olympics and the UK economy

Discussion in 'Politics & The Economy' started by Member 614124, Aug 21, 2012.

  1. Member 614124

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    Many have been saying that the Olympics were a total failure for the UK economy. That is not true - most people have been told so, ignoring the statistical data and the long term effect of the venture.

    The Olympics have caused an increase in the national output ( also known as potential output) leading to an expansion of the economy which leads to long term growth. Furthermore, the domestic demand has increased significantly (not compared to the cost of the Olympics but to the current situation - recession) which is the main component of the aggregate demand - aka short term growth.

    As you can see the cornerstones are placed, it all depends on the consumer confidence to get the UK out of the recession now.
     
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  2. karkus30

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    I read it, but they are all predictions, so far it appears they were completely wrong and there was actually a down turn for many businesses. The stimulus is just the cost to the taxpayer which Governments do like to term as stimulus packages instead of the plain old term spending. I'm going to use that one on my wife when I buy my next bike....don't think of it as spending, think of it as economic stimulus. I wouldn't believe anything Jeremy Hunt says he seems incapable of lying straight in bed, the only thing he is interested in turbocharging is his popularity. Where do the get 17,900 jobs are we sure it isn't 17,800 or 18,132 ? We used to write this stuff when we were bidding for projects, it showed lots of positive outcomes, from economic to emotional and everything in between......can we have the money please.
     
  3. Steven

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    The country is on a natural high after the storming success of our athletes but one suspects the third quarter GDP results will bring the gov back down to earth
     
  4. logiciel

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    :confused:
    Why would a few people running faster or jumping higher than others have the slightest effect on the country, and in what sense are those people "ours"?
     
  5. IronGiant

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    I think he is talking about the nation's morale being generally on a high. Not everyone is wondering if they should get a two week refund of their TV licence ;)

    And it's "our" athletes in the sense of they are citizens of "our" nation just as we are :smashin:
     
    Last edited: Aug 21, 2012
  6. MikeTV

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    Because we're all whistling while we work now! Go Team GB!
     
  7. johntheexpat

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    Looking at the Olympics from here, it seems that in between the sporting events it was a hugely succesful two week tv advert for the UK.
    There were loads of short films about the UK, it's heritage, places, people, products etc etc. There were a few comments that tried to be snidey, trying to knock the Olympic traffic lanes and (of course, from the French) the non TGV based rail system, but on the whole the message was hugely positive.
    So, from where I stand, it was a hugely succesful event and one that will pay dividends in increased tourism etc for many many years. So my vote goes to the "well worth every penny" option.
     
  8. la gran siete

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    it depends on whether you identify with them .You clearly dont, which is fair enough but others do which is why the term "ours" is used
     
  9. la gran siete

    la gran siete
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    i also hope they make good use of the venues so that the "waste of money" brigade dont have much ammunition to throw their misery at the rest of us
     
  10. la gran siete

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    the only thing your bike will stimulate is your legs into pump action.Presumably what is meant by economic stimulus is some kind of knock on effect which encourages people to spend their own money and thus induce growth
     
  11. karkus30

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    Can you give more detail on the short films? We're they in the language of the country that showed them? Quite interested in what went out globally.

    Personally I didn't watch any of the Olympics and was glad when it finished. Reminded me of the time when I was impatiently waiting to watch Doctor Who as a kid and the football results were being typed out on a printer/teletype Hamilton Academicals 1 Cowden Arbroath 0 . Mind you I don't watch football, Tennis, Golf etc although I do watch Motorsport if I catch it on and I'm too lazy to get out the door and do something. Happy that everyone else seemed to enjoy it otherwise that really would have been money badly spent.
     
  12. Member 614124

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    We all know that Britain is experiencing such bad recessionary times due to the Labour Party's inability to create budget surplus during boom years. All they did was spend and spend, with the hope of re-election, which has left the economy in a budget deficit. Once a global recession hits, after a decade of high economic growth, and the government does not have the funds to deal with it - that's what happens. Do not blame the current government for spending 9bn on the Olympics, it was a necessary venture to save the British economy from a much worse future.
    You say you want your money back, but what are you going to do with them? Save in a bank account? Yes you might feel better as you have more money, but this has a negative effect on the economy as a whole and if you wish your children to have a good future I suggest stop moaning about the money that you could've had and work your ass off to help the community. It is a global recession, not just a UK one.
    Third quarter figures, in my opinion, will be positive (0.1% economic growth), whether it can be maintained, that depends on the conservative party and their strategies.
     
  13. karkus30

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    It's not that kind of bike I was thinking about. I put petrol in it and get it serviced, taxed and insured......economic stimulus of an ongoing nature dear wife.
     
  14. karkus30

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    The point is that £9bn and it rumoured to be a lot higher could have been spent on other things which are more permanent and sustainable. Remember the Government actually borrow this money from the banks and are charged interest on it and that cost becomes the tax payers burden. I hope it does produce the returns promised for everyone in the UK which appear so promising that I will be expecting a cut in tax on VAT at least. Remember 10% of the country didn't watch any of the Olympic Games and that's around 6 million people.

