Is 2008 a crisis year?

[deniser]

I am now feeling the effect of the credit crunch in different ways. Last week we were contacted by one of our long standing suppliers in Denmark saying that they no longer trusted their UK accounts because of the economic conditions in the UK and they wouldn't supply us unless we paid for our goods in advance!

This is unheard of in our business where 30-90 day payment terms are the norm. They have ignored the fact that we have always paid them on time, because of general concerns about the UK economy. I am quite shocked by this (incidentally we have never had cashflow difficulties and always pay our bills on time so should have a impeccable credit history so that shouldn't account for this).

Things like this are going to make trading conditions worse.

 

[Cornish Steve]

Is the Danish supplier adopting this policy for British firms only? If so, it doesn't say a lot about our country's reputation, does it? Given how bureaucratic is the EU, I would have thought this was contravening some rule or other.

 

[quikshop]

Is the Danish supplier adopting this policy for British firms only? If so, it doesn't say a lot about our country's reputation, does it? Given how bureaucratic is the EU, I would have thought this was contravening some rule or other.

It will soon be illegal to make any decisions about your own business without first getting it signed off and approved in triplicate by the Emperor of Europe and his minions

I suspect your Danish supplier has been stung by some others they supply to so and are adopting a far more conservative approach to their clients.

If its a pre-emptive action then it might be worth questioning how much they value your business, or are there other suppliers you could use?

 

[cjd]

Lots of crap financial news today -

Taylor Wimpey and Barrat in trouble - lost between 80-90% of their share value. Taylor Wimpey failed to raise £500m re-financing and now looks unlikley to survive - 900 redundancies and FD gets the boot.

Starbucks anounces 12,000 job losses as it closes 600 stores

Marks & Spencer like-for-like sales down 5%

Batten down the hatches and keep hold of your cash - expect job losses to increase.

 

[deniser]

Is the Danish supplier adopting this policy for British firms only? If so, it doesn't say a lot about our country's reputation, does it? Given how bureaucratic is the EU, I would have thought this was contravening some rule or other.

Yes British companies only as they have heard bad things about our economy.

 

[deniser]

It will soon be illegal to make any decisions about your own business without first getting it signed off and approved in triplicate by the Emperor of Europe and his minions

I suspect your Danish supplier has been stung by some others they supply to so and are adopting a far more conservative approach to their clients.

If its a pre-emptive action then it might be worth questioning how much they value your business, or are there other suppliers you could use?

Yes I have gone back to them to tell them that I will have to sever a very good business relationship unless they reconsider. I am still waiting for a reply......

 

[deniser]

Lots of crap financial news today -

Taylor Wimpey and Barrat in trouble - lost between 80-90% of their share value. Taylor Wimpey failed to raise £500m re-financing and now looks unlikley to survive - 900 redundancies and FD gets the boot.

Starbucks anounces 12,000 job losses as it closes 600 stores

Marks & Spencer like-for-like sales down 5%

Batten down the hatches and keep hold of your cash - expect job losses to increase.

There are some success stories too notably ASOS whose sales are up 90%

 

[Cornish Steve]

There are some success stories too notably ASOS whose sales are up 90%

It depends what we're looking out for.

In the US, all I heard yesterday is how Ford and GM are in dire straits and how the price of oil continues to rise. There has been hardly a mention that the economy's growth is beginning to pick up and that the sale of new homes actually increased. Both were small numbers, and one month does not make a trend, but surely that's good news.

 

[cjd]

It's long term patterns that matter, of course. This is US GDP.

We haven't begun to hit bottom yet I'm afraid and when we do it will be 6 months before we know and 2-5 years before we'll be back anywhere where we where.

 

[Cornish Steve]

Yet, despite all the doom and gloom we hear, the US economy continues to grow and is beginning to pick up. There is no recession, just a downturn. As I understand it, the same is true of the British economy - it continues to grow. The most likely reason why the economy might contract is because of awful consumer confidence, for which we can largely blame high-profile commentators and the media.

