The UK economy- A paradox? And the changing face of the global economy.

[Dante Von Hespburg]

Hello one and all,

This is a thread i've been meaning to make for a while now, but haven't really had the scope for discussion yet, beyond the probable agree-ance that we're in a mess worldwide economically.

I'd like to start by discussing some of the rather odd issues the UK is currently facing, as you may have seen from other threads. There is a multitude of issues with the UK; people having to rely on food banks to support themselves:

But the coalition is not even prepared to play the hypocrite. Iain Duncan Smith showed why he never won the VC when he was in the Scots Guards when he refused to face the Labour benches as the Commons debated food banks on 18 December. He pushed forward his deputy, one Esther McVey, a former "TV personality". All she could say was that hunger was Labour's fault for wrecking the economy. She gave no hint that her government had been in power for three years during which the number attending food banks had risen from 41,000 in 2010 to more than 500,000. Her remedy was for the coalition to help more people into work.

http://www.theguardian.com/commentis...-of-food-banks

More than that, people are struggling in other areas from all 'classes'. The rise of the 0 hour contract has meant a lack of stable and consistently paid jobs, in their stead we have 0 hour contracts, with no guarantee of work, and indeed are contracts in which people and employers are actually unclear on just what the rights of workers are! All this meaning people are suffering smaller and smaller disposable incomes to put back into the economy. Forget about renting or buying your own home if your 3 people or less.

Indeed it's all a bit of a 'bitter sweet recovery'

The Institute for Public Policy Research (IPPR) said “there is still plenty of cause for alarm” as household debt begins to climb again after falling for five years. Households have cut debt as a share of their income to around 140 per cent since 2008, but the independent Office for Budget Responsibility (OBR) forecasts that this will increase again to 160 per cent of income by 2018.The IPPR’s pessimism – and warnings over the Government’s support scheme for the housing market, Help to Buy – contrasts with recent much better news on the economy. This has prompted hefty growth upgrades from the OBR as well as the Bank of England and International Monetary Fund. Inflation has also fallen to a four-year low of 2.1 per cent, easing the pressure on household budgets for now, despite record low wage growth.

http://www.independent.co.uk/news/bu...n-9027725.html

Yet in the face of this quick and lacking in detail summary, apparently the UK economy is growing (indeed faster than our neighbors)...to such an extent that we have predictions such as this floating around now:

http://www.bbc.co.uk/news/business-25519110

The CEBR predicts that Germany will lose its current top spot in Europe by 2030.It cites the UK's population growth as an aid to economic acceleration.
The report echoes the recent confidence of other business groups such as the British Chambers of Commerce (BCC).
Earlier this month the BCC said that the UK economy will surpass its pre-recession peak in 2014.
In its annual World Economic League Table, where it ranks the ups and downs of global economies, and forecasts their future position, the CEBR said in addition that China will overtake the US in 2028, which is later than some analysts have suggested.
The UK will overall perform second best of all advanced economies, the CEBR said.
Yet, this performance will still lag behind growth in emerging countries such India and Brazil.
The CEBR in its report added that in addition to the UK's population growth boosting economic expansion, that "lesser dependence on other European economies" would also aid progress, as well as "relatively low taxes by European standards."

THE UK is on course to become Europe's largest economy within two decades, overtaking France and Germany, according to a new report.The think tank Centre for Economics and Business Research (CEBR) predicts the UK's GDP will first move to fifth place ahead of France by 2018 before leapfrogging Germany around 2030.


Read more: http://www.nottinghampost.com/UK-set...#ixzz2oob1nn60

http://www.nottinghampost.com/UK-set...ail/story.html

I mean seriously? Wow... that's some come back. Though again it's like the least loser really, as we in Europe lose out to the developing world anyway. It's more case of last man standing in effect. But i'm concerned that what is the point of such economic predictions if families and the people don't really feel it?

Though again in terms of the UK's neighbors somehow maybe things aren't't as bad as they seem to be here?

However, as far as Germany, the group said that should the euro "break up", that "Germany's outlook would be much better."
As for France, The CEBR said it will be one of the "worst performing" of the Western economies, and will be overtaken by the UK by 2018. This is because of slow growth due to "high taxation" in addition to the general issues of eurozone economies.

Especially considering things like this:

Sterling will be the global “safe haven” currency of 2014 as Britain’s strengthening economy makes it a magnet for inward investment, according to Citgroup.The pound, supported by a run of positive economic data, climbed to a two-year high against the dollar on Friday, rising to $1.6578.

"The UK economy is recovering faster than people expected, and we think that continues next year," said Mark Schofield, head of macro research at Citigroup.

http://www.telegraph.co.uk/finance/c...Citigroup.html

And then we have even better predictions for 2050 for the UK
http://www.spectator.co.uk/features/...take-germanys/

A very interesting article on the how and why of all this.

But what i ask to you my friends is three fold really. I know a discussing on a country and indeed the international economy (Feel free to bring in other countries as we're all tied in together!) can be daunting, so i'd start by putting forward these questions.

Firstly is this actually a serious issue? I see Germany is indeed potentially in trouble with an ageing population (as opposed to the UK's growing one through immigration), and also literally now single handedly propping up the eurozone. So it's conceivable the UK will do this (Especially with France circling the drain currently), though it's unlikely it will be based upon industrial growth, maybe a greater and expanded services sector...which i would question as to it's durability in the face of new crisis.

What this leads me to then ask is, what's the point of the UK's current and future growth if its not actually benefiting those that matter, the people? Currently it seems life for British citizens is as difficult as it was during the peak of the recession, This growth is fueled on the back of the 0 hour contract, and extensive government cuts to the people who in some cases need it the most (I'm not talking about Job seekers allowance here, but the entire government care industry has been privatized...with quite disastrous results in some cases, along with the handing over of many state obligations to charities, who are failing to provided the resources and manpower to fulfill properly). Will living standards ever get back to where they once where, homes being affordable for single individuals on a mid-tier income?

