Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
bWhat you should do - apply principles to conclude whether Brown took us into the GFC with the public finances far weaker than they should have been.
What you are doing - decide that Brown took us into the GFC with the public finances far weaker than they should have been and create principles to support this.
No my principles predated the GFC. That's why I was worried before the GFC hit. It isn't hindsight, I have always believed in sound money and that is why 2001 Labour managed to get my vote as an 18 year old but 2005 Labour did not.
You have just posted the following - "running a deficit of 2-3% in the year prior to the GFC led to economic catastrophe in the public finances."
As if entering the GFC with a smaller deficit would have averted the catastrophe. I should coco. It was the GFC itself that both was and led to catastrophe.
Brown can be attacked for letting the City run out of control. For profligate spending, not so much. You come across a bit off kilter on this one. Like me on Laura Pidcock.
It would have. The catastrophe would have been averted. The GFC would have happened and we would have moved on.
The catastrophe I am referring to is the 10% deficit in the years after the GFC had happened. As I said always throughout our history previously we had gone into the recession with below-average deficits and come out of it with them above-average and then gradually brought it back down.
Had we gone into the recession with a balanced budget then we would have come out of the recession with say a 7% budget instead of a 10% one. That would simply have been a recession then as normal rather than a fiscal catastrophe. It was the pre-existing deficit that converted having a recession into a catastrophe.
Your prejudices are in the driving seat. With a smaller deficit going into the catastrophe we'd have been a bit better placed to cope with it. The facts cannot in good conscience support a more lurid conclusion than that.
The GFC was not a catastrophe, it was a recession. Recessions happen. It is boom and bust and a natural part of the economic cycle that sound governments need to prepare for.
The catastrophe in the public finances was the 10% deficit that followed the GFC and that was caused by going into a recession with a maxed out deficit. That catastrophe would have been averted had we gone into a recession with a balanced budget as we had the prior recession.
Have a look throughout our history at how much trough-to-peak the budget deficit changes when recessions happen. The ~7% change trough-to-peak change in the deficit during the GFC was not extraordinary. What was extraordinary was having a 3% trough and that is what caused the catastrophe.
"The Global Financial Crisis was not a catastrophe, it was merely a natural part of the economic cycle."
"Entering the GFC with a smaller deficit would have averted most of the pain."
Thank you. 2 more for the list. It is now a nice round 10.
I suggest you get back to posting about Boris's muscly legs. You add much value and insight on that topic.
Its true. Put them on 'the list' both claims are entirely accurate.
Recessions happen it is a fact of life. It is Brown's hubris that led him to fail to prepare for the next recession. The fact that a recession happened on his watch is not the problem - the problem is what he did BEFORE the recession hit.
Both statements are objectively absurd - both qualitatively and quantitatively.
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
@Barnesian You are quoting the current budget deficit, not the total one (the Public Sector Borrowing Requirement or PSBR). By Brown’s own Golden rule this should have been zero averaged over the economic cycle.
This might be of interest: it suggests that things were perhaps somewhere between the picture painted by you and @Philip_Thompson.
The Donlad's best poll for a long time. If it were more representative and from a less questionable source it might have moved the betting but he remains a 15/8 chance.
Edit: That was a genuine typo but I kind of like it.
Trafalgar group's state polls in 2016 were more accurate than most so yes a good poll for Trump on that basis, though holding Georgia only means he avoids a landslide defeat, he needs Florida or Pennsylvania, Wisconsin and Michigan to win
So we know that Putin sees 45% of Scots who bothered to vote as Useful Idiots, but thanks to our Useful Idiot government we don't know for certain whether he sees 52% of the voting British electorate in the same way.
Does anyone really think that Putin did not try to influence the 2016 referendum? He hates the EU, he hates the UK and would like to see the demise of both, and we know that he attempted to influence the 2019 GE and the Scottish ref. Motive, means and previous . The only question is really whether enough of the electorate were stupid enough to be influenced. I suspect Mr Putin thinks so.
Reading through the spats on the posts on here this morning is more chav than reading about the Johnie Depp/Heard case. This site has definitely gone downhill in terms of disrespect over the years
Dunno, it's been a while since I was called a paedophile or cunty. Perhaps I've just got less paedophilic and/or cunty.
You haven't been done until you have receive the full blast of SeanT's original and carefully worded invective. Sadly he is no longer with us.
Perhaps his bastard offspring LadyG could assist.
The last name change has definitely calmed the aggression.
When we had our Spaniel castrated, he too became less aggressive.
I have to say, whilst I don't think Russia caused Leave, I do find it odd that the Government would want to have questions about Russian meddling be out there. Not investigating at all looks very easy to attack.
Of course Labour must be smart, as they will look like they are trying to overturn the result if they go after them.
Reading through the spats on the posts on here this morning is more chav than reading about the Johnie Depp/Heard case. This site has definitely gone downhill in terms of disrespect over the years
Dunno, it's been a while since I was called a paedophile or cunty. Perhaps I've just got less paedophilic and/or cunty.
You haven't been done until you have receive the full blast of SeanT's original and carefully worded invective. Sadly he is no longer with us.
Perhaps his bastard offspring LadyG could assist.
The last name change has definitely calmed the aggression.
When we had our Spaniel castrated, he too became less aggressive.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
Reading through the spats on the posts on here this morning is more chav than reading about the Johnie Depp/Heard case. This site has definitely gone downhill in terms of disrespect over the years
You weren’t here in the Tim days then (I was a lurker in those days).
Come on guys, did you never meet Colin W or Martin Day?
Tim was at least coherent. CW and MD sprayed insults and abuse randomly and chaotically in all directions.
And more importantly for this site, Tim was a punter.
Yes, he was an astute punter.
I wouldn't want to drive anyone off the site, but I have little time for posters who contribute nothing on either politics or betting. Generally they are easy to avoid though, and that I find is the most effective response.
I think the point to remember is that while most posters of course are right or left leaning to some degree, there are few genuine neutrals here, this is not a political campaign blog but a political analysis and betting blog yes.
So while you can present the case for your side and point of view you also have to do at least some reflection on what will happen electorally in a reasonably objective fashion from time to time.
I would highlight Nick Palmer and indeed yourself as two examples of people who are always unfailingly polite and able to give shrewd analysis without getting personal and overly aggressive, despite Nick's political views being well to the left of mine I find him one of the easiest to converse with on here
You are very kind, Hyufd, although I do recall being rude to you once. I regretted it and mention it only to affirm that none of us is without sin.
There are many reasons why this has remained for many years the best political forum around. Some you mention. I would add OGH's light touch. The betting element too helps in that it discourages some of the wilder assertions.
I agree very much about the range of opinions. If I reflect on the posters who I always read they cover the full spectrum.
Now will you kindly p*ss off before the mellow mood evaporates.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
You are entitled to your opinion of course, but you should be aware that it is not the mainstream view among people who make their living looking at these things.
That is not true.
Can you name one government ever in our postwar history before Browns that took a surplus, turned it into a consistent budget deficit at 2-3% of GDP during a sustained period of growth prior to a recession? Even one ever that had made such what I consider a catastrophic mistake but you consider mainstream?
But Brown didn't inherit the surplus, he created the surplus by following an excessively tight fiscal policy and then unwound it by following too loose a policy. Over the period as a whole the policy was broadly appropriate as is evident from the fact that the deficit and debt both went down relative to GDP. The deficit was going down again after 2004. With the benefit of hindsight I think you might have gone into the GFC running a slightly smaller deficit, but then nobody was expecting the world economy to be hit by the biggest financial crisis since the great depression, and given the deterioration in the public finances that that crisis caused dwarfed what was happening beforehand it would have made almost no difference. If you think the deficit in 2007 was so catastrophic, you need to explain why the current government stopped reducing the deficit aggressively when it reached around the same level and has left it at around this level ever since, even though debt levels are far higher. I should add I think that is entirely the right policy, but you will note that that is a consistent view on my part.
Brown inherited a deficit coming down annually towards surplus as almost every government had done since World War II before the next recession hit and sends the deficit up again. It is cyclical economics and had consistently happened red or blue since WWII.
Brown blew the deficit wide open consistently running at 2% to 3% which the country could not afford while we were growing and making no effort to eliminate it.
It was unprecedented and it was a catastrophic error.
The policy was not "broadly appropriate" there was no appropriate reason to run such loose policy. Trying to average things out doesn't work either that's like saying if you put your feet in a furnace and your head in liquid nitrogen then on average you are fine.
The current government did not stop reducing the deficit at 2% to 3%. If it had I would have been annoyed. In the final full financial year the deficit was 1.2%
You keep saying it was 1.2%, but as I have pointed out you are looking at the wrong numbers. The correct figure is 1.9% for FY18/19 and it would have been around 2.3% in FY19/20 even without the virus hitting in the last month of that FY rather than the 2.5% actually recorded (OBR says 2.6% but those data are out of date). The point about looking at the whole period is that if the policy in the first period of Labour's period in office was too tight (as most commentators including Ken Clarke agree) then loosening the fiscal stance was the right thing to do, at least up to a point. I am not saying that Labour did not make mistakes. Following Clarke's initial fiscal plans was a mistake. They should have increased public investment more especially in transport infrastructure and housing. They should have kept the deficit a bit lower, maybe about 2% maximum outside of recessions. They certainly should have kept a closer eye on RBS. But your hyperbolic attacks on Brown's record simply don't stack up, they just expose your overt partisanship.
