Economists urge Rachel Reeves to bend fiscal rules instead of cutting welfare

23 comments

1. Because cuts to welfare are direct cuts to the economy. The money isn’t hoarded, it is spent, it is a direct stimulus that is being withdrawn while everything else goes to shit.

2. She can borrow to invest, get some infrastructure built and people won’t be so depressed, get the hospitals working and the schools teaching and more people will be fit and educated enough to do something useful that makes them happier.

   This fear of spending is holding everything back.

3. Austerity got us here, more austerity will make things even worse. Austerity had zero benefits for anyone but the rich who managed to buy stripped down assets on the cheap and take on government contracts to provide the same services but do it worse than before.

   What is even the end goal to austerity now? It used to be told to us that it was a temporary tightening of the belts until the wealth trickled down, what’s the justification for it now? The wealth shot up and stayed there and we’re squeezing all the people who actually spend money in the economy so what’s the actual plan here, hope enough of us die so there’s enough crumbs to share between those that are left?

4. People don’t seem to realise we really are between a rock and a hard place. Screaming ‘wealth tax’ as great as that sounds, has major pitfalls based on our highly progressive tax system. This is just a shit situation all around and I’m quite sure Reeves is as tired of it as we are. Britain is living beyond its means.

5. These cuts are purely happening because the numbers on an imaginary forecast 5 years out changed from a body that is notorious for getting things wrong.

   The entire situation is ludicrous. The bond market isn’t going to go haywire because the chancellor didn’t immediately find a way to save 0.2% of UK GDP in 2029. The sensible thing to do would have been to just evaluate at this year’s budget. Reeves even said she was committed to only one fiscal event a year.

6. Just a reminder that Labour failed to cut private equity tax loopholes worth almost £500m, despite pledging to do so before the election. But I’m sure fund managers need the money more than disabled people.

7. Fed up of reading this nonsense. 9.2 million working adults are out of work. Unless the UK has a particular issue with long term disability or illness that makes working not an option – Than a significant proportion of these individuals are taking the piss.

   Correct Career advice to streamline individuals into needed sectors is a requirement. Welfare cuts are a requirement.

   The current situation is unaffordable. The situation will get worse as our population swells and gets older. This is an inevitability as a direct result of demographics.

   I cannot believe that money being spent on welfare is seen as a benefit to the economy on this forum. Welfare doesn’t create additional wealth unless it gets adults back to work (which is why the UK can, and should, support individuals to do so). The money that is spent on Adults Out of Work could be spent on Infrastructure upgrades, innovation, funding business enterprise – I.E proven wealth generators.

   Can we please stop pissing money into a black hole before the country goes broke. Your desire to put a heavier burden in tax on the rich doesn’t work when they have the highest global mobility of any social group. It’s punitive to the country as a whole.

8. We have seen enormous sums of money taken from the middle class and absorbed by the top 1% – every normal person is poorer today compared to 5 years ago. AND despite this the government is going one level deeper to extract money from the poorest people in the country.

9. Roosevelt saved America from the Great Depression with his ‘New Deal’. Basically the state creating jobs by investing in loads of infrastructure projects.

   The Atlee govt after ww2 created the NHS and the welfare state. Also, again, hugely investing in public infrastructure like building millions of council homes 

   Reeves and her bosses know perfectly well that austerity causes recession. They’re not ‘misguided’. They’re deliberately funnelling money to the ultra wealthy whilst actively destroying the economy. When everyone’s bankrupt, Blackrock can buy ‘assets’ ( like people’s homes and businesses) at fire sale prices. 

   If they actually wanted to fix anything in the uk they’d be kickstarting economic growth by building council houses, fixing our crumbling infrastructure, mending our dilapidated roads. They could give the NEETS proper jobs. 

   When a govt invests like this it creates jobs which lowers the benefit bill, raises taxes and gives people money to spend on local goods and services. When people have money to spend on local services (eg, a pub meal, a vehicle service, a haircut, etc), local businesses thrive, and take on more staff, who have money to spend, which in turn creates jobs…

   They’d also raise min wage and slowly phase out top up benefits for low wages. Employers get £billions in wage subsidies via Universal Credit. 

   And yes, they should give a substantial raise to universal credit 

   When employers know you have a reasonable, livable alternative, it pushes wages up. By protecting those that cannot find work, we protect ourselves in the long run. Higher benefits would mean higher wages 

10. The productive elements of society are being crushed through taxation to pay for the entitlements and benefits of the unproductive and the ratio is getting worse every year.

    This is entirely **unsustainable**, we cannot have an ageing population (and so a dwindling number of working age adults paying taxes) and _also_ have 9+ million, and growing, economically inactive _working age_ adults living off the state on benefits alongside the growing number of pensioners.

11. Ahh, the old Argentinian school of economic theory. Look just how well it worked for them over the course of the 20th century!

12. She knows her fiscal rules are damaging the economy.

    They’re a vote winner for the majority of the population that don’t understand currency sovereignty, and the benefits of a floating fiat currency.

13. The problem is she’s only looking at a small percentage of people, and of that small amount, an even smaller number of people game the system and so she’s basically dealing with a wasps nest by firebombing the house, and isn’t concerned with who else gets burnt in the process.

    This will only majorly negatively affect those in greatest need and it will not save her the money she thinks it will – they never do.

14. The “Fiscal Rules” are more like fiscal guidelines, and what they are is set by the incumbent party, so it’s not even like they don’t have a choice here.

15. The country is fucked, The tories did a shit job and Covid has destroyed us. All that money spent on Furlough and covid contracts and just so much waste has to he accounted for.

    Labours first budget sent us into a dip, businesses which are wealth creators in this country are nervous and have been hit hard. So now instead of extra taxation that will send the markets into free fall they’re going to hurt the most vulnerable and make us blame it on the small minority of exploiters

16. Didn’t realise Benefit Claimants were called “Economists” in Guardian headlines these days.

17. Maybe if disabled people donated huge amounts to the labour party before the election this wouldn’t be happening

18. Economists should shut up.

    This post-empire country that has been in managed decline is living beyond its means. You don’t have the money for unsustainable welfare.

19. The LD position on this has been most correct imo.

    These are unprecedented times. If absolutely nothing else the fiscal rules need to be bent anyway so that we can invest more into the military and shoring up European defenses against Russia.

    Keeping the markets calm by reassuring them that the UK government is no longer taking crazy jump-flips every 12 to 18 months is one thing, but reassuring the markets that there is not going to be another major landwar in Europe is slightly more important right now. Because of that alone this is not really the time to be making such hard fiscal rules and setting yourself up for political strife every time you then need to challenge those rules in the coming years ahead.

20. They’re willing to do anything but the actual core root of all our problems. Tax the rich!!! Tax them and we can have a better economy and a fighting chance at a decent life.

21. I’m loving this timeline. Tories were the austerity party. And now Labour are doing the same. Go left long enough and you make a full circle.

22. This woman really is doing her absolute best to get Reform elected.

23. I genuinely think she is out of her depth and too proud to actually see it herself.

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