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vimothy
24-03-2010, 12:42 PM
Budget day!

Will the UK get downgraded? Will markets collapse? Does any of this even matter anyway?

vimothy
24-03-2010, 12:55 PM
If the pound does plummet, what happens to the foreign denominated debt that the UK banks hold (4 * GDP, IIRC)? Could be a bad time to be a giant hedge fund state.

See also: Iceland.

vimothy
24-03-2010, 01:05 PM
Oh shit:


Fastest deficit reduction plan of any G7 economy

Bulk of structural deficit will be removed by end of next parliament - will fall from 8.4% of GDP in 2009/10 to 2.5 per cent by 2014/15

Defecit to fall from 11.8 per cent in 2009-10 to 5.2 per cent in 2014-15

To be replaced with...?

hucks
24-03-2010, 01:09 PM
Also spending up in real terms next year by 2.2%.

hucks
24-03-2010, 01:11 PM
Oh shit:

Fastest deficit reduction plan of any G7 economy

Bulk of structural deficit will be removed by end of next parliament - will fall from 8.4% of GDP in 2009/10 to 2.5 per cent by 2014/15

Defecit to fall from 11.8 per cent in 2009-10 to 5.2 per cent in 2014-15

To be replaced with...?




Asset sales will also make a "significant contribution" to reducing debt

Which assets are they, then? Is the Tote still state owned? Ah - banks.

vimothy
24-03-2010, 01:12 PM
Yeah, that's how I read that.

vimothy
24-03-2010, 01:14 PM
Ha!


Asset sales under way. Banks have been appointed to sell student loan book, government is finalising options for the Tote and the Dartford Crossing is on course to be privatised later this year

hucks
24-03-2010, 01:16 PM
I'll have the Dartford crossing...

vimothy
24-03-2010, 01:18 PM
Some qualitative easing planned...

vimothy
24-03-2010, 01:22 PM
Hey this looks alright really, at least for the next year or two. Maybe I'm missing something obvious.

hucks
24-03-2010, 01:25 PM
An investment bank, controlling 2bn of equity, will be set up to fund green transport and energy initiatives. Some 60m will be spent helping ports develop for the manufacture of wind turbines. (This is something Nick Clegg proposed earlier this year, I seem to remember.)



This is exactly what the govt should be doing right now. No investment is coming from private business, who are all paying down debt.

vimothy
24-03-2010, 01:30 PM
Not sure about this education fund. Aren't Labour planning to cut ed spending 10% over the next parliamentray period? What is the net change?

vimothy
24-03-2010, 01:37 PM
Not very impressed with the ed component.

vimothy
24-03-2010, 01:37 PM
Not sure about capital gains either.

crackerjack
24-03-2010, 02:45 PM
so far he's "soaked the rich"(c) The Times without sending shares or the pound tumbling - is this a first?

vimothy
24-03-2010, 04:46 PM
hucks (anyone really): do you know where I can see the rational for the Treasury growth forecasts referred to in the budget (e.g. below)?

http://www.hm-treasury.gov.uk/i/budget2010_chart_b4.jpg

Also, is there anywhere I can see an up-to-date version of that sectoral balances graph your boss used without having to make it myself?

Ta

hucks
24-03-2010, 05:05 PM
hucks (anyone really): do you know where I can see the rational for the Treasury growth forecasts referred to in the budget (e.g. below)?

http://www.hm-treasury.gov.uk/i/budget2010_chart_b4.jpg

Also, is there anywhere I can see an up-to-date version of that sectoral balances graph your boss used without having to make it myself?

Ta

On the first one, is the graph itself from the red book? I've never actually known the forecasts to be explained, though. They just, um, are

On the second one - he drew it himself, so I don't think there is one kicking around.

vimothy
24-03-2010, 05:46 PM
Yeah, the graph's from the red book. I think that the forecast is pretty weird. Where is that growth coming from? If the economy doesn't bounce back as if by magic, are we still goiing to cut the deficit? There is also a law: the Fiscal Responsibility Act 2010.


On the second one - he drew it himself, so I don't think there is one kicking around.

Damn.

Well, anyway, I don't see net exports doing it. Corporations need to invest some of that saving, but they're not going to do so in an anemic economy. Is the forecast predicated on corporate sector investment, I wonder?

vimothy
25-03-2010, 11:47 AM
I'm not mad keen on this blog, but this post is useful:

http://blogs.ft.com/money-supply/2010/03/24/uk-budget-in-real-time/

crackerjack
25-03-2010, 11:59 AM
So what's the verdict? The likes of the Economist and Times (ie Nu Lab, but probably about to go Tory) seem pretty sniffy, but the markets are mildly upbeat. Is that just cos he didn't lead with kill the bankers?

vimothy
25-03-2010, 12:18 PM
The way I see it, there's lots for investment. The rationale for this in general is sound (as hucks notes above), since, business sector saving is way up/investment is way down (see graph here page 4 (http://www.npi.org.uk/comments/Deficit%20damned%20either%20way.pdf)). The govt need lots of growth to make the ooh scary deficit look less scary. Otherwise, no reduction (tax revenue is still low, transfer payments are high). Will this actually happen? Don't know. I think the budget is okay (tho some odd stuff like capital gains) but I'm sceptical that private sector demand is going to reappear early enough to allow govt to hit its legal (!) obligation (http://www.opsi.gov.uk/acts/acts2010/pdf/ukpga_20100003_en.pdf) to reduce borrowing every year from 2011.

What's with the markets--I have two theories: one, they're not actually as stupid as Osborne, and they know what's going on; two, they don't believe this budget will actually get implemented.