Finally i'd also ask what's fueling this recovery? Why are we doing so much better than our neighbors? Immigration is a key here i believe as has been stated, but is that truly the whole point? Or is it more we just seem to suck less than everyone else currently.

I'd also question the benefits of being Europe's biggest economy, when we're all set to fall down to around 13th economy in the world compared to the growing BRIC nations. Also what does this mean for the EU? Could a large UK economy be it's savior (if we got off our arses and went full in?) Or is it now doomed?

I realize this is a lot to discuss, but we're all intelligent chaps..and chap-eses(?) here, so i'm sure we'll be able to debate with only the minimal required amount of jingoistic name calling!

[Thorn777]

Dont worry Dante, you will be fine. I've red an article recently that Barclay's "Futurists" are predicting that the UK economy will surpass the German economy in the early 2020's.

Just stay on breeding and sucking the outside world of its discretionary GDP. Life living of the global oligarchs crumbles is a good life.

[Dante Von Hespburg]

Dont worry Dante, you will be fine. I've red an article recently that Barclay's "Futurists" are predicting that the UK economy will surpass the German economy in the early 2020's.

Just stay on breeding and sucking the outside world of its discretionary GDP. Life living of the global oligarchs crumbles is a good life.

I think you may have to take your argument up with the BRIC countries in terms of any changes to GDP in the near future my friend. It's set for quite a change. Falling out of the top 10 largest economies for nearly all the countries in Europe is going to be quite the economic shock. Don't even get me started on the ageing population issues...

But what would you do to change this Thorn? As i've said in the other thread i'm no economic philosopher who can extol the finer points of European Socialism verses US capitalism. I can work in the current reality we live and put forward ideas to change and improve. Like the much needed diversification of the UK's economy. Sustainable and real growth needs to start from the ground up, not the top down, it's too unstable, and indeed too pointless in the long run if those who need economic growth and better living the most end up being the last to feel any effect. Thus i find it hard to see the UK achieving such dominance in Europe until this is looked at.

[Hekko]

As I said it in the other thread: the welfare state in the west is going to have to dismantle itself. Free trade means that unskilled workers are going to get shafted more and more, because lets face it, no one will hire someone in the UK to do the same job as someone in Vietnam for several times the cost when shipping is affordable.

That leaves two situations, either subsidise the unskilled workers or cut them loose. If you subsidise them too much all the people who still are able to float on their own are going to move, lets face it, these are the people who have marketable skills in several places in the world, incentives to leave and the language skills to support it. The other option is to cut the unskilled workers loose, which isn't very nice, but it's the least bad option (a bit like democracy). This is the only way the west can compete with developing markets. Once the developing markets improve the west will have room to improve as well, of course, but until then it's an uphill battle for unskilled workers.

The unions are shooting people in the foot by fighting for wages. In the long run they would serve their members best by improving conditions abroad, as well as creating awareness of CSR issues abroad and at home. This way decent wages would be prerequisite to stay in business.

The UK is in a better position in the sense that their whole population isn't just about to retire, which means that the senior citizens won't be a huge extra burden to those who will be able to stay afloat at least.

Finally I don't think the size of the economy is what matters, it's the quality of life in the country. And while I see dark times ahead for the west I can also see potential when it comes to poaching talent from developing nations, and staying competitive that way, unfortunately that's not really a very nice thing to do, and it would also require the shafting of unskilled workers to some degree, because lets face it, no one will move somewhere to feed millions of people when they can live in luxury at home.

p.s. I think chapette would be suitable for the feminine form of chap.

[Thorn777]

^And let the middle-class "dismantle" itself for that matter as well. The amount of lofty docility and class-traitors on this site is depressing.
Guess its an Anglo-Saxon thing. In my RL I rarily meet with such a compartmentalized mentality reminding of the Stockholm Syndrome. People mostly dont give a . Thats enough to keep the ball rolling. Both mentalities are very interesting though.

I think you may have to take your argument up with the BRIC countries in terms of any changes to GDP in the near future my friend. It's set for quite a change. Falling out of the top 10 largest economies for nearly all the countries in Europe is going to be quite the economic shock. Don't even get me started on the ageing population issues...

But what would you do to change this Thorn? As i've said in the other thread i'm no economic philosopher who can extol the finer points of European Socialism verses US capitalism. I can work in the current reality we live and put forward ideas to change and improve. Like the much needed diversification of the UK's economy. Sustainable and real growth needs to start from the ground up, not the top down, it's too unstable, and indeed too pointless in the long run if those who need economic growth and better living the most end up being the last to feel any effect. Thus i find it hard to see the UK achieving such dominance in Europe until this is looked at.

Bretton-Woods 2.0.

And the time is ticking indeed.

[Cold_Mac]

The sole way forward, in a progressive way, for UK & indeed all european economies is a functional fusion of core-states. The struggle to get equality of chances & social mobility for the unpriviliged will unlikely to be solved and, given the massive turmoil on europe's borders (Ukraine, Near East, Russia, Northern Africa...) is likely to increase - involving further demographical shifting and adjustments of politics. In what way this pendulum will line out is impossible to predict.

If, thats a big if, the UK "surpasses" Germany - and its apparently not even clear to what extent on what sector - than its entirely immaterial. Any impact of this will be marginalised through the relativity of the market volume. The supposed strength of German economy is a short-lived wonder, as it was in a dire crisis back in 2004/5 and there is no safety mark on it with a market as stagnant at some points, yet on other spots hastily fluctuant.

As I said, the sole way forward is a progressive economical complete-union of core-states, otherwise its a dogger on the pacific occean.

As I said it in the other thread: the welfare state in the west is going to have to dismantle itself.

Yeah, lets shoot the foundation of the society in the back, turn around and run away screaming because they face the turning tide!

