Reply to: Britain will be the strongest major economy in Europe for the next 2 years, says IMF

[scooterscot]

Revised GDP reveals struggling economy

Something of a contradiction with the OP. Could it be Rimmer is full of, wait for it, does anyone smell that? ugh

http://www.thetimes.co.uk/tto/busine...cle3330625.ece

The British economy has recovered less than half of the output it lost during the 2008-09 slump, with the “subdued” environment continuing into the fourth quarter of last year, according to the Office for National Statistics.

Gross Domestic Product (GDP) shrank by a quarterly 0.2 per cent in the final three months of the year, according to the second official estimate of the economy’s performance for the period, released this morning.

Corporate investment slumped, in a worrying piece of data for George Osborne, who is counting on business spending to help revive growth.

Business investment fell by £1.7 billion to £28.7 billion, according to the ONS.

The figures showed that industrial production slid by 1.4 per cent, within which manufacturing dropped by 0.8 per cent.

Households delivered a modest boost, raising spending by 0.5 per cent in the final quarter, but that followed four straight quarters of declines. Incomes remained under pressure, with employee compensation dropping 0.3 per cent.

The economy was supported by higher exports, with trade deficit shrinking to £2.5 billion in the fourth quarter from £4.4 billion in the third.

The figures confirm a picture of an economy struggling to make headway despite a Bank of England stimulus programme that is headed for £325 billion. The UK has grown by 3.4 per cent since the end of the recession, underperforming peers such as the US and Germany.

The Bank of England forecasts that the economy will revive in the current quarter, rising by 0.5 per cent, but Sir Mervyn King, the Bank Governor, has warned it will “zig-zag” this year because of one-off factors such as the Diamond Jubilee bank holiday.

Samuel Tombs, an economist at Capital Economics, said: “While it was encouraging to see that real household spending rose by 0.5 per cent — the first rise since the second quarter of 2010 – households are unlikely to be able to keep increasing their spending as unemployment rises, credit constraints tighten and inflation continues to erode their real spending power.”

[DodgyAgent]

A man should know his limitations.

That is what socialists and old people say. Thank god no one listens to you

[Mich the Tester]

Very sensible viewpoint.
The best solution for Greece IMHO is an aided exit. Let them keep all EU rights, help them set up the drachma (it could even shadow or peg the Euro if they felt up to the discipline, with a view to eventually rejoining), take the debt hit (it's going to happen anyway).
Basically do everthying to let them get as competitive as they can with some very strict criteria for rejoining when they were ready as assessed by outside observers.

I'm a geographer, so I view this from that perspective; I have only a basic understanding of economics, but I know what happens when rich societies or states are bordered by failed states; it ends up in violence, streams of refugees and sometimes war, costing the rich country a lot of resources when it might be cheaper, and better for all round good cheer, to just accept that some neighbours need subsidies. Interesting parallels with the kingdoms of Buganda and Bunyoro, described on TV last night by that African historian; both states fought for economic supremacy for centuries, one getting rich while the other got poorer, the power swung back and forth and eventually both were taken over by the Brits and then destroyed by Obote and Amin. Perhaps if they had been allies and helped each other instead of just battling for supremacy and resources they could both have avoided a lot of trouble. This with the benefit of hindsight, of course.

But then this isn't something that's easy to explain to voters who prefer one-liners and false promises from populist politicians, who seem to be en vogue in Europe right now. That's one reason I say that the solutions might not be politically acceptable.

[sasguru]

Why do you go on and on about this tulipe?

It's not like you can influence the decisions or have any say in the outcome whatsoever.

Go back to the shed and turn off the Wifi, there's a good chap.

Why not scratch your balls, gibber and gurn? Oh you're doing that already.

[DimPrawn]

Very sensible viewpoint.
The best solution for Greece IMHO is an aided exit. Let them keep all EU rights, help them set up the drachma (it could even shadow or peg the Euro if they felt up to the discipline, with a view to eventually rejoining), take the debt hit (it's going to happen anyway).
Basically do everthying to let them get as competitive as they can with some very strict criteria for rejoining when they were ready as assessed by outside observers.

Why do you go on and on about this tulipe?

It's not like you can influence the decisions or have any say in the outcome whatsoever.

Go back to the shed and turn off the Wifi, there's a good chap.