    I wonder if you would have gladly paid the anticipated cost of £400 upfront for each person in your family?
     
  15. Member 614124

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    I don't think VAT cuts are possible - what you could be expecting is a corporation tax cuts in order to stimulate investment in the country. This should in turn, lead to wage and salary increases. As you know VAT is an indirect tax and it's strictly speaking "optional", similar to alcohol and cigarettes and truth is, VAT, cigarettes and alcohol are the taxes which bring the highest revenue back to the government. Wealthy and rich people tend to avoid the income tax.

    Yes there is an interest rate paid on the borrowed amount, but as you know the UK is maintaining an AAA rating (triple A rating) which gives it the advantage to borrow at a much cheaper rate than other countries as it deemed as a safe investment. The % of interest the government will be paying will be rather humble (I think around 1-2%) a year. That would be around 13 500 000 pounds a year which from a working population of 39 million who pay taxes, it comes to about 3.46 pounds per tax payer. I don't think that is a very demanding amount?
     
  16. karkus30

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    Debt interest was £44bn in 2010/11 and it's rising fast. Just like credit card debt we already have increasing debt and then the interest is added on. It's not an interest only payment. The Government is flooding money into the economy and inflating it at the same time so we have rising prices. This is like a tide going up a beach, those lower down the pay scale get drowned first, this has caused an increase in the need for food parcels for the less well off already. Pensioners and small savers suffer from the low interest rate and this also puts many of them in the poverty trap.

    If you run a business then you have an advertising and PR budget. It's factored in and is used carefully because advertising is both expensive and often fails to produce results. The Government have sold the Olympics like a huge PR/ Marketing exercise as if it was some kind of entrepreneur managing a private company and not actually other people's money that they are entrusted with. If the Olympics were such a huge benefit to business in the UK then the corporations would have paid for the cost of the whole thing knowing they would get a great return, but when the Government are prepared to spend other peoples money instead why bother.

    VAT is another insidious tax which is bad for the economy, but I will leave that for now.
     
  17. Member 614124

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    The businesses never funded the Olympics because of the fragile times we are in right now. Business and consumer confidence is low and security is a priority at the moment. It is indeed a big investment and the future as you know is uncertain. Most small business are trying to maintain break even at the moment just to survive past the recession and the bigger ones are cautious about risky investments more than ever.

    I'm not saying it's a perfect scheme, if it was we wouldn't be discussing it right now. You are talking about debt interest being 44bn - I am talking about the Olympics specifically, I know people are already paying high taxes but the point was that the Olympics would not have affected the average tax payer that much. If you read the article and the info-graphics below it, on the link I have posted above, you will see how the money have been spent and where the 750m of consumer spending has gone to. It has not been gone to waste. Inflation (and I'm talking about the period 2010-2011) has increased due to the increase in VAT to 20% which adds to it. As you know in the second year it drops out of the calculation and when it did inflation fell to its target bracket.

    The poverty trap you speak of has been looked upon by the government. If you remember the Budget back in march 2012 - the chancellor increased the lowest tax bracket to 9100 from 8000 allowing those earning below that amount to claim benefits as well without paying taxes. Of course that leads to the unemployment trap but that is a different topic.

    The small interest rates have been set for a reason - stimulate the economy. If the average person decides to save up 50% of what he earns, compared to 30% as from last year, because of an increase in the interest rates, that would have a pretty bad effect on the economy. You can't make rich people spend their money, it's an imperfect system which is being resolved through inheritance and mansion taxes (which were also increased by the government).

    The government does not get anything out of the Olympics - the conservatives will benefit if they bring the UK back to positive economic growth. It is not done with the intentions of spending other people's money they can, but because they believe that it will, both lead to economic growth in the medium term and will lead to a huge stimulus from the 5.5 million day visitors which the Olympics attracted.
     
    Last edited: Aug 22, 2012
  18. IronGiant

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    Please stop advertising your blog, it was only necessary to mention it once :thumbsdow
     
  19. karkus30

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    Target bracket of inflation is the problem IMO. I don't use the Government calculation based on RPI or CPI its easier just to use the rise in GDP and the M4 figure. The reason we got into this mess was by spending too much, seems a crazy idea that to get out of it we need to continue the theme. The best people to get us out of recession are the countries entrepreneurs, these are people for whom speculation is their stock in trade, they take risks when other people won't.

    I'm sorry, but I don't believe putting on an Olympic show is going to pull us out of recession no matter how many people enjoyed it, in reality it was a great big party that took people's minds off the current situation. Regardless of your belief in it being a small outlay I was brought up not to spend what you don't have and to save for things you want. The figures on public debt released yesterday showed an increased deficit opening up when the previous year was in surplus. To be cutting back on public services that do actually provide a basis for supporting real term economic growth and then spending it on something that 'might' produce something is frivolous.
     