 

[quikshop]

There is no recession, just a downturn.

Excellent, if reality doesn't work for you then a complete and utter denial of the facts will see us all through

Sorry Steve but I think you're reading too much into Government stated figures if you think that your country is not already well into a recession.

You can't possibly believe that a contracting housing market coupled with slowing consumer activity, a contracting manufacturing sector and constracting service industry = growth.

I think you've been listening to the Republicans a bit too much

 

[cjd]

Excellent, if reality doesn't work for you then a complete and utter denial of the facts will see us all through

 

[Cornish Steve]

Excellent, if reality doesn't work for you then a complete and utter denial of the facts will see us all through

Sorry Steve but I think you're reading too much into Government stated figures if you think that your country is not already well into a recession.

Let's just stick to the facts. As we've discussed before, a recession is defined as two consecutive quarters of negative growth. We have yet to experience even one quarter of negative growth, so there's no recession. Sure, certain sectors are struggling, but that's always the case. The economy as a whole, though, continues to grow. Indeed, the amount of growth is beginning to climb again if the most recent month's numbers can be believed. Any questions?

I have no political agenda. I can't vote in any country (a travesty, by the way, that our wonderful government disenfranchises citizens who live overseas). I don't watch TV. I have my own views - and can be much too opinionated.

But there's no opinion about recession. We are not in one and we're at least 6 months from knowing whether one is starting.

 

[cjd]

But there's no opinion about recession. We are not in one and we're at least 6 months from knowing whether one is starting.

You'd better hope we never get into a real recession - a few years of slowing growth is bad enough.

Here's some bullshit about how companies survived during the last recession.

Both the winners and losers of the last recession shopped for bargain assets, reduced costs and delayed or eliminated some spending. But while these are important and prudent tactics during a recession, these actions did not spell the difference between good and poor performance.

What does appear to be a driver is openness to innovative perspectives on existing knowledge, tools and relationships. Our research and analysis shows that winning companies took some actions not taken by others. These decisive actions strengthened a company’s strategic position. These high performing organizations:

• Set priorities based on detailed knowledge of how the company creates value. Companies did not just cut costs—they cut the right costs. They diverted resources to activities that actually created value. How did these companies make the right calls?
  
  Unlike most executives, the leaders and everyone else in their companies knew explicitly how their companies made money.² They knew how their products and services stacked up against those of the competition, why customers preferred doing business with them and exactly what they had to do to turn a profit. This kind of knowledge at all levels meant that recommendations and decisions about budgets were made with a clear understanding about the potential impact.
• Leveraged unique information systems. The high performing companies invested in information systems, such as computer-based modeling, designed to give them the ability to manage and gain insight about their key value drivers. More importantly, they used the output. The poorly performing companies did not have the same responsive systems.
• Collaborated with customers to improve value propositions. The winners of the last recession reached out to customers to better understand their challenges. Gathering this information allowed the companies to create new products and services that were uniquely suited to the pressures customers were facing during the downturn.
• Priced for profitability. Winners worked themselves into an advantaged cost position during good times, and then used their pricing flexibility to pick up market share in a downturn.
  
  However, in the downturn, winning companies walked away from bad business and losers did not. The companies that performed poorly accepted unprofitable sales in an attempt to hold onto market share.

The Accenture research shows that savvy executives changed their companies' competitive position and created value by managing the last recession effectively. Their actions gained market share, forged new customer relations, strengthened product and service positions, and helped build a platform for profitable growth into the expansion that followed.
In fact, we found that companies with the highest return on invested capital for the three-year period following the recession tended to maintain their lead despite other factors in the market. This correlation shows that companies that pull away from the competition during a downturn have lasting advantages, not just a fragile edge (see Figure 1).​

Companies that are not well positioned in the current uncertain economy can still turn the downturn to their advantage by receiving unvarnished answers to vital questions. Executives have a chance to learn what is important to customers, what is essential for delivering value and what actually distinguishes their company from the competition.
Companies can, of course, ask these questions at any time, but the pressure of a difficult economic environment puts a much finer point on the responses. Organizations that seek and apply these answers may well be in a better position to take advantage of the next inflection point

http://www.accenture.com/Global/Research_and_Insights/Outlook/By_Alphabet/WhatRight.htm

 

[quikshop]

Let's just stick to the facts.

