The Fed, the European Central Bank and the Bank of England made the same mistake last year. They each went on printing new money and buying up state debt Ā to keep interest rates too low through 2021 when recovery was well underway. As a result Ā they each triggered a 10% inflation against a target of 2%. It was not mainly the Ukraine war and energy prices that caused the inflation. Their Ā inflations were well set in before the war. The Ā world’s second and third largest economies, Japan and China, kept inflation below 3% despite importing lots of dear energy because they did not create excess money and credit.
The three bad Banks have now decided to do the opposite and tighten money, sell some of the bonds they bought and jack up interest rates. This is now spooking the markets, who fear they intend Ā to bring on a recession. Bonds fall in price to adjust them to the higher interest rates the Banks want, and shares fall in anticipation of a slump. All too often in last cycles these Central Banks have loosened near a peak to stoke the inflation more and tightened into a trough to make the recession Ā worse. Unlike the Asian Banks the three big Western Central Banks fly blind, refusing to Ā monitor and target money and credit. If they did they would have seen excess last year and would see too little this year. Yesterday was another bad day for share and bond markets in all three central bank areas.
There is a clear danger the Bank of England will lean too hard against government attempts to ease the squeeze and will engineer the recession they are forecasting. I believe their latest estimate that inflation will fall away rapidly next year so they can now pause their tough actions. Pressing on with selling bonds they have bought would be damaging at a time of a large external shock from energy prices. As this is a joint policy with the Chancellor they would be well advised to agree to delay it until recession is vanquished.
September 24, 2022
Indeed and the high energy prices are not mainly due to Putin they are due to the EU & UK’s insane energy policy and the May’s idiotic “net zero” agenda. This idiotic lockdowns and vast Covid waste of tax payers money did huge & needless economic and health damage too.
Listening to the left wing reports on the BBC and MSM on the Kwasi’s “budget” and Q. Time yesterday many seem to think he has made huge tax cuts. This is total drivel – most of the “tax cuts” were just reversals of Sunak’s Manifeso ratting increases on NI. But he has not even reversed the frozen allowance on income tax, CGT, pension limits, IHT… these are also vast tax increases at a time of high inflation.
September 24, 2022
Sorry Any Questions not Question Time I meant.
September 24, 2022
JR, Bailey has failed his mandate why is he not sacked? I keep reading your posts about who is to blame but your govt is in charge. Can you imagine any business putting up with this dire performance? Same for NHS, DEFRA, Home Office, Foreign Office, MoD. No more quangos created for govt excuses get ministers to act like leaders and get their depts to do what they are told.
Scrapping Bankers bonuses stupid without attaching any personal responsibility for failing, did your lot learn nothing from the last fiasco that we are still paying for as we own some of the banks! Glass and Steagle kept banks under control u til Clinton came along and Blaire and Brown copied.
September 24, 2022
+1
The Government is desperate to blame Big Bad Putin for the shambles of our energy supply, when it is almost entirely home-grown by the EU and British Establishment acting in cohort with the Eco Nutters and their supporters in Parliament.
Sadly, the silence of the few sensible but cowardly politicians, who didn’t dare speak up against the lunacy of destroying our energy security in favour of unreliable alternatives, has helped facilitate it.
September 24, 2022
+1
September 24, 2022
Donna,
+1
Truss even claims expensive energy a price worth paying to fight Putin- no it is not! Pure spin and lies from her while she ridiculously promotes net stupid policy.
September 24, 2022
Certainly expensive energy is not a sensible price to pay to save a bit of CO2.
September 24, 2022
the silence of a few is actually a deafening roar to those of us that pull the fingers out of our ears.
They were elected, not to sit on hands thinking about their next holiday, but to listen, comprehend and stand for Speaker to allow them to point out the futility and foolishness of what is going on.
But then Chief Whip – very apt may I say, will threaten torture for those who dare engage brain.
September 24, 2022
Don’t forget that King Charlie has been acting with the WEF, Carney and the Greencrap brigade.
September 24, 2022
Seems so.
September 24, 2022
I too get fed up listening to politicians blaming Russia for the power shortage. As I said yesterday gas was producing 68% of generation, it’s not a shortage of gas but a shortage of generating capacity.
Wind was down to 2% as it is entirely unpredictable but the Business Extinction and Import Substitution want to build more windmills
Despite the know alls saying different fracking and coal mining is the immediate answer.
September 24, 2022
Alas idiotic ministers liked to be filmed blowing up most coal fired power stations!
September 24, 2022
Vested interests Ian.
September 24, 2022
@LL; “insane energy policy … idiotic lockdowns and vast Covid waste”
You really do take the biscuit at times Mr Life, when have you ever backed coal, the cheapest and most plentiful energy source under our feet, nor were you against lockdowns back in early 2020 when you sounded scared witless, all but demanding the govt buy vast amounts of PPE and vacuum cleaners that could also blow, whatever the cost…
As for those tax cuts, perhaps they were just reversing previous policies, but why were those polices put in place, have checked the GBP-USD FX rates this morning; Tax cuts for a select few, pain for the rest of us, yet you want more?!
September 24, 2022
Gas is cleaner and better than coal but I have always been in favour or cost effective, reliable and on demand energy like gas and coal.
September 24, 2022
@LL; Coal could have been made a lot cleaner, the technology existed back in the 1980s too, the main advantage of gas has over coal is less risk of supply disruption – that is until now.
September 24, 2022
Er, the sheer genius of the recent budget has caused Sterling to tank, and as a result the AA say that it will cost your Tory-voting petrolhead Ā£6 a tank more to fuel, owing to the price of oil in our yet-again-devalued currency.
Oh. My. Aching. Sides.
September 24, 2022
A most bizarre sense of humour Martin.
September 24, 2022
There more to it than that NHL
The relative rates of interest and bond prices are two factors.
But if you and many others on the left hate the budget then it’s a great indication that it’s good.
Even baz is back!
September 24, 2022
Lifelogic, you werenāt saying the covid spending was a waste at the time, you were calling for more ventilators, PPE, more vaccinations for men targeted at younger age groups and faster than women, werenāt you the person writing here about getting test and trace set up faster and encouraging more test sites? I didnāt hear you complain about the free test kits!
