2014 - the year of recovery

[Kendhni]

We have been in recession now for just over 6 years ... to me there are definitely shoots of recovery but I still think that post Christmas this recession will throw a bit more at us.

Do we think that 2014 will be the year the recovery begins in earnest?
While I am sure we all want to see recovery and savers/investors will be happy with returns, it will mean the end of the cheap mortgages that we have enjoyed for the last 6 years .. hopefully the BoE will raise the rates in a slow controlled manner to minimise impact. The main thing that the government needs to do is to provide meaningful high quality jobs.

[Dark Knight]

why is up to the Government to provide jobs?
it is up to private companies to provide jobs

The jobs the government provide are the ones that need culling, like the civil service and over paid Quango's and useless committees
unless you are referring to the NHS, police fire service etc
as it is unclear which jobs you mean Ken, but I will take a guess at those ones?

[david63]

The big worry is that policies will change, not necessarily for the better, in the second half of 2014 with a view towards the next General Election.

[Silver_Shiney]

IMHO, interest rates should have gone up years ago, although my bank balance has appreciated the low interest payments on my mortgage.

Governments have been printing money that is not backed by real assets. China is the notable exception - their purchases of gold over the last couple of years have been phenomenal and it would not be a surprise if they re-introduce the "gold standard". The remnimbi will then be backed by real, solid assets.

It is my belief that the real recession is yet to start.

[towny44]

I am seriously worried, once again I find myself agreeing with DK, both central and local govt. jobs need to be kept under tight control to ensure that we only increase these where necessary as public finances expand and we can afford them.
As to Ken's question, I do expect the economy to grow more during 2014, but we have to try and avoid imports running far in excess of exports, and this is the area where the govt and B of E economic policies need to be focused.

[Dark Knight]

being heavily involved in the construction and building sector, most companies are forecasting growth for next year and increased output
this is echoed across a lot of other companies , who export a good proportion of their products

[Kendhni]

why is up to the Government to provide jobs?
it is up to private companies to provide jobs

The jobs the government provide are the ones that need culling, like the civil service and over paid Quango's and useless committees
unless you are referring to the NHS, police fire service etc
as it is unclear which jobs you mean Ken, but I will take a guess at those ones?

The last thing I mean is more backend public sector jobs ... that is already bloated enough with non-jobs.

What I meant is that the government (and I suppose the Royal Family) need to do their best ambassadorial work to attract investment and job creation in this country. The government needs to put in place the incentives and tax legislation to promote GB PLC and provide the means whereby factories and other commercial premises can be built and expanded without being bogged down in stupid legislation for years. Finally we need attract the right balance of industries including manufacturing, service based, R&D etc.

Unlike last decade, it has to be an economy that grows based on actual wealth and earnings and not borrowed make-believe money and unsustainable housing bubble.

[Quizzical Bob]

why is up to the Government to provide jobs?
it is up to private companies to provide jobs

The jobs the government provide are the ones that need culling, like the civil service and over paid Quango's and useless committees
unless you are referring to the NHS, police fire service etc
as it is unclear which jobs you mean Ken, but I will take a guess at those ones?

High government charges reduce jobs.

[Dark Knight]

Ken
I assumed you meant that, thanks for the clarification
we do need to move away from a country based on service industries and banking and get back to a balanced economy of manufacturing, service industries and innovation and invention
and we need to cull the bloated public sector

[Mervyn and Trish]

I'm okay with "culling the bloated public sector", just so long as when it happens people don't whinge about the inevitable cuts in services.

Too many people say things like "the government should do this...." without recognising it's our money they're spending. So yes, let's have them spend less, but let's understand that while there are some areas of waste we will notice the difference in others.

To make a cruising comparison, we can't demand lower fares and complain that the biscuits aren't so good!

[Dark Knight]

Merv
I agree, but we need to cut the cost of government and get them into the real world, huge final salary pensions and over inflated salaries need to be cut, also the sheer number of backroom staff needs to be cut
front line services need to be made more attractive to attract nurses, firemen, police etc
and we need to see a better return on our investment from the state

[Mervyn and Trish]

Merv
I agree, but we need to cut the cost of government and get them into the real world, huge final salary pensions and over inflated salaries need to be cut, also the sheer number of backroom staff needs to be cut
front line services need to be made more attractive to attract nurses, firemen, police etc
and we need to see a better return on our investment from the state

I'm with you on waste, but don't entirely accept the line about salaries and pensions. I worked most of my life in the public sector and almost all of that time could have got a better package in private industry. I never had a company car or private health insurance.