For Labour since they had a balanced budget in 2002 then loosening to keep it as a balanced budget would have been fine. Loosely using all the proceeds of growth for expenditure instead of getting a bigger surplus. Instead they used all the proceeds of growth and then some more to splash out and increase the deficit pre-crash. It was a catastrophic failure of judgement that had never been done before.
If my attacks on Brown don't stand up then please show ANY prior government INCREASING the deficit to 2-3% after a period of growth and in the years before a recession. Or please acknowledge what I am saying that what Brown did was unprecedented.
The 1.2% number you link to is the EU standard deficit definition, the General Government deficit, but the UK standard is the Public Sector Net Deficit so that is the one I am using - and indeed is the number people are referring to when they refer to "the deficit" in this country. If you are going to criticise Brown for increasing the deficit after 2000 I think it is only fair that you acknowledge that he was simply unwinding what had been an unprecedented fiscal tightening. Referring to one without the other is simply absurd. Can you please show ANY government that ran a fiscal surplus for three years in a row?
I note PB Tories will be silent about their hero BJ being bought and paid for with a certain tennis match
It must be very satisfying for Vlad to know that directly through his meddling in he US election, the US managed to have the ridiculous and incompetent Trump, and that through his meddling in the 2016 referendum he indirectly managed to assist with the elevation of the ridiculous and incompetent Johnson.
Possibly it might have been even better for him had he influenced things to get Corbyn in, but, hey, even the best disinformation campaign has its limitations!
PB used to have an awfully prescient contributor called @SeanT who regularly warned of China's massively increased research budgets at a time when we were misguidedly reducing ours.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
The Donlad's best poll for a long time. If it were more representative and from a less questionable source it might have moved the betting but he remains a 15/8 chance.
Edit: That was a genuine typo but I kind of like it.
No previous poll to compare against from this pollster.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
That which my 17 yr old grandson talks about appears significantly different from what I did in in 1956/7
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
bWhat you should do - apply principles to conclude whether Brown took us into the GFC with the public finances far weaker than they should have been.
What you are doing - decide that Brown took us into the GFC with the public finances far weaker than they should have been and create principles to support this.
No my principles predated the GFC. That's why I was worried before the GFC hit. It isn't hindsight, I have always believed in sound money and that is why 2001 Labour managed to get my vote as an 18 year old but 2005 Labour did not.
You have just posted the following - "running a deficit of 2-3% in the year prior to the GFC led to economic catastrophe in the public finances."
As if entering the GFC with a smaller deficit would have averted the catastrophe. I should coco. It was the GFC itself that both was and led to catastrophe.
Brown can be attacked for letting the City run out of control. For profligate spending, not so much. You come across a bit off kilter on this one. Like me on Laura Pidcock.
It would have. The catastrophe would have been averted. The GFC would have happened and we would have moved on.
The catastrophe I am referring to is the 10% deficit in the years after the GFC had happened. As I said always throughout our history previously we had gone into the recession with below-average deficits and come out of it with them above-average and then gradually brought it back down.
Had we gone into the recession with a balanced budget then we would have come out of the recession with say a 7% budget instead of a 10% one. That would simply have been a recession then as normal rather than a fiscal catastrophe. It was the pre-existing deficit that converted having a recession into a catastrophe.
Your prejudices are in the driving seat. With a smaller deficit going into the catastrophe we'd have been a bit better placed to cope with it. The facts cannot in good conscience support a more lurid conclusion than that.
The GFC was not a catastrophe, it was a recession. Recessions happen. It is boom and bust and a natural part of the economic cycle that sound governments need to prepare for.
The catastrophe in the public finances was the 10% deficit that followed the GFC and that was caused by going into a recession with a maxed out deficit. That catastrophe would have been averted had we gone into a recession with a balanced budget as we had the prior recession.
Have a look throughout our history at how much trough-to-peak the budget deficit changes when recessions happen. The ~7% change trough-to-peak change in the deficit during the GFC was not extraordinary. What was extraordinary was having a 3% trough and that is what caused the catastrophe.
"The Global Financial Crisis was not a catastrophe, it was merely a natural part of the economic cycle."
"Entering the GFC with a smaller deficit would have averted most of the pain."
Thank you. 2 more for the list. It is now a nice round 10.
I suggest you get back to posting about Boris's muscly legs. You add much value and insight on that topic.
Its true. Put them on 'the list' both claims are entirely accurate.
Recessions happen it is a fact of life. It is Brown's hubris that led him to fail to prepare for the next recession. The fact that a recession happened on his watch is not the problem - the problem is what he did BEFORE the recession hit.
Both statements are objectively absurd - both qualitatively and quantitatively.
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
And of course it is - looking back.
Then why did he base a major policy (the Golden Rule) on being able to predict it?
Unfortunately for the government, the bodies that assist with the evaluation and presentation of standards (known as notified bodies) are already overworked and many have relocated to continental Europe thanks to a lunatic policy called Brexit
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
I have to say, whilst I don't think Russia caused Leave, I do find it odd that the Government would want to have questions about Russian meddling be out there. Not investigating at all looks very easy to attack.
Of course Labour must be smart, as they will look like they are trying to overturn the result if they go after them.
Labour should press for the mechanisms of Russian influence to be probed with an eye to easier detection. Britain should not need to wait for Facebook to notice something is up, and of course our own dear, much-missed @Plato, may she rest in peace, managed to get herself banned by Twitter when it cracked down on Russian trolls.
Boris will resist once Cummings reminds him that CCHQ uses some of the same techniques! Similar considerations might mean SKS soft-balls it.
PB used to have an awfully prescient contributor called @SeanT who regularly warned of China's massively increased research budgets at a time when we were misguidedly reducing ours.
Yes, though he was also an early advocate of the lunacy known as Brexit, though credit to him he did more latterly admit it was most likely folly.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
Dark matter and dark energy nearly caught me out - both discovered since I did my physics degree.
Oh, and I still cringe inside when I remember the ridiculous explanation of a solar eclipse give by physics teacher whom I was shadowing. OK, so it was off-curriculum during an ongoing partial eclipse by a teacher who lacked a physics degree, but still!
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
You can help me perhaps, Fys, by giving me your opinion of Stephen Hawkin. I've read a couple of his books and enjoyed them though obviously from a humanist viewpoint since I'm no scientist. I've just ordered his final book because I'm particularly interested in the cosmic views of such a great scientist. It occurs to me however that the really great physicists were not necessarily very nice people and didn't have much to teach us about the way we live our lives.
Newton, I believe, was a bit of a shit and ended his career actively persecuting Catholics. Einstein was nicer, but had a very messy personal life and highly questionable theological views.
I'd hope Hawkin's views on life, the universe and everything might be worth savouring, but perhaps Dougkas Adams would be better value in this repsect.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
Dark matter and dark energy nearly caught me out - both discovered since I did my physics degree.
Unfortunately for the government, the bodies that assist with the evaluation and presentation of standards (known as notified bodies) are already overworked and many have relocated to continental Europe thanks to a lunatic policy called Brexit
Very sensible of them, given that there is roughly zero chance of the UK not eventually realising it has no choice but to recognise the CE mark (which will of course have to be recognised in NI in any case), and a similar chance of the EU recognising some local standard we might come up with. The only question is how much chaos we need to go through in the interim before the penny drops. Still, we could hardly expect a government as lunatic as this to realise that manufacturers need more than 5 months warning of changes to standards and testing regimes.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
That which my 17 yr old grandson talks about appears significantly different from what I did in in 1956/7
Probably a lot more radioactivity than then. There is very little I teach other than that that was not known before the First World War. Possibly some electronics.
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
Most of physics is still pre-20th Century, with half an hour on 1905 and the photoelectric effect. A-level physics is Newtonian mechanics, Newtonian optics and Faraday's messing around with electromagnets and iron filings. At least the biologists are now up to the 1950s and DNA.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
You are entitled to your opinion of course, but you should be aware that it is not the mainstream view among people who make their living looking at these things.
That is not true.
Can you name one government ever in our postwar history before Browns that took a surplus, turned it into a consistent budget deficit at 2-3% of GDP during a sustained period of growth prior to a recession? Even one ever that had made such what I consider a catastrophic mistake but you consider mainstream?
But Brown didn't inherit the surplus, he created the surplus by following an excessively tight fiscal policy and then unwound it by following too loose a policy. Over the period as a whole the policy was broadly appropriate as is evident from the fact that the deficit and debt both went down relative to GDP. The deficit was going down again after 2004. With the benefit of hindsight I think you might have gone into the GFC running a slightly smaller deficit, but then nobody was expecting the world economy to be hit by the biggest financial crisis since the great depression, and given the deterioration in the public finances that that crisis caused dwarfed what was happening beforehand it would have made almost no difference. If you think the deficit in 2007 was so catastrophic, you need to explain why the current government stopped reducing the deficit aggressively when it reached around the same level and has left it at around this level ever since, even though debt levels are far higher. I should add I think that is entirely the right policy, but you will note that that is a consistent view on my part.
Brown inherited a deficit coming down annually towards surplus as almost every government had done since World War II before the next recession hit and sends the deficit up again. It is cyclical economics and had consistently happened red or blue since WWII.
Brown blew the deficit wide open consistently running at 2% to 3% which the country could not afford while we were growing and making no effort to eliminate it.
It was unprecedented and it was a catastrophic error.
The policy was not "broadly appropriate" there was no appropriate reason to run such loose policy. Trying to average things out doesn't work either that's like saying if you put your feet in a furnace and your head in liquid nitrogen then on average you are fine.