And therein lies the problem. Everyone is playing an angle, those that publish official figures included. Why do you think the official rate of inflation in the UK (as an example) is around 3% when the actual rate is closer to double that?

If you believe in the absolute truth of official economic figures then you should believe there is no recession. I suggest that the reality is quite different.

 

[Cornish Steve]

And therein lies the problem. Everyone is playing an angle, those that publish official figures included. Why do you think the official rate of inflation in the UK (as an example) is around 3% when the actual rate is closer to double that?

If you believe in the absolute truth of official economic figures then you should believe there is no recession. I suggest that the reality is quite different.

I take your point, Dave, but which set of numbers is the most credible? Generally, it's numbers from credible bodies, often linked to the government but not officially part of or answerable to the government. This is why most successful countries, for example, ensure the independence of their national banks.

The numbers I quote come from such sources. Of course, we can question them, but I believe they are the most credible.

 

[telemax]

I'm with Steve on this one, yes the inflation figures are undereported but in reality they are a large basket of goods, with a few items rising very rapidly, unfortunately these few items are the most important things to us ie staple foods and fuel.

However the system of measuring inflation served us perfectly well for the last 15 years, in fairness to the government it's only very recently this system of measuring inflation has lost accuracy, due to commodity rises that no one could have predicted.

However the economic growth figures are much harder to "bullshit", I am old enough to remember the last downturn (early 90's), they were certainly telling the truth about the economy then, I'm sure if the economy actually contracts we will all get to know about it in the same way

 

[Cornish Steve]

Actually, the UK economy continues to grow: 2.3% annual growth based on the most recent data. As you can see, things were worse about three years ago.

​

 

[quikshop]

As you can see, things were worse about three years ago.

You have very little understanding of economics if you genuinely believe that the UK economy is better off now than 3 years ago.

For the last 7 years 'growth' has been artificially inflated by a boom in land and property prices, increasing equity and therefore disposable income thus driving the economy forward.

The same has happened on your side of the water and quoting official growth figures is paramount to stating UK inflation at 3%... its meaningless and simply one very selective measure of one part of the economy, not the economy as a whole.

The last thing the Governments on either side of the water want is to drive all confidence out of the financial system, and so selective figures are published.

You can either be a realist and take necessary actions to manage how the realities of the economy affect you and your business, or produce selective data and rely whatever you can derive out of that.

 

[Cornish Steve]

You have very little understanding of economics if you genuinely believe that the UK economy is better off now than 3 years ago.

For the last 7 years 'growth' has been artificially inflated by a boom in land and property prices, increasing equity and therefore disposable income thus driving the economy forward....You can either be a realist and take necessary actions to manage how the realities of the economy affect you and your business, or produce selective data and rely whatever you can derive out of that.

I fail to understand your logic. You dismiss official and accepted and reasonably independent numbers as meaningless. You imply that the economists and professionals who produce these numbers have little understanding of economics. You claim that things are actually much worse, but you base this claim on how people "feel" about the situation - which is largely influenced by what we read in the media.

Unless you can produce objective data to support your claims, I can only conclude that you have an axe to grind. Economics is like science: It's based on cold, hard facts. All that's open to us is the interpretation of those facts. You appear to want to ignore them, and I don't understand why.

 

[quikshop]

No, I am trying to make the point that these cold hard facts that you refer to are simply a perspective of a particular measure, they are not definitive and those that produce the figures, whether it be a financial institution or Government agency all have a vested interest in portraying the figures in a certain light.

I am definitely not saying that those who produce the figures do not know what they are doing, quite the opposite.