  20. karkus30

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    Oh I see now 'spam' owns a website design company as well. Nice bit of viral work eh.
     
  21. Member 614124

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    We got into this mess by spending so much at the wrong period. Recessions is when you need to spend and booms is when the party in charge needs to save up and create big budget surpluses, because I'm sure they are aware of the economic cycle.

    GDP is waaay too general to base your assumptions on. It is accumulated of the total expenditure, income and output of an economy whereas CPI and RPI have very similar (slightly different) basket of 650 goods. Each and every good has an increase or decrease of its price according to demand, elasticity and inflation. It is a much more accurate ( in theory ) calculation.

    I agree with you that the entrepreneurs need to save the economy, but as I said confidence is low. A large injection of money into the economy (the Olympics visitors) can start off a large multiplier effect and increase the revenue and profits of businesses all over the country because as you know ' one man's spending is another man's income '. That will open doors to new investments and maybe regain some of the confidence, since the interest rates are low, there will be no incentive for the people to save, hence the logical thing to do will be to invest (even if it's in government bonds).

    I am not saying the money couldn't have been invested anywhere else, but you would appreciate the fact that once you start a project in 9 times out of 10 the actual expenditure exceeds the forecast. I also agree that the forecast has been badly done as it turned out twice and a half times more expensive than predicted, or it was done on purpose, I don't think we will ever find out.

    All countries and economies do in crisis, is spend money they don't have. In order to get out of the current problematic situation, that needs to be done. The Government tries to stimulate the economy by quantitative easing(375 billion pounds) however there are problems such as, banks not lending, low consumer confidence and businesses not investing but rather paying off employees.

    If every person thinks only about himself, then we will never get out of this recession and much worse things will happen. Think about it.
     
  22. Member 614124

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    The alternative option would have been to say - "look up to where I posted the link" instead of reposting it? Which do you think is more convenient?
     
  23. Member 614124

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    Mainly a discussion on the topic I have posted. If you do not wish to comment you don't have to.
     
    Last edited: Aug 22, 2012
  24. karkus30

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    Inflation is the expansion in the money supply and GDP is effectively the amount of things available in the economy. Therefore if you use the M4 number and GDP numbers as percentile increases you get the true expansion. CPI and RPI are flawed because the basket isn't static, or turning over at a constant rate. It gives the impression that price rises and price falls are inflationary but that's not how I see it at all. I see that an increase in the money supply without an increase in the goods available IS inflation, it doesn't cause inflation.

    Confidence is whatever an individual makes of it. Entrepreneurs see opportunity in everything. I don't see lack of confidence at all except in the Governments handling of the economy and blank refusal to accept that it can't be fixed by incessant meddling. QE is simply propping up banks that should have folded and is inflationary once it breaches the barriers around it.

    I think you are right and wrong in what you are saying regarding selfishness. It's actually that value that has driven humanity to where it is now, co operative working and division of labour are the natural conditions which allow that to happen when society is operated on an open platform. Government, Banks and big Business decided to operate on a separate platform and ignored that basic rule of being an open platform. Society must operate openly or we will get these constant crashes as those in the second tier try to store the wealth generated by the first tier, eventually that polarising effect causes the machine to stop working. It's happened throughout history.
     
  25. karkus30

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    We are all self centred, some just don't like admitting it. That quotation doesn't alter anything. Do not know the change I wsh to see in the world? :)
     
  26. IronGiant

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    I would probably guess "refer to previous link" doesn't get as many SEO hits as reposting it :)

    I would have also kept my head down :)
     
  27. sidicks

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    Can I offer a bit of friendly advice - best to take note of what the Moderators say if you want to remain an active member on this forum...!!
    :smashin:
     
  28. Member 614124

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    Inflation is the increase in the general price level over a fixed period. It is merely one of the consequences of expanding the money supply in an economy. GDP is a measurement for growth rather than inflation. Of course if AD outstrips AS than it can be shown by a graph using GDP, however you can never get an exact %. CPI and RPI might not be very accurate, but they take into consideration the volatility of prices, which is what the inflation is all about, and estimates a % to represent the level of inflation.

    Entrepreneurs may see opportunity in everything, that doesn't mean they are always ready to invest. Starting up a business, especially during a recession when AD (overall demand in the economy) is low, is not a popular venture. You can see for yourself investment levels have decreased substantially since 2008-2009. Most people now aim to start a business online because of the small start up expenditures + you can manage a business from your home computer rather renting a building and what not. I'm not saying the confidence is completely gone, I'm saying it's not at a high level.
     
  29. Member 614124

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    Well, just to show you that I'm not here for advertising purposes I removed the url. Hope that has settled the confusion! :) :smashin:
     
  30. Member 614124

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    Sure! Thank you so much! :thumbsup::thumbsup:
     

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