The current government did not stop reducing the deficit at 2% to 3%. If it had I would have been annoyed. In the final full financial year the deficit was 1.2%
You keep saying it was 1.2%, but as I have pointed out you are looking at the wrong numbers. The correct figure is 1.9% for FY18/19 and it would have been around 2.3% in FY19/20 even without the virus hitting in the last month of that FY rather than the 2.5% actually recorded (OBR says 2.6% but those data are out of date). The point about looking at the whole period is that if the policy in the first period of Labour's period in office was too tight (as most commentators including Ken Clarke agree) then loosening the fiscal stance was the right thing to do, at least up to a point. I am not saying that Labour did not make mistakes. Following Clarke's initial fiscal plans was a mistake. They should have increased public investment more especially in transport infrastructure and housing. They should have kept the deficit a bit lower, maybe about 2% maximum outside of recessions. They certainly should have kept a closer eye on RBS. But your hyperbolic attacks on Brown's record simply don't stack up, they just expose your overt partisanship.
For Labour since they had a balanced budget in 2002 then loosening to keep it as a balanced budget would have been fine. Loosely using all the proceeds of growth for expenditure instead of getting a bigger surplus. Instead they used all the proceeds of growth and then some more to splash out and increase the deficit pre-crash. It was a catastrophic failure of judgement that had never been done before.
If my attacks on Brown don't stand up then please show ANY prior government INCREASING the deficit to 2-3% after a period of growth and in the years before a recession. Or please acknowledge what I am saying that what Brown did was unprecedented.
The 1.2% number you link to is the EU standard deficit definition, the General Government deficit, but the UK standard is the Public Sector Net Deficit so that is the one I am using - and indeed is the number people are referring to when they refer to "the deficit" in this country. If you are going to criticise Brown for increasing the deficit after 2000 I think it is only fair that you acknowledge that he was simply unwinding what had been an unprecedented fiscal tightening. Referring to one without the other is simply absurd. Can you please show ANY government that ran a fiscal surplus for three years in a row?
If you want to go by Current Budget Deficit which is what you seem to be doing then easy. 1948 to 1974
The budget deficit was kept below 2% of GDP from 1948 to 1991.
The UK was back in surplus by 1989 and the only period in postwar history that the budget deficit increased to above 2% was 1992 to 1994 following a recession that the country had a surplus going into.
The deficit from 2003 to 2008 was absolutely unprecedented for growth times.so when the inevitable recession finally came we were screwed.
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
Most of physics is still pre-20th Century, with half an hour on 1905 and the photoelectric effect. A-level physics is Newtonian mechanics, Newtonian optics and Faraday's messing around with electromagnets and iron filings. At least the biologists are now up to the 1950s and DNA.
Actually, both relativity and quantum theory are introduced at A-Level. As is an inordinate amount of particle physics, at least in the AQA specification from a year or two ago.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
That which my 17 yr old grandson talks about appears significantly different from what I did in in 1956/7
Probably a lot more radioactivity than then. There is very little I teach other than that that was not known before the First World War. Possibly some electronics.
Do you teach materials science (sensu lato), as a matter of interest? It was one of my favourite modules of the 10 or so in Nuffield A Level physics in the 1970s - Gordon's book The New Science of Strong Materials was one of the key reading texts. Edit: of course much of this was not known before 1900 - e.g. the composite materials such as GRP and the reasons for their strength.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
bWhat you should do - apply principles to conclude whether Brown took us into the GFC with the public finances far weaker than they should have been.
What you are doing - decide that Brown took us into the GFC with the public finances far weaker than they should have been and create principles to support this.
No my principles predated the GFC. That's why I was worried before the GFC hit. It isn't hindsight, I have always believed in sound money and that is why 2001 Labour managed to get my vote as an 18 year old but 2005 Labour did not.
You have just posted the following - "running a deficit of 2-3% in the year prior to the GFC led to economic catastrophe in the public finances."
As if entering the GFC with a smaller deficit would have averted the catastrophe. I should coco. It was the GFC itself that both was and led to catastrophe.
Brown can be attacked for letting the City run out of control. For profligate spending, not so much. You come across a bit off kilter on this one. Like me on Laura Pidcock.
It would have. The catastrophe would have been averted. The GFC would have happened and we would have moved on.
The catastrophe I am referring to is the 10% deficit in the years after the GFC had happened. As I said always throughout our history previously we had gone into the recession with below-average deficits and come out of it with them above-average and then gradually brought it back down.
Had we gone into the recession with a balanced budget then we would have come out of the recession with say a 7% budget instead of a 10% one. That would simply have been a recession then as normal rather than a fiscal catastrophe. It was the pre-existing deficit that converted having a recession into a catastrophe.
Your prejudices are in the driving seat. With a smaller deficit going into the catastrophe we'd have been a bit better placed to cope with it. The facts cannot in good conscience support a more lurid conclusion than that.
The GFC was not a catastrophe, it was a recession. Recessions happen. It is boom and bust and a natural part of the economic cycle that sound governments need to prepare for.
The catastrophe in the public finances was the 10% deficit that followed the GFC and that was caused by going into a recession with a maxed out deficit. That catastrophe would have been averted had we gone into a recession with a balanced budget as we had the prior recession. Have a look throughout our history at how much trough-to-peak the budget deficit when recessions happen. The ~7% change trough-to-peak change in the deficit during the GFC was not extraordinary. What was extraordinary was having a 3% trough and that is what caused the catastrophe.
"The Global Financial Crisis was not a catastrophe, it was merely a natural part of the economic cycle."
"Entering the GFC with a smaller deficit would have averted most of the pain."
Thank you. 2 more for the list. It is now a nice round 10.
I suggest you get back to posting about Boris's muscly legs. You add much value and insight on that topic.
Its true. Put them on 'the list' both claims are entirely accurate.
Recessions happen it is a fact of life. It is Brown's hubris that led him to fail to prepare for the next recession. The fact that a recession happened on his watch is not the problem - the problem is what he did BEFORE the recession hit.
Both statements are objectively absurd - both qualitatively and quantitatively.
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
And of course it is - looking back.
The economic cycle is something that is predictable in the sense of being real. Its shape and timing is unknown but that doesn't matter. Recessions happen it is a fact of life so sound finance requires in the words of the Boy Scouts (or Scar from the Lion King) that you Be Prepared.
In 2002-2007 we didn't know when the next recession would come but nor does that matter. What we did know is that it was over a decade since the last one and the public finances were not appropriate for pre-recession levels.
Even if the GFC had not happened, something would inevitably trigger a recession - that my friend is an unavoidable fact of life. It was Brown's hubris to believe he had abolished boom and bust.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
bWhat you should do - apply principles to conclude whether Brown took us into the GFC with the public finances far weaker than they should have been.
What you are doing - decide that Brown took us into the GFC with the public finances far weaker than they should have been and create principles to support this.
No my principles predated the GFC. That's why I was worried before the GFC hit. It isn't hindsight, I have always believed in sound money and that is why 2001 Labour managed to get my vote as an 18 year old but 2005 Labour did not.
You have just posted the following - "running a deficit of 2-3% in the year prior to the GFC led to economic catastrophe in the public finances."
As if entering the GFC with a smaller deficit would have averted the catastrophe. I should coco. It was the GFC itself that both was and led to catastrophe.
Brown can be attacked for letting the City run out of control. For profligate spending, not so much. You come across a bit off kilter on this one. Like me on Laura Pidcock.
It would have. The catastrophe would have been averted. The GFC would have happened and we would have moved on.
The catastrophe I am referring to is the 10% deficit in the years after the GFC had happened. As I said always throughout our history previously we had gone into the recession with below-average deficits and come out of it with them above-average and then gradually brought it back down.
Had we gone into the recession with a balanced budget then we would have come out of the recession with say a 7% budget instead of a 10% one. That would simply have been a recession then as normal rather than a fiscal catastrophe. It was the pre-existing deficit that converted having a recession into a catastrophe.
Your prejudices are in the driving seat. With a smaller deficit going into the catastrophe we'd have been a bit better placed to cope with it. The facts cannot in good conscience support a more lurid conclusion than that.
The GFC was not a catastrophe, it was a recession. Recessions happen. It is boom and bust and a natural part of the economic cycle that sound governments need to prepare for.
The catastrophe in the public finances was the 10% deficit that followed the GFC and that was caused by going into a recession with a maxed out deficit. That catastrophe would have been averted had we gone into a recession with a balanced budget as we had the prior recession.
Have a look throughout our history at how much trough-to-peak the budget deficit changes when recessions happen. The ~7% change trough-to-peak change in the deficit during the GFC was not extraordinary. What was extraordinary was having a 3% trough and that is what caused the catastrophe.
"The Global Financial Crisis was not a catastrophe, it was merely a natural part of the economic cycle."
"Entering the GFC with a smaller deficit would have averted most of the pain."
Thank you. 2 more for the list. It is now a nice round 10.
I suggest you get back to posting about Boris's muscly legs. You add much value and insight on that topic.
Its true. Put them on 'the list' both claims are entirely accurate.
Recessions happen it is a fact of life. It is Brown's hubris that led him to fail to prepare for the next recession. The fact that a recession happened on his watch is not the problem - the problem is what he did BEFORE the recession hit.
Both statements are objectively absurd - both qualitatively and quantitatively.
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
And of course it is - looking back.
Then why did he base a major policy (the Golden Rule) on being able to predict it?
Brown's economic cycle was an elastic construct, which is partly why some say he overspent in the latter stages, which is what @Philip_Thompson is complaining about. Trouble is, even if true, it was small scale by international or historical comparison and had absolutely damn all to do with the global financial crisis and our ability to recover from it. @Philip_Thompson might have a case that if the GFC had not happened then something bad might have happened a few years later but in truth no-one (else) believes even that any more. Now is not a good time to be an austerian deficit hawk.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
You are entitled to your opinion of course, but you should be aware that it is not the mainstream view among people who make their living looking at these things.