What I got was a reasonable (definitely not huge) pension, for which I paid in substantial contributions. The problem with pensions is that government incompetence and the recession have damaged mainly private pensions. What we should be campaigning for is decent pensions for all, not moving down to the lowest common denominator.

Yes there are some idiotic salaries in the public sector - as there are too in the private sector, not least national newspaper editors, some of whom get 10 times what the Prime Minister is paid, but they don't mention that. But my son-in-law is a Police Sergeant and I wouldn't put myself through the shifts he endures for the money or the pension he will get.

[oldbluefox]

we do need to move away from a country based on service industries and banking and get back to a balanced economy of manufacturing, service industries and innovation and invention

I'm with you on waste, but don't entirely accept the line about salaries and pensions. I worked most of my life in the public sector and almost all of that time could have got a better package in private industry. I never had a company car or private health insurance.

What I got was a reasonable (definitely not huge) pension, for which I paid in substantial contributions. The problem with pensions is that government incompetence and the recession have damaged mainly private pensions. What we should be campaigning for is decent pensions for all, not moving down to the lowest common denominator.

Yes there are some idiotic salaries in the public sector - as there are too in the private sector, not least national newspaper editors, some of whom get 10 times what the Prime Minister is paid, but they don't mention that. But my son-in-law is a Police Sergeant and I wouldn't put myself through the shifts he endures for the money or the pension he will get.

[davecttr]

What recovery? My disposable income took a hefty reduction when the interest rates plunged at the start of the recession. Recovery for me will be when my disposable income returns to what it was, plus an adjustment upwards for inflation. This is unlikely to ever happen so no recovery. Plus the fat cats are still raking in the cash.

[Quizzical Bob]

What recovery? My disposable income took a hefty reduction when the interest rates plunged at the start of the recession. Recovery for me will be when my disposable income returns to what it was, plus an adjustment upwards for inflation. This is unlikely to ever happen so no recovery. Plus the fat cats are still raking in the cash.

Same here. Orders are still down, overheads keep on rising, no prospect of ever giving up.

[Mervyn and Trish]

The big difference for me will be when interest rates go up to a more sensible level. I don't mean so high as to cripple everyone but with them at 0.5% I'm losing around £3k a year on my savings. Over borrowing got us into this mess. We should be encouraging saving on the way out of it.

[Quizzical Bob]

The big difference for me will be when interest rates go up to a more sensible level. I don't mean so high as to cripple everyone but with them at 0.5% I'm losing around £3k a year on my savings. Over borrowing got us into this mess. We should be encouraging saving on the way out of it.

That's my view too. The recovery won't have started until the rates rise. Of course with all this government debt they want inflation to last as long a possible so as to reduce its value. Effectively they are siphoning money out of bank accounts in order to finance their debt.

[Mervyn and Trish]

The recovery won't have started until the rates rise. Of course with all this government debt they want inflation to last as long a possible so as to reduce its value. Effectively they are siphoning money out of bank accounts in order to finance their debt.

I pretty much agree with you QB, apart from one word - "their". Governments have no money and therefore no debt either. Sadly it's not their money or debt, it's ours. I know that people we elected, rather than us directly, ran up the bills, but it came out of our national account and was spent on services we used.

[Kendhni]

Let's make a distinction between the recovery that is. without doubt, currently in progress versus people expecting to get back to the point they were in prior to the recovery ... which is unlikely for some groups, especially those in a position where their portfolio has not evolved since the start of this recession. It took several years to slow the ship down as it headed of on a course of self-destruction, but it is now headed back in the right direction (hopefully) but will take time to gather speed again.

I doubt if interest rates will get back to the sort of levels that some savers would like in the short or medium term .. it appears that they are likely to stay low for quite a while longer .. which is good for those with loans and mortgages.

[Kendhni]

The big difference for me will be when interest rates go up to a more sensible level. I don't mean so high as to cripple everyone but with them at 0.5% I'm losing around £3k a year on my savings. Over borrowing got us into this mess. We should be encouraging saving on the way out of it.