Thats it, its based on my experience of the UK financial markets and those of my friends who work in the City. Its also based on what I see in front of me, grossly misleading economic indicators such as the rate of inflation, jobless claimants (which is very different to the number of people out of work), banks reclassifying debt in order to avoid owning up to the real impact of the sub-prime losses, etc.

And don't get me started on food and oil prices, that's completely at the bequest of the US Government and we could be here all night ranting about that... well I'd be ranting anyway

 

[Cornish Steve]

these cold hard facts that you refer to are simply a perspective of a particular measure, they are not definitive and those that produce the figures, whether it be a financial institution or Government agency all have a vested interest in portraying the figures in a certain light.

You're stealing my reputation from me. I'm the one who is forever suspicious of government, believes that government is the cause rather than the cure of most ills, and will challenge the establishment view.

On this occasion, though, I do believe that we have to put opinions aside and rely on the data. The measures we use today are accepted not only by government but by universities, accounting bodies, and many more professional bodies. No measure is perfect, but what we have is pretty good. There's not much room for government manipulation. Indeed, in this aspect of life, the government has little option but to accept bad news when it's published. Thank goodness for the independence of central banks and the like.

We have to ask ourselves why there is a substantial difference between the actual data (which still indicates growth) and the incredible doom and gloom in the media. In part, it's because bad news sells. Within the big picture, there will always be aspects of the economy that are not good. If it's not the decline of housing prices, it's inflation or interest rates or a widening balance of payments or a declining currency or declining exports or rising inflation. Right now, about the only bad areas in the economy are housing and energy - so guess what we hear about! Nothing, of course, about low inflation or reduced balance of payments or low unemployment and so on.

In the US, there's another reason. The media want their candidate elected in November, so it makes sense for them to focus on bad news. As someone once said, "it's the economy, stupid". In other words, if you can convince everyone that the economic situation is dire, the ruling party will be voted out.

So, yes, I do challenge what I see and hear - and particularly all the opinions and the commentary. The one thing you can't argue with, though, are the numbers - and the economy continues to grow.

 

[Matt1959]

I don't know how we got on the definition of a recession as the thread title is - is 2008 a crisis year. The answer to that for many private individuals and companies is YES! Not as much to do with media hype as is made out I think....

 

[Moneyman]

you dont have to be an economist to see something aint right out there and i would back the likes of M & S directors against our dear leader any day. Low unemployment? Easy "miracle" the government simply hired them. So government is not actually producing more but hiring more. This is inflation. They have done everything possible to boost inflation (chucking money about while borrowing more) and selling off the assets such as hospitals and renting new ones and calling that investment (?)but Luckily we have had cheaper and cheaper goods from overseas and cheaper labour which hid it all. But that seems to be stopping.

The thing that destroyed the soviet state was inflation. although prices never went up it took more and more resources both human and natural to produce goods as there was no benefit in efficiency.

The figures are all a bit dodgy because you get this "ooh i can borrow cash because i am allowed to under my own fiscal responsibility rule" and "it will be OK over the cycle (P.S. I get to choose the cycle)" Oh and i did change the way inflation was calculated so that we are different from every other country.
We are not in a recession yet but just chatting with other businesses and you can see that things are getting very tight. The electrical wholesalers down the road have seen 4 of their 16 clients go under in the last 6 weeks. that might be a bit extreme. If people aint buying houses they dont buy sofas, insurance, tablelamps, etc. and it all trickles down. I have been here before. call it what you like, things are not good and might get worse. hope for the best but prepare for the worst. Personally I dont think we are heading off a cliff but when the figures from companies are poor then i doubt the official figures if they are good.

 

[Cornish Steve]

The thing that destroyed the soviet state was inflation. although prices never went up it took more and more resources both human and natural to produce goods as there was no benefit in efficiency.