That is not true.
Can you name one government ever in our postwar history before Browns that took a surplus, turned it into a consistent budget deficit at 2-3% of GDP during a sustained period of growth prior to a recession? Even one ever that had made such what I consider a catastrophic mistake but you consider mainstream?
But Brown didn't inherit the surplus, he created the surplus by following an excessively tight fiscal policy and then unwound it by following too loose a policy. Over the period as a whole the policy was broadly appropriate as is evident from the fact that the deficit and debt both went down relative to GDP. The deficit was going down again after 2004. With the benefit of hindsight I think you might have gone into the GFC running a slightly smaller deficit, but then nobody was expecting the world economy to be hit by the biggest financial crisis since the great depression, and given the deterioration in the public finances that that crisis caused dwarfed what was happening beforehand it would have made almost no difference. If you think the deficit in 2007 was so catastrophic, you need to explain why the current government stopped reducing the deficit aggressively when it reached around the same level and has left it at around this level ever since, even though debt levels are far higher. I should add I think that is entirely the right policy, but you will note that that is a consistent view on my part.
Brown inherited a deficit coming down annually towards surplus as almost every government had done since World War II before the next recession hit and sends the deficit up again. It is cyclical economics and had consistently happened red or blue since WWII.
Brown blew the deficit wide open consistently running at 2% to 3% which the country could not afford while we were growing and making no effort to eliminate it.
It was unprecedented and it was a catastrophic error.
The policy was not "broadly appropriate" there was no appropriate reason to run such loose policy. Trying to average things out doesn't work either that's like saying if you put your feet in a furnace and your head in liquid nitrogen then on average you are fine.
The current government did not stop reducing the deficit at 2% to 3%. If it had I would have been annoyed. In the final full financial year the deficit was 1.2%
You keep saying it was 1.2%, but as I have pointed out you are looking at the wrong numbers. The correct figure is 1.9% for FY18/19 and it would have been around 2.3% in FY19/20 even without the virus hitting in the last month of that FY rather than the 2.5% actually recorded (OBR says 2.6% but those data are out of date). The point about looking at the whole period is that if the policy in the first period of Labour's period in office was too tight (as most commentators including Ken Clarke agree) then loosening the fiscal stance was the right thing to do, at least up to a point. I am not saying that Labour did not make mistakes. Following Clarke's initial fiscal plans was a mistake. They should have increased public investment more especially in transport infrastructure and housing. They should have kept the deficit a bit lower, maybe about 2% maximum outside of recessions. They certainly should have kept a closer eye on RBS. But your hyperbolic attacks on Brown's record simply don't stack up, they just expose your overt partisanship.
For Labour since they had a balanced budget in 2002 then loosening to keep it as a balanced budget would have been fine. Loosely using all the proceeds of growth for expenditure instead of getting a bigger surplus. Instead they used all the proceeds of growth and then some more to splash out and increase the deficit pre-crash. It was a catastrophic failure of judgement that had never been done before.
If my attacks on Brown don't stand up then please show ANY prior government INCREASING the deficit to 2-3% after a period of growth and in the years before a recession. Or please acknowledge what I am saying that what Brown did was unprecedented.
The 1.2% number you link to is the EU standard deficit definition, the General Government deficit, but the UK standard is the Public Sector Net Deficit so that is the one I am using - and indeed is the number people are referring to when they refer to "the deficit" in this country. If you are going to criticise Brown for increasing the deficit after 2000 I think it is only fair that you acknowledge that he was simply unwinding what had been an unprecedented fiscal tightening. Referring to one without the other is simply absurd. Can you please show ANY government that ran a fiscal surplus for three years in a row?
If you want to go by Current Budget Deficit which is what you seem to be doing then easy. 1948 to 1974
The budget deficit was kept below 2% of GDP from 1948 to 1991.
The UK was back in surplus by 1989 and the only period in postwar history that the budget deficit increased to above 2% was 1992 to 1994 following a recession that the country had a surplus going into.
The deficit from 2003 to 2008 was absolutely unprecedented for growth times.so when the inevitable recession finally came we were screwed.
Not current budget, Public Sector Net Borrowing (PSNB). This is the standard measure used to define the fiscal deficit (e.g. the £35bn number for June published this morning). It would help the discussion if you would use the same numbers as everyone else and not cherry-pick for your own convenience.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
bWhat you should do - apply principles to conclude whether Brown took us into the GFC with the public finances far weaker than they should have been.
What you are doing - decide that Brown took us into the GFC with the public finances far weaker than they should have been and create principles to support this.
No my principles predated the GFC. That's why I was worried before the GFC hit. It isn't hindsight, I have always believed in sound money and that is why 2001 Labour managed to get my vote as an 18 year old but 2005 Labour did not.
You have just posted the following - "running a deficit of 2-3% in the year prior to the GFC led to economic catastrophe in the public finances."
As if entering the GFC with a smaller deficit would have averted the catastrophe. I should coco. It was the GFC itself that both was and led to catastrophe.
Brown can be attacked for letting the City run out of control. For profligate spending, not so much. You come across a bit off kilter on this one. Like me on Laura Pidcock.
It would have. The catastrophe would have been averted. The GFC would have happened and we would have moved on.
The catastrophe I am referring to is the 10% deficit in the years after the GFC had happened. As I said always throughout our history previously we had gone into the recession with below-average deficits and come out of it with them above-average and then gradually brought it back down.
Had we gone into the recession with a balanced budget then we would have come out of the recession with say a 7% budget instead of a 10% one. That would simply have been a recession then as normal rather than a fiscal catastrophe. It was the pre-existing deficit that converted having a recession into a catastrophe.
Your prejudices are in the driving seat. With a smaller deficit going into the catastrophe we'd have been a bit better placed to cope with it. The facts cannot in good conscience support a more lurid conclusion than that.
The GFC was not a catastrophe, it was a recession. Recessions happen. It is boom and bust and a natural part of the economic cycle that sound governments need to prepare for.
The catastrophe in the public finances was the 10% deficit that followed the GFC and that was caused by going into a recession with a maxed out deficit. That catastrophe would have been averted had we gone into a recession with a balanced budget as we had the prior recession.
Have a look throughout our history at how much trough-to-peak the budget deficit changes when recessions happen. The ~7% change trough-to-peak change in the deficit during the GFC was not extraordinary. What was extraordinary was having a 3% trough and that is what caused the catastrophe.
"The Global Financial Crisis was not a catastrophe, it was merely a natural part of the economic cycle."
"Entering the GFC with a smaller deficit would have averted most of the pain."
Thank you. 2 more for the list. It is now a nice round 10.
I suggest you get back to posting about Boris's muscly legs. You add much value and insight on that topic.
Its true. Put them on 'the list' both claims are entirely accurate.
Recessions happen it is a fact of life. It is Brown's hubris that led him to fail to prepare for the next recession. The fact that a recession happened on his watch is not the problem - the problem is what he did BEFORE the recession hit.
Both statements are objectively absurd - both qualitatively and quantitatively.
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
And of course it is - looking back.
Then why did he base a major policy (the Golden Rule) on being able to predict it?
That "rule" says you borrow only to invest and cover current spending from revenue. It does not involve predicting when the world's banking system is going to crash, or similar cataclysmic events such as pandemics. Although that would be nice obviously.
A load of bollox in any case imo. PR really. It can be fiddled big time by finessing the classifications of current vs capital and going off balance sheet - e.g. PFI.
Would like honest opinions, how good/bad do you think Brexit will be
It's going to be great ! A great big balls up! In generations to come people will see it as pointless and self damaging as the Charge of the Light Brigade. Poets will write poems about "into the valley of death rode the 66 million"
Seriously though, I hope the government sees sense and mitigates it as much as possible, though when we have someone as incompetent as Johnson in charge I fear for the worst.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
bWhat you should do - apply principles to conclude whether Brown took us into the GFC with the public finances far weaker than they should have been.
What you are doing - decide that Brown took us into the GFC with the public finances far weaker than they should have been and create principles to support this.
No my principles predated the GFC. That's why I was worried before the GFC hit. It isn't hindsight, I have always believed in sound money and that is why 2001 Labour managed to get my vote as an 18 year old but 2005 Labour did not.
You have just posted the following - "running a deficit of 2-3% in the year prior to the GFC led to economic catastrophe in the public finances."
As if entering the GFC with a smaller deficit would have averted the catastrophe. I should coco. It was the GFC itself that both was and led to catastrophe.
Brown can be attacked for letting the City run out of control. For profligate spending, not so much. You come across a bit off kilter on this one. Like me on Laura Pidcock.
It would have. The catastrophe would have been averted. The GFC would have happened and we would have moved on.
The catastrophe I am referring to is the 10% deficit in the years after the GFC had happened. As I said always throughout our history previously we had gone into the recession with below-average deficits and come out of it with them above-average and then gradually brought it back down.
Had we gone into the recession with a balanced budget then we would have come out of the recession with say a 7% budget instead of a 10% one. That would simply have been a recession then as normal rather than a fiscal catastrophe. It was the pre-existing deficit that converted having a recession into a catastrophe.
Your prejudices are in the driving seat. With a smaller deficit going into the catastrophe we'd have been a bit better placed to cope with it. The facts cannot in good conscience support a more lurid conclusion than that.
The GFC was not a catastrophe, it was a recession. Recessions happen. It is boom and bust and a natural part of the economic cycle that sound governments need to prepare for.