M&T if you are talking of rates of 0.5% you are at least 6X - 10X lower than you can get in the current market.

The current government is doing their bit to encourage saving .. they have increased the ISA allowance to £15K .. but they can't force people to save. Many people will have pulled in their purse strings over the last 6-7 years and want to start spending again .. car sales seem to be on the up as is travel ... that in itself is helping the recovery.

I agree with you about 'over borrowing' ... especially those who have effectively raided their children's piggy banks. We need to take the advice from economists as far back as 2003 when they warned the government that they had to start turning the tap of both public and private credit off ... maybe more needs to be done to make people live within their means ... go back to credit being a privilege rather than a right.

[Mervyn and Trish]

I didn't mean we were getting 0.5% Ken, I meant that as the base rate. We are getting more than that but savings rates have followed base rate down and are now 3-5% lower than we could get before. I'm talking about "safe" investments, such as fixed rate cash ISAs and deposit accounts. With only a pension coming in now I can't afford to risk losing capital on anything less than rock solid, because I have no means to top it up.

[towny44]

The big difference for me will be when interest rates go up to a more sensible level. I don't mean so high as to cripple everyone but with them at 0.5% I'm losing around £3k a year on my savings. Over borrowing got us into this mess. We should be encouraging saving on the way out of it.

M&T if you are talking of rates of 0.5% you are at least 6X - 10X lower than you can get in the current market.

The current government is doing their bit to encourage saving .. they have increased the ISA allowance to £15K .. but they can't force people to save. Many people will have pulled in their purse strings over the last 6-7 years and want to start spending again .. car sales seem to be on the up as is travel ... that in itself is helping the recovery.

I agree with you about 'over borrowing' ... especially those who have effectively raided their children's piggy banks. We need to take the advice from economists as far back as 2003 when they warned the government that they had to start turning the tap of both public and private credit off ... maybe more needs to be done to make people live within their means ... go back to credit being a privilege rather than a right.

You are beginning to talk some sennse Ken, I agree with your second para but not with the first, it makes little difference how much they increase the ISA allowance by when the interest rate is so low, and especially when the ISA rate offered by most banks is only equivalent to the tax paid rates the banks are offering.

[davecttr]

I am spending capital to maintain my lifestyle and go on cruises. This is in a planned way but within 7 years it will be all gone except a contingency fund. After that it will have to be equity release from the house.

i have not bothered with any new investments because the interest rates are too low to make any difference. Plus i can't choose anything risky to get a better rate

ps - the best rate available is on Carnival shares. Invest £2000 plus and get about 20% return tax free. You have to do 4 cruises a year though.

[Mervyn and Trish]

The best rate available is on Carnival shares. Invest £2000 plus and get about 20% return tax free. You have to do 4 cruises a year though.

Tempting Dave. Even the return on one cruise per year is better than most banks or building societies.

[Kendhni]

The big difference for me will be when interest rates go up to a more sensible level. I don't mean so high as to cripple everyone but with them at 0.5% I'm losing around £3k a year on my savings. Over borrowing got us into this mess. We should be encouraging saving on the way out of it.

M&T if you are talking of rates of 0.5% you are at least 6X - 10X lower than you can get in the current market.

The current government is doing their bit to encourage saving .. they have increased the ISA allowance to £15K .. but they can't force people to save. Many people will have pulled in their purse strings over the last 6-7 years and want to start spending again .. car sales seem to be on the up as is travel ... that in itself is helping the recovery.

I agree with you about 'over borrowing' ... especially those who have effectively raided their children's piggy banks. We need to take the advice from economists as far back as 2003 when they warned the government that they had to start turning the tap of both public and private credit off ... maybe more needs to be done to make people live within their means ... go back to credit being a privilege rather than a right.

You are beginning to talk some sennse Ken, I agree with your second para but not with the first, it makes little difference how much they increase the ISA allowance by when the interest rate is so low, and especially when the ISA rate offered by most banks is only equivalent to the tax paid rates the banks are offering.

What do you mean 'beginning' ... I always talk sense.

I agree about cash ISA rates ... But for those that can get into S&S ISAs it is beneficial and makes money available for investment ... Even as a cash ISA, it may not have decent rates at the minute, but as a means of long term tax avoidance it could pay off - if/when rates go up.