People have very short memories, the Unions were insisting on regular frequent testing even on tiny children or they would walk out. The opposition and media was using testing as a frequent stick, in fact if you remember they didnāt want it stopping in January 2022, it has been borne out that it was right to reduce it. People can still get test kits, how many fewer though when they have to put their hands in their own pockets!
September 24, 2022
Indeed and I was largely correct in this sensible precautions given knowledge at the time. I did not support the endless lockdowns, the vacciation children ot at risk or those who had had Covid or the school closures. The vaccination of men slightly younger than women would have saved hundreds of lives had the vaccines been about 80% effective as was falsely claimed from the trials and by gov experts but we now know they are rather ineffective often dangerous too.
September 24, 2022
rather ineffective a bit like not really pregnant? Are they ineffective, or not – make your mind up!
September 24, 2022
One is either pregnant or not pregnant (or pregnant with 2.3.4, 5…). Vaccines however can be 100% effective or 0% effective or just in between. Or they can even do little good and severe net harm.
Your comparison with pregnancy is totally absurd.
September 25, 2022
I knew you would feel stung into reaction.
September 24, 2022
I was clear from the outset: unless test and trace operated at high speed isolating people in under 24 hours it was pointless, because by the time the test results were in and the isolation orders given out infection would have spread too far and multiplied otherwise. As soon as it was clear that standard could not be met the scheme should have been abandoned and common sense advice offered instead. Testing should then have been reserved for estimating prevalence and for good medical reasons only, which would have reduced the number of tests over 90%.
September 24, 2022
I agree Mark, but anyone saying that at the time was a heretic and treated very badly.
September 24, 2022
What is your criteria for using the first name of a person, rather than their surname ? Do you know them personally, and therefore use the first name ?
Not a word in your lengthy postings about the true peril here, which is immigration and the costs paid by English people.
September 24, 2022
Well not much confusion over Kwasi, Redwood, Osborne or Boris or Truss or Cameron but if you said John, George, Johnson, Elizabeth, David… rather more so.
September 24, 2022
Boris is not his name, and you should stick with the pattern – use Johnson.
September 24, 2022
Spot on! He has rejected imposing increases.
September 24, 2022
I am also SICK of the gaslighting that is going on against Russia.
I’ve always thought Putin a nasty piece of work … which is why we should not have got within grappling distance of a well trained grappler.
Then we get mournful stories from the BBC about murder, torture and rape…. well this is what happens in a war which is why we should not have provoked one.
September 24, 2022
Some tax rates now and when Thatcher left office. VAT 8%/12.5% now 20%, Insurance Premium Tax 0% then now 12%, Income tax top rates 40% & now finally back to 40%, Stamp duty 1% now the top rate is 15%, NI (both) about 5% higher now too combined). Plus we have the virtually enforced workplace pension contribution for both employers and employees in effect another tax. The student loans + interest are yet another income tax of 9% for many people. Most of these loans were for fairly worthless degrees too. Often the interest far exceed the repayments deducted from salary.
Also we now have the pension lifetime limit of just circa Ā£1,070K (frozen) when we had no limit at all under Thatcher (nor should there be a limit as it is mainly just tax deferral after all. Also Brown taxed the dividend in the pension funds). Osborne tax landlords at over 100% of profits with his moronic attack on Landlords and thus Tenants too. The IHT limit is now pathetically low in real terms at Ā£325K, we no longer have inflation adjustment on CGT which makes the rates of up to 28% absurdly high. We also got tax breaks for private medical insurance too.
Overall tax rates in the UK have increases hugely since 1980 and are still absurdly high. They were far too high even in 1980! Absurd tax complexity, daft employment tax and endless red tape are another “tax” in effect on top too. The government are the main cause of low productivity, low growth, lack of investment and of the absurdly high energy prices.
September 24, 2022
All these vast tax increases and yet still most public services are dire & generally are still declining. People even waiting many hours for “emergency” ambulance and many dying as a direct result of the delay.
Much government expenditure even does positive harm – the lockdowns, test and trace, the worthless degree loans, HS2, vaccination of the young and children, & most of what is wasted on the NHS.
September 24, 2022
Lifelogic
Correct on that pal.
I know five people all put on end of life care with cancer but there family are told they don’t know where it is. They are all over 65 and have been undergoing tests in some cases for over a year. Add to that friends with dementia and their partners half killing themselves with the stress of being a carer in turn making themselves ill, their world is not a very nice place. Worked alÄŗ their days never took any handouts and the families perception is they are being left to die.
September 24, 2022
Juliet Samuel says Kwasi Kwarteng has gambled on revolution.
Well hardly a revolution! A tax-cutting stimulus amounting to Ā£45ābillion per year by 2026-27 but Ā£37 billion of this is just not choosing not to implementing Sunakās moronic manifesto ratting tax increases that were planned but not in place
The freezing of all the many allowances will claw much of this back unless he increases these anyway. A first tiny step in the right direction but no more.
September 24, 2022
As the last responsible Chief Secretary to the Treasury, William Waldegrave, used to say, the bigger the government, the bigger the mistakes. Another thing he used to say of various destructive developments was, “if they hadn’t been given the money in the first place, they couldn’t have done the damage.”
September 24, 2022
+1
September 24, 2022
Iāve heard a rumour that HS2 will never be cancelledā¦no matter the cost
September 25, 2022
not a rumour – it has been a fact for years and years.
September 25, 2022
+1 ministers following vested interests (or worse) rather than serving the public as usual. No other sensible explanations.
September 24, 2022
Massive taxes, yet the government has still lost control of the economy. The only exit path is for the money markets to turn their backs on sterling and state spending is crashed. Then the waste will end.
September 24, 2022
Excellent post LL
September 24, 2022
Which one P2?
September 24, 2022
The first one heffy.
You are so keen aren’t you, hanging on my every word.
Bless
September 24, 2022
Hef. Have a read of “7 Types of Toxic People and How to Spot Them” (scienceofpeople.com)
September 24, 2022
Are you on there acorn?
