DaveO wrote:You don't half write some rubbish at times ...

Dally wrote:Says the man who puts 3 full stops at the end of a sentence.

Durham Giant wrote:Surely even you can recognise that pay freezes, masive job cuts, and reductions in spending by the Government is going to contribute to squeezed real incomes

DaveO wrote:You don't half write some rubbish at times. When a government stops spending it has a huge effect on the economy. Period.

It was only last week it was on the radio that we were in fact likely to avoid a double dip recession because the panic buying of fuel induced by the government had increased economic activity sufficiently to keep the growth figure positive!

I thought then I couldn't believe my ears that they needed this "false" demand in the economy to keep things positive and would no doubt be singing the news from the hills that they had avoided the double dip as a result. As the BBC article points out the extra fuel buying is not in these figures so if they were relying on this false demand in the domestic economy to keep things positive it stands to reason it there wasn't enough demand in the domestic economy without it to avoid a recession. Why is domestic economic activity so weak that it needs panic fuel buying to keep it out of recession? Because things like the construction industry are in recession (as the figures show) and they rely heavily on government contracts.

Demand will weaken further as government policy on benefit cuts come in to force this month and with more job cuts to come.

The idea public spending cuts have not contributed to these figures in a big was is ridiculous.

Dally wrote:Why does it show the Coalition got it wrong by cutting spending too quickly? It simply doesn't. It shows we may be in recession, but that's more likely as a result of debt, sqeezed real incomes, the Eurozone, etc, etc and probably little to do with public spending cuts.

Dally wrote:They may have contributed but they are not the principal reason.

People have become fixated with public spending being an economic driver. It is not. It is something that can only be done out of the wealth created from other economic activities. It can have a place in simulating construction, etc - but the government are chucking loads of money at building acadamies, etc, etc. Also, through the BoE's QE huge amounts of extra money have been put into the economy.

The real problem, as I said, is more fundamental - debt, falling real incomes, EZ, etc. Until personal debt and fear as to incomes are reduced the problems will persist (with short-term ups and downs along the way). As predicted in 2008 it would take 10 years to sort out and still believe it will (but now I would suggest that is the best outcome). As a country we need to get used to falling living standards due to competition rom the developing world. People talk about British companies not investing - the top UK listed companies do invest but not much in the UK - because returns are smaller here than on a factory in a deveolping country.