The catastrophe in the public finances was the 10% deficit that followed the GFC and that was caused by going into a recession with a maxed out deficit. That catastrophe would have been averted had we gone into a recession with a balanced budget as we had the prior recession.
Have a look throughout our history at how much trough-to-peak the budget deficit changes when recessions happen. The ~7% change trough-to-peak change in the deficit during the GFC was not extraordinary. What was extraordinary was having a 3% trough and that is what caused the catastrophe.
"The Global Financial Crisis was not a catastrophe, it was merely a natural part of the economic cycle."
"Entering the GFC with a smaller deficit would have averted most of the pain."
Thank you. 2 more for the list. It is now a nice round 10.
I suggest you get back to posting about Boris's muscly legs. You add much value and insight on that topic.
Its true. Put them on 'the list' both claims are entirely accurate.
Recessions happen it is a fact of life. It is Brown's hubris that led him to fail to prepare for the next recession. The fact that a recession happened on his watch is not the problem - the problem is what he did BEFORE the recession hit.
Both statements are objectively absurd - both qualitatively and quantitatively.
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
And of course it is - looking back.
Then why did he base a major policy (the Golden Rule) on being able to predict it?
Brown's economic cycle was an elastic construct, which is partly why some say he overspent in the latter stages, which is what @Philip_Thompson is complaining about. Trouble is, even if true, it was small scale by international or historical comparison and had absolutely damn all to do with the global financial crisis and our ability to recover from it. @Philip_Thompson might have a case that if the GFC had not happened then something bad might have happened a few years later but in truth no-one (else) believes even that any more. Now is not a good time to be an austerian deficit hawk.
No-one (else) believes recession happen!? We're living in one right now!
His pre-recession deficit was unprecedentedly massive by historical standards in terms of pre-recession times.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
You can help me perhaps, Fys, by giving me your opinion of Stephen Hawkin. I've read a couple of his books and enjoyed them though obviously from a humanist viewpoint since I'm no scientist. I've just ordered his final book because I'm particularly interested in the cosmic views of such a great scientist. It occurs to me however that the really great physicists were not necessarily very nice people and didn't have much to teach us about the way we live our lives.
Newton, I believe, was a bit of a shit and ended his career actively persecuting Catholics. Einstein was nicer, but had a very messy personal life and highly questionable theological views.
I'd hope Hawkin's views on life, the universe and everything might be worth savouring, but perhaps Dougkas Adams would be better value in this repsect.
As a Physicist he was way beyond anything I could ever approach. His field was Cosmology and those are the people who think in five dimensions and regard galaxies as far too small to worry about. I’ve tried to understand General Relatively, as in the tensor equations, and had to give up (I didn’t do it at University, opting for Astrophysics instead, so I was trying to teach myself). I have great respect for anyone who can take those equations and use them to get new insights.
As a person, all I know about him is from watching “The Theory of Everything”.
Edit: if you want a hero in Physics, Kepler might be the one to go for, though Feynman has many fans, particularly anyone who used his Lectures in Physics To get through their degrees.
Have you read SeanT's comments over the last couple of years (in whatever guise is the guise de jour) ?
The users in questions are acting like every post of mine is a sweary rant. I will use bad language when it's effective and when it calls out obvious trolling or baiting.
I would like to think the majority of my posts are respected, even if disagreed with. I simply have no time for bullshit.
Would like honest opinions, how good/bad do you think Brexit will be
It's going to be great ! A great big balls up! In generations to come people will see it as pointless and self damaging as the Charge of the Light Brigade. Poets will write poems about "into the valley of death rode the 66 million"
Seriously though, I hope the government sees sense and mitigates it as much as possible, though when we have someone as incompetent as Johnson in charge I fear for the worst.
Do you think we're going to be looking at empty shelves in the supermarkets at the end of the year / start of next year?
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
Most of physics is still pre-20th Century, with half an hour on 1905 and the photoelectric effect. A-level physics is Newtonian mechanics, Newtonian optics and Faraday's messing around with electromagnets and iron filings. At least the biologists are now up to the 1950s and DNA.
I would add Nuclear Physics and basic Cosmology to that mix for GCSE and Particle Physics and the Standard Model for A-level. But for the rest, yes.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
That which my 17 yr old grandson talks about appears significantly different from what I did in in 1956/7
Probably a lot more radioactivity than then. There is very little I teach other than that that was not known before the First World War. Possibly some electronics.
Do you teach materials science (sensu lato), as a matter of interest? It was one of my favourite modules of the 10 or so in Nuffield A Level physics in the 1970s - Gordon's book The New Science of Strong Materials was one of the key reading texts. Edit: of course much of this was not known before 1900 - e.g. the composite materials such as GRP and the reasons for their strength.
There's some in the AS courses I've taught. And both of Gordon's books (Strong Materials and Structures) are fantastic examples of how to do popular science well.
Suspect that's what triggered my intuition that this government (bringing it back to politics) is going to turn out to be brittle, like glass. Lots of things will hit it, most won't seem to do any damage, people will chortle at the lack of damage, then something small and surprising will hit the right place and the whole thing will shatter.
A young blackbird is stranded on the ground outside my kitchen door. It's desperate father keeps trying to feed it a grub and constantly squawks at the poor thing.
Any suggestions?
leave it alone unless you see a cat
Yes, the "just leave animals where you find them" advice faces difficulties when you've found a bird or rodent in your front room.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
That which my 17 yr old grandson talks about appears significantly different from what I did in in 1956/7
Probably a lot more radioactivity than then. There is very little I teach other than that that was not known before the First World War. Possibly some electronics.
Do you teach materials science (sensu lato), as a matter of interest? It was one of my favourite modules of the 10 or so in Nuffield A Level physics in the 1970s - Gordon's book The New Science of Strong Materials was one of the key reading texts. Edit: of course much of this was not known before 1900 - e.g. the composite materials such as GRP and the reasons for their strength.
I still recommend that book to my A-level students.
‘... But, really, the Russia report is not about Brexit. Instead it paints a picture of a country which has become the plaything of Russian oligarchs and elites, who have twisted and manipulated Britain’s systems, processes and institutions to their will with impunity...’
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
You can help me perhaps, Fys, by giving me your opinion of Stephen Hawkin. I've read a couple of his books and enjoyed them though obviously from a humanist viewpoint since I'm no scientist. I've just ordered his final book because I'm particularly interested in the cosmic views of such a great scientist. It occurs to me however that the really great physicists were not necessarily very nice people and didn't have much to teach us about the way we live our lives.
Newton, I believe, was a bit of a shit and ended his career actively persecuting Catholics. Einstein was nicer, but had a very messy personal life and highly questionable theological views.
I'd hope Hawkin's views on life, the universe and everything might be worth savouring, but perhaps Dougkas Adams would be better value in this repsect.
As a Physicist he was way beyond anything I could ever approach. His field was Cosmology and those are the people who think in five dimensions and regard galaxies as far too small to worry about. I’ve tried to understand General Relatively, as in the tensor equations, and had to give up (I didn’t do it at University, opting for Astrophysics instead, so I was trying to teach myself). I have great respect for anyone who can take those equations and use them to get new insights.
As a person, all I know about him is from watching “The Theory of Everything”.
Edit: if you want a hero in Physics, Kepler might be the one to go for, though Feynman has many fans, particularly anyone who used his Lectures in Physics To get through their degrees.
Noted with thanks.
Paul Dirac seems my kind of bloke but he was more of a mathemetician, no?
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
You can help me perhaps, Fys, by giving me your opinion of Stephen Hawkin. I've read a couple of his books and enjoyed them though obviously from a humanist viewpoint since I'm no scientist. I've just ordered his final book because I'm particularly interested in the cosmic views of such a great scientist. It occurs to me however that the really great physicists were not necessarily very nice people and didn't have much to teach us about the way we live our lives.
Newton, I believe, was a bit of a shit and ended his career actively persecuting Catholics. Einstein was nicer, but had a very messy personal life and highly questionable theological views.
I'd hope Hawkin's views on life, the universe and everything might be worth savouring, but perhaps Dougkas Adams would be better value in this repsect.
As a Physicist he was way beyond anything I could ever approach. His field was Cosmology and those are the people who think in five dimensions and regard galaxies as far too small to worry about. I’ve tried to understand General Relatively, as in the tensor equations, and had to give up (I didn’t do it at University, opting for Astrophysics instead, so I was trying to teach myself). I have great respect for anyone who can take those equations and use them to get new insights.
As a person, all I know about him is from watching “The Theory of Everything”.
Edit: if you want a hero in Physics, Kepler might be the one to go for, though Feynman has many fans, particularly anyone who used his Lectures in Physics To get through their degrees.
Noted with thanks.
Paul Dirac seems my kind of bloke but he was more of a mathemetician, no?
Reading through the spats on the posts on here this morning is more chav than reading about the Johnie Depp/Heard case. This site has definitely gone downhill in terms of disrespect over the years
Dunno, it's been a while since I was called a paedophile or cunty. Perhaps I've just got less paedophilic and/or cunty.
You haven't been done until you have receive the full blast of SeanT's original and carefully worded invective. Sadly he is no longer with us.
Perhaps his bastard offspring LadyG could assist.
The last name change has definitely calmed the aggression.
When we had our Spaniel castrated, he too became less aggressive.
Hey there Pete, how's it going today
Working hard mate!
Been in Bristol today, little time for PB now the "holiday" is over. Catching up with PB at Magor services. Those over a certain age will understand!
So we know that Putin sees 45% of Scots who bothered to vote as Useful Idiots, but thanks to our Useful Idiot government we don't know for certain whether he sees 52% of the voting British electorate in the same way.