September 24, 2022
Check out how to spot a boring predictable lefty troll on acorn bill heffy and baz.com
September 24, 2022
Yes and the shameful thing is those politicians now crowing about freedoms, reduced tax etc who sat on their hands supporting previous PMs because keeping/getting jobs was more important than the appalling state they were allowing this country to get into.
Plus zero comment on egregious amounts of money wasted so we that will continue and the usual tosh about deregulation, simplification etc. it has been said so many times before, I donāt believe you.
12 years of Tory rule has got us into this mess, not one scintilla of apology indeed even today our host is blaming Central Banks.
reply I made the case against the NI tax rise, voted against and then helped get it repealed.
September 24, 2022
Labour makes the valid point that the last 12 years of the Tories got us into this mess and Truss was in the Cabinet voting for it. But then they supported all the green crap, the bonkers long lockdown and would have had even more taxes and even more red tape and other insanities from Labour.
The reality is the UK has been appalling governed certainly since Attlee with only a gap for Thatcher (and that only partial) until she appointed the fool John Major and allowed him idiotically to join the ERM as a precursor to joining the Euro. Still I suppose without this fool and his predictable ERM disaster we would never have got Brexit.
September 24, 2022
LL Not quite sure what you mean that Liz Truss was ‘in the Cabinet voting for it’. Do you meann she was voting for it while in Cabinet, or in the Cabinet which was voting for it. Could you clarify.
Reply It is true Liz was in the Cabinet when Sunakl put through tax rises. I think she argued against but lost the argument.
September 24, 2022
Brilliant post LL. Thank you.
September 24, 2022
It’s this post I think is brilliant. Former post in wrong place. Second post from LL.
September 24, 2022
@LL; “Some tax rates now and when Thatcher left office.”
You need to also list tax rates before Mrs Thatcher entered office and how they changed during her time in office, many people ended up effectively paying vastly more in tax during the 1980s, due to the shift from direct to indirect taxation, or the scrapping of subsides, the regulated price of milk for example.
You cite the level of VAT when Mrs Thatcher left office, but give the rates for when she entered office, oops!
Mrs Thatcher actually oversaw the highest ever single-step percentage rise in the standard rate of VAT, an increase of 7%. Even Luxury goods and petrol became 2.5% more expensive under the single unified rate then when she entered office:-
Historical Standard rates of VAT.
1 April 1973 to July 1974 – 10.0%
July 1974 to 17 June 1979 – 8.0%
18 June 1979 to 18 March 1991 – 15.0%
19 March 1991 to 30 November 2008 – 17.5%
1 December 2008 to 31 December 2009 – 15.0%
1 January 2010 to 3 January 2011 – 17.5%
4 January 2011 to Present – 20.0%
September 24, 2022
Thanks 15% then.
September 24, 2022
Higher under the Tories
September 24, 2022
You didnāt mention Class 1A and 1B contributions introduced April 1991. The national insurance increases have been much greater than you mentioned.
There is fiscal drag on other expenses too i.e only a Ā£5 meal allowance if you stay away from home for work purposes.
September 24, 2022
Indeed and they have pushed back the pension age by up to 8 years for some women and three years for men I think (another back door tax) many other tax grabs all over the place too.
Reply This was a spending reduction which you normally urge upon us. As life expectancy rises so people either need to pay higher NI into the (unfunded) state pension scheme or work for more years before drawing the pension.
September 24, 2022
Oh John, I canāt believe that you think the state pension is unfunded, it certainly isnāt for those working for over 50 years paying PAYE NI as an employee and having the employer contribution made. Yes, it may be unfunded for those that live on benefits all their life, those that earn less than the lel and those self-employed that only contribute half what PAYE workers contribute. Those that donāt pay enough in so get pension credits instead, it is pension credits that are the unfunded part!
People were told back in the 50ās it was for their healthcare and pension, and through the following decades, it should never have been used for general taxation, it should have been ring-fenced and the State pension element invested and I donāt just blame the tories for that Labour claim full credit for the National INSURANCE ponzi scheme and people would have better off making their own investments and least their partner could benefit when they die at 64!
September 24, 2022
Well yes but we are paying more and more in taxes & NI but getting less and less back by way of services of any real value or pensions.
I agree but life expectancy has declined recently. Compared with 2019, life expectancy in 2020 fell by 1.3 years in males and 1 year in females, and remained virtually unchanged between 2020 and 2021. We still have high excess deaths currently too ~ 10% up.
September 24, 2022
It appears that life expectancy is waning. I suspect the winter will further reduce the figures. A budget bonus that is yet to be accounted for.
September 25, 2022
Undertakers are on a roll in recent years, The new growth business.
September 25, 2022
It would be a little more comfort if people losing jobs at over 50 could find work to take them beyond 65 – in fact several years beyond 65.
September 25, 2022
MT, we get plenty of applicants over 55 and hire them, they are not treated any different than anyone else, in fact one chap was offered a job at 64, saying he wanted to work until he was 70, so we bought his uniform, trained him, offered him external training, six months later on his state pension date he resigned, heād changed his mind he said. He had been selected over younger applicants because he had convinced the HR person of his intentions.
Lots of firms are afraid of the sick pay risk and at around Ā£4000 per year SSP/SSP Holiday, more if the firm pays enhanced sick pay, it is a consideration but I have found this age group that genuinely WANT to work to be generally more committed and less absent.
September 25, 2022
Tracy – my response to yours below – –
It is refreshing that you employ so readily , But I doubt its the story across the country, indeed it might depend on the nature of the work available. The Governments continue to raise the age to pay state pension, but do they think people can wait struggling to survive?
September 24, 2022
daft employment laws and red tape I meant – not tax.
September 24, 2022
Specifically tell us which employmet laws and red tape are ‘daft’?
As you have previously not been able to the why right this fanatical nonsense?
Daft to you because you have no skin in the game one presumes.
