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WHEN the next recession arrives what can the Government/Bank of England do? watch

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    WHEN the next recession arrives what can the Government/Bank of England do?

    - UK government debt is LARGE
    - Interest rates are already at record lows for 8 odd years can't go lower
    - Trade deficit is high
    - QE has only propped up existing assets, more QE will further devalue the £

    What tools can they use/have available realistically? or will this be the ultimate recession/depression.
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    (Original post by Bill_Gates)
    WHEN the next recession arrives what can the Government/Bank of England do?

    - UK government debt is LARGE
    - Interest rates are already at record lows for 8 odd years can't go lower
    - Trade deficit is high
    - QE has only propped up existing assets, more QE will further devalue the £

    What tools can they use/have available realistically? or will this be the ultimate recession/depression.
    You presume the next recession will be both major and arrive soon.
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    (Original post by United1892)
    You presume the next recession will be both major and arrive soon.
    Smart money appears to think so. Corporations are hoarding cash, businesses are not investing as much as they could. But let's say it does.

    What happens?
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    (Original post by Bill_Gates)
    Smart money appears to think so. Corporations are hoarding cash, businesses are not investing as much as they could. But let's say it does.

    What happens?
    I don't know. QE would obviously be used, the rest is variable,
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    (Original post by Bill_Gates)
    WHEN the next recession arrives what can the Government/Bank of England do?

    - UK government debt is LARGE
    - Interest rates are already at record lows for 8 odd years can't go lower
    - Trade deficit is high
    - QE has only propped up existing assets, more QE will further devalue the £

    What tools can they use/have available realistically? or will this be the ultimate recession/depression.
    Given the level of unfunded liabilities it's hard to see what they can do, QE can only go so far and we'd still have a stonking fiscal and trade deficit. If it's big enough to cause a UK default then with the amount of debt we issue, the global economy goes into meltdown as contagion occurs. It would also depend whether the electorate called for a further right or further left government depending on who's in power at the time.

    Assuming we survived default though then the best thing to do would be to no longer inflate the household credit supply, accept lower short term growth (0-2%) and massively increase capital spending while paying for it with tax rises or spending cuts (i'd prefer spending cuts). At the same time we'd need to actually tackle our trade deficit by aiming to move to being a net energy and goods producer. A harder task than it sounds.
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    (Original post by United1892)
    I don't know. QE would obviously be used, the rest is variable,
    So you think QE will be their only viable tool?

    Jeez we're screwed.
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    (Original post by Rakas21)
    Given the level of unfunded liabilities it's hard to see what they can do, QE can only go so far and we'd still have a stonking fiscal and trade deficit. If it's big enough to cause a UK default then with the amount of debt we issue, the global economy goes into meltdown as contagion occurs. It would also depend whether the electorate called for a further right or further left government depending on who's in power at the time.

    Assuming we survived default though then the best thing to do would be to no longer inflate the household credit supply, accept lower short term growth (0-2%) and massively increase capital spending while paying for it with tax rises or spending cuts (i'd prefer spending cuts). At the same time we'd need to actually tackle our trade deficit by aiming to move to being a net energy and goods producer. A harder task than it sounds.
    So you really think we would go down the default route?! Jeez. We're the next Greece!!!!!

    :rip::stomp::woo::zomg:
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    Bailing out the private sector again hey? Quelle surprise. Anyway how could a recession happen on the Tories watch I thought they had secured us lol
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    true prosperity of a nation will depend upon its natural resources, infrastructure, skills of its workforce and social cohesion.
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    (Original post by Bill_Gates)
    So you think QE will be their only viable tool?

    Jeez we're screwed.
    No but I can't predict the actions of a tory government.
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    (Original post by Arkasia)
    Hear hear. People would still vote tory haha.
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    (Original post by Bill_Gates)
    So you really think we would go down the default route?! Jeez. We're the next Greece!!!!!

    :rip::stomp::woo::zomg:
    Help To Buy is a giant government guarantee to banks, there's plenty of other stuff like that too.

    At the very least i think that sustained low growth is very possible after such a recession in order to tackle our deficiencies (2010-2012 being much more the norm).

    Looking at it as an opportunity, governments would finally have to tackle long term issues like the trade deficit, high house prices, low wage growth. If we addressed these with an injection of capital spending then our economy would boom properly. We do have pluses like high education and a very pro-business attitude. The negatives to such reform would likely be in the form of more saving from consumers/lower consumption.

    (Original post by Bill_Gates)
    true prosperity of a nation will depend upon its natural resources, infrastructure, skills of its workforce and social cohesion.
    Natural resources are cyclical as Russia and Brazil are finding out but yeah.
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    (Original post by Rakas21)
    Help To Buy is a giant government guarantee to banks, there's plenty of other stuff like that too.

    At the very least i think that sustained low growth is very possible after such a recession in order to tackle our deficiencies (2010-2012 being much more the norm).

    Looking at it as an opportunity, governments would finally have to tackle long term issues like the trade deficit, high house prices, low wage growth. If we addressed these with an injection of capital spending then our economy would boom properly. We do have pluses like high education and a very pro-business attitude. The negatives to such reform would likely be in the form of more saving from consumers/lower consumption.



    Natural resources are cyclical as Russia and Brazil are finding out but yeah.
    Natural resources still keep the ££££ coming in regardless. You'd be foolish to think any country wouldn't want them haha.
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    QE and more austerity I guess.
    Accelerate fracking
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    (Original post by Bill_Gates)
    So you think QE will be their only viable tool?

    Jeez we're screwed.
    They can use fiscal tools. They could either reduce taxes to encourage spending to stimulate the economy or they could take a more Keynesist approach and increase taxes and spend the money on public infrastructure works which would also stimulate the economy.

    Other than that there's not much to do. Monetary policy can't be used (interest rates can't go lower) so you're left with QE (printing dosh)
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    (Original post by sdotd)
    QE and more austerity I guess.
    Accelerate fracking
    QE is the opposite of austerity.
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    Just a note but interest rates can go negative. It's not very practical though.
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    (Original post by Howard)
    QE is the opposite of austerity.
    but can't the govt choose which sectors to enforce these policies on
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    (Original post by sdotd)
    but can't the govt choose which sectors to enforce these policies on
    I suppose they could ring fence in some fashion. Apply QE to the private sector while curtailing public spending on the NHS for example.
 
 
 
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