This is a good analogy. What with all the benefits and entitlements and minimum wage and minimum holidays and regulations and red tape and taxes on taxes on taxes on everything, the British economy is like an obese person climbing up a down escalator: It gets increasingly difficult to move ahead. Productivity is essential to a strong economy, and these overheads simply reduce productivity. Communist systems relied on central planning by interfering bureaucrats - which defines the British government quite well. The answer, of course, is to slash taxes, abolish as many regulations and entitlements as possible, and let the free market work its magic. Small businesses will thrive. Since they generate a big majority of new jobs, the economy as a whole will break out of its chains and flourish. When that happens, you just can't keep a good country down.

 

[cjd]

Actually, the UK economy continues to grow: 2.3% annual growth based on the most recent data. As you can see, things were worse about three years ago.

In the UK it was worse in 2005 - which is interesting as hardly anyone remembers that although at the time, many pundits were predicting house price falls.

The major difference though, was that the government was able to reduce interest rates repeatedly inorder to stimulate consumer spending and keep housing costs (mortgages repayments) affordable. At that time the UK government had some economic tools at its disposal because the problem looked domestic - house price inflation and consumer credit - rather than global.

For obvious reasons they are no longer able to do reduce interest rates - in fact they are forced to increase them in order to keep some sort of order in the banking sector.

On top of that the increase in energy prices has created inflation which, again, can't be countered by lowering interest rates.

It's beginning to look like the perfect storm and there is a very real danger of economic stagnation for a couple of years - at best. The economic concensus is moving towards a full blown recession; but it's still not anywhere near a certainty.

There is always a lag between a downturn and job losses as industry reajusts but we are beginning to see them - if we find unemployment rising sharply between now and Christmas - head for the bunkers.

 

[cjd]

So, yes, I do challenge what I see and hear - and particularly all the opinions and the commentary. The one thing you can't argue with, though, are the numbers - and the economy continues to grow.

For some reason you always need to be on the wrong side of an argument - I suspect contrariness as a habit, obstinacy and a sprinkling of sheer masochism.

It is impossible for anyone looking objectively at the numbers - from any source - to find good economic news. I have no idea why you find comfort in saying that the economy is still in growth - all that matters is relative growth. Growth is falling.

In practise there will be sod all difference to anyone here whether growth is 0.3% for 2 consecutive quarters ( positive growth but devastating downturn) or -0.3% for 2 quarters (technical recession and devastating downturn).

You can bet against sentiment but you need to be able to afford the loss.

Personally I'd sleep easier planning for the worst and if it doesn't happen feeling happy about it.

 

[Cornish Steve]

For some reason you always need to be on the wrong side of an argument - I suspect contrariness as a habit, obstinacy and a sprinkling of sheer masochism.

I can't help it if everyone believes the earth is round, can I?

For sure, a lot could be done to improve the economy - especially cutting taxes and abolishing oppressive regulations. I'm not saying for a moment that everything is hunkydory; however, I find all the doom and gloom out of order. We're talking ourselves into trouble. If only more people believed in our individual power to make a difference; we'd boost consumer confidence, start thriving new companies, and stop this slide into general depression. It's just not in my nature to always believe the worst will happen.

 

[Moneyman]

The question is not a personal one. When you see a depressing future you should try to see how to make money out of it not pretend it isnt happening. I am predicting a very good year for some of my businesses but there is no way i will spend on overheads at the moment as comercial rents will go down and i will get a better deal in 6 months

 

[Cornish Steve]

I am predicting a very good year for some of my businesses but there is no way i will spend on overheads at the moment as comercial rents will go down and i will get a better deal in 6 months

And that's good business sense.

I have no argument with being conservative or taking advantage of lower rents, lower interest rates, etc. Far from it. I've been converting our loans to zero percent credit cards at every opportunity. You have to be hard-nosed and take appropriate action based on the state of the economy.

Despite all that, there's no excuse for so many people in the public eye declaring that we're in the worst situation since the Great Depression. Utter nonsense. And this loose talk really does have the potential to become a self-fulfilling prophecy because of the impact on consumer confidence.