September 24, 2022
Batman two minor ones, having to put no smoking signs in work vehicles, everyone knows the law, the signs need replacing frequently and the company is obliged to check the rules are followed. Having to put no smoking signs up in the office, again everyone knows the law. You even have to put up signs to tell workers to wash their own hands, there is no personal responsibility you are told by advisors to assume that no-one that works for you has common sense and cover your back on every possible scenario that you can think of.
So the staff handbook, that started off years ago about six pages is now 55 pages. Works social events your employer is now responsible for comments made, you are also responsible for their partners and spouses to ensure no-one is upset. Everything is totally sanitised and lots of small employers just donāt realise how at risk they are at casual events. Lunch room conversations also end up with the Employer vicariously responsible for offence. Just how is the employer responsible for adults in their own time that they happen to employ, they didnāt give birth to them.
Or the H&S booklet that started off with a days worth of checks and are ten pages and now takes three weeks to check off with 100 pages in the booklet. That still wouldnāt stop someone climbing on a chair to pin up a Christmas decoration they werenāt given permission for when you have safety ladders and the rules in place, covered in the training induction. Or the guy that walks up and downstairs with his laces undone because he doesnāt like them fastened, so you have to send a memo to cover your companies social responsibilities for a 38 year old!
September 24, 2022
Simplify REACH COSHH GDPR.
There is 3 baz
September 24, 2022
Almost all of the employment laws. They generally encourage malingering and absurd tribunal/legal claims. Good workers suffer and it is hard, costly and slow to get rid of bad and unsuitable ones.
So duff teachers, surgeons, nurses and many other workers continue and often do much damage as they do so. The best protection for workers is lots of good available alternative jobs not government interference.
September 24, 2022
LL. I couldn’t agree more with your comments on duff surgeons. They very often go into private practise after being thrown out of the NHS as was the case with my surgeon.
September 24, 2022
You don’t mention Stamp Duty 0% up to Ā£250k. So zero for most housing in the North.
However houses further south sold at Ā£500k stamp duty 5% cost Ā£12.5k.
Is this the levelling up?
September 25, 2022
MT, it should take into account the amount that was paid for the home, plus the amount spent on refurbishments for that home. The house being in London and the South is often the only reason houses have exploded in value, the stamp duty should be paid by the seller on the difference, its them that have made the profit.
September 24, 2022
+1 on your first post LL
Add the windfall on VAT and general taxes to the treasury that are rising on inflation.
September 24, 2022
Much talk on Mark Dolan (GB New) about how brilliant Kwasi is with his free scholarship at Eton and his doctorate at Trinity. Well perhaps he is (he seems to have a reasonable grasp of sound economics). But if so why did he accept the job as Energy Minister when the job was to push through an insane energy agenda that has wreaked havoc and gave us rip off unreliable energy?
He spent much of his time in the job wittering nonsense about the UK becoming “the Saudi Arabia of Wind” and demonstrating his almost total ignorance of energy engineering and the realities of climate, physics & energy production and security. He, like the Dept. of Transport, quite wrongly seem to think that walking and cycling produce no CO2 (they can actually be worse than full cars) and that EV cars actually save CO2 (keeping your old car is far better for CO2 in general). Not that a little more atmospheric CO2 is a serious problem anyway – it is prob. a net benefit in fact. He even retained the insanity of importing wood (young coal) to burn at Drax when old cold is far more efficient and produces less CO2 per KWH.
So why is the government still sticking to the insanity of Net Zero Kwasi/Truss?
Then again 98% income tax Dennis Healey had a double first in Greats.
āThere are some ideas so absurd that only an intellectual could believe them.ā ā George Orwell
September 24, 2022
old coal (not cold)!
September 24, 2022
Dolan did a very good opinion piece on why we should cancel Net Zero
https://www.gbnews.uk/news/blindly-pursuing-net-zero-threatens-to-hasten-the-decline-of-the-west-and-therefore-poses-an-existential-threat-to-the-free-world-says-mark-dolan/369952
September 24, 2022
+1 – we should never have had net zero nor the Climate Change Act but clearly most (90%+) of our MPs are scientifically illiterate, group think, virtue signalling idiots.
But Putinās idiotic war gives them a perfect excuse to cover up their gross incompetence! Will they take it?
September 24, 2022
LL :
Agreed.
But be grateful that Drax managed to bamboozle Kwasi Kwareng/BEIS into substituting coal with wood pellets (probably willingly as it meant the percentage of electricity supplied by ārenewablesā increased by 10 percentage points as a result) because it managed to prevent Drax being explosively demolished by the COP 26 President, Alok Sharma :
Official SSE video of the demolition of a UK asset :
https://video.twimg.com/ext_tw_video/1429456184902393858/pu/vid/720×720/JwPnpycxEiyBmqVJ.mp4?tag=12
September 24, 2022
Destroying security and putting beyond use functional plant (with known domestic reserves) rather than mothballing. Just imagine if we could bring on-line 10GW of coal for winter.
Consideration should be given to putting them on trial for economic damage and treason.
No extra-hydro built(imagine Ā£100 bn being spent on needed infrastructure) to smooth the renewables or provide balancing functions.
September 24, 2022
Usual fsct and evidence free drivel fom Rigsby.
September 24, 2022
Just when we said what this site needs is another lefty….along comes baz
September 24, 2022
Good morning.
But is not the Chancellors job to sign off on this or any new money ? If it is, then there will no engineering of a recession.
I am afraid Sir John that the actions of this government and the failure of parliament to hold it to account over its actions before, during and after the SCAMDEMIC are coming back to haunt you.
We can not continue with the policy of spend, spend, spend. Because, sooner or later, you are going to run out of other peoples money.
September 24, 2022
MarkB, they need some small business people in as volunteers to find savings.
September 24, 2022
Not their money though.
September 24, 2022
@Mark B; “SCAMDEMIC”
That’s no way of talking about UK and US economic polices during the 1980s! š
September 24, 2022
The Federal Reserve is certainly promoting a recession but its forecasts do not show one as it uses numbers that would make the OBR proud.
The Chancellor can prevent the Bank raising rates by giving it a new inflation target, can he not?
(Did yesterday’s activity that ignored VAT rates prove at last the oven ready deal prevents that?)