[Hekko]

The sole way forward, in a progressive way, for UK & indeed all european economies is a functional fusion of core-states. The struggle to get equality of chances & social mobility for the unpriviliged will unlikely to be solved and, given the massive turmoil on europe's borders (Ukraine, Near East, Russia, Northern Africa...) is likely to increase - involving further demographical shifting and adjustments of politics. In what way this pendulum will line out is impossible to predict.

If, thats a big if, the UK "surpasses" Germany - and its apparently not even clear to what extent on what sector - than its entirely immaterial. Any impact of this will be marginalised through the relativity of the market volume.

You stare too much on the absolute volume rather than the quality of life implications of said volume for the people. I'd rather live in Luxemburg or Switzerland than China for instance.

Yeah, lets shoot the foundation of the society in the back, turn around and run away screaming because they face the turning tide!

I would not call the welfare state the foundation of the society. I'd say it's a way of distributing the wealth that society has generated (unfairly or fairly is besides the point for this discussion though). However, due to the economic realities of the world the welfare state system will begin to destroy so much value that it will become impossible to hold onto it.

[Cold_Mac]

You stare too much on the absolute volume rather than the quality of life implications of said volume for the people. I'd rather live in Luxemburg or Switzerland than China for instance.

Yet neither have a high social mobility or good equality of chance, so its the same old song of being born into very settled circumstances. Especially in the UK. If there is one country that needs social welfare to establish a better up/down spiral than its the UK.

You should go to Denmark, btw.

I would not call the welfare state the foundation of the society. I'd say it's a way of distributing the wealth that society has generated (unfairly or fairly is besides the point for this discussion though). However, due to the economic realities of the world the welfare state system will begin to destroy so much value that it will become impossible to hold onto it.

Circumstances change like a leaf in the wind - shall our values? Its very much the backbone of society and literally vital (even in a purely economical sense) to have a spending capacity, thus being more stable if hit by bad trade cycles. Keep asset-exchange fluent.

One very interesting development in the welfare section are the retirement pensions with the possibility of extending life-periods.

[Hekko]

Yet neither have a high social mobility or good equality of chance, so its the same old song of being born into very settled circumstances. Especially in the UK. If there is one country that needs social welfare to establish a better up/down spiral than its the UK.

You should go to Denmark, btw.

You're taking this out of context, I am saying that per capita income is more important than the total income of the state.

Circumstances change like a leaf in the wind - shall our values? Its very much the backbone of society and literally vital (even in a purely economical sense) to have a spending capacity, thus being more stable if hit by bad trade cycles. Keep asset-exchange fluent.

One very interesting development in the welfare section are the retirement pensions with the possibility of extending life-periods.

I am not saying anything about the values here. You can lament the loss of welfare or you can cheer in joy. I am saying that it will happen sooner or later (for a while). Spending capacity will always be there, people are always inclined to want more, so demand is ever present in the long run. Building up the supply section is the tricky bit.

[Cold_Mac]

You're taking this out of context, I am saying that per capita income is more important than the total income of the state.

You are right. It is, indeed. My apologies, its late - I don't want to twist your words.

I am not saying anything about the values here. You can lament the loss of welfare or you can cheer in joy. I am saying that it will happen sooner or later (for a while). Spending capacity will always be there, people are always inclined to want more, so demand is ever present in the long run. Building up the supply section is the tricky bit.

Fair point.

I'd say we both agree that down-sizing changes are going to happen in the welfare sector but that an overly repressive economy is the worst case.

[Basil II the B.S]

Both Barclay's and CEBR are obviously trying to gather as many stupid investors as possible with cheap lies.
Germany's population has been in constant decline for more than a decade, their economy enjoys stability and constant growth, even in bad times like now. The British economy instead suffers from a dependancy on an overgrown, bubble-prone financial sector, filled with questionable activities that may actually be hurting other sectors of the economy, although I'm waiting for official confirmation for that (see Dante's post in the Banking wages' thread).
Plus, the ECB makes predictions every year about each countries GDP growth, and so far they hardly ever get anything right. Given that an year-to-year prediction in this uncertain days is often wrong, I honestly don't see how a 5-15 years one with such weak hypothesis and major bias should be taken in consideration.
Sometimes I honestly wonder how economists got their phds when their conclusions are so detached from reality.

[Thorn777]

^Most of us will be increasingly redundant as "important consumers" ala Henry Ford. The consumer has become almost as global as capital already is.

[Ludicus]

^Most of us will be increasingly redundant as "important consumers" ...The consumer has become almost as global as capital already is.

Lasciate ogni speranza o voi che entrate? it seems to me that the Achilles heel of the global capital is the global working class.

[Condottiere 40K]

I believe Cameron and Merkel are missing a golden opportunity; he was more bodies than he knows what to do with, the Germans need skilled workers. He could rent them out to German industrialists, which would finance the Welfare State and allow the Germans to grease their industrial base.

[Hekko]

Replying from my iPad so I can't make a fancy quote.

You are partially right Denny. I don't really look at the total economy which might grow thanks to skilled labour etc. There are two problems with seeing this as a solution, first of all if the UK has a growing population the population might outpace the economy. Secondly will the people who are the source of the growth tolerate subsidising the unskilled workers ad absurdum rather than moving after a while. The unskilled workers are between a rock and a hard place though, because while it's possible to create new unskilled jobs in the UK rhey might as well be created in Vietnam where it is cheaper. This will be the trend until the UK unskilled workers depress their wages and the Vietnamese face so high demand for their unskilled workers that the wages riseto the level of UK.

that is just with a two state model. Adding in more states like you did you will see that this process will take substantially longer. As you say china is facing it's own problems, however, but that does not mean it is to gain of the UK, there are other states to pick up the slack. But I agree that in the long run it's more efficient to add to the problems of other states rather than trying to fix the almost unfixable at home. This is also why I have said that the unions need to face their efforts on csr awareness and conditions abroad rather than at home.

[Mangalore]

Does anyone know where this CEBR report comes from out of the blue? I may just be a butthurt German but it sounds pretty weird.

