UK Turned Into “Nation Of Savers” … “Instantly” After "Radical" Accounting Overhaul

GoldCore's picture

Today’s AM fix was USD 1,314.75, EUR 955.14 and GBP 786.90 per ounce.               

Yesterday’s AM fix was USD 1,299.00, EUR 946.93 and GBP 783.76 per ounce.

Gold fell $7.00 or 0.54% yesterday to $1,296.50/oz. Silver slipped $0.06 or 0.3% to $19.88/oz.   

Gold in U.S. Dollars, 5 Days - (Thomson Reuters)

Gold rose by 1.3% today to a session high of $1,313.50, on safe haven demand due to renewed geopolitical tensions in Ukraine.  Technical buying was also likely after gold moved above the $1,300 an ounce mark. This may have triggered stop loss buying.

Silver, platinum and palladium were also all up about 1%.

In Ukraine, pro Moscow protesters seized arms in one city and declared a separatist republic in another, in moves Kiev described as part of a Russian orchestrated plan to justify an invasion to dismember the country.

Russia has alleged that there are 150 U.S. mercenaries working with the Ukraine military and urged Ukraine to halt any interior military preparations which could lead to a civil war.


 Gold in U.S. Dollars, 1 Year - (Thomson Reuters)

Gold looks set to benefit from the continuing economic and geopolitical uncertainties.

Also supportive may be Chinese demand which returned after their markets reopened after the Tomb Sweeping holiday yesterday.

UK And Nigeria Use Accounting Tricks To Boost GDP

A radical overhaul of the UK national accounts is set to double the official measure of household savings rates according to the Financial Times. The moves will present Britons as a nation of unexpected prudence and undercut their widely held reputation for profligacy and indebtedness.

For the first time in 15 years, the Office for National Statistics (ONS) is preparing to rip up the way it measures Britain’s economy. The new “techniques” will show a huge increase in the size of the economy, a higher level of public debt and a much increased savings ratio.

The UK’s Office for National Statistics will alter the way it measures the economy by adopting new accounting standards to gross domestic product and related measures in September. There is also a good chance that the government statisticians will significantly revise up growth recorded in the economy in 2012 and last year.

One of the biggest changes will see future pension rights measured as if they were present income. Given that the UK has a large funded private sector defined benefit pension system, this will significantly increase the official savings ratio.
In addition, research and development spending will count towards GDP rather than being seen as a cost of production. The ONS says the accounting change will add between 2.5% and 5% to the official measure of GDP, increasing the total by up to £75 billion.

Bizarrely, the accounting gimmick at the Office for National Statistics (ONS) will turn the UK into a nation of savers instantly.

It is hoped that the moves will have a PR benefit, overturning Britain’s reputation as a spendthrift nation and significantly improve the poor productivity performance of the past few years by including future pension rights as current income.

The reforms, the first for 15 years, will 'boost the size' of the economy, increase the amount of public debt and raise the savings ratio. The report said, as a result the body could revise up growth in 2012 and 2013.

Separately, Nigeria has "rebased" its gross domestic product (GDP) data, which has pushed it above South Africa as the Africa's largest economy.

GDP for 2013 totalled 80.3 trillion naira (£307.6 billion: $509.9 billion), the Nigerian statistics office said. That compares with South Africa's GDP of $370.3 billion at the end of 2013.

However, some economists point out that Nigeria's economic output is underperforming because at 170 million people, its population is three times larger than South Africa's. On a per capita basis, South Africa's GDP numbers are three times larger than Nigeria's. Nigerian financial analyst Bismarck Rewane called the revisions "a vanity".

Accounting tricks and manipulation of economic data is taking place globally and will contribute to people being misled regarding the actual true state of national economies and the global economy.

The false sense of security seen before the global financial crisis has returned ...   it can only end in tears ...

Owning physical coins and bars directly and in a fully allocated and fully segregated account remains vital.    