 

[Moneyman]

On the other hand we got into this mess by having all that "everything is going great" rubbish that was being put around for the last few years.

Brown should have been saying "everything is OK but i am running up huge debts and sooner or later it is going to go pop, you had better save for the rainy day because i sure haven't"

 

[cjd]

Communist systems relied on central planning by interfering bureaucrats - which defines the British government quite well.

Total and utter cobblers. The UK economy is a plural, liberal capitalist system and is one of the most successful economies in the world. The state own almost no industry - in what way is that communism????

The answer, of course, is to slash taxes, abolish as many regulations and entitlements as possible, and let the free market work its magic. Small businesses will thrive. Since they generate a big majority of new jobs, the economy as a whole will break out of its chains and flourish. When that happens, you just can't keep a good country down.

Also utter bullshit. Slashing taxes would lower government spending which would hasten the downturn and cause unemployment. A government's first response to an economic downturn is to try to spend its way out of it - which can work and did last time.

'Letting the market work' is how the current credit crunch occurred - we need better not less regulation. If there had been efficient regulation in place to stop the banks 'letting the market work' the crunch could not have happened.

You'll find over the next few months, new financial regulations being put in by your right wing government - it's purpose will be to moderate the excesses of an open market in an attempt to prevent these boom and bust cycles.

 

[Moneyman]

Close. When downturns loom governments should:
1) borrow a bit of cash and spend it
2) lower taxes so we all have a few more quid in our pocket.

Unfortunately this government has been doing the borrowing during good times and has hiked taxes left right and center so there is nowhere for it to go. Typical case of not putting money aside for a rainy day. They also flogged the gold at $250 (now 1000) and sold things like Quinetiq at a fraction of its value.

After a couple of good years on the stock market, pension funds were loaded with cash. so instead of saying "oh fine, bit unnecessary but that should cover things in bad times and even out" they put taxes on the funds making them not particularly good investments. instead people went out and bought houses to rent and we get a stupid boom. Up goes the house prices and everyone feels rich and go spending like a loony. this is the point where you should tax a bit to build up a decent balance sheet or invest in infrastructure to cut future running costs. But instead they lowered capital expenditure by selling things off and upped running costs by renting. The hospitals, schools etc were built with borrowed money but this was hidden from the government figures because, technically the companies that did the building PFI borrowed the money even though the repayments were built into the future running costs. It looks good and you can bab on about fiscal security etc but in the background you have simply taken out a big mortgage and now it has to be paid back and there is no cash in the kitty. He's been rumbled.

 

[quikshop]

You're stealing my reputation from me. I'm the one who is forever suspicious of government, believes that government is the cause rather than the cure of most ills, and will challenge the establishment view.

Yes I am going for the July Paranoia Awards, or I would if everyone would stop following me

Right now, about the only bad areas in the economy are housing and energy

Have you not been shopping lately?

I think you'll find that retail is mostly crashing and burning, whispers of General Motors going bankrupt, the UKs leading car retailer posting awful figures yesterday, Marks and Sparks shedding Directors like confetti as their higher end market vanishes in favour of discount outlets.

They say that the stock market looks approximately 6 months ahead of the game, so the shocking fall and official bear markets we are now in are a reflection of where they see the economy as a whole heading, not a reflection of how it is now.

Don't get me wrong, I am an optimist and as long as my business and those businesses I support survive and continue to grow then I've got a smile on my face, but there is no doubt in my mind we are, have been and will continue to be in a recession (or prolonged downturn as the officials will have us believe) until next Spring.

 

[Cornish Steve]

It a bit short-sighted to claim that government can raise money by raising taxes. When you raise taxes, you put the squeeze on people and especially on businesses. People buy less, companies struggle and make less profit, and so tax revenue falls.

If, on the other hand, you slash taxes, you put money in people's pockets. They buy more, which means companies can grow, which means higher tax revenue for the government. Just as valuable, fewer taxes means much less bureaucratic overhead, which means greater productivity, which means a healthier economy, which means more wealth for individuals.