I particularly don't get the reasoning that germany's downfall is partially due to the Euro when the base claim is that the current 65:80 population ratio is simply reversed. Yes, if the population development is that I would expect the UK to have the bigger economy by pretty much that projected factor...

[Dante Von Hespburg]

Both Barclay's and CEBR are obviously trying to gather as many stupid investors as possible with cheap lies.
Germany's population has been in constant decline for more than a decade, their economy enjoys stability and constant growth, even in bad times like now. The British economy instead suffers from a dependancy on an overgrown, bubble-prone financial sector, filled with questionable activities that may actually be hurting other sectors of the economy, although I'm waiting for official confirmation for that (see Dante's post in the Banking wages' thread).
Plus, the ECB makes predictions every year about each countries GDP growth, and so far they hardly ever get anything right. Given that an year-to-year prediction in this uncertain days is often wrong, I honestly don't see how a 5-15 years one with such weak hypothesis and major bias should be taken in consideration.
Sometimes I honestly wonder how economists got their phds when their conclusions are so detached from reality.

I'm still awaiting their findings too my friend. I'm beginning to suspect though it will be another closed doors carpet job for the Banks as the government is currently relying on them a lot/pushing on them to give out these loans to people 'in need'. Make of that what you will for long term sustainable recovery...

That is rather what i was thinking too, reading the premise it's awfully... well, ill detailed. It dosen't seem to take into account any variables (for instance UK growth is fueled on the back of a population boom that's currently happening, largely down to immigration. Of course if the government cracks down on immigration (Which stupidly they want to do for the political points and to try and keep UKIP in check) then surely it all goes out the window? Or indeed if the UK ends up leaving the Eurozone, then the immigration we need all gets capped severely anyone (plus our economy will be severely effected! When upwards half your trade is with the EU, it's stupid as to why we'd want to opt-out..)

Well the food bank issue is there. But I don't think its a big one actually. It is an emergency service provided by charities yes but you have to learn to look at numbers. It has risen 60% but what is 60%? They fudge the numbers on this and IDS is right to attack them.

They helped 350000 people between April and September, they handed out a million miles in the Christmas period. How many people is that actually? It isn't a million people as some claim, it is a million meals over an indefinite period, it is 350000 people between how many months, how many are the same people? It isn't 350000 people consistently needing them.

(Dante sorry I religiously proselytise these shows and whatnot but "more or less" by the undercover economist Tim Harford is great for dismantling this stuff, and if you can believe it statistics can be funny too)

The other alternative view is that the rise of foodbanks is a good thing. Emergency interventions they provide (starting in 2000) solve problems or prevent them before the arise, deeper costlier problems. These emergency interventions aren't always related to economic crisis in fact they happen without recessions or income dips. Family breakdown, debt, crime and drug addiction cause hunger and homelessness irrelevant of what is happening in the world. In the beuracratic process losing one source of income and going onto another whether that is a job or one form of income support to another can cause lag time. According to the very people who run the food banks they should exist in every city and access to every town thanks to this very, inescapable, fact. They fill a void that government can't, or won't fill. They fix a problem that a large welfare state is to inefficient regardless of its many virtues cannot fix.

Just one in five people going to food banks are there as a result of low income. One in six because of benefit changes. One of the most needy cases are battered and abused women seeking escape and stuck in a vacuum as they wait for the systems to kick in and rescue them.

No its quite alright you raise a good point about the possible (indeed likely) manipulation of figures here to make a better case in favour of the Charities main aims. Though i would still put forward that the fact their being used at all in any serious volume by people from all walks of life is a very serious issue (as we've said in the other thread indeed!) I can't really seem them being a desirable long term solution though, and i fear the UK may actually take this idea forward as that.

Dante I don't want to make you cynical I truly don't. But food banks started in the midst of the boom and demand has soared ever since. Is it possible that charities know how to work the media as well as anyone else

That being said I'm not denying that things aren't getting tougher for people but lets not gild the lilly, tilt at windmills or assume that food banks won't be needed if we suddenly reverse the economy overnight and experience growth in real wages tomorrow. If we managed to do that and took away the food banks, we are hurting people who need them still.

Haha a very interesting perspective! Indeed charities are hardly bastions of unbiased perspectives! I think though in the short term we'd see some improvement, though again this may be my own naivety and wish to see these supposed results make a major impact on the ground up. Though i doubt it will. I can see any surge predicted or otherwise staying at the mid-top tier of the UK economy. Workers i believe will still be in the same straits as now.

Can I suggest (without any intended insult) that I detect a slight tinge of hysteria over the current recovery which hasn't really happened yet? You do realise we've only really just had a year of marginal growth and that employment is what you call a lagging economic indicator. You can't expect a growth in wages, employment or long term employment rises as the recovery is in its earliest stages after one of the deepest ever recessions and huge structural economic problems have been exposed.

Lagging indicators: Changes in the economy occur before lagging indicators change. For example, employment as shown by the Employment Situation report tends to continue to fall or grow very slowly as the economy comes out of a recession (even though unemployment rates often rise as the economy enters a recession). Lagging indicators may not tell the future, but they're great for confirming where the economy has been and whether it's heading toward recession or expansion. If an indicator that lags recessions starts rising, for example, you can be quite sure that the trough has been reached and the expansion has begun.

http://www.aheadofthecurve-thebook.com/11-03.html

It is evident in this chart that peaks and troughs in employment follow, rather than lead, those of consumer spending. Because of this, every economic recovery, in its early stages, appears to be a “jobless recovery.” Even though employment does have some secondary causality in driving consumer demand, it should never be used as a primary indicator in forecasting consumer spending.

Very interesting stuff here, i hadn't actually considered that in the bigger picture so to speak. It's quite alright i don't it as an insult, merely as an education! I'm just wandering though on what basis the various reports project us too, especially when i still believe that fundamentally we're going about the recovery the wrong way, and will end up paying for it in the mid term. But i concede your probably quite right here.