Educate yourself with our guide to safely storing gold - The 7 Key Gold Storage Must Haves

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whidbey-2's picture

The propensity to lie grows with all elected governments as a strategy to show superiority of governance and economic results rather than do unpleasent things.  The practice is rampent in all  world states, but particularly in western governments that want to appear both effective and painless to the voters. Other less free states merely lie without attempting to make up false tales of success.  The practice of hollowing out both truth and results was at the very heart of the Deline and Fall of Rome, Great Britian in 1947 (labor governments )  and the USA today.  Easy government brings hard times - for centuries to come.

Ban KKiller's picture

Accounting now by Winston Smith and his memory holes.

Watson's picture

The UK stopped being a 'nation of savers' in the 1950's (it did have a commendable record beforehand, particularly in Victorian times).

The situation changed when economic policies were introduced that made it increasingly obvious to UK citizens that to get rich you had to borrow as much as possible, to buy as expensive a house as you could afford.

With a few bumps along the road that has been true up to the present.
That road does look as though it is coming to an end, however: despite worries of a 'housing bubble' prices ex-London are only up 5-10%, despite ultra-low interest rates. Those sort of interest rates, having been in place for a number of years, ought to have put prices up by 50-100%.

By guess is that there is, just starting, to be a 'revulsion' agsinst the general debt load, so little more will be taken on.
That situation is fatal to any asset market largely financed by debt.

The proof that something is wrong is the government feeling it needs to offer guarantees to back 95% mortgages...they wouldn't do this if there wasn't a chance the balloon bursts before the next election.


Sandmann's picture

Probably when Pension Funds and Trusts were forced to invest in 3% Consols until Ross Goobey started in Equities in the late-1950s and people saw fixed incomes destroyed by devaluation of Sterling in 1949 and the loss of labour discipline under the 1951 Churchill Government. The Financial Repression as the Government tried to erode the huge interwar debt to which 1939-47 added a huge pile more destroyed savings.

If you recall Hayek writing about receiving a 1901 penny in his change when paying bus fare in 1961 you get a sense of stability which went out of the window in the 1960s. It used to be commonplace to get 1901 or 1910 pennies in change.

Now everything is debased to the point of making a £1 coin look like a threepenny bit in 2017. This country shares with the USA the biggest Bernays Advertising/Propaganda Sector on earth and it works overtime to puff up its own glories and find Objects of Hate - Ghadaffi, Saddam, Assad, Putin - to keep the show on the road.

It is a Kleptocracy that will do anything to stay in power in a basically Norman Feudal Society oppressing the mass of the population and extorting from it


GreatUncle's picture

UK economy ... lol I see this ... at some point it has to break ,,,

There is no place economically safe to store wealth under the fiat monetary system. All places you invest can be smacked down and manipulated by the value of paper that has no value based in the real world. 3 Points of recent news ... 2.9% growth ... if you have no tangible asset accruing this growth the rate of your devaluation is rapidly growing. Then the other good news ASDA (part of walmart) creating 2K new jobs as proclaimed by Cameron is only 2% of the current immigration level by an American company where if besides tax avoidance, profits will flow set by the direction of the money as an import out of the country but never declared as such. Lastly, where as a guy can I get one of these nice little money earners called a child free on the NHS that comes with a home and financial security all paid for by somebody else. Oh it is only for single women!

That is the trendy UK economy ... there is no way back.

DOGGONE's picture

Tell this truth first:
The Public Be Suckered

AdvancingTime's picture

I have been watching with wonder as the economic news flowing from the UK has been spun to give the impression of robust growth. How do you explain the pick up in growth to a mature country that has been struggling under debt? In general the UK economy is not particularly competitive, over-weighted in the service sector and global finance it is vulnerable to problems that surface throughout the world. As usual we must look deeper into the facts to get a clear picture of what is really happening.