September 24, 2022
“that” being revising VAT rates. !
September 24, 2022
I think it does.
September 24, 2022
@formula57; Surely Central Bank figures are only valid for the economy they relate to. Of course I might be wrong, and thus Jim Callaghan was totally correct when he suggested some of being far to parochial back in early 1979…?!
“The Chancellor can prevent the Bank raising rates by giving it a new inflation target, can he not?”
Indeed, what is more the Chancellor could decide to reintegrate the BoE into govt, as it was before, cancelling the theoretical independence Brown gave them. If the BoE were truly independent they would set the inflation target and would not have to write a letter to the Chancellor should the actual rate exceed the target.
September 24, 2022
When is the government going to address all the waste and grow up and stop talking handing out money to all and sundry
and stop all these Net Zero, dingy invaders nonsense and all these woke jobs being created in the civil and public services.
Government has an obligation to show it is being responsible in spending our money, but that is for the fairies, it never happens and nobody is ever held to account.
September 24, 2022
@turboterrier; “it never happens and nobody is ever held to account.”
Of course it will never happen because not enough voters think as you and a few others on this site do, even the entire audience of ‘Gone Bonkers News’ won’t be enough – clue, the majority do not thinking such policies are “for the fairies”.
September 24, 2022
Reading this in bed early on a Saturday morning, Iād have to say to LifeLogic – in the nicest possible way – āget a lifeā. You must trot this stuff out in your sleep. Donāt you ever get tired of saying the same thing over and over again? What do you think youāre achieving?
Itās a beautiful morning down here in West Dorset. Iām off for a walk along the coast path with the dog. I wonāt be thinking about central banks, bond yields, green crap, ā the lockdowns, test and trace, the worthless degree loans, HS2, vaccination of the young and children, & most of what is wasted on the NHS.ā etc.
September 24, 2022
I’m sorry Mike, but the points LL makes, and the questions s/he asks, are far more relevant to me than learning what you happen to be doing today. If our good host is LL’s MP, I’d say s/he is especially entitled to keep asking what this Conservative government is up to, enforcing the Greens’ agenda. Perhaps one day Sir John will explain.
September 24, 2022
@Mike Wilson; I’ll give you the same advice I gave Peter2 when he complained about my comments, learn to skip past those people you dislike reading. I might not like LL’s style but he does often ask pertinent questions within his repetitive rants, unlike some.
September 24, 2022
You might see a French armada having lost its way coming up the beach!
September 24, 2022
The French Foreign Legion.
September 24, 2022
Ignore the envious Left: this Budget helps rich and poor
There is a backlash to any policy that benefits high earners, but they are often the ones who create jobs and foster growth
John Redwood in the Telegraph.
The problem is it did not go anywhere far enough. The very many allowance freezes all remain and these are still vast tax increases at times of high inflation, net zero and the āgreenā levy remain too. Vat not cut, corporation not cut (just the increases stopped thank goodness) the landlord/tenant mugging remains. Yes the evil politics of envy from the left harms and embitters everyone both rich and poor.
September 24, 2022
Specifically in what way does trickle down economics help the poor?
Reply We are not doing trickle down. If you have income and company tax rates above the world average you attract less international investment and business to your country
September 24, 2022
The UK has the lowest rate of Corporation Tax in the G7 and the lowest level of business investment. That would suggest that higher levels of Corporation Tax don’t act as a deterrent to investment.
September 25, 2022
G7 – Canada, The general corporate tax rate on business incomeāthe net tax rate after the general tax reduction, is 15%. Local taxes average from 2-4% (is local tax similar to uk business rates?)
France, In 2022 the standard corporate tax rate will be lowered to 25% for all companies. (Borisā rate) I wonder, do they have business rates too?
Germany, Corporation tax is levied at a uniform rate of 15% and is then subject to a surcharge of 5.5% (solidarity surcharge). This results in a total tax rate of 15.825%. (do they also have business rates?)
Italy, The rate of national corporation tax (IRES) is currently 24%. The rate of regional corporation tax (IRAP) may vary from region to region and it is normally 3.9% (I assume this is our equivalent business rates/+ local estate taxes)
Japan, around 30.62%, its not clear how that is made up, some sites say there are lower rates for lower turnovers, I wonder if this is why their companies invest and manufacture abroad.
the United Kingdom, 19%, the proposed 25% (6% jump in 2023) was just halted.
the United States. the nominal federal corporate tax rate in the United States of America is a flat 21% – Biden proposed putting it up to 28% in 2021.
September 24, 2022
Plus the rich, bright and hard working leave, give up or invest elsewhere. Or spend more and more time with tax planners, accountants and lawyers and less and less actually running and expanding the businesses.
September 24, 2022
If thats helping the poor, and thinking about the next few years should the Government be re-elected, I imagine the disturbance and ‘the force’ will be felt on the streets.
September 24, 2022
I remember Liz indicating, before her election, that she’d lower the VAT on energy, remove the green levy and reduce fuel duty….nothing has came to pass
Reply The removal of green levies and the VAT charge is incorporated in the overall substantial energy assistance
September 24, 2022
Right to reply
Iāve read the full āThe Growth Plan 2022ā, and it doesnāt quite say what youāre suggestingā¦as I might have missed it; could you point me to the page & para in the document
September 24, 2022
As I understand it, the government imposes the green energy levy on domestic bills, and for the next two years the same government is going to cover the cost of that levy, using taxpayers moneyā¦. thatās not removing the green levy, thatās not cancelling the levy, thatās not repealing the levy, thatās a slight of hand accounting trick ā we all pay in the end…the green levy remains
September 24, 2022
Yet what we really need is to cancel the subsidies for renewables, including indirect ones such as carbon taxes that push up market prices. Follow up with a proper reappraisal of energy policy: the Energy Security Strategy is worthless green propaganda.
September 25, 2022
+1
September 24, 2022
But in truth maybe they really do want a recession.
I know I have banged on about itā¦but isnāt this actually the Cloward-Piven Strategy the end game of which is Universal Basic Income?
It is said that Obama tried to implement it. ( To abolish poverty).
