Uk Current Account Deficit At New High

[mikey4444]

http://www.bbc.co.uk/news/business-35931968

"The UK's current account deficit widened to a record high in the final quarter of last year.

The deficit in the three months to December was £32.7bn, the equivalent of 7% of GDP, said the Office for National Statistics (ONS).

For all of 2015, it came to £96.2bn or 5.2% of GDP. Both figures were the highest since records began in 1948"

Do all you AB Tory Supporters still believe that Osborne has been doing a wonderful job, over the last nearly 6 years ?

[New Judge]

I’ve just come round. Mrs NJ had to administer a large dose of smelling salts as I’d keeled over following the award of BA from my old mate Mikey. Thanks Mikey. I’ll keep a lookout in my railway journals for any steam activity in South Wales.

“Even things such as EU expenditure and foreign aid are not presently negotiable”

Foreign Aid is completely negotiable. All that’s needed is a government with the bottle to repeal the ludicrous legislation that dictates that we must borrow money to spend 0.7% of GDP by using it to line the pockets of foreign despots.

[Gromit]

// £1.50 of every £7 taken in taxes is spent on welfare (excluding State pensions which have been funded by the recipients) //

The usually very reliable New Judge made me smile with the bit in brackets. Surely he doesn't believe that?

[fiction-factory]

Yes, Gromit- on average pensioners will take out more in real terms than they have paid in to the state pension scheme through NI.

New Judge- I agree that it is ultimately negotiable in theory- but given we have given a commitment to go along with the other major nations I think it would be a big step to try to wriggle out of it- especially if we wanted to continue the think we have some influence on world affairs through the G7. And despite the view that all foreign aid is wasted I am convinced it is often a sweetener to ensure we have some influence- e.g. the recent promise to help Pakistan as we want them on our side in certain matters. Certainly Labour, Liberals and SNP wouldn't want to slash foreign aid and the Tories show no inclination so I simply can't see it happening in the next 5-10 years.

[New Judge]

It won't happen in 50-100 years , f-f, because politicians are more concerned about demonstrating their concern for foreigners than troubling themselves with trifling concerns such as taxing people to service a £12bn loan.

“…on average pensioners will take out more in real terms than they have paid in to the state pension scheme through NI.”

Yes that’s certainly true. That’s why I added the caveat “…which have been funded by the recipients”

Included in the term “pensioners” are those who have paid in very little or (often) absolutely nothing towards the State pension scheme. These include those who have never worked (or at least who have never paid any NI); women who have spent their lives bringing up children; those who have been sick or disabled for their entire working lives. I’m not making an argument about whether or not payments to them in “retirement” are justified or not. I'm making the argument that the payments they receive are not "pensions". The payments they receive are lumped under the “pensions” total. They are not pensions at all they are retirement age welfare benefits.

The total bill for benefits and tax credits for 2015-16 is expected to be around £217bn – or about 30% of total public spending. The State Pension (which includes payments which, as above, I contend are not pensions at all) account for £92bn of that. Those figures are fairly undisputed but from here on it gets a bit tricky. Those who receive a reduced State pension could be said to have fully funded their payments (their pension is reduced in accordance with the reduced NI payments they have made). The tricky bit is establish how many people in receipt of a full State pension (and often more in the form of “Pension Credits”) have made no contributions at all. This is not easy but if we take a stab at, say 30% of the £92bn being paid to people who have not funded their pension this means the “proper” pension bill is £66bn. Deduct that from the £217bn total welfare bill and that means £151bn is being paid in “proper” welfare. This is 20.8% of total public spending (£723bn) and is not unadjacent to the £1.50 in every £7 that I mentioned in my earlier post.

It is well accepted that a worker who was allowed to keep his NI contributions and invested them himself would gain a far larger pension than the State provides. This is particularly true for the higher paid. So whilst it is true that on average “pensioners” will take out more than they pay in, that average is necessarily considerably skewed by those who have not funded their payments. The State pension scheme is quite sustainable if only funded pensions are considered. It is unsustainable when those who have paid nothing in daw out more in many cases than those who have made the full contributions. It would be even more sustainable if it was not operated like a giant Ponzi scheme – schemes which would see operators in the private sector locked up.

[Svejk]

FF. Again, you talk about G7 agreements. Again, I have to tell you, a) That was a G8 agreement. b) We are the only country in the G8 that comes anywhere near that arbitrary 0.7% figure for aid.
And as has been pointed out before, we don't pay anything, we just borrow it using our grandchildren as collateral.
Also, despite an army of people engaged in spending it, they can't find enough fatuous projects to waste it on. So they have to transfer vast tranches of it to a Swiss company that employs 600 busy beavers on £130,000 average salaries to find despots willing to take some.

[Hypognosis]

Let us not forget that pension and welfare money is not a dead loss. It does not just evaporate. It all gets spent.

If the products purchased are manufactured overseas, however then I do grant that deficits racked up via welfare compound the problem of our import/export imbalance (aka current account deficit, if I read this thread rightly).

Let us also not forget, that, when it was dreamed up, most of those who retired at 65 lived only to age 70 (men), on average. Up to 51 years of paying in, for only 5 years paying out. Those who died prematurely (50s not uncommon, in some heavily-polluting industries) probably helped balance the costs of the ones who lived well beyond age 70.

Well, in theory, at least. Real-life played out very differently and government actuaries were decades too slow in responding to increasing lifespans (averages respond slowly, in a large dataset). Bumping up retirement ages, incrementally was the response; diddling some out of a year or two's payout, although full salary, instead, should have made up for such (notional) losses.

Well done, the NHS, for granting us decades of extra time with our loved ones but it has irreversibly changed the economic climate of this country.

Meanwhile, a lower minimum wage for under-25s. Just what they need when they're trying to start a family. Do we want our own kind to 'breed' successfully or do we want to inhibit them?

[New Judge]

"Do we want our own kind to 'breed' successfully or do we want to inhibit them?"

I would say that excessive breeding (by anybody) should be discouraged (see my previous posts where, ad nauseum, I suggest that over population if a far greater threat to mankind than so-call "climate change" - or whatever it is currently called to match the prevailing data –will ever be).

However, that aside, those unable to sustain themselves and their children should be discouraged from excessive breeding (I could argue from breeding at all but I won't because I feel I’ve already hijacked Mikey’s thread enough). The current welfare system does precisely the opposite. Large families are now mainly (though not exclusively so please don't provide details of the odd millionaire with ten children) the preserve of those in receipt of large amounts of benefits. Their income is increased with the size of their brood; their new housing requirements are met as their brood expands. People who work for a living have no such luxury. Having more children for them is a big decision because they have to think of accommodation and income which will not be automatically adjusted to suit their revised needs.

That is where the welfare system needs radical alteration. Messing about at the edges with a penny on this and fivepence off that is not the answer. Nor is suggesting that the State pension (for those who have funded theirs) is an unsustainable drain on the welfare bill. In fact those payments should not form part of the "welfare" bill at all any more than private pension scheme payments should.