Because jobs will continue to be created, so even if say worst case 750,000 public sector workers lose their jobs I think enough jobs will be created in the private sector that will IMHO have unemployment max out at about 2.8m

 

That's not the worst case. Even the Treasury admit they expect over 1m jobs to be lost from the public sector.

And with private sector confidence stalling and plummeting, and unemployment being a notorious lagging indicator, we're likely to be seeing at least 3.5 million unemployment at some point in the next year - if not more!

Further to the discussion about Ireland yesterday, it now seems the Irish economy is almost certainly headed for a double-dip, after GDP there contracted by 1.2% in the second quarter - compared to analysts' expectations that it had GROWN by 0.5%. Remember Osborne and Cameron had singled out the Irish government's approach for praise, and saying Britain would be emulating it.

 

From the Guardian's economics editor:

 

 

Ireland's austerity measures show us how not to do it

Savage budget cuts have prevented the Irish economy, once the poster child for deficit hawks, from returning to growth

 

Ireland is the poster child for deficit hawks. When the rest of the world was dusting down their copies of Keynes's General Theory to justify fiscal stimulus packages during the great recession, the Irish embraced austerity. Big time.

 

The government in Dublin announced not one but three slash-and-burn budgets that took the axe to the public sector and welfare entitlements. Unemployment has tripled; emigration of talent has resumed. But it was deemed to be a price worth paying. The aim was to reassure the financial markets that the government was serious about cleaning up the mess left behind in the banking system from the colossal boom-bust in the property market.

 

And it won plaudits for doing so. Take this hymn of praise from Jean-Claude Trichet, the president of the European Central Bank, as the problems piled up on Greece and the other weak members of the eurozone earlier this year. "Greece has a role model and that role model is Ireland," Trichet said. "Ireland had extremely difficult problems and took them very seriously – and that's now been recognised by all."

 

The UK's deficit hawks insisted that it was not just Greece that could learn some lessons from Ireland. Writing in the Sunday Telegraph in April, Liam Halligan contrasted Ireland's "mature, responsible approach to fiscal consolidation" with the UK's "weak-willed approach". By taking the deficit seriously, Ireland was winning the respect of the bond markets, leading to lower long-term interest rates. They, in turn, would lay the foundation for economic recovery.

 

George Osborne, David Cameron, Nick Clegg and Vince Cable bought this argument, which is why Britain had an emergency budget within six weeks of the election and is about to experience the deepest cuts in public spending since the 1920s. Despite the wobbly state of the global economy, the coalition government at Westminster believes the Irish were right to take their medicine early.

 

So how are things going across the Irish Sea? Well, figures out today showed that the economy has bombed after briefly flickering into life in the first three months of 2010. There are rumours swirling around Dublin about the viability of Anglo Irish Bank. And the bond markets that were once impressed by the bravery of prime minister Brian Cowen's government have now turned on Ireland with a vengeance.

 

One measure of market confidence is the difference, or spread, between the yield on Irish government bonds and German bunds. Today that widened to a record level.

 

The reason for this is simple: the budget cuts have impaired the economy's ability to grow. The Irish government wants to slash the country's budget deficit from 12% to less than 3% by 2014, which would be eye-wateringly tough even if the economy were growing robustly. But when the economy is shrinking, it means the government is in effect running to stand still, hence the calls for even greater austerity to mollify the markets. That would, of course, simply weaken growth prospects still further.

 

Ireland, in other words, is perilously close to locking itself into permanent depression and deflation, from which the only way out may be a default that would further damage consumer and business confidence. There is indeed a lesson for the UK from Ireland: how not to do it.

We are in a far better position than them, triple A credit rating, flexibility thanks to not being in the Euro, a far higher global standing as a trading nation.

 

A double dip recession is a slight possibility but we are in a far better position to whether the storm than Ireland

Ireland used to have a AAA rating too!

 

Thats gone to hell now of course.

Ireland used to have a AAA rating too!

 

Thats gone to hell now of course.

 

We have a lot more flexibility with regards our monetary policy than Ireland thanks to not being in the Euro though

 

I am not ruling out a double dip, it is possible but I think we are better equipped to avoid it

Somebody said earlier to me that unemployment benefit in Ireland is around £200 a week, is that true ? if true then that is absolutely insane no wonder they are in such a financial mess doling out £200 a week to 1/8th of the population

Somebody said earlier to me that unemployment benefit in Ireland is around £200 a week, is that true ? if true then that is absolutely insane no wonder they are in such a financial mess doling out £200 a week to 1/8th of the population

The maximum rate is/was €196 per week (about £160), but let's not forget that Ireland's population is far smaller than ours - about 4.4 million. Workforce of about 3.5 million - so 1/8th is about 450,000. Not as much of a financial stress as it would first seem.

 

Estimates for the minimum cost of living in Ireland range from about 700 to 800 euros, and wages tend/ed to be far higher than the unemployment benefit rate, so it was more a case that they had an adequate safety net there to begin with - but which has now been scrapped.

We have a lot more flexibility with regards our monetary policy than Ireland thanks to not being in the Euro though

 

I am not ruling out a double dip, it is possible but I think we are better equipped to avoid it

 

Having the pound is an advantage, but only a small one - it won't be enough to cancel out the fall in GDP that these cuts will bring.

We're better equipped to avoid a double dip, but our cuts are also far deeper than those in Ireland - so it's basically negating it.

Tax cuts ahead :wub: :heart:

 

http://www.telegraph.co.uk/news/newstopics...-class-tax.html

Ha! I'd like to know where the stronger economy he wishes to give tax cuts back from is going to come from.

http://www.bbc.co.uk/news/business-11419937

 

The IMF has given resounding support to Cameron

 

 

They would! Ever heard of the Washington Consensus?

 

I seem to recall the IMF sponsoring Ireland's cuts - indeed, they've still been calling on them to make more cuts as late as July when it's been painfully obvious to all observers that they've been harming rather than helping the Irish economy!

The IMF has been a complete condradictory mess lately. They praise governments' austerity plans, but also simultaneously moan about the jobs crisis in Europe (which will obviously be exacerbated by cuts). Better to ignore their conflicting advice completely and just focus on the examples this government is leading from -- i.e. Ireland.

David Davis has criticised the Coalition's plans, saying there's no agenda for growth.