Does anyone really think that Putin did not try to influence the 2016 referendum? He hates the EU, he hates the UK and would like to see the demise of both, and we know that he attempted to influence the 2019 GE and the Scottish ref. Motive, means and previous . The only question is really whether enough of the electorate were stupid enough to be influenced. I suspect Mr Putin thinks so.
You thick plonker, Putin intervened after Cameron begged him and sent emissaries from the state propaganda unit over to get him to say so live to the moronic BBC listeners. It was the 55% who were the useful idiots , if only you could reach such a high level as to be just a gibbering idiot.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
You've got me intrigued now. What were they?
You’ve already mentioned one.
The other was the number of planets...
Ironically, the boffin who got Pluto chucked out thinks there is a different ninth planet out there waiting to be discovered.
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
Most of physics is still pre-20th Century, with half an hour on 1905 and the photoelectric effect. A-level physics is Newtonian mechanics, Newtonian optics and Faraday's messing around with electromagnets and iron filings. At least the biologists are now up to the 1950s and DNA.
I have this strange view from time to time that we are past the peak rate of technological advance. That is to say, science and technology will continue to advance but at a slower rate than it did in the 250 or so years following the Enlightenment.
Consider the number of inventions, discoveries and new technologies which came about during the 100 years from, say 1850 to 1950, and compare with those that have emerged in the 70 years since 1950.
In the former period I could list hundreds but: powered flight, cars, commercial electricity, electronics, telephones, radio, radar, cinema, TV, nuclear energy, computing, antibiotics, evolution, plate tectonics, production lines, plastics, bessemer process, refrigeration and reinforced concrete make a sample top twenty.
Since 1950? Well, space travel, genetics, the internet and mobile computing I guess. And I am not sure we're going to make up the gap much in the remaining 30 years to 2050.
Then doesn't that mean we are in net LESS real debt than we were before this hit?
The £310bn is the total that was announced in June, it won't be completed until year-end, and it includes £10-20bn of corporate bonds do gilt purchases will be a bit under £300bn. Total borrowing in FY20-21 will likely be close to £400bn so it's likely that net issuance net of BOE purchases will still be positive - although the BOE may buy more in Q1 2021 (the last quarter of the fiscal year). However, for the year to date the BOE purchases have been greater than net isduance, as they were front-loaded with aggressive buying at the start.
Thanks. So net there might be some real borrowing by the government but a tiny fraction of what is being touted in these headlines.
What a shame that no journalists seem to be economically literate or wanting to give the full picture rather than just spout off massive numbers.
Yes the standards of economic journalism in this country are pretty bad, journalism in general in fact. And then we let these ignorant hacks run the country (Johnson and Gove) and wonder why everything goes to shit. Basically, most of what is written about the economy outside of the FT and BBC is rubbish. The BOE covering most or all of net issuance is a repeat of 2009. If they do the same again, the big build up of debt net of BOE purchases will happen in subsequent years. Government borrowing will almost certainly stay elevated for several years from here.
Indeed this is what I was saying from the start of the crisis.
The impact of this crisis is so vast that realistically the only way to cope is printing money this year. The Bank will print money to cover this year's debts but can't be expected to do that indefinitely so in the future
In future years the deficit will need to be brought under control just like it had to be from 2010 onwards but the way to do that is to ensure the taxpaying base of the economy survives as best as it can this year. Not fretting over every penny and pound borrowed this year.
Not at all.
There was no problem borrowing in 2007/08 for the financial crisis.
The problem was increasing borrowing from 2002 to 2007 and not wanting to address the eyewatering legacy of the deficit in 2009/10 onwards.
During a temporary systemic shock crisis do what you need to do. Before and afterwards though you need to be responsible.
For some reason socialists seem to think that the 2007/08 financial crisis absolved them of any reason to tackle the deficit before 2007 or that it shouldn't be tackled in 2010 onwards.
What level of borrowing do you think is ok in normal times? Presumably more than 2.6% of GDP (2019) but less than 2.9% (2007)? What criteria do you use to arrive at this Thompson Rule? (What role does the fact that net debt was 34% of GDP in 2007 and 80% in 2019 play in your calculations?)
Not sure where you're getting 2.6% from, the final pre-recession, pre-pandemic economic year had a deficit of 1.2% (2019) not 2.6%.
As a rule of thumb borrowing in normal times depends upon the economic cycle but we should aim for it to be less than the year before during period of growth with an aim to bring the deficit to zero and keep it around zero. The delta, the change in the deficit is what matters most.
Looking at the last 3 recessions we had in reverse order. A deficit of 1.2% of GDP following a decade of annual reductions in the deficit from a peak of over 10%. A deficit of 2.6% of GDP following five years of growth after the deficit had been a surplus. A budget surplus when the recession hit.
Spot the odd one out.
2.6% is the OBR's number for PSNB for FY19/20. Where do you get 1.2% from? That looks like the primary balance number (excluding debt payments). The primary deficit was 1.2% in 2019 and also 1.2% in 2007. Your thesis that borrowing was out of control in 2007 but responsible in 2019 is hard to sustain with reference to the data.
You said 2019 so why are you using 2020 data, the recession had already begun in 2020? You can't use data from during the recession and claim it is before the recession.
The final full economic year before the recession hit was FY18/19.
I am using fiscal year data (April-March) because that is how it is conventionally published. Since the Covid crisis effectively started, in terms of its economic impact, in the last two weeks of March, it had virtually no effect on the public finances in FY19/20. You could say the same for 2008 - although in quarterly terms the recession started in Q2, GDP growth was already negative in March. So your clean comparison would be 2006/07 (2.6%) Vs 2018/19 (1.9%). In terms of primary deficit it's 1% Vs 0.4%. It's hard to make the case that just 0.6 or 0.7% of GDP is the difference between sound economic management and catastrophic fiscal profligacy.
Yes use economic year data but you need to use the final economic year before the recession began which is measured using quarterly growth figures.
In 2008 it was Q3 which was the first negative growth figure so that rules out 2008/09 and sets 2007/08 as the baseline. In 2020 it was Q1 which was the first negative growth figure so that rules out 2019/20 and sets 2018/19 as the baseline.
Using 2019/20 when the recession had already began in 2019/20 is like using 2008/09.
As for a 0.7% difference is it not hard whatsoever to make the case the that 0.7% is a tremendous difference between sound economic management and catastrophic fiscal profligacy. Because we also need to consider where that came from in the years before then.
As I said it is the year on year change in the deficit that matters more than what the deficit is for judging soundness. Brown managed to spend five years pissing away a budget surplus and transform it into a higher deficit than the Tories had going into the next recession coming off a 10% deficit they had inherited.
The deficit was lower as a % of GDP in both 06/07 and 07/08 than in 96/97, so Brown also reduced the deficit relative to the one he inherited from the Tories. He also reduced debt as a % of GDP over the same period.
1996/97 was a different stage of the economic cycle than 2007/08 too.
Nobody to my knowledge objects to how Brown dealt with the deficit between 1996/97 to 2001/02. He ran sound finances then and I've never seen any Tories say otherwise. Of course he was largely following Ken Clarke's plans then but that is to his credit that he did.
It is from 2002 onwards that Brown blew the deficit wide open prior to the recession.
Following Clarke's financial settlement was a mistake, it was too tight (Clarke himself said he wouldn't have followed it). As a result, public services were grossly under-resourced and public debt fell to a level that was unsustainably low given the financial system's demand for safe assets. I would agree that they over-corrected by increasing spending too aggressively subsequently, although I think they recognised that, which is why the deficit was on a declining path between 2004/05 and 2006/07. But running a deficit of 2-3% of GDP is perfectly reasonable when the economy is growing broadly in line with potential as the UK economy was during that period. Look, I understand you have a narrative about Labour profligacy that you want to sell, and you evidently believe it yourself. I just don't think it is one that most economists would recognise as a fair description of events.
No running a deficit of 2-3% of GDP without trying to reduce it while the economy is growing is a catastrophically stupid mistake that led to economic catastrophe in the public finances. It is not "perfectly reasonable".
bWhat you should do - apply principles to conclude whether Brown took us into the GFC with the public finances far weaker than they should have been.
What you are doing - decide that Brown took us into the GFC with the public finances far weaker than they should have been and create principles to support this.
No my principles predated the GFC. That's why I was worried before the GFC hit. It isn't hindsight, I have always believed in sound money and that is why 2001 Labour managed to get my vote as an 18 year old but 2005 Labour did not.
You have just posted the following - "running a deficit of 2-3% in the year prior to the GFC led to economic catastrophe in the public finances."
As if entering the GFC with a smaller deficit would have averted the catastrophe. I should coco. It was the GFC itself that both was and led to catastrophe.
Brown can be attacked for letting the City run out of control. For profligate spending, not so much. You come across a bit off kilter on this one. Like me on Laura Pidcock.
It would have. The catastrophe would have been averted. The GFC would have happened and we would have moved on.
The catastrophe I am referring to is the 10% deficit in the years after the GFC had happened. As I said always throughout our history previously we had gone into the recession with below-average deficits and come out of it with them above-average and then gradually brought it back down.
Had we gone into the recession with a balanced budget then we would have come out of the recession with say a 7% budget instead of a 10% one. That would simply have been a recession then as normal rather than a fiscal catastrophe. It was the pre-existing deficit that converted having a recession into a catastrophe.
Your prejudices are in the driving seat. With a smaller deficit going into the catastrophe we'd have been a bit better placed to cope with it. The facts cannot in good conscience support a more lurid conclusion than that.
