Government expenditure and the economic downturn..

[max_tranmere]

None of this makes any sense to me. The Government spent something like ?67 billion bailing the banks out in 2007, they spend about ?700 billion a year, so from the beginning of 2007 to the start of this year the Government has spent something like ?4.2 trillion pounds. Even with the cuts over the last year or two Government expenditure between early 07 and the start of this year would be well over ?4 trillion. So the bailout in 2007 of ?67 billion represents hardly anything - it is basically a drop in the ocean, proportionately speaking.

Even if the ?67 billion bailout was hugely crippling to the nation's finances and left the Government short of money (I don't know how it could have done if you look at what I've just said), can someone explain to me how we can give away ?12 billion annually in foreign aid - this totals ?72 billion in the six years from the start of 2007 to the start of this year.

How can we also find ?40 billion for a rail link from London to Birmingham which hardly anyone seems to want and will be of little benefit? The cost of the HS2 rail link recently increased by about ?10 billion and I am certain that by the time it's finished the costs will have shot up even higher. They can find all this money without any problems it seems. Just the recent increase in costs, before you even look at the principle amount, is a sum of money greater than what it cost to put on the entire 2012 Olympic Games. They find all this cash without any trouble it seems, and none of this has a negative effect on the Treasury's coffers or on the country.

So the Government bailouts of the banks represents less than 2% of Government expenditure for the last 6 years, but this screwed the nation and caused enormous problems, we are told. A greater amount went in foreign aid over the last 6 years and this is no problem at all apparently. The HS2 rail link is no problem for the Government either.

Can someone please explain all this to me, because I am puzzled. It seems the Government spending out on some things causes us mega problems, but them spending out on other things (and just as much money too) can be done without it causing any problems at all.

[Jonone]

If you're not confused you don't know what's going on !

[Porn Baron]

I thought it was ?500 Billion to bail out the banks??????


We seem to be very generous with aid when compared to other nations. I guess government see it as a bribe to buy British?

Someone on an income of ?25,000 pays ?5,465 in tax, of which ?52 would go to the overseas aid budget a year. India has been one of the main countries that have received our aid but that is stopping in 2015. Yet the budget is getting ever bigger???

[David Johnson]

Where you get your data from but the impact of the financial collapse was much bigger.

Not only has the government bailed the banks out to the tune of ?123.93bn, and at its peak had liabilities for the banking crisis of ?1.2 trillion, but the value of its stakes in the biggest banks has plummeted and the interest it is receiving on the loans is relatively small. The interest collected is smaller than that the government pays on its debts, taken out to refinance the banks.

And that doesn't include all the quantitative easing that has been going on in the last few years.

Foreign aid is about 0.7% of Gross National Income.

[cockneygeezer2009]

There is a debate over how much the bank bailout has cost the taxpayer as it can be calculated several ways and it depends who you believe. The bank bailout out still has ongoing costs apparently. It was obviously a hell of a lot more than 67 billion.

The government consistently tell us foreign aid out is to facilitate governments being 'friendly' to us and to curry favour in getting contracts for British firms and companies. I have no idea if this policy is working or not. It must be working or surely they would abandon it on economic grounds. However i'm not a politician who gets given lots of free money to spend on other people's behalf.

[fatmick]

http://www.youtube.com/watch?v=OXBFpuUOD9Y



Max, have a look at this it will explain a lot regarding foreign aid....

[max_tranmere]

"If you're not confused you don't know what's going on !"

I acquiesce!

[max_tranmere]

I've always found it odd that we give so much away in foreign aid and don't seem too concerned whether it will be spent correctly. I read the bank bailouts in 2007 were ?67b, not sure about the ?500b you talk off. If it was ?67b six years ago, we have given MORE than that away since then in foreign aid and we have no problem finding the cash for that - or finding the money for this stupid HS2 rail link from London to Birmingham.

[max_tranmere]

I suppose it depends what a person reads. I heard ?67b, Porn Baron says ?500b, you claim it was ?123.93b - with liabilities much higher. I am very puzzled additionally, as I said earlier, how we can give away so much in foreign aid, even if it does represent just 0.7% of gross national income. Why the mammoth expenditure on the HS2 rail link aswell? As I said, just the rise in the cost of that, before even considering what the initial anticipated cost of it would be, is an amount greater than putting on the entire Olympic Games last year. We seem to have no problem finding the money for that either.

[max_tranmere]

"The government consistently tell us foreign aid out is to facilitate governments being 'friendly' to us and to curry favour in getting contracts for British firms and companies. I have no idea if this policy is working or not. It must be working or surely they would abandon it on economic grounds. However i'm not a politician who gets given lots of free money to spend on other people's behalf."

I doubt very much if we get more in return, as a result of contracts that happen, than we give to these countries in foreign aid. ?12b a year I am sure exceeds what we get back. On this issue of whether we would abandon it on economic grounds if it didn't make financial sense, I doubt we would somehow. As I've said above, look at the vast cost of the HS2 rail link from London to Birmingham, does that make economic sense? It doesn't seem like it, yet they're doing it anyway in an era of massive Government cuts.