 

[Cornish Steve]

Total and utter cobblers. The UK economy is a plural, liberal capitalist system and is one of the most successful economies in the world. The state own almost no industry - in what way is that communism????

We're talking about financials, not other aspects of government. Yes, our country remains open and free politically. From a financial perspective, though, the amount stolen in taxes and the extent of regulation is symptomatic of an interfering and overbearing government. So, the analogy that Moneyman made is a fairly good analogy. In that type of situation, the overhead costs of government make it difficult to sustain strong growth. There's too much flab for healthy businesses to pay for (i.e., the tax revenue needed to pay for it all is much too high).

In the long-term, this is actually the biggest threat to our economy. We need meaningful and sustained cuts in government spending.

 

[Jon123]

2008 shouldn't be a year of crisis it should be a year of change. Gordon brown has clearly spent all the money in his pot from the good times and there is now no way he can offer tax reductions to put some cash in to the economy. So if the change can't come from the goverment it should have to come from the inviduals and company's. There are many ways to cut the costs to make your company or personal circumstances better.

If you have saved from the good times now/soon will be the time to invest this in items that will reduce you future costs i.e lpg vehicles/ lpg conversion kits - diesel - £1.33 lpg £0.51 your fuel bill is likely to be halved and your road tax will go down.

renewable energy solar power, wind power for offices, homes, warehouses. Company's that sell these items could be having huge sales if they are experiencing downturns, bargains could be had.

Forming small co-ops - If your looking for a warehouse look for a few other people looking for a warehouse and all chip in with the rent/bills you will pay less rents and business rates.

small co-ops for food and energy are all over the place and they experience greatly reduced costs compared to average Joe.

Swapping services/products with other companies can be a great way to reduce your spending. after all this is how alot of people used to live 100's of years ago.

Ebay, why pay high street prices for items that come from the same factory when you can buy it on ebay for 75% less.

There are plenty of ways to reduce costs that shouldn't affect your day to day lives, walk more, wait for the best deals for monthly phone contracts/broadband/sky etc..

We clearly cannot carry on as we are going as it will only fuel debt and inflation but by seeking more direct roots to the services and products we need cutting out the layers of middle men money can be saved but also changing our habits and attitudes towards the fossil fuels and paying to much for over inflated goods and services.

 

[Cornish Steve]

2008 shouldn't be a year of crisis it should be a year of change. Gordon brown has clearly spent all the money in his pot from the good times and there is now no way he can offer tax reductions to put some cash in to the economy.

Actually, that's exactly what he should do. Cutting taxes would strengthen the economy, allow companies to thrive, which means he'll end up with more tax revenue.

 

[Jon123]

Actually, that's exactly what he should do. Cutting taxes would strengthen the economy, allow companies to thrive, which means he'll end up with more tax revenue.

Cutting the taxes would free up more cash, more cash would then be spent sending inflation towards the sky, to curb that inflation BOE puts up rates even higher and we find ourselves in the same position.

Cutting taxes is not the answer. The answer is too many things are overvalued and that they have to come down in price the only way this can happen is if there is not enough cash for these items to be in huge demand, and we have to change our spending habits and what we spend our money on.

 

[Cornish Steve]

Cutting the taxes would free up more cash, more cash would then be spent sending inflation towards the sky, to curb that inflation BOE puts up rates even higher...

We can't take measures to help grow the economy in case it overheats. Now that's a cautious approach for you.

The government can grow the economy by putting money in people's pockets. That can be done by lowering interest rates - which you say is not possible right now. So, another way is to cut taxes (which has the added benefit of encouraging cuts in government spending). If the economy grows too fast and inflation becomes a problem, the Bank of England could raise interest rates, but what's wrong with that? It's an effective throttle mechanism. This is how officials have run successful economies for years.

What you don't do is stifle people's willingness or ability to spend - whether by raising taxes (throttling when we're struggling to breathe) or saying things that undermine confidence.