The GFC was not a catastrophe, it was a recession. Recessions happen. It is boom and bust and a natural part of the economic cycle that sound governments need to prepare for.
The catastrophe in the public finances was the 10% deficit that followed the GFC and that was caused by going into a recession with a maxed out deficit. That catastrophe would have been averted had we gone into a recession with a balanced budget as we had the prior recession. Have a look throughout our history at how much trough-to-peak the budget deficit when recessions happen. The ~7% change trough-to-peak change in the deficit during the GFC was not extraordinary. What was extraordinary was having a 3% trough and that is what caused the catastrophe.
"The Global Financial Crisis was not a catastrophe, it was merely a natural part of the economic cycle."
"Entering the GFC with a smaller deficit would have averted most of the pain."
Thank you. 2 more for the list. It is now a nice round 10.
I suggest you get back to posting about Boris's muscly legs. You add much value and insight on that topic.
Its true. Put them on 'the list' both claims are entirely accurate.
Recessions happen it is a fact of life. It is Brown's hubris that led him to fail to prepare for the next recession. The fact that a recession happened on his watch is not the problem - the problem is what he did BEFORE the recession hit.
Both statements are objectively absurd - both qualitatively and quantitatively.
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
And of course it is - looking back.
The economic cycle is something that is predictable in the sense of being real. Its shape and timing is unknown but that doesn't matter. Recessions happen it is a fact of life so sound finance requires in the words of the Boy Scouts (or Scar from the Lion King) that you Be Prepared.
In 2002-2007 we didn't know when the next recession would come but nor does that matter. What we did know is that it was over a decade since the last one and the public finances were not appropriate for pre-recession levels.
Even if the GFC had not happened, something would inevitably trigger a recession - that my friend is an unavoidable fact of life. It was Brown's hubris to believe he had abolished boom and bust.
The Boy Scouts. Mmm. I see.
I bring you back to what I have already supplied as the only conclusion that an objective analysis of this topic will bear -
If we had gone into the catastrophe of the GFC with a smaller deficit it would have been a bit easier to cope with the aftermath.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
You can help me perhaps, Fys, by giving me your opinion of Stephen Hawkin. I've read a couple of his books and enjoyed them though obviously from a humanist viewpoint since I'm no scientist. I've just ordered his final book because I'm particularly interested in the cosmic views of such a great scientist. It occurs to me however that the really great physicists were not necessarily very nice people and didn't have much to teach us about the way we live our lives.
Newton, I believe, was a bit of a shit and ended his career actively persecuting Catholics. Einstein was nicer, but had a very messy personal life and highly questionable theological views.
I'd hope Hawkin's views on life, the universe and everything might be worth savouring, but perhaps Dougkas Adams would be better value in this repsect.
As a Physicist he was way beyond anything I could ever approach. His field was Cosmology and those are the people who think in five dimensions and regard galaxies as far too small to worry about. I’ve tried to understand General Relatively, as in the tensor equations, and had to give up (I didn’t do it at University, opting for Astrophysics instead, so I was trying to teach myself). I have great respect for anyone who can take those equations and use them to get new insights.
As a person, all I know about him is from watching “The Theory of Everything”.
Edit: if you want a hero in Physics, Kepler might be the one to go for, though Feynman has many fans, particularly anyone who used his Lectures in Physics To get through their degrees.
Noted with thanks.
Paul Dirac seems my kind of bloke but he was more of a mathemetician, no?
At that level there is very little to distinguish them. Newton was the Lucian Professor of Maths at Cambridge and Hawking had his old job.
@Peter_the_Punter If the laws of the universe change even a bit we are all in trouble...
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
You can help me perhaps, Fys, by giving me your opinion of Stephen Hawkin. I've read a couple of his books and enjoyed them though obviously from a humanist viewpoint since I'm no scientist. I've just ordered his final book because I'm particularly interested in the cosmic views of such a great scientist. It occurs to me however that the really great physicists were not necessarily very nice people and didn't have much to teach us about the way we live our lives.
Newton, I believe, was a bit of a shit and ended his career actively persecuting Catholics. Einstein was nicer, but had a very messy personal life and highly questionable theological views.
I'd hope Hawkin's views on life, the universe and everything might be worth savouring, but perhaps Dougkas Adams would be better value in this repsect.
As a Physicist he was way beyond anything I could ever approach. His field was Cosmology and those are the people who think in five dimensions and regard galaxies as far too small to worry about. I’ve tried to understand General Relatively, as in the tensor equations, and had to give up (I didn’t do it at University, opting for Astrophysics instead, so I was trying to teach myself). I have great respect for anyone who can take those equations and use them to get new insights.
As a person, all I know about him is from watching “The Theory of Everything”.
Edit: if you want a hero in Physics, Kepler might be the one to go for, though Feynman has many fans, particularly anyone who used his Lectures in Physics To get through their degrees.
Noted with thanks.
Paul Dirac seems my kind of bloke but he was more of a mathemetician, no?
There's a video on this q I need to dig out and post on the new thread.
@Barnesian You are quoting the current budget deficit, not the total one (the Public Sector Borrowing Requirement or PSBR). By Brown’s own Golden rule this should have been zero averaged over the economic cycle.
This might be of interest: it suggests that things were perhaps somewhere between the picture painted by you and @Philip_Thompson.
Thanks for the clarification. It looks to be an interesting paper.
I think the PSBR is a dodgy metric as I think it includes LAs etc who should be able to borrow in their own right and excludes PFI and other dodges.
The BIG metric used to the the Balance of Payments which is much more important. It shows whether we are paying our way as a country. It used to be quoted all the time and we all waited for the latest estimate. Will the IMF have to step in? The PSBR was hardly mentioned.
The Balance of Payments was demoted by the Tories because of the embarrassment of continually having to sell the family silver to make ends meet, which is still going on. PSBR suited them and particularly the Treasury as it was an instrument of Control. Brown liked it for that reason too. It was also a stick with which to beat Labour (as we have seen here today).
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
Most of physics is still pre-20th Century, with half an hour on 1905 and the photoelectric effect. A-level physics is Newtonian mechanics, Newtonian optics and Faraday's messing around with electromagnets and iron filings. At least the biologists are now up to the 1950s and DNA.
I have this strange view from time to time that we are past the peak rate of technological advance. That is to say, science and technology will continue to advance but at a slower rate than it did in the 250 or so years following the Enlightenment.
Consider the number of inventions, discoveries and new technologies which came about during the 100 years from, say 1850 to 1950, and compare with those that have emerged in the 70 years since 1950.
In the former period I could list hundreds but: powered flight, cars, commercial electricity, electronics, telephones, radio, radar, cinema, TV, nuclear energy, computing, antibiotics, evolution, plate tectonics, production lines, plastics, bessemer process, refrigeration and reinforced concrete make a sample top twenty.
Since 1950? Well, space travel, genetics, the internet and mobile computing I guess. And I am not sure we're going to make up the gap much in the remaining 30 years to 2050.
Happy to be persuaded otherwise.
Pervasive AI, virtual reality big time, and personalised genetics will be transformative. Not to mention nano, and energy innovations.
Teaching science is a doddle. If you want something really difficult try local government finance. I had to rewrite my lectures virtually every year - particularly when it came to central government grants to local government.
Would like honest opinions, how good/bad do you think Brexit will be
In the short term (next few years) tough, with businesses needing to adjust. In the longer term, will work out ok, because people want to trade, to buy stuff and will get on with it. We can't run the counter-factual to see if it will be better or worse sadly.
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
Most of physics is still pre-20th Century, with half an hour on 1905 and the photoelectric effect. A-level physics is Newtonian mechanics, Newtonian optics and Faraday's messing around with electromagnets and iron filings. At least the biologists are now up to the 1950s and DNA.
I have this strange view from time to time that we are past the peak rate of technological advance. That is to say, science and technology will continue to advance but at a slower rate than it did in the 250 or so years following the Enlightenment.
Consider the number of inventions, discoveries and new technologies which came about during the 100 years from, say 1850 to 1950, and compare with those that have emerged in the 70 years since 1950.
In the former period I could list hundreds but: powered flight, cars, commercial electricity, electronics, telephones, radio, radar, cinema, TV, nuclear energy, computing, antibiotics, evolution, plate tectonics, production lines, plastics, bessemer process, refrigeration and reinforced concrete make a sample top twenty.
Since 1950? Well, space travel, genetics, the internet and mobile computing I guess. And I am not sure we're going to make up the gap much in the remaining 30 years to 2050.
Happy to be persuaded otherwise.
I work everyday with quantum mechanics, but the users I help just press go (basically) and the results are divorced from the scientific understanding, as with all modern technology.
Mr. Battery, if you check a long term graph the most significant shift in the last two decades was the financial crisis and 2008 recession. Before than it was around €1.45, and afterwards mostly €1.15ish, with a molehill around 2015/6.
Please can you call me Horse. Calling me Mr makes me very uncomfortable and makes me feel like you're putting me above yourself.
Morris Dancer calls everyone Mr and it is quite endearing
Nah I think it's fucking unnerving and I asked him to stop.
Just because you ask someone to stop doesn't mean they're obliged to do so. Unless it's something they're doing just to you.
But it is polite to call people by the names they want to be known as.
Equally it is polite not to react to someone by swearing at them.
I agree. The name people want to be known as is on this site their username. If someone chooses to call me Phil, Philip or Thompson I know it is because of the username I chose. Same for Horse or Mr Battery.
I prefer to be called sir...
Is that Sir Fysics, Sir Underscore or Sir Teacher?
Just Sir...
