to impossible as long as major trading partners continue to pursue an overtly mercantalist approach to the economy. Britain plainly has far too little investment, but at the other extreme is China, with gross fixed capital formulation of virtually 50pc of GDP last year.

Even for a developing country, this is extraordinarily high. China is producing far more than it consumes. The surplus is exported, and the earnings thereby accumulated are saved rather than consumed.

Consumer nations, such as Britain, are more or less required to run big deficits to support the economic models of its trading counterparts. Goaded by German example, the eurozone is ominously pursuing a similar export-led path to growth, by crushing the life out of internal demand and more or less forcing all member states to become surplus economies.

This undermines the UK’s attempts to rebalance, though Britain hardly helps itself by running a monetary policy which is extraordinarily conducive to excessive consumption.

Negative real interest rates in the West have also created new deficit economies in emerging markets, such as India and Brazil, with unsustainable consumer booms and widening trade gaps. I wish I could conclude by saying that, given time, Britain’s economy will rebalance in the manner required.

Who knows? Maybe it will, but, given the current macro and micro economic environment, it’s hard to be optimistic. The underlying causes of Britain’s deficit in investment remain largely unaddressed.

 

whilst supping on a pint or two of

 

Piss poor levels of investment (in keeping it would appear with a trend of piss poor levels), a return to debt fuelled consumerism helped by institutionally enforced low interest rates and a surge in house prices to boot. Will we never learn?

Edited October 8, 2013 by snowychap

[drat01]

So despite the fluff that the gvmt and its most avid supporters would have you believe the most damning indication of the mess we are in is the news re the red cross providing food support for some of the poorest in the uk society (and we all know what the tory party view is on society). First time the red cross has done this for many many years shows the real picture of what is happening