A rise of 5p in the pound on the basic and higher rate of income tax would fill the budget gap, NIESR said
Oh. they’d love to do it. But even this lot aren’t that suicidal.
A rise of 5p in the pound on the basic and higher rate of income tax would fill the budget gap, NIESR said
Oh. they’d love to do it. But even this lot aren’t that suicidal.
But even this lot aren’t that suicidal.
You seriously believe that?
For starters 5% on the additional rate (45% up to 50%) seems an absolute gimme in November as their pledges will be revealed as only referring to the basic rate of IT. That opens the door for raising the higher rate in 2026 meaning the additional rate has to go up again. Finally frozen allowances already mean more and more average earners move out of the basic rate band.
This lot are in power until 2029 and will do whatever they like.
John is right. It will be one of this, something more stupid or a mixture of several stupid things. They’re not going to cut a single £ of spending and have been spending more on pointless crap.
This lot are in power until 2029 and will do whatever they like.
Would anyone be amazed if the 2029 election were cancelled because of some exogenous event? Zelensky has cancelled them in Ukraine, and they do keep explaining how we’re soon going to be at war with Russia.
Or… Surely it would be irresponsible to hold elections when the global climate is on a knife edge, and so much work is yet to be done.
Or… Oops another pandemic.
Or… How many battalions does the Electoral Commission have? Not that it matters – they’re on our side!
Stupid people do stupid things. Desperate people do desperate things. Stupid desperate people etc etc
Anyone seen that nice Dr Laffer…..?
Would anyone be amazed if the 2029 election were cancelled because of some exogenous event?
It’s already happened. Rayner cancelled our local elections this year because we are supposed to be getting a unitary authority next year and they didn’t want to spend the money on a ‘wasted’ election.
OK it wasn’t exogenous but the precedent has been set.
A convenient “national emergency” at the beginning of 2029 should provide the necessary cover for postponing the election.
By then the various ethnic factions will have decimated Labour as it current exists so they’d have no chance of winning a majority.
Banning Reform is another possibility. Maybe it’s just a case of seeing what Germany does with AfD and then falling into line. Alternately just claim election interference as happened in Romania last year. Either way I can’t see the Supreme Court stopping them.
And what would the second-order effects be? Income would be reduced from 68p to 63p in the marginal nominal pound for basic-rate taxpayers and from 58p to 53p for higher rate. That’s a 7.4% and 8.6% reduction in post-tax income respectively. Not something that is just shruggable-offable: people will change their behaviour. And the change in behaviour won’t be by working more because there won’t be the jobs.
Effect on the hospitality industry? VAT receipts?
Bloody hell, theres some conspiracy theories about:
Raynor didn’t cancel elections, she said affected councils could if they wanted to as a money saving issue and as we know councils are strapped for cash.
Ukraine’s constitution specifically doesn’t allow elections during war and how can you have valid elections in occupied territory? No doubt if they did we’d then get complaints the election wasn’t valid because the occupied territories’ votes weren’t valid.
We don’t have a basic law like Germany so what legal process do we could be used to ban Reform, even in the unlikely event the German constitutional court does ban the AfD?
I think you underestimate just how deluded they are, and just how much they believe their own publicity.
BiND: the effect was the same whether Rayner directly cancelled or the councils did it for budgetary purposes. She enabled it to happen.
Can’t think why…
Elections? A threat to socialist democracy!
A thing of the past…
Berthold had it right. They will dissolve the people and elect another. Whom they are already importing.
I don’t know who you really are. I don’t know what you want. If you are looking for tax, I can tell you I don’t have money. But what I do have are a very particular set of skills, skills I have acquired over a very long career. Skills that make me a nightmare for people like you. If you let me have an election in ’29, that’ll be the end of it. I will not look for you, I will not pursue you. But if you don’t, I will look for you, I will find you . .
That sounds like some of the skills we are currently welcoming into the country.
This lot aren’t in power til 2029. We’re a year in and already the wheels are coming off economically, which will be what finishes them. We are entering the socialist doom loop, where they spend too much, tax the economy into the ground, which then fails to grow, or contracts, which increases borrowing, which increases borrowing rates, all of which means less money to spend, which means more tax rises on the productive, rinse and repeat.
I would put the crisis around next autumn. Reeves does whatever she does this autumn, which will again be aimed at the productive sector rather than the consumption sector, by next spring its obvious the medicine isn’t working (again), deficits continue to rise, borrowing rates ditto, and we are back exactly where we are today. At some point next year the bond market will pull the plug, rates rise into the stratosphere and the government is toast. If they get their mates at the ‘independent’ BoE to announce more QE to ‘support the government’ by buying debt with printed money and drive rates down, the pound gets massacred on the exchanges and inflation rips overnight. Game over.
This is where ignoring Aztec wisdom inevitably leads you
Jim,
All of that is probably inevitable but with the huge Labour majority backed up by fellow-traveller greens, libs, nats, shinners and “others” what is the mechanism for change?
TTK is never going to ask King Tampon to dissolve parliament irrespective of how far up shit creek the economy, law and order and the country are. Neither will his successor although I don’t deny there may be one before 2029 as scapegoats are always seen as the answer and if anyone deserves it………….
