First shoots of recovery trampled on?

[Gromit]

The UK economy saw its fastest growth in more than four years between April and June, official estimates showed today.

The 1.1 per cent leap in output was almost double the 0.6 per cent expected by the City. There was also a big contribution from the construction industry, which grew at its fastest pace since 1963.

The huge 6.6 per cent rise over the quarter contributed 0.4 percentage points to overall GDP as building bounced back from a snowbound first three months of the year.

But many experts warn that the stunning growth seen could be as good as it gets for the UK economy as the impact of Chancellor George Osborne's savage Budget cutting kicks in.

http://www.independen...1-growth-2033728.html

Is paying back the Country's debts too quickly going to stifle growth and possibly push us back into recession?

[New Judge]

Hopefully not, Gromit.

But what will stifle growth to a far greater degree in the long term would be to continue financing the unsustainable levels of debt the UK has accumulated. Currently one pound in every four spent by the government is borrowed. Servicing the debt costs as much as is spent on Housing and Transport combined. It is equivalent to half the VAT take, or as much as is collected in Council Tax and Business Rates combined, or all the Corporation Tax collected annually. It is plainly and simply unsustainable.

Imagine having to borrow a quarter of your monthly expenditure, month in month out, year in year out. You’d soon be bankrupt. Before that, your lenders would increase your interest rates (to counter their fear that you may not be able to meet the repayments) and they would ultimately turn the tap off.

Most people know where the blame lies for this situation but that is no longer for debate. We are where we are and the problem must be tackled urgently.

[rov1200]

But didn't the previous government in its last throes heralded in its budget of Mar 2010 free stamp duty for the lower end of the market. This would have brought more buyers into the market before the general election and benefitted the construction industry as most first time buyers get their new house from developers.

http://www.guardian.c...udget-2010-stamp-duty

If the government offers sweeteners to the general public they will respond and take up the offers. Just take the 'bangers for cash' and also the payment towards a central heating boiler: both were heavily taken up.

I've always suggested the way out of a slump is to give the purchaser a reward. I fear this government is resorting to the old method of giving handouts to the companies instead.

[modeller]

Giving sweeteners may push up demand but it also pushes up house prices in the same way as easy to get morgages did , which resulted in the crash . If you want to boost the economy bring house prices down and that can only be done by applying strict prudent lending. Unfortunately that takes a long time as nobody wants to sell at a lower price but it's the only way. I saw it happen in the last house slump in the 80s and it took 5 years to get the market moving again.

[modeller]

Similarly the success of the old bangers scheme was only temporary . The EU has now reported the lowest sales for 20 years . Also it did little for our economy as most new cars are made abroad. It was also reported that because of the lower VAT returns and the government subsidy there was a net loss of £18million. Sweeteners may have their place like New Year sales but they are not a cure for long term problems.