So many bizarre things have happened I would not be surprised if it were the banksā plan.
September 24, 2022
Given that the new measure of poverty is “relative” any implementation of universal basic income will just move the point at which people become relatively poor.
Universal basic income would really feed inflation and it would not stop once prices had adjusted to account for everyone’s extra money because as we have seen recently when inflation spikes wage demands soon follow.
September 24, 2022
Your party is spending money the country hasnāt got. Our children will pay. Tories used to be the party of sound money, you will pay a savage price at the next General Election
September 24, 2022
How does a bank “want”?
Some people might though, so who does Sir John mean?
September 24, 2022
Good question, lad. Our host may well reply for himself, but in the meantime, what about Mark Carney? As BoE governor and then Johnson’s Finance Advisor he was all for net zero. Last year he promoted the Glasgow Financial Alliance for Net Zero (GFANZ), which advocates directing finance only to projects that are in line with its objectives. As he said: ‘With private finance focused on achieving Net Zero, country platforms must integrate Paris-aligned NDCs to attract capital at scale. Projects that are consistent with long term country strategies that are certified as Paris aligned are more likely to attract private capital.’
https://climatechampions.unfccc.int/mark-carney-hosts-gfanz-ceos-meeting/
That sounds to me like synchronised globalist central banking. So it’s perhaps no surprise that all three big central banks are operating in much the same way in other respects, as Sir John points out.
September 24, 2022
The great RESET underway?
September 25, 2022
No question mark needed, MT.
September 24, 2022
Carney add up,?
September 24, 2022
I am lost for words. The UK is being driven into despair by incompetent people! I have never known such ridiculous ‘tax everything’ agenda, especially if it moves, while providing such appalling (and virtually non-existent) services for the taxpayer. We are just the cash cows for the virtue signalling and generosity given by our politician and ‘influencers’ to every other inhabitant of the world. Don’t they realise they are killing the golden goose? If you kill the source of the money …. who can you help then?
September 24, 2022
ESPECIALLY if it moves. They will do so with bicycles eventually.
September 24, 2022
Not mentioned is the currency. BOE traditionally in the 80s and 90s had to maintain rates at around 2% above German and US rates because of our history of inflation and because reducing them ran a risk of house price runaway. Now BOE seem to be frightened to increase. So the Pound collapses and leads us back to where we started with bad inflation.
The stupidity was allowing borrowing at low low rates for so long, chucking money at people sitting at home. It’s led us back to inflation. Both Tory inspired, home grown actions, I’m afraid.
Reply The pound has not collapsed. This year it is up against the yen, down against the dollar and little changed against the Euro
September 24, 2022
Ā£1 is about 15% down against the Swiss France this year and about 10% down on the gold price in just nine months.
September 24, 2022
They will blame it on Putin (who ironically is now on the gold standard – a much more sensible policy) but the economy would be much healthier without central bank interference.
September 24, 2022
Well, its either Putin or Climate Change
September 25, 2022
so leave your dodgy Swiss bank accounts at rest, raiding it to buy that posh watch over there is not wise.
September 24, 2022
Unfortunately, oil is priced in dollars – so in spite of a fall in the cost of oil, we will probably not see that reflected in the cost of fuel at the pumps here. Not entirely within the control of the BoE (whilst the Fed is raising their rates in 0.75% jumps) but clearly the BoE was late in increasing rates and still seems hesitant to keep up with other Central Banks.
September 24, 2022
I still have fond memories for many years of USD 1.50 and CHF 2.20. Below 1.10 in each case is collapse or heading that way. So unnecessary when we didn’t HAVE to bail out banks nor perfectly healthy people and tell them to sit at home. Quite nuts.
September 24, 2022
Excellent article.
Call me a conspiratorial cynic but I have a sneaking feeling the three (Fed, ECB and BOE) main CB’s have $/Ā£/EU parity in mind forming the basis of something much more sinister. I believe some warped souls refer to it as ‘the great reset’ or something akin to that
In the UK we are now not far away from $Ā£ parity which reflects the appalling political management of our public finances and John’s party is intimately involved as are the main parties who desperately seek to maintain their positions in this destructive undermining of trust in how this nation’s finances are run.
Politicians simply refuse to tell the TRUTH. There is no free lunch and yet they continue to roll out policies based on that simple lie. The State is diluting the future of the person in the street to finance itself as a vested interest in its own right. It has become a loan shark in the truest sense of that word. At some point it will seek to take what it wants using threat
The State should not buying peoples appeasement by paying their energy bills, buying off unions and paying public sector workers to stay home. It is a monstrous SCAM
Slash spending on the feather bedded union-Labour controlled public sector including the politicised bottomless pit that is the NHS. Stop all immigration into the UK unless necessary.
September 24, 2022
Would the new currency be called World Electronic Funds? Global fungibility would of course have to be avoided, otherwise it becomes too easy to take advantage of the new Colombian president’s apparent plans to depend on income from the sale of cocaine rather than oil and coal and coffee and emeralds.
September 24, 2022
+1
September 24, 2022
Illuminating and instructive though it would have been to have had a critique today of yesterdayās special fiscal operation, we know largely what you would have done instead and so realize what is disappointingly missing. It is a gamble, whatever Kwasi says, and if it fails we get a Labour government but one that because of your Partyās naughty, pure cunning, will have no money to spend so we need not fear it.
September 24, 2022
It wasn’t enough of a gamble. To have done nothing, to have continued with high tax, high spending, low growth, and no energy, would have beeen worse than a gamble.
September 24, 2022
Ever since Andrew Bailey was appointed to the top job in the B of E I have always felt that we were filling a place with a ‘nice chap’ who’s only qualification was long service. He is no leader and seems to have no foresight and is being led by the other two central banks. He is out of his depth and needs to be replaced
September 24, 2022
While he was head of the FCA they gave us the “40% overdrafts for all” regardless of credit rating rules! The man is not fit to run his own piggy bank!
September 24, 2022
I think the little piggy has run all the way home.
September 24, 2022
Might be better if the wolf huffed and puffed and ate him!