[sasguru]

I think that whether Greece stays in the Euro or not, northern Europe will have to keep subsidizing Greece anyway for some time to come; quite simply, Greece is on the edge of Europe, guards borders and a lot of coastline that need defending against the greatest fear of the very same people who oppose the EU; immigration. It's also an EU member that could spew out its young people all over Europe if they're unable to find work in Greece or if the state collapses in violence. Basically, if people want less immigrants or at least, not more immigration, then they'll have to subsidize Europe's border economies. Whether that's in the EU, the Euro or not is irrelevant; we have a basket case economy in Europe, bordering on Turkey, Albania, Bulgaria and Macedonia which will need help for some time; cut them loose and there will be chaos and bloodshed. That help needs to have as its main aim to help the Greek economy and state to stand on its own two feet and provide incentive for people to stick around in Greece; the debts may as well be written off as we're going to be paying their bills for some time to come anyway.

Thing is, try selling that to your average northern European taxpayer/voter.

Very sensible viewpoint.
The best solution for Greece IMHO is an aided exit. Let them keep all EU rights, help them set up the drachma (it could even shadow or peg the Euro if they felt up to the discipline, with a view to eventually rejoining), take the debt hit (it's going to happen anyway).
Basically do everthying to let them get as competitive as they can with some very strict criteria for rejoining when they were ready as assessed by outside observers.

[Mich the Tester]

Quite. This is a politican-created crisis.
And unlike the banking crisis which was caused by greed, and hence has a possibility for a long term fix, this one doesn't execept by revolution.
But push the southern states enough and a revolution there will be.

I think that whether Greece stays in the Euro or not, northern Europe will have to keep subsidizing Greece anyway for some time to come; quite simply, Greece is on the edge of Europe, guards borders and a lot of coastline that need defending against the greatest fear of the very same people who oppose the EU; immigration. It's also an EU member that could spew out its young people all over Europe if they're unable to find work in Greece or if the state collapses in violence. Basically, if people want less immigrants or at least, not more immigration, then they'll have to subsidize Europe's border economies. Whether that's in the EU, the Euro or not is irrelevant; we have a basket case economy in Europe, bordering on Turkey, Albania, Bulgaria and Macedonia which will need help for some time; cut them loose and there will be chaos and bloodshed. That help needs to have as its main aim to help the Greek economy and state to stand on its own two feet and provide incentive for people to stick around in Greece; the debts may as well be written off as we're going to be paying their bills for some time to come anyway.

Thing is, try selling that to your average northern European taxpayer/voter.

[The Spartan]

If Greece leaves the euro maybe they'll be able to kickstart their tourism industry as it'll be a lot cheaper to go there

[sasguru]

I think there are enough solutions to Europe's debt problems AND Greece's crisis; the trouble is that they're probably not politically acceptable.

Quite. This is a politican-created crisis.
And unlike the banking crisis which was caused by greed, and hence has a possibility for a long term fix, this one doesn't execept by revolution.
But push the southern states enough and a revolution there will be.

[Mich the Tester]

If I knew what the solutions were I would be very rich indeed.
What was obvious from the start was that what was essentially a political project that ignored economic reality was bound to fail.
You're forgetting that Germany was the first country to break the Euro rules when it suited them.
And was it also foolish to lend to Portugal, Soain, Ireland and Italy?

I think there are enough solutions to Europe's debt problems AND Greece's crisis; the trouble is that they're probably not politically acceptable.

[sasguru]

What's understood in your view?

That when it comes to Economics, you're a complete ignoramus.

[AtW]

Come on AtW, that is fundamentally understood.

What's understood in your view?

[sasguru]

How are they going to buy raw materials if they don't have a stable currency?

Why isn't it the case that whoever foolishly lent Greece money now takes a hit?

If I knew what the solutions were I would be very rich indeed.
What was obvious from the start was that what was essentially a political project that ignored economic reality was bound to fail.
You're forgetting that Germany was the first country to break the Euro rules when it suited them.
And was it also foolish to lend to Portugal, Soain, Ireland and Italy?

[Doggy Styles]

Greece's problem got nothing to do with euro but everything to do with debt.

Come on AtW, that is fundamentally understood.

[TimberWolf]

Coming out of the Euro is the only solution for Greece. No one said it was a magic solution.

How are they going to buy raw materials if they don't have a stable currency?

Why isn't it the case that whoever foolishly lent Greece money now takes a hit?