Edit: how common is it now to call teachers Sir or Ma’m? We still do at my school but I’m not sure how many other schools do. And yes, it is a state school.
At all the schools I visited during my abortive attempt to become, ahem, a physics teacher a few years ago, the teachers were uniformly addressed as Sir or Miss (regardless of marital status).
How did you manage not to become a Physics teacher? You do have a pulse don’t you?
I decided after a couple of months of teacher training that it wasn't for me. There were a number of reasons for my decision, but first among them was the fact that I also wanted a life outside work. Granted, all new careers are tough to begin with, but one can usually see light at the end of the tunnel after a month or two. I'm glad I gave it a go, but also glad that I gave it up.
What is this “life outside work” of which you speak?
More seriously it is tough for the first few years, but Physics teachers have it easier than most as what we teach doesn’t change much from year to year even through the many revisions to the curriculum. English teachers have to do new books and plays every couple of years (and there are stories most summers about teachers who don’t check and teach the wrong book), history teachers have to teach different periods of history, but the Physics specification I’m teaching now is 80% the same as the one I was teaching back in the early 90’s. It’s one of the reasons the lock down was a pain: I couldn’t do what I normally do and let the lesson flow through interactions in class, which might look to the uninitiated as if I am making it up as I go along, but I cover all the points I need to and am able to answer questions as I go. Instead I had to prepare detailed notes before the lesson which took far longer.
Yeah, but you're in dead trouble if the laws of the universe change.
There was a niche bit of the A Level physics course where that happened a few years back (to do with the expansion of the Universe, which appears to be accelerating, which is nuts). Nothing was said officially, but I think the examiners had the sense not to ask any questions about it.
Dark energy. Astrophysicists are in the embarrassing position of having lost track of 94% of the Universe...
Most of physics is still pre-20th Century, with half an hour on 1905 and the photoelectric effect. A-level physics is Newtonian mechanics, Newtonian optics and Faraday's messing around with electromagnets and iron filings. At least the biologists are now up to the 1950s and DNA.
I have this strange view from time to time that we are past the peak rate of technological advance. That is to say, science and technology will continue to advance but at a slower rate than it did in the 250 or so years following the Enlightenment.
Consider the number of inventions, discoveries and new technologies which came about during the 100 years from, say 1850 to 1950, and compare with those that have emerged in the 70 years since 1950.
In the former period I could list hundreds but: powered flight, cars, commercial electricity, electronics, telephones, radio, radar, cinema, TV, nuclear energy, computing, antibiotics, evolution, plate tectonics, production lines, plastics, bessemer process, refrigeration and reinforced concrete make a sample top twenty.
Since 1950? Well, space travel, genetics, the internet and mobile computing I guess. And I am not sure we're going to make up the gap much in the remaining 30 years to 2050.
Comments
I sense the core problem - apart from a touch of Brownaphobia - is that you conceive of the economic cycle as something predictable in shape and timing.
And of course it is - looking back.
You are quoting the current budget deficit, not the total one (the Public Sector Borrowing Requirement or PSBR). By Brown’s own Golden rule this should have been zero averaged over the economic cycle.
This might be of interest: it suggests that things were perhaps somewhere between the picture painted by you and @Philip_Thompson.
http://www.econ.cam.ac.uk/MMPM/s-papers/Paul-Johnson-fiscal-pre-crisis-slides.pdf
Does anyone really think that Putin did not try to influence the 2016 referendum? He hates the EU, he hates the UK and would like to see the demise of both, and we know that he attempted to influence the 2019 GE and the Scottish ref. Motive, means and previous . The only question is really whether enough of the electorate were stupid enough to be influenced. I suspect Mr Putin thinks so.
When we had our Spaniel castrated, he too became less aggressive.
Of course Labour must be smart, as they will look like they are trying to overturn the result if they go after them.
EU leaders slash science spending in €1.8 trillion deal
https://www.sciencemag.org/news/2020/07/eu-leaders-slash-science-spending-18-trillion-deal
More seriously I’ve had to change only two bits of Physics teaching Since I started (other than not being able to say that the next eclipse visible from the UK is going to be in 1999).
There are many reasons why this has remained for many years the best political forum around. Some you mention. I would add OGH's light touch. The betting element too helps in that it discourages some of the wilder assertions.
I agree very much about the range of opinions. If I reflect on the posters who I always read they cover the full spectrum.
Now will you kindly p*ss off before the mellow mood evaporates.
If you are going to criticise Brown for increasing the deficit after 2000 I think it is only fair that you acknowledge that he was simply unwinding what had been an unprecedented fiscal tightening. Referring to one without the other is simply absurd. Can you please show ANY government that ran a fiscal surplus for three years in a row?
Possibly it might have been even better for him had he influenced things to get Corbyn in, but, hey, even the best disinformation campaign has its limitations!
https://twitter.com/pmdfoster/status/1285496946145267714
if he is right then any positive test total you see overstates the true number, possibly by as much as much as 50%.
Boris will resist once Cummings reminds him that CCHQ uses some of the same techniques! Similar considerations might mean SKS soft-balls it.
Oh, and I still cringe inside when I remember the ridiculous explanation of a solar eclipse give by physics teacher whom I was shadowing. OK, so it was off-curriculum during an ongoing partial eclipse by a teacher who lacked a physics degree, but still!
The other was the number of planets...
Newton, I believe, was a bit of a shit and ended his career actively persecuting Catholics. Einstein was nicer, but had a very messy personal life and highly questionable theological views.
I'd hope Hawkin's views on life, the universe and everything might be worth savouring, but perhaps Dougkas Adams would be better value in this repsect.
There is very little I teach other than that that was not known before the First World War. Possibly some electronics.
The budget deficit was kept below 2% of GDP from 1948 to 1991.
The UK was back in surplus by 1989 and the only period in postwar history that the budget deficit increased to above 2% was 1992 to 1994 following a recession that the country had a surplus going into.
The deficit from 2003 to 2008 was absolutely unprecedented for growth times.so when the inevitable recession finally came we were screwed.
In 2002-2007 we didn't know when the next recession would come but nor does that matter. What we did know is that it was over a decade since the last one and the public finances were not appropriate for pre-recession levels.
Even if the GFC had not happened, something would inevitably trigger a recession - that my friend is an unavoidable fact of life. It was Brown's hubris to believe he had abolished boom and bust.
A load of bollox in any case imo. PR really. It can be fiddled big time by finessing the classifications of current vs capital and going off balance sheet - e.g. PFI.
Seriously though, I hope the government sees sense and mitigates it as much as possible, though when we have someone as incompetent as Johnson in charge I fear for the worst.
His pre-recession deficit was unprecedentedly massive by historical standards in terms of pre-recession times.
https://tinyurl.com/yxr45fbz
Recessions happen. On average once a decade but they absolutely do happen and after a decade's growth we should be prepared for the next one.
I’ve tried to understand General Relatively, as in the tensor equations, and had to give up (I didn’t do it at University, opting for Astrophysics instead, so I was trying to teach myself). I have great respect for anyone who can take those equations and use them to get new insights.
As a person, all I know about him is from watching “The Theory of Everything”.
Edit: if you want a hero in Physics, Kepler might be the one to go for, though Feynman has many fans, particularly anyone who used his Lectures in Physics To get through their degrees.
I would like to think the majority of my posts are respected, even if disagreed with. I simply have no time for bullshit.
Suspect that's what triggered my intuition that this government (bringing it back to politics) is going to turn out to be brittle, like glass. Lots of things will hit it, most won't seem to do any damage, people will chortle at the lack of damage, then something small and surprising will hit the right place and the whole thing will shatter.
Paul Dirac seems my kind of bloke but he was more of a mathemetician, no?
Been in Bristol today, little time for PB now the "holiday" is over. Catching up with PB at Magor services. Those over a certain age will understand!
To have a duplicate, meaningless, and onerous set of regulations was always the Brexiters' aim.
So that we can say we have our own standards.
That bonkers.
Consider the number of inventions, discoveries and new technologies which came about during the 100 years from, say 1850 to 1950, and compare with those that have emerged in the 70 years since 1950.
In the former period I could list hundreds but: powered flight, cars, commercial electricity, electronics, telephones, radio, radar, cinema, TV, nuclear energy, computing, antibiotics, evolution, plate tectonics, production lines, plastics, bessemer process, refrigeration and reinforced concrete make a sample top twenty.
Since 1950? Well, space travel, genetics, the internet and mobile computing I guess. And I am not sure we're going to make up the gap much in the remaining 30 years to 2050.
Happy to be persuaded otherwise.
I bring you back to what I have already supplied as the only conclusion that an objective analysis of this topic will bear -
If we had gone into the catastrophe of the GFC with a smaller deficit it would have been a bit easier to cope with the aftermath.
It's boring, I know, but there we are.
I think the PSBR is a dodgy metric as I think it includes LAs etc who should be able to borrow in their own right and excludes PFI and other dodges.
The BIG metric used to the the Balance of Payments which is much more important. It shows whether we are paying our way as a country. It used to be quoted all the time and we all waited for the latest estimate. Will the IMF have to step in? The PSBR was hardly mentioned.
The Balance of Payments was demoted by the Tories because of the embarrassment of continually having to sell the family silver to make ends meet, which is still going on. PSBR suited them and particularly the Treasury as it was an instrument of Control. Brown liked it for that reason too. It was also a stick with which to beat Labour (as we have seen here today).
We can't run the counter-factual to see if it will be better or worse sadly.
... that's barely scratching the surface.
https://fivethirtyeight.com/videos/secret-trump-voters-didnt-decide-2016-and-probably-wont-swing-2020/