Upto half a million people on ESA will completely lose their benefit starting from this Monday (30th April). They will literally have no money to spend on anything, essentials or otherwise. Your ignorance astounds me sometimes

The government are spending sod all on new academies etc
Why do you think consumer purchasing power or confidence has fallen? It's got sod all to do with personal debt, it's got to do with inflation and real income decreases. These have happened because of excessive public spending cuts which have led to higher unemployment & lower wages ontop of higher VAT (which is just crazy). As I said its a vicious circle. Lower spending power leads to lower consumption leads to lower production leads to higher inflation & unemployment/lower wages leads to lower spending power.
The government have done nothing to alleviate that situation. Lower public spending, especially on infrastructure (the construction industry is in tatters), & higher non-progressive taxes only reduce consumer spending & confidence.
The BoE's QE isn't really working yet and won't work fully until confidence increases and businesses feel confident enough to invest. Then they can take advantage of the cheaper money that QE provides.

Gideon's wondering what all the fuss is about, he quite likes double-dip

"Austerity policies are driving us towards a double-dip recession" and "politics is at the root of the problem". Krugman and Stiglitz. Economics Nobel prize winners.

What was predicted by Ed Balls was that the shallow economic recovery that was under way two years ago when he took office could not stand the level of austerity policies added to the tax increases the government has made. He has been saying this ever since he got the shadow chancellors job and it looks like he was right and he has some of the worlds most respected economists on his side. Even before today bodies like the IMF have also stepped away from austerity policies as the solution and now we know why.

However the real reason why you are wrong is that you clearly have no idea of how big the public sector is relative to our economy. It is currently over 45% of out GDP figure. Anyone who suggesting you can make big cuts to that and not affect the economy in a big way is nuts.

Some will say that is too high a percentage but that is not the debate here. You can't hack huge chunks off public spending and not expect a recession when the private sector hasn't taken up the difference when there was next to no growth in the first place.

rlGraph showing UK growth since The Comprehensive Spending Reviewrl

The language of recession is entirely semantic. Richard Nixon changed the definition to mean two successive quarters of contraction purely so he could say that America wasn't in one when it actually was. It would have been worth the hit to next the quarters figures if this one was showing growth from a purely academic and semantic standpoint only.
The key figure in all this is not whether we are technically back in recession or not, but this: the economy has grown by 0.4% since Gideon took office.

And anyway, the theory of perpetual growth is a nonsense. Maybe the UK economy is as big as it's ever going to get. How we might deal with that prospect is perhaps more interesting.

If the banks are willing to lend it

A very salient question. In terms of this government, it quite clearly couldn't give a damn – and the austerity cobblers is just a convenient smokescreen to help it shuffle more money into the pockets of its already-rich friends.

Things don't change overnight. There is inevitably a hard period of readjustment. But, the fundamental issues need addressing. The problem IS the size of the public sector as it eats resources that could be deployed more profitably. That's what rebalancing is about - cutting the public sector, shrinking the banking sector and allowing new indutries to develop and flourish. With such a large public sector and so relatively well paid there is no economic rationale for people to be entreprenerial and take risks. When by being a middle manager in a Local Authority you can become a millionaire (which is clearly the case with pension assets) why on earth would anyone take risks to set up a business or even work in the private sector as an employee? That is a very real issue which has been causing stagnation in the economy and has to be addressed before we turn into Greece. You can see from there just how sustainable a public sector based "economy" is. The only way a large public sector could work long-terms is by exporting its services to citizens of other countries in return for fees.

I thought we were drifting north-west, in general? But even if plate tectonics were reversed, surely the Alps would stop us ever turning into Greece?

If you are claiming Contributory ESA and are placed in the Work Related Activity Group and your household income is above the threshold of £7,500 your ESA ceases after 365 days. Your "household" is expected to support you. Given that I still have presctiptions to pay for, full mortgage, council tax, petrol to get to hospital appointments, all of which I contribute to, it does affect things. No more will we be able to buy anthing other than the absolute essentials to live. I'm not saying right now we will go straight into poverty but the household income will now be fully spent on the above I have mentioned,just to live, with nothing left, not even to go to rugby anymore With half a million ESA claimants not receiving their ESA benefit, 1000,s being made redundant ie caravan industry in Hull, more public sector cuts coming, and don't forget the pasty tax this surely must affect spending?

Can I be the first to shout BINGO!

Just walked past a TV set to get me coffee and there is Panface struggling hard in the Commons shouting at the top of his voice "Its what we inherited!"

I'll have a prize from the middle row please.

That is as I said a different debate as to whether or not cutting back spending on the public sector is a major factor in driving the economy into recession at this point in time. Given it is so large a part of the economy and given the private sector has not filled the gap it is so blindingly obvious that the cuts driven as much by ideology as economics (which is what those economists I quoted meant about politics being the problem) are a major factor.

Just admit you are wrong on that.

You will also have to explain how money currently spent on the public sector can be deployed more profitably. By doing what exactly? Cutting public spending and giving companies a tax break? Well that clearly isn't working (and it is what Osborne's one strategy for growth is).

The Tory philosophy of cut taxes for the wealthy and for companies funded by public sector spending cuts and this will all trickle down and magically rebalance the economy just won't work. However that won't stop Osborne sitting on his hands waiting for the miracle to happen.



What? First of all there is no evidence of rebalancing going on and in any case the rebalancing we need to less reliance on banking and the city not just a switch from public to private. I suppose you will be telling me next the privatisation of the health service is rebalancing the economy? And where does this millionaire local authority middle management thing come from? The Daily Mail?



The public sector has grown since the 60's (as opposed to since 1997 as the Tories would have you believe) to be the percentage of GDP that it is. It isn't much different in that respect in the USA, that bastion of "small government". You have to ask why that is and in my view it is not what we do in the public sector but what it [icosts[/i to do it. I also believe that costs have gone up the more private industry has become involved. Many of our services are now decentralised, open to competition (buses and refuse collection for example) and while I don't have any figures to back it up I just do not believe we get these services cheaper as a result. I know from the work my wife has to do at he school she works at regarding what gets spent on suppliers of things like refuse collection the outgoings of a council to private companies are huge. If you want a fundamental rethink then I reckon we need to change the record of privatising everything that moves and thinking competition will drive costs down.

1. To reduce the debate to the fact we are apparently in recession today is silly. As I said, we have major problems which will take years to, hopefully, resolve. The fact is there will be ups and downs in headline figures along the way.

2. Resources will be reallocated into profitable areas if the public sector shrinks, just as they were after Thatcher's era. It just takes time. Is China more propserous now than during the days of Mao?

3. If a public sector manager gets a pension of say £50,000 pa that would be equivalent to saving a capital sum of ca. £1,000,000 (or £25,000 pa for 40 years - how many people can do that in the rest of the economy)?

4. Just like you, I have no idea whether outsourcing has been cost-effective or not. If it has not been then there has been mismanagement. It probably has been because even if it cost 10% more to collect the bins than the Council doing it through its employees the back offf savings in payroll, personnel management, training, pensions, holidays, etc would be saved.