In that case though, what the heck does it mean for the rest of Europe if we're actually going to surpass Germany and France? Am i the only one thing who doesn't think this is good news overall?

So as we exit what was absolutely not a normal recession, it was a hideous disaster in economic terms and political terms and I would imagine a recovery in terms of a decade or two not ONE year then it absolutely does not surprise to see a recovery jobs is a recovery in temporary, part time or zero hour contracts.

I think you are right to be worried though because while I am not surprised at the type of employment and recovery we are having I think there was a crisis in employment and wages even before the recession happened. What I would suggest is much like the food banks is focusing anxiety and hysteria in specific terms rather than developing short termist perspectives over economic issues. You must look at things over years not months and sometimes decades not years.

Slight reinforcement. Did you know serious commentators on education will tell you the effects of changes in education policy are best measured a decade after they are introduced, and so it is with economics.

Again interesting here, i think you may be right in that i have too short sighted a scope overall, it's interesting (though highly probable thinking about it) to think their was already underlying issues which the recession has merely brought to light. Living roughly half my adult life thus far under the recession i think has somewhat coloured my perspective to be properly academic on this! (An interesting psychological paper could be written i'm sure on my generation and our economic outlook before, after and in the future).

Indeed if this is the case, have we actually fixed these underling issues with employment and wages? and indeed will they need fixing to avert such problems next time?

Here you are absolutely right. This is a concern and I have a significant question that I honestly don't know the answer to and this question or rather the answer would frame a great deal of my political thought.

What proportion of household debt is mounting due to consumerist avarice and the desire to live beyond our means and what proportion of household debt is mounting just for people to survive?

I don't think that is as easy to answer as you'd first assume when you hear that at least one of the people at the Food Banks was an investment banker in so much debt and using payday lenders to survive month to month. That damn caviar is so expensive! I know a lot of low paid workers with iPhones!

I recently resolved to buy a new smartphone cash or not at all when I worked out just how damn expensive they were by contract. My supposed £45 a month contract never comes in at less than £55. Recently I decided to forsake my upgrade, PAYG for now (all you can eat data on 3, still good) and sim only later when I decide. I will switch to android and enjoy a lovely S4 as and when I can afford to buy one outright or not at all.

Just two examples of the question not being so clear cut.

It's rather the potential for the Golden Age of Narcissism (as some academics are calling our consumer driven, me, me, me, must have culture) vs actual recession impact then? I think cynically as you point out it may somewhat be people just arn't used to living at their current level of means. They've either always been able to credit card a lifestyle away, or indeed where used to better pay before and didn't adapt.

I think actually if we look at the recessions issues from a cultural/ social perspective, quite a scary picture may emerge as to what people's values and 'needs' are now when compared to say 30 or 50 years ago.

I'd question this as well. Apparently austerity is working in Greece. I heard a large investor talking of how Greece is turning the corner. Lets not get into the Eurozone though lol.

That's something i wouldn't have thought i'd been hearing for at least another couple of years! And indeed the Eurozone, is quite frankly a mess at the moment. With France spinning the drain, it's not looking great to be a full member.

You know honestly I think the other thread was much better than this one in terms of focusing on this crisis (unless you are intentionally switching focus to this one) because these are long term problems with long term solutions. As much as I dislike Thorn (it turns out implicating you bought your wife won't endear you to anyone) he is correct in some very small ways. The roots of the crisis are structural and not in some minor benefit changes, we need to transport the focus back to the 70's and the creation of consumer credit vehicles and depression of real wages in favour of stockmarkets and profits. The selling of every new and future generations into debt slavery to finance our social visions. Fiat currency and the effect this has (check out "the short unhappy lives of fiat currencies" on youtube) and long term effects of inflationary effects from a variety of sources even the imbalancing of the economy that happened under Labour towards state controlled and financed factors. The mass expansion of local government (usually the worst and most inefficient unfortunately) and more than doubling of the government payroll. There are huge glaring problems that span decades, lets not assume the last two years have been so super important.

Indeed for detail wise your quite right Denny, but with this thread (and i didn't wish to contaminate the other one/ drive it off topic) i'm hoping to get some viewpoints on the German economy too and just how this may affect things, and indeed why the hell the UK is set to be number one in Europe again after so many decades of lagging behind everyone really.

Haha indeed Thorns posts have a way about them. I totally agree that the UK needs a switch in direction, though again i wouldn't say the 70's was the best time or method either. It in all honesty seems to me if we run our economy back (looking at the bigger picture), we've been on a downward spiral since the end of the Second World War in a way. The UK economy has never really stabilized or found direction after the collapse of Empire (an interesting argument that could be made), we've yet still to actually find a stable niche. Finance as we both know, and being heavily reliant on said finance tends to be a ticking time bomb (As Thorn quite rightly has pointed out), yet we struggle for other serious options.

Will have a look at the fiat currency.

It's interesting you'd mention about local government, as i always thought greater decentralization allows for better and more even economic prosperity, as then regions can build micro-economies that suit them, thus improving local areas and allowing for sustainable greater growth. It's slower i grant you, but i think more of a benefit surely? As well as being far more rugged than an eggs all in one basket approach?

Does anyone know where this CEBR report comes from out of the blue? I may just be a butthurt German but it sounds pretty weird.

I particularly don't get the reasoning that germany's downfall is partially due to the Euro when the base claim is that the current 65:80 population ratio is simply reversed. Yes, if the population development is that I would expect the UK to have the bigger economy by pretty much that projected factor...

