Growth in the economy

[pdq1]

We are now entering a period of negative growth. What proportion of growth is down to exports and what is attributable to home sales?

I say this because some pundits say because Europe is suffering then our growth is severely curtailed. But then you hear from others who suggest the cure for growth is to give the British public more sweeteners such as a cut in VAT to make us spend more.

[pdq1]

///Car manufacturer Honda is putting a third of the staff at its Swindon plant onto a four-day week from September///

In 2010 the motoring industry was given a boost by introducing the car scrappage scheme which helped to increase the sales of cars. It also took us from negative recesssion into a positive one. Why can't the government do something similar to that rather than relying on QE which has printed nearly £350bn and achieved almost nothing.

[jake-the-peg]

Why do you say the QE has achieved nothing?

As I recall the cut in VAT was widely condemed at the time as pointless because retailers would not take much account of it in setting prices and people wouldn't change their buying habits much based on what was much of a price change.

IMHO the issue is consumer confidence - people don't buy when they're worried about their jobs and their diminishing disposable income.

Therefore government spending is best directed at projects that boost people's employment.

This colour Government doesn't like direct spending on public employees - well OK fair enough.

There is an excellent scheme for providing government assurances for infrastructure projects that can't otherwise get finance.

Sounds just what the doctor ordered until you see the hoops to jump through

http://www.bbc.co.uk/news/business-18880354

Good idea - take off the brakes on it!

[pdq1]

Jake that scheme sounds a good idea in practice but as it says most of the schemes will take years to get off the drawing board into practice. This scheme should operate whether we are in recession or not.

I agree with you about the VAT cut....although costing £bns it will do almost nothing to change peoples buying habits as the reduction seems almost insignificant.

There are many opposed to QE and what effect it has had but ploughing £350bn hasn't shown much difference. If it was a successful ploy many of the European governments would have used it.

Average families do not have a lot of spare cash as many are paying off mortgaes and families to consider. The disposable wealth is with those who have no committments and getting income from private pensions. Of course these are the OAPs and elderly who would gladly accept a bargain or two and where current spending is to come from. Our motor industry has benefitted from their spending in the past few years.