We all know that the current situation is going to cost us £‘s. However the media keeps reminding us that govt borrowing will rise- my question for the financial gurus out there is “who do they borrow it from”? Some institution must be hyper rich or have an orchard of money trees.
Money
- Thread starter ronk
- Start date
The Bank of England is simply printing the stuff and giving it to the government at the moment. Normally that would be a massive no no as it would devalue the currency and result in rapid inflation. However I suspect every other G7 economy is doing something similar due to Covid 19, which in effect cancels out the down side. Long term though every pound that is created will devalue those already in circulation. So we all get a pay cut without really noticing it.
Massive over simplification there, but I believe that is basically what is going on.
Massive over simplification there, but I believe that is basically what is going on.
My biggest concern is the way the Govt has been throwing money at everything, all the more annoying when the public sector i.e. Local Government have been bled dry so simplisticly put we will all be paying for this for years to come, higher taxation, more job cuts and years of misery.
Theres already rumblings of pay freezes for NHS staff.
As I work for Local Government I hope redundancy is beckoning so I can take retirement, not far off 40 years anyways that's if my pension will still be intact :|
Tim.
Theres already rumblings of pay freezes for NHS staff.
As I work for Local Government I hope redundancy is beckoning so I can take retirement, not far off 40 years anyways that's if my pension will still be intact :|
Tim.
i thought most of the borrowing was from the IMF
https://www.ecnmy.org/learn/your-world/international-organizations/what-is-the-imf/?gclid=EAIaIQobChMI0MT5j9uz6QIVOYBQBh1cHgmyEAAYASAAEgLa5fD_BwE
https://en.wikipedia.org/wiki/International_Monetary_Fund
4 years ago the fund was worth a cool $667,000,000,000. 8)
https://www.ecnmy.org/learn/your-world/international-organizations/what-is-the-imf/?gclid=EAIaIQobChMI0MT5j9uz6QIVOYBQBh1cHgmyEAAYASAAEgLa5fD_BwE
https://en.wikipedia.org/wiki/International_Monetary_Fund
4 years ago the fund was worth a cool $667,000,000,000. 8)
this is also quite interesting reading... march budget predicted UK treasury will get income of £873bn, and expenditure of £928bn. apparently the furlough scheme extension could cost another £100bn, so the deficit this year could be £150bn.
https://en.wikipedia.org/wiki/Budget_of_the_United_Kingdom
We've been running at a deficit for some time, 2009 to 2011 were pretty bad years too. but generally in the last 9 years the deficit has been getting smaller, though this year will reverse that it seems.
https://en.wikipedia.org/wiki/Budget_of_the_United_Kingdom
We've been running at a deficit for some time, 2009 to 2011 were pretty bad years too. but generally in the last 9 years the deficit has been getting smaller, though this year will reverse that it seems.
Some are even saying the deficit could be as high as £500bn because in addition to the furlough scheme there are a host of other interventions and effects that cost money - from reduced VAT and company taxes through to specific grants and additional funding of Health and Social Services etc.
Some talk about delaying the hit to taxpayers for a year or so to allow the economy to recover a bit but then there will probably be a hit on a whole range of things - taxes of course, spending/pay/allowance freezes or cuts but also perhaps removing the triple lock on pensions. A penny on income tax gets you £5bn/year so nowhere near enough to make much of a dent in these numbers. My guess is that we start to feel the pain in late 2021 for at least 3 years before letting the brakes off in time to buy votes at the next general election in December 2024. Given the low rate of interest on government borrowing the chancellor may be prepared to accept a higher level of debt going forward than was the case in the past.
The B word may blow another hole in the budget but that is a big unknown.
Some talk about delaying the hit to taxpayers for a year or so to allow the economy to recover a bit but then there will probably be a hit on a whole range of things - taxes of course, spending/pay/allowance freezes or cuts but also perhaps removing the triple lock on pensions. A penny on income tax gets you £5bn/year so nowhere near enough to make much of a dent in these numbers. My guess is that we start to feel the pain in late 2021 for at least 3 years before letting the brakes off in time to buy votes at the next general election in December 2024. Given the low rate of interest on government borrowing the chancellor may be prepared to accept a higher level of debt going forward than was the case in the past.
The B word may blow another hole in the budget but that is a big unknown.
I believe it's the BoE that is providing the loans not the IMF. The gov does not necessarily have to pay back the BoE. They can simply allow the pound to devalue. So not so much a tax rise on the current wage, as the pound in your pocket is worth less. How that happens without inflation I am unsure I would expect inflation to rise as a result, but time will tell.TitanTim said:
Smartbear said:ronk said:
I read that if we delayed leaving we’d be liable for massive bail out costs for EU member states, that would add considerably to the mess we’re looking at already
Rob
AFAIK the bailout fund is only relevant to the 19 Eurozone countries so would not impact the UK. The "Eurogroup countries" agreed to a bail out fund of €540bn in early April. These funds are effectively loan capital underwritten by the 19.
We've managed the pandemic worse than most other countries, so will come out of lockdown slower (I have staff working for me in four other European countries and they are all much more relaxed than we are). So the British economy will be hit harder for longer. We will need EU help more than they need our help.Smartbear said:ronk said:
I read that if we delayed leaving we’d be liable for massive bail out costs for EU member states, that would add considerably to the mess we’re looking at already
Rob
North West Surrey
NickDE said:
I'm not sure about that, given that we were the 2nd largest contributor to the EU for many years. I would have thought they might miss our funding regardless of how we have handled the pandemic!
But only time will tell.
Vornwend said:Smartbear said:ronk said:
I read that if we delayed leaving we’d be liable for massive bail out costs for EU member states, that would add considerably to the mess we’re looking at already
Rob
AFAIK the bailout fund is only relevant to the 19 Eurozone countries so would not impact the UK. The "Eurogroup countries" agreed to a bail out fund of €540bn in early April. These funds are effectively loan capital underwritten by the 19.
I think that you’re right only if we leave on the stated date, But if our departure is delayed i read as a country we’ll be liable to contribute to the EU bail out fund costs.
Rob
buzyg said:
The term is Quantitative Easing, where the BoE for example here, buys Government bonds and other assets in order to inject money into the economy so expanding economic activity. And stimulating us to spend in our every day lives, a more robust outlook encourages corporate investment and re-investment and at local and national government levels significant infrastucture development occurs. Think roads, bridges hospitals schools etc. Over time the payback comes, as already discussed in taxation at all levels including VAT, so perhaps prepare for increases here. And those of you with money tied up in pension funds and superannuation schemes I would be looking closely at your early termination clauses, and keeping a watchful eye on the balances, chances are your impending retirements may not be so rosy