September 25, 2022
Perhaps the little piggy will squeal a lot at the next GE, and that wolf will be banished for a generation.
September 24, 2022
I am slightly perplexed with the narrative coming out of yesterday’s statement. And I blame the Chancellor for it, politically naive.
A huge amount of money is being spaffed to keep poor people able to heat their homes. The panic that they may have to choose between heating and eating (rich people would not have to make that choice) was overwhelming leading up to Liz Truss being announced as leader of the party and this massive intervention has been over shadowed removing the 45% rate of tax.
Reversing corporation tax and the NI increase would have signalled that the new administration was serious about cutting taxes – stamp duty changes have been shown to only affect the price of house and removing the top rate of tax just looks like handouts for the rich.
Budgets are as much political events and fiscal ones and your administration lost this one when they had an open goal.
September 24, 2022
To be clear, I am very much in favour of letting people keep more of their own money, and it is fair that the people expected to pay for government largesse get to keep as much of their own money as possible but you have to be mindful of the politics and optics. This was an opportunity to win back support and have that carry you to the next election whereas now you have to wait for the economy to recover to be able to say I told you so.
September 24, 2022
NS, yes I thought it was odd to reduce the higher rate now, did they also remove the claw back of the personal allowance at Ā£100,000-Ā£120,000 thats gives an effective tax rate over 60%? I would have preferred they not do that and just give the child benefit back to single earning men.
You never hear that mentioned do you when people shout about rich people not paying enough tax, so it would have been a far easier tax reduction without the fanfare as there is no fanfare about it being there in the first place!
September 24, 2022
The removal of the allowance stays a-tracy and I would substitute single earners for single earing men in your statement above but otherwise wholeheartedly agree.
Giving back the 5% over Ā£150,000 only reduces the tax take by Ā£2 billion, giving back the personal allowance would cost much more as would raising the threshold from Ā£12,570 for all. It was grandstanding for no gain.
September 24, 2022
NS, quite right I donāt know why I typed men, I know a female doctor whose partner is the stay at home carer.
Days and Days of bad press over the 5% though. I hope these people step up and give the Tories the extra taxes they say theyāre going to get to warrant it and increase their UK spending with their saving. Perhaps more money for their meals in restaurants (weāre old theyāll be struggling with rising energy bills), cleaner, gardener, and nanny would boost the UKs tax take anyway, I think thatās what they mean by trickle down. They have to spend it otherwise whatās the point of earning it, lets hope they spend it in the UK because sterling has fallen. They need all these employees in order to do the hours and hard work they need to generate that income I guess even some of those hours are sales and marketing on the golf courses š!
September 25, 2022
‘I know a female doctor whose partner is the stay at home carer.’
Of course you do – – lots of people do.
The female doctor working 3 days a week, or more earns much more than most men, and way more than average pay, living wage etc.
September 24, 2022
Raise the basic allowance by Ā£5000, reduce the next threshold from Ā£50k to Ā£47k to pay for it.
September 24, 2022
I’d vote for that
September 24, 2022
MT but donāt you think that people should pay towards their own healthcare and state pension. I often wonder if everyone should pay a low % on every Ā£1 with a higher % over the upper earnings level to contribute to the economically inactiveās pensions and healthcare. Perhaps everyone would start to realise just how much the NHS and the State pension costs and not just take it for granted.
years ago women I know that wanted to stay home and work raising their own children used to take in friends children to top up their income, then all the large rules and regulations stepped in and stopped this. So often married women have to go back out of the home to work and if they donāt have parents to help with childcare spend more than half their wages on childcare.
September 24, 2022
Yes, a-tracy, the pere de famille is never encouraged.
September 25, 2022
Tracy – but people, even families, are trying to live on Ā£12.5k up to even Ā£20k. You want a contribution towards health care and state pension? The first priority is to eat and heat – not who will give them free prescriptions in 30 years time, and everybody doubts the state pension will exist for them anyway.
September 25, 2022
+1
September 25, 2022
MT – The NLW for a 40 hours per week worker pays Ā£19,760. A person earning Ā£20k gross is costing the employer Ā£21,531, the tax office skims Ā£1531 straight off the top in Employers NI and Nest 3%.
In total the government takes Ā£4689.50 from this Ā£20k worker. Itās a lot and John writes above that their state pension is considered by government unfunded!
I believe anyone aged 25 and over can get UC top ups (it used to be called Working Tax Credits, families also have UC to include Child Tax Credits, Housing benefits, although both parents incomes are taken into account and nuls a lot of benefits. Living alone in the UK is very expensive, I know a lady recently bereaved whose husbands state pension died with him, she is thinking of moving in with her sister in a small two double bedroom property, or stay where she is near a big city and take in a student lodger.
September 24, 2022
The B of E is tasked with keeping inflation at 2%. It is, we are told, independent (yes, I know that is being economical with the actualite) so it is up to the B of E how it achieves the 2% inflation rate. All it has to do is write a letter each month to the Chancellor explaining why it has failed.
Inflation is currently around 10%. The quickest way to get it down again ….. and achieve the 2% rate it is tasked to deliver by the Government ….. is to generate a recession.
Perhaps the Government should pay more attention to the duties and responsibilities it assigns to organisations like the B of E, and the rest of the 1000 Quangos we are now paying for. There are numerous examples of these organisations taking the action they deem appropriate to deliver the outcome they are tasked to deliver …. with catastrophic results (ie the Environment Agence/flooding the Somerset levels; the Highways Agency/SMART motorways etc).
September 24, 2022
Donna, smart motorways! When we didnāt have āsmartā motorways if someone broke down on the hard-shoulder the other three lanes were able to continue on their way. Last Saturday we got held up 30 minutes stuck between junctions no warning prior to the immediate junction so that we could come off the motorway, just because one vehicle had broken down in the inside line, they said theyād got two lanes closed they didnāt, they put up the signs saying to get over into lanes 3 and 4 miles too soon, so all the jack the lads, and racy ladies, sped down the inside two lanes and got a free pass, everyone else following the rules just stood still unnecessarily.