It now appears much of the recent strength comes from the fact that thousands of Britons are receiving compensation for Payment Protection Insurance (PPI). Most Americans reading about the pickup in Britain's economy never even heard of the PPI. The total paid out so far is £13.3bn or about 22 billion American dollars. Dropping this huge amount of "helicopter money" on a country of only about 63 million people has been a big boost. The post below goes into why the growth won't last and has been way over spun.


Sandmann's picture

The UK Economy is a glory to behold......every election coincides with easy credit and ravishing success followed by "correction" after the seats are warm from sweaty bums after the next Occupier takes power and extracts the juice from the orange.

It is simply The Matrix

moneybots's picture

"The ONS says the accounting change will add between 2.5% and 5% to the official measure of GDP, increasing the total by up to £75 billion."


Why not a bigger accounting change to boost it 10, 20, 30% or more. If they are going to lie, they should just do it big. That way when unemployment spikes to 15%, they can point to GDP and say "look, the GDP is still growing- it's not a recession.

Sandmann's picture

The change also allows the USA to book its 14 carrier groups to GDP as part of the "Hedonic Calculus" of Alan Greenspan Squared.

I envisage the USA being debt free within 2 years as it allocates its National Debt to one of Saturn's moons,

Toburk's picture

Didn't the U.S. do this very same change last year?

klockwerks's picture

Toburk, yes we can! Now when the GDP figures come out no one says , wait a minute, they just talk about our grand recovery

Crawdaddy's picture

If you noticed that then that makes you a a terrorist. Welcome aboard!

klockwerks's picture

Toburk, yes we can! Now when the GDP figures come out no one says , wait a minute, they just talk about our grand recovery

starman's picture

next is the US, got any cash in savings? now you don't!

Dick Buttkiss's picture

Lies, damned lies, and goverment accounting.

Not to mention the mind-numbing Audacity of Hypocrisy:

Sovereign Man

April 8, 2014
Santiago, Chile

The Land of the Free is one of the only countries on the planet that taxes its non-resident citizens on their worldwide income.

For most nationalities, if you don't live in the country of your citizenship, your home government doesn't tax you. 

So if you're a French national living in, say, Abu Dhabi, you're subject to income taxes in Abu Dhabi (which happen to be zero). Not France. 

But in the Land of the Free, the US government wants its fair share of your labor no matter where in the world you live. 

One of the only other countries on the planet where this is true is Eritrea. (In case you have to look that up, it's by Ethiopia on the Red Sea.)

Eritrea's government charges its non-resident citizens a discounted tax rate of just 2%. That's it. 

But here's what's amazing: in 2011, the United Nations caught wind of this 2% tax on Eritrean nationals living overseas and found it woefully immoral.

So immoral, in fact, that the UN Security Council passed resolution 2023 that year, condemning the Eritrean government for imposing a tax on non-resident citizens.

The resolution states that: "Eritrea shall cease using extortion, threats of violence, fraud and other illicit means to collect taxes outside of Eritrea from its nationals or other individuals of Eritrean descent."

Incredible. The UN Security Council considered a 2% tax on Eritrean citizens living abroad to be 'extortion'. 

Even more incredible? The United States of America VOTED FOR the resolution.

Let that last part sink in.

The US government is establishing IRS field offices around the globe to demand taxation from its non-resident citizens... yet simultaneously condemns Eritrea's government for taxing expats at just 2%.

The Eritrean tax authority's tactics of "extortion, threats of violence," etc. are worth denouncing in the UN. But it's perfectly acceptable for the US government to throw people in jail simply for failing to file an offshore disclosure form.

It's an unbelievable level of arrogance and hypocrisy... all to keep financing a bankrupt government's wish list of more bombs, more drones, and more thugs just a little while longer.

Until tomorrow,

Simon Black

Grouchy Marx's picture

They won't fool the individuals, who know what they have saved; but imagine how dumbstruck the oligarchs will be when they attempt to bail in all these nonexistent savings. 

whotookmyalias's picture

And it continues......

Coming next, the US minimum wage is doubled and politicians take credit for strengthening the economy.