As far as i can tell, its just part of their future league-table predictions that they do every few years my friend, so please don't worry you don't sound like that at all! We're all rather skeptical. For instance, it seems they've also predicted that actually China will overtake the US far later than most seem to think it actually will:

According to the think tank, the Centre for Economic and Business Research (CEBR), the UK will be in a position to overtake Germany as Europe's largest economy.The CEBR predicts that Germany will lose its current top spot in Europe by 2030.
It cited the UK's population growth as an aid to economic acceleration.
The report echoes the recent confidence of other business groups such as the British Chambers of Commerce (BCC).
Earlier this month the BCC said the UK economy will surpass its pre-recession peak in 2014.
In its annual World Economic League Table, where it ranks the ups and downs of global economies, and forecasts their future position, the CEBR said in addition that China will overtake the US in 2028, which is later than some analysts have suggested.

http://rjrnewsonline.com/business/uk...ays-think-tank

To be honest, there are so many variables it seems unlikely to be able to be a definitive by any means. About the only thing they have pointed out that is right, is the UK is going through a population boom, and this is predicted to help a lot. Immigration is key for our economy really. But they seem to not take into account that Germany for instance might also make itself an attractive option to immigrants too, thus helping out with the population issues.

I would ask for your opinion to all this really? I mean is Germany actually experiencing any troubles? I'm aware France is currently in rather dire straits (It's what happens when you go full retard with anti-immigration stance, while also trying to tax your main economic sectors to the hilt, combined with said brain drain from this issue), But i can't really see Germany losing ground in such a way.

[Mangalore]

...

As far as i can tell, its just part of their future league-table predictions that they do every few years my friend, so please don't worry you don't sound like that at all! We're all rather skeptical. For instance, it seems they've also predicted that actually China will overtake the US far later than most seem to think it actually will:

http://rjrnewsonline.com/business/uk...ays-think-tank

To be honest, there are so many variables it seems unlikely to be able to be a definitive by any means. About the only thing they have pointed out that is right, is the UK is going through a population boom, and this is predicted to help a lot. Immigration is key for our economy really. But they seem to not take into account that Germany for instance might also make itself an attractive option to immigrants too, thus helping out with the population issues.

I would ask for your opinion to all this really? I mean is Germany actually experiencing any troubles? I'm aware France is currently in rather dire straits (It's what happens when you go full retard with anti-immigration stance, while also trying to tax your main economic sectors to the hilt, combined with said brain drain from this issue), But i can't really see Germany losing ground in such a way.

Germany is currently full of good news, not sure how much of that got to do with us having a new government now though. Ifo index is very high, 2014 is expected to be a good year, assuming even a chance of the Eurozone getting out of its troubles though with the greatest risks being that some Euro country gets into trouble again.

http://www.bundesbank.de/Redaktion/E...ublicationFile

German consumption is overall also on the rise, not sure if for any policy reason or simply because interest rates are down and after a decade of self imposed austerity Germans simply need to buy more stuff.


I couldn't find any long term projections about germany from German sources, but this study expects a population decrease of 2.5% until 2030 and another study assumed a shrinkage of 1.4 million people concerning the labour market.
http://www.fulbright.de/fileadmin/fi..._Fulbright.pdf


I do think Uk's advantage in immigration is the anglophone sphere which means more migration over a wider range of countries, however it seems that overall mobility in the western world is up but in reverse it is not necessarily a one time decision aka people move to other countries for the experience but just as easily move home or elsewhere if the situation changes. It's not to the same extent a lifetime decision anymore.

[Basil II the B.S]

http://rjrnewsonline.com/business/uk...ays-think-tank

To be honest, there are so many variables it seems unlikely to be able to be a definitive by any means. About the only thing they have pointed out that is right, is the UK is going through a population boom, and this is predicted to help a lot. Immigration is key for our economy really. But they seem to not take into account that Germany for instance might also make itself an attractive option to immigrants too, thus helping out with the population issues.

Thing is, more people=economic growth is honestly poop economics, which seems to be the premise of the entire study. This might be somewhat true for third world countries, but the first world is a lot more complicated. Immigrants unemployment is notoriously much higher than the average, especially if they are from outside Europe (with very few exceptions) and they are poor, meaning that in countries with a developed welfare state, they are more likely to be an economic burden rather than a source of strength.

Hans Werner Sinn is probably the best German economist out there and has often pointed this out:

If immigrants gain welfare benefits in addition to wages, more will be lured into coming than necessary, and marginal migrants would create welfare losses for the EU equal to the benefits. Given that immigrants usually enter countries that redistribute resources from above-average to below-average incomes, such benefits are likely even if immigrants work and pay taxes and social security contributions. Excluding taxes and contributions paid and transfers and public goods received, the Ifo Institute reckons that the average immigrant to Germany receives a net 2,300 euros annually.

http://www.project-syndicate.org/com...not-immigrants

Given that the premise is so banally flawed I'm honestly wondering what's the true purpose of releasing reports like this. It's deceiving and unhealthy.

He also points out that there's immigrant and immigrant. The one everyone wants is the young, educated (especially if university degree) and single, who becomes immediately a net contributor to the welfare state and helps lowering the average age of the country. Then you have the unskilled, married with children one, who instantly becomes a burden for welfare and then brings his entire family to join the party. Indeed reality is a lot more complex than how it is presented by the CEBR report.
We also live in times of austerity, thus more immigration can end up resulting in more unnecessary pressure on the welfare state, leading to its eventual collapse (I'm pretty sure Hekko mentioned something similar in one of these threads). Taking this in consideration, the CEBR forecast seems hazardous to the very least, as things can easily turn into the complete opposite direction.

[Dante Von Hespburg]

Germany is currently full of good news, not sure how much of that got to do with us having a new government now though. Ifo index is very high, 2014 is expected to be a good year, assuming even a chance of the Eurozone getting out of its troubles though with the greatest risks being that some Euro country gets into trouble again.

http://www.bundesbank.de/Redaktion/E...ublicationFile

German consumption is overall also on the rise, not sure if for any policy reason or simply because interest rates are down and after a decade of self imposed austerity Germans simply need to buy more stuff.