“All of that is probably inevitable but with the huge Labour majority backed up by fellow-traveller greens, libs, nats, shinners and “others” what is the mechanism for change?”
Simple – currency collapse. If it becomes apparent that a government has no intention of acting responsibly their currency will collapse. That rapidly feeds through into all manner of other nasty downward spirals that finally end up with literally running out of money, or the money being worth nothing, which is pretty much the same thing. In todays modern world of instant communications and global commerce, this could play out inside a week or two. No government, however large their nominal majority can survive that sort of chaos.
I think the scenario Jim sets out is very plausible. They could be going to the IMF with a begging bowl in 18 months time.
The tories usually leave the economy in at least a reasonable state so it takes labour some time to wreck it. This time it came pre-wrecked and they doubled down.
Jim, Labour would cling to power even during an IMF bailout – unless the PLP rejected the IMF’s austerity and somehow brought down the government…
To be on the safe side we are withdrawing the last of our Tax-Free Lump Sums from our pensions.
It’s hard to know what other precautions to take because we can have no idea what old age “Care” will cost us. Probably nowt for me but probably lots for my widow – but unknowable and, alas, uninsurable.
Question is, dearieme, where are you going to stash the dosh? Cash ISAs aren’t going to be a fat lot of use if the pound tanks.
@ Theophrastus
The PLP is unlikely to shoot themselves in the face by bringing down the Labour government mid-term while the UK is a basket case. In 1931 they lost three-quarters of their seats
“A rise of 5p in the pound on the basic and higher rate of income tax would fill the budget gap”
But for how long? As soon as the government had closed the gap it would use that as an excuse to increase spending again. As Jim says, “socialist doom loop”.
@Jack C: can you imagine how long it would take the British government to put up a decent pyramid?
“The tories usually leave the economy in at least a reasonable state so it takes labour some time to wreck it. This time it came pre-wrecked and they doubled down.”
Quite. For once Labour got in just as the economy is on its knees, and they’ve acted like its booming and they can afford to tax off some of the profits, and in doing so have applied the coup de grace. Not only that, they’ve got in at a point where the last lot maxed out the UK’s credit card paying for all the covid nonsense (all of which Labour agreed with in spades of course), so their ability to borrow is constrained, and the cost of doing so is also rising. No wonder Rishi Sunak was doing his best to lose the last election.
“Question is, dearieme, where are you going to stash the dosh?”
Good question: the first bit will just clear some recent high expenditure on our credit cards.
I have invented a sort of synthetic Index-Linked Savings Certificate that I might try a plunge on, helped by cashing in our Premium Bonds. We’ve got some gold and silver ETFs that have gone up about four-fold in 17-18 years, so they’ve beaten inflation. (At least I assume they have.)
We could always hope they’ll continue to do so.
But what I suppose I should do is find out how to invest safely in sound foreign countries and currencies – Swiss Franc? Singapore Dollar? Norwegian Krona? I keep hoping someone will say “What you do, old son, is …. xyz.” But usually all I get is generalities.
@ dearieme
The problem is that everyone else (except Trade Unionists) share your problem so the combination of currency risk, political risk and exchange rate appreciation vs £ or $ tend to be in balance. If any one country became an obvious choice people would pile in and the exchange rate would go up and then interest rates would go down as we saw with Switzerland in the 1980s.
If you can afford to live in retirement in Switzerland that’s an obvious choice but I certainly cannot; if not choose an alternative safe haven. A Scot might find Norway’s climate easier to tolerate than Singapore’s.
@Norman
Question is, dearieme, where are you going to stash the dosh? Cash ISAs aren’t going to be a fat lot of use if the pound tanks.
I am not a financial advisor.
There are some interesting things that you can hold in Stocks & Shares ISAs. I moved about 20% of mine into gold at the back end of 2023 as a hedge against stagflation. SGLN is physical gold, but held in an LSE-listed ETF, slightly more expensive but less risky than some gold funds that hold “paper” gold. Various other options exist. Similarly, gold miners will give you more of an exposure to gold futures. I’ve got some in GDGB, again listed on the LSE, and again there are plenty of other options. These can both be held in a Stocks & Shares ISA.
There is a rule that you can’t hold foreign currency in cash in a S&S ISA so I prefer LSE-listed ETFs over NYSE ones because there’s no currency exchange fees to pay when you trade; in a SIPP you can hold foreign currency, so most of mine is in USD and I hold a lot more American shares/ETFs in that.
If you’re worried about inflation or currency weakness, don’t hold that currency, or anything whose value is based on non-indexed future returns in that currency (e.g. bonds). The only problem is what? The US market is looking badly over-valued at the moment, the Continentals seem to be doing a slow-mo version of Starmer, Japan is in a demographic doom loop, emerging markets/China look more and more politically risky…
Interesting investment remarks, chaps. Actually, I think I’m too small a fish, so am probably fucked. Never mind; I’ve had a good life and done my dad job. Can’t win ’em all.
One of the things which is true is that 70% of the FTSE100 revenue comes from outside the UK and sterling. So, as sterling declines in value the FTSE 100 goes up. And, really, it does. So, the FTSE100 is actually a pretty good hedge against sterling becoming worth nothing.
“FTSE100 revenue comes from outside the UK and sterling”
And which is also true to greater or lesser extent of various larger corps on the various EU and US exchanges.