To spend, or not to spend?

November 25, 2008

A day after Britain unveiled a multi-billion-pound fiscal stimulus package to spend its way out of recession, market analysts have been busy figuring out what it all means, in the context of a sharply slowing economy.

Nick Parsons, head of market strategy at nabCapital, has come to this conclusion:

“People need to spend less, not more, and though little Johnny’s Xbox is indeed 4 quid cheaper, his Dad’s house is worth £3.97 less every hour,”he wrote in his daily note.

“That’s every hour of every day, 24 hours a day and is not going to get in the slightest bit better as a result of yesterday’s budget announcement… Thanks to the VAT reduction, Easter eggs might be 10p cheaper next year but by then average house prices will be another £10,000 cheaper. Go figure.”

7 comments

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[...] A day after Britain unveiled a multi-billion-pound fiscal stimulus package to spend its way out of recession, market analysts have been busy figuring out what it all means, in the context of a sharply slowing economy. Nick Parsons, head of market Easter Gift Idea Tips [...]

House price are having a correction, having gone to high, to quickly ..but they don’t make land any more.
A house that cost £3,500 in 1970, around £160,000 today.

We will never know the true value in saved jobs, and everything that goes with that.

The action taken in the UK is part of world wide action taken because greedy people sold to much credit to people who could not afford it, and others who are maxed out on easy borrowing. Keeping people in work has great value.

The cost of the VAT saving might have better been used to keep people off of benifit.

Posted by Larry Darmanin | Report as abusive

Alistair Darling’s plans to spend his way out of recession has so many flaws it’s become a tower of incompetence on the brink of collapsing

Posted by Pete | Report as abusive

For the first time, someone telling it like it is! Well done Nick Parsons. When cars are being sold on a 2 for 1 basis (and we’re told how pleased they are about it) does the government really think that we’re going to go rushing out to buy plasma screens for £975 instead of £1000 (screens which are probably made in Taiwan anyway)? It’s just plain daft. There might have been something in Labour’s old jibe “boom and bust”, but I think that situation was far better than “recession and depression and bust” which is what we’re now facing for the next five years or so.

Posted by Matthew | Report as abusive

Look at it from Badger’s point of view and the question “To spend or not to spend?” doesn’t arise.

If Labour win the next election he will have successfully bought the votes they need. If Labour lose the next election he will leave scorched earth for the Conservatives and can sit back and laugh at their awful opinion poll ratings as they administer the nasty medicine necessary to get the country back on track.

A win-win for Badger. And a familiar story from the past.

Posted by Jason | Report as abusive

People need to get real!

Those who have enough reserves of cash NEED to go out NOW and spend something. To save jobs, etc., et al.

Indeed it is their duty to do so – we all need them to act now.

Of course people who have little or nothing in reserve cannot and should not spend anything they do not have – that’s logic for you.

The problem we have is an intractably pugilist, duplicitous Tory party that lacks acumen and is now deliberately making things worse in order to score political points. That is unforgivable and morally reprehensible. Shame on Cameron!

Cameron has gone way down in my estimations (I was once thinking of voting for him) as his slightly rabid rants and the insidious talking down of the pound and the economy do nothing but the worst for us all.

The Tories must STOP these negative and aggressive attacks and try to do some good.

I really do think that we have come to a very damaging situation where the opposition seeks advantage if the economy does not respond to Brown’s measure – indeed, Cameron does not want the economy to rally.

If it does he will NOT win the next election – right?

Cynical is not the word for this kind of skulduggery!

Posted by TheTruthIs... | Report as abusive

That land everyone (so called) owns is leased to you by your government(s) called taxation…And an anchor that hinders your career migration in the new world stay nimble work force…
By the way count up all the costs associated with homeownership(insurance,taxes,maintenanc e,utility costs etc) over time and see what your true equity results are…

TOUCHE!!!

Labours bankruptcy plans continue. To increase Govt spending by increasing Govt borrowing and to encourage people to spend more. Economic madness!

The health of an economy is not based on consumer spending, it’s based on wealth creation. There’s nothing Govt or the central bank can or should do but to let capitalism run its course.

All else is folly. From a party that has been a folly for 11 years.