I couldn't find any long term projections about germany from German sources, but this study expects a population decrease of 2.5% until 2030 and another study assumed a shrinkage of 1.4 million people concerning the labour market.
http://www.fulbright.de/fileadmin/fi..._Fulbright.pdf

Some very interesting stuff here, thank you Manglore. Something you've highlighted here seems to be a running trend among most economic reports and predictions i've seen, indeed i believe a few of the articles in the OP went into this. That if Germany wasn't in the Eurozone, it would be doing even better than it is now, and indeed the question or possibility of it losing the top spot would be absurd. So is there any feeling in German politics that maybe the Eurozone should be ditched? All I've managed to find are countless articles extolling the good points, but not going into say polling results for the real picture of what people think.

Don't get me wrong here either, i'm not against the EU by any means, indeed i'm rather of the idea the UK should go full in, as the three biggest economies in Europe (assuming France recovers from it's floundering) working together under one guideline would be beneficial to everyone, plus our political clout in EU matters is lessened by having all our special opt-outs (Though arguably in a way this shows the UK could potentially be a better player in the EU in managing to achieve said special treatment). The drumming up of the BNP and UKIP (Both parties quite dead now) of leaving the EU constantly filled me with despair as it seemed like economic and political suicide.

I do think Uk's advantage in immigration is the anglophone sphere which means more migration over a wider range of countries, however it seems that overall mobility in the western world is up but in reverse it is not necessarily a one time decision aka people move to other countries for the experience but just as easily move home or elsewhere if the situation changes. It's not to the same extent a lifetime decision anymore.

I think this a very good point, I read an article a while back which put forward the exact same thing, increasingly globalisation has made it very easy for people to travel a lot. A fantastic thing in my view. Living a number of years in one place, and then moving onto the next, which means again i question the reports viability, and would like to try and find a lot more about the how and why they work these things out. I mean admittedly yes currently Germany is as you say going to face a decrease until 2030 potentially, and indeed most immigration to the UK tends to be in the long-term sphere, though i think we've actually just gone and rather shot ourselves in the foot with this:

http://www.bbc.co.uk/news/uk-politics-17204297

Migrant workers will need to earn at least £35,000 to qualify for settlement in the UK, says the Home Office.Home Secretary Theresa May said the change - from April 2016 - would help cut the number of non-Europeans and their dependants granted settlement each year from 60,000 to 20,000.
The pay threshold will apply to people wanting to remain permanently after more than five years working in the UK.

So roughly then from 2016 if this gets through Parliament, five years will be the maximum time someone could stay earning under this amount...which is frankly rather ridiculous as most UK citizens don't earn such numbers!

Currently though if you stay here for five years, you automatically can apply to stay permanently, which i think may be one of the biggest reasons (coupled with the anglo-sphere) that the UK looks so attractive to immigrants.

Saying all this though, what i don't understand is the report seems to not take into account that Germany could quite easily open itself up to mass immigration, or indeed go through an immigrant boom which off-sets any ageing population disadvantage. To me it seems a shabby premise to be honest to base a list of economies on.

Thing is, more people=economic growth is honestly poop economics, which seems to be the premise of the entire study. This might be somewhat true for third world countries, but the first world is a lot more complicated. Immigrants unemployment is notoriously much higher than the average, especially if they are from outside Europe (with very few exceptions) and they are poor, meaning that in countries with a developed welfare state, they are more likely to be an economic burden rather than a source of strength.

Hans Werner Sinn is probably the best German economist out there and has often pointed this out:


http://www.project-syndicate.org/commentary/block-benefits--not-immigrants

I agree with most of what your saying my friend, though i would point out some of the posts i've just made in the Islamaphobic thread, i'll post it in here for continuity!

Migrants coming to the UK since the year 2000 have been less likely to receive benefits or use social housing than people already living in the country, according to a study that argues the new arrivals have made a net contribution of £25bn to public finances.People from European Economic Area countries have been the most likely to make a positive contribution, paying about 34% more in taxes than they received in benefits over the 10 years from 2001 to 2011, according to the findings from University College London's migration research unit. Other immigrants paid about 2% more than they received.Recent immigrants were 45% less likely to receive state benefits or tax credits than people native to the UK and 3% less likely to live in social housing, says the report written by Professor Christian Dustmann and Dr Tommaso Frattini.
But going back further to 1995, the study found that non-EEA immigrants arriving between that year and 2011 had claimed more in benefits than they paid in taxes, mainly because they had more children than people already living in Britain.


http://www.theguardian.com/uk-news/2...seless-experts


Tory MPs are busyhailing what they regard as a late Christmas present: the news that the UK is forecast to become Europe's largest economy by 2030. According to the Centre for Economic and Business Research (CEBR), Britain will overtake France by 2018 and Germany within the next two decades, leaving it as the second biggest western economy after the US.The response from the Conservatives could be summarised as "See? We told you George knows what he's doing!" But here's one point they're conveniently avoiding: Britain won't win the growth race unless it maintains a high rate of immigration. As the CEBR states, "positive demographics with continuing immigration" is the main factor (along with non-membership of the euro) behind the UK's projected success. While Germany's population is forecast to decline sharply over the next few decades, the UK's is expected torise to 75 million by 2043, making it the biggest country in Europe.
That a significant part of this increase is expected to come through immigration helps explain why Britain will grow strongly. An OECD report last month, for instance, found that migrants make a net contribution of 1.02 per cent of GDP or £16.3bn, since they are younger and more economically active than the population in general. Far from being "benefit tourists", migrants contribute far more in taxes than they receive in welfare payments and public services. Of the 5.5 million people claiming working age benefits in February 2011, just 371,000 (6.4 per cent) were foreign nationals when they first arrived in the UK, meaning only 6.6 per cent of those born abroad receive benefits, compared to 16.6 per cent of UK nationals.


http://www.newstatesman.com/politics...sh-immigration



mmigrants who arrived after 1999 were 45% less likely to receive state benefits or tax credits than UK natives in the period 2000-2011, according to the report by Prof Christian Dustmann and Dr Tommaso Frattini from UCL's Centre for Research and Analysis of Migration.They were also 3% less likely to live in social housing.
"These differences are partly explainable by immigrants' more favourable age-gender composition. However, even when compared to natives with the same age, gender composition, and education, recent immigrants are still 21% less likely than natives to receive benefits," the authors say.


http://www.bbc.co.uk/news/uk-24813467


A pledge by Britain's government to slow immigration could make the economy 11 percent smaller by 2060 and taxpayers would have to fund higher public spending, a study by a leading research institute showed on Monday.




