Should we save or should we spend?

[Judge Judy]

The more money that is made, the less the value the pound becomes.

The idea of lowering VAT was to get us people to start spending again, which on the news sales have gone up again, but that could be a coincedence that many shops done one day sales. If we spend more jobs are created, which is good because recently people have gone jobless.

So I say start spending.

[GommeInc]

After talking to a few people about this, it's about as good to save as it is to spend, because after the price cuts and lower VAT will just mean we have to pay an ultimate price later. Something about what happened last time cropped up.

[Ramones]

laaaaaaaaged soz delete

[Ramones]

After talking to a few people about this, it's about as good to save as it is to spend, because after the price cuts and lower VAT will just mean we have to pay an ultimate price later. Something about what happened last time cropped up.

I disagree, i know what you mean but i don't think it will work like that. It's like part of a trade cycle, there will be slumps, and the lower prices and tax cuts lead to increased consumption push it back into recovery and then it might boom and then prices will get too high and it might slump again etc etc etc. The only difference is that this time it isn't just about the supply and demand of the UK population.
If we save.. then what? we keep saving until half of the companies in the UK have gone under?
If we spend, which is triggered by lower prices, the firms will be losing out on profit but will still be supplying and the economy may not look great straight away but long term, it's what is needed.

[GommeInc]

I disagree, i know what you mean but i don't think it will work like that. It's like part of a trade cycle, there will be slumps, and the lower prices and tax cuts lead to increased consumption push it back into recovery and then it might boom and then prices will get too high and it might slump again etc etc etc. The only difference is that this time it isn't just about the supply and demand of the UK population.
If we save.. then what? we keep saving until half of the companies in the UK have gone under?
If we spend, which is triggered by lower prices, the firms will be losing out on profit but will still be supplying and the economy may not look great straight away but long term, it's what is needed.

It's what happens in 2010 when VAT is apparently set to rise, people are still thinking about saving because it'll be worse in the future than it is now. Sure, lower VAT, but raising it more than 17.5% which is one fear, won't make much difference to some businesses. It's delaying the inevitable in some cases...

[Ramones]

It's what happens in 2010 when VAT is apparently set to rise, people are still thinking about saving because it'll be worse in the future than it is now. Sure, lower VAT, but raising it more than 17.5% which is one fear, won't make much difference to some businesses. It's delaying the inevitable in some cases...

Firstly, there has been no evidence to suggest it will rise above 17.5%, it was mistakenly put in a report at 18.5% when it should of been 17.5 and the idea of rising it above 17.5 has been dismissed by many officials.

Secondly, in your first post you said saving was a good thing cause we're gonna have to ultimately pay it back later. Do you mean pay it back when the VAT up to 18%+, which isn't set to happen anyway, but i still don't understand why it would be better to wait?

I'm not talking about what people are likely to do, but about what we should do.

[GommeInc]

What people are likely to do is very important :/ It's like giving someone £10 to go buy something to eat and what they should do is spend it, when they are just as likely to save it.

And as I said, the "apparent" (not definite) idea of VAT increasing above that of 17.5% is making people think, even though there no solid evidence. The media and small mistakes like this do have an effect on some people and after talking to some other business studies students about this, it seems people are believing the worse from the government, which you can't blame them when some believe the government is utterly useless and deceiptful. It's how some people work.

Speaking of VAT cuts though, PC World was doing very good today. The one in town was advertising the 15% VAT rate and was packed for a change. They were even giving out documents about what the VAT change means i.e. £100 the Ex VAT is £85.11 and that £85.11 with the new VAT becomes £97.87, which means a saving of £2.13 (I think, too tired for math).

[kk.]

The VAT cut is being paid back as soon as it happens. The rich are gonna pay more income tax and something else is increasing but cant remember what. Its still a possibilty though that they may raise it above 17.5 after this 1 year is up

[Ramones]

I'd like to hear why you think our government is useless? And also you didn't answer my question on why saving is good.
The thread was talking about what should we do, so i replied in most cases about that.
Now i think it's pretty damn impossible to understand what people are likely do, the way i see it, the VAT cut is good, i watch the news, i see that the they are planning on putting it back up to 17.5, not 18.5% in 13 months. I'm not scared about spending money. And i know alot of people including my family who share the same view as me, interest rates falling, taxes falling, people are gonna spend.
And theres been a possibility they may rise it above 17.5% for the past 10 years, but i just can't see it happening

[.Zi]

Prices are lower to encourage the public to spend more money which in turn will give companies and shops money for selling their products. Companies can then buy more products from suppliers which will give the suppliers money etc.

I agree, so we need to spend. Im buying alot of stuff and planning on it - Electric Guitar - New Laptop and some other stuff.