But a halving of net migration over the period to 2060 would have "strong negative effects" on the economy, said the new study, published by the independent National Institute of Economic and Social Research.
"The level of both GDP (gross domestic product) and GDP per person fall during the simulation period by 11.0 percent and 2.7 percent respectively," it said.
Furthermore, lower numbers of immigrants, who tend to be young, would add significantly to public spending, as a share of the economy, in order to care for a generally older population.
"To keep the government budget balanced, the labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario," the report said.

That meant net wages would be 3.3 percent lower in 2060 than if immigration flows remain unchanged, it added.



http://uk.reuters.com/article/2013/1...9BM0AG20131223

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/9172b1f4-4...#ixzz2p0DcAybJ

The latest reports – one from the Centre for Research and Analysis of Migration at University College London, the other from the National Institute for Economic and Social Research – looked at two aspects of migration.
The first considered the net fiscal cost or benefit of relatively recent arrivals, in particular from European countries. The second examined the impact on worker productivity and the attitudes of employers and workers.
The UCL study concluded that between 1995 and 2011, immigrants from the European Economic Area contributed £8.8bn more than they received in benefits. That compared with a drain on the nation’s finances of £604.5bn by native Britons. More recent migrants contributed even more, the study found.
“Our analysis suggests that rather than being a drain on the UK’s fiscal system, immigrants arriving since the early 2000s have made substantial net contributions to [the UK’s] public finances, a reality that contrasts starkly with the view often maintained in public debate,” the report concludes.
“Between 2001 and 2011, recent EEA immigrants contributed to the fiscal system 34 per cent more than they took out, with a net fiscal contribution of about £22.1bn,” the study said. Migrants from non-EEA countries made a more modest but still positive contribution, putting in roughly 2 per cent more than they took out.
But over the same period, native Britons paid much less into the system than they took out in benefits, contributing only 89 per cent of what they cost. Even when the data are adjusted to take account of differences with the native population in gender mix, age and educational attainment, recent immigrants are still 21 per cent less likely than natives to be receiving benefits.




http://www.ft.com/cms/s/0/9172b1f4-4...#axzz2p0D0mUeG

Finally from a very conclusive report by the centre for economic performance:


Immigrants are younger and better educated than their UK-born counterparts, on average (Table 2). The most recent immigrants are better educated still. Around 10% of all migrants
are in full-time education. Immigrants are over-represented in the very high-skilled and very
low-skilled occupations.

 Immigrants are arriving from many more countries than in the past. Poland, India and China
are currently the countries that contribute the biggest proportion of new arrivals (Table 1).

 Immigrants, on average, are less likely to be in social housing than people born in the UK,
even when the immigrant is from a developing country. Only immigrants who became UK
citizens are neither more nor less likely to be in social housing than UK-born individuals.

 There are potential economic benefits associated with migration, especially to fill gaps in the
UK labour market – where there are shortages of workers, whether high- or low-skilled.
While there may be costs to particular groups, there is little evidence of an overall negative
impact on jobs or wages.


http://cep.lse.ac.uk/pubs/download/pa014.pdf

Immigration is clearly beneficial to the UK short, mid and long term my friend. But indeed this could just be for the UK as i can't really say with any authority what would suit say Germany. I also hear you about Immigrants outside the EU, though as you can see, for the UK at least, even these have made a positive contribution (a 3% difference i believe it was) over what they take out. This also combined with the complete gutting of our benefits system, has had the effect of making that even worthwhile, admittedly in a very minor way.

But again i think in general your points are very valid, the UK currently just how a rather unique environment when considering this issue.

Given that the premise is so banally flawed I'm honestly wondering what's the true purpose of releasing reports like this. It's deceiving and unhealthy.


He also points out that there's immigrant and immigrant. The one everyone wants is the young, educated (especially if university degree) and single, who becomes immediately a net contributor to the welfare state and helps lowering the average age of the country. Then you have the unskilled, married with children one, who instantly becomes a burden for welfare and then brings his entire family to join the party. Indeed reality is a lot more complex than how it is presented by the CEBR report.

We also live in times of austerity, thus more immigration can end up resulting in more unnecessary pressure on the welfare state, leading to its eventual collapse (I'm pretty sure Hekko mentioned something similar in one of these threads). Taking this in consideration, the CEBR forecast seems hazardous to the very least, as things can easily turn into the complete opposite direction.

Again i find i couldn't agree more. I fear actually that such reports could indeed have a negative effect, not only in terms of potentially lulling politicians into a false sense of security, or panic. But also in terms of investment. These reports misplace confidence in areas where in reality it may not be that viable, and indeed may also have an effect of putting off investors just because possibly long-term (which may not even happen!) said economic zone will run into difficulties somehow. It's ridiculous, so i'd like to try and find out a lot more about how they work this out in terms of projection, especially when currently they can't even get 2 year one right!

Indeed also their are just so many variables to their seemingly current premise. What if the UK goes full Tory and implements the same destructive anti-immigration policies which France is currently in support of? What if we leave the EU in the upcoming referendum? Both of these would surely then throw off the entire premise of the report. Or indeed what Germany to combat a 2.5% ( i believe that was it) decrease in their population go on a recruiting drive? Or indeed as most demographics seem to predict once the baby boomers are gone, we'll have a population that actually levels out again! Thus it means the issue of an ageing population is literally potentially a temporary one.

It does indeed seem very strange to run reports on something so distant. I do worry how a credible economic organisation could actually do this in a serious manner.