September 24, 2022
The real way to deal with blockages and constrictions of that sort is to encourage traffic to divert as soon as possible and from a considerable distance. A closure of an hour and a half affects traffic 100 miles away, yet diverting as soon as that may impose little penalty in trip distance while saving being caught in a jam. The further away that traffic diversions start the less they will concentrate onto minor local roads.
Roadside illuminated maps, colour coded for traffic conditions would be a efficient way to convey information to drivers. Of course, the best sat navs do make some attempt at taking account of traffic.
September 25, 2022
What actually happens though Mark is more timid drivers get in the open lanes very early as you suggest, all the hgvs, more daring drivers carry on down the then clear lanes are that closing miles ahead and the two supposed moving lanes donāt move at all as they cut in right at the cones causing a jamming on of brakes by people who were trying to keep a safe braking distance as these people cut into their small gap.
Iāve seen contraflows working with a traffic control vehicle match speed driving of the queue so people have to zip in but motorway police donāt do this.
September 26, 2022
All because motorway signs are usually wrong!
September 24, 2022
Hear hear
September 24, 2022
Can we take today’s article as an explanation of how tax cuts, releasing liquidity into the economy at a time where demand is stoking inflation, are countering the Bank of England tightening money?
We do not need to fear a recession, our GDP is being stoked by new arrivals. That has been the government’s growth strategy for 17 years.
September 25, 2022
NS, how is GDP being stoked by new arrivals? I thought most new arrivals arenāt allowed to work.
September 25, 2022
They require money to be spent on them though a-tracy that contributes to activity and GDP
September 26, 2022
we need the opposite – provide farming labour, street cleaning rubbish collecting now that high streets are quiet.
Put them to work – they won’t be sent ‘home’ will they!
September 24, 2022
We have noticed that more smaller businesses are shutting down, whether in services such as key cutting, hardware or catering. These were very good and we used them until recently and they appeared to be recovering from the lockdown. The huge increases in energy bills hit them and perhaps rent increases. Any help for them is six months too late. Their customers have also had to avoid spending on non essentials, owing to the high general inflation and higher fuel and electricity bills. The capping of bills will still leave them doubled.
In this situation I cannot see that putting the tax cuts only for the high income groups and just reversing the unwise increases is going to help smaller businesses or their customers. The raid on private landlords is also resulting in many giving up rather than face the inability to end tenancies and the forthcoming very high costs of attaining energy certificates grade C. The increased CGT without indexation continues and is obviously aimed to collect the resulting house price increase gain resulting from near zero interest rates. Instead, it appears that this ‘Conservative’ government prefers to have the banks buy up the letting market and close the only successful investment to supplement the poor pensions after taxation and banking bonuses whittled those away. It looks like the idea that we will own nothing but be happy has taken hold. The bankers of course will own plenty and be even happier with their increased bonuses.
If Liz and Queasy think that ordinary voters are not going to notice that they are still being fleeced, they are not in touch with reality.
September 24, 2022
Likewise here. They were otherwise viable businesses that we all wanted to use.
Lockdown caused this and it also invited the invasion of Ukraine.
September 24, 2022
Yawn, the usual diversionary blog after the night before, blame the BoE…
There is nothing “incisive” about this mornings blog, just pure partisan party politics, whenever a Tory govt messes up our host always claims its someone else’s fault the next morning, rather than be incisive and lay the blame at the feet of his own colleagues in his own party who make the polices. It wasn’t the Central Bank’s QE that spooked the markets yesterday, it wasn’t the Central Bank who announce the biggest fiscal event in 50 yeas, thus sending the GBP plunging to all but parity with the USD, no it was his leader and her Chancellor, people he backed, people he likely advised if the whispers are true.
Reply The share markets in the EU and the USA fell a little more than the UK! The main news channels are leading today on the global sell off in recent days heralding recessions brought on by Central Banks. Do try to follow what is happening.
September 24, 2022
@JR reply; Come off it! Central Banks operate under laws and policies set by govts or presidents, hence why the GOP in the US are blaming Biden, not the Fed’.
Had Kwarteng delivered the correct polices yesterday, for the times we live in now (not those of 40 years ago), he could have made Sterling stronger, it could well have become a safe currency, as would UK listed Stocks.
“The main news channels are leading today on the global sell off in recent days”, “Do try to follow what is happening”, you suggest, yet the more rounded coverage given by the ‘traditional heavyweights’ here in the UK today are all leading on Kwarteng’s mini budget not the global market turmoils. The FT is Headlining ‘Pound slumps below $1.09 after Kwarteng’s Ā£45bn tax cut gamble’, whilst citing comments made on Blomberg TV; nor does it get much better in the Telegraph, calling the mini budget a ‘high-risk leap of faith’; the Times questions the level of borrowing, calling it a ‘tax gamble’ too. Who needs enemies with friends like that, and those three publications should be a reliable friend to the (supposed) party of business.
Reply Eurostox Index Friday -2.29% year to date -22.7%
FTSE 100 Friday -1.97% YTD -6.48%
S and P 500 Friday -1.7% YTD -23%
Care to explain the differences?
September 24, 2022
Reply to reply. Differences in exchange rates. If Ā£ falls 3% against USD in a day and both FTSE and S&P fall 2% the same day, which market would you rather be in?
September 24, 2022
The media talk about FX data, you reply with FTSE data…
JR you seem intent on changing the narrative, not liking the headlines and what most people will be talking about today and tomorrow, more so when they grasp oil & gas is sold in USD and thus many UK fuels will see a hike in the price once again. The issue is how your party is being to be portrayed outside of your (parties) control, there is a real danger of telling the truth but not being believed, as happened to Jim Callaghan in Jan 1979.
“Crisis? What crisis?”.
September 24, 2022
It is rather āhilariousā¢ļøā to try to āattackā or ādefendā the FTSE100 based on these YTD fluctuations. This index has become sloth-like and has practically not grown since January 2000 and has remained practically steady (within +/-15%) since January 2013. In comparison DAX has grown by 70% in 22 years and S&P500 has grown by 160%. Even Nikkei grew by 40% over the period.
Only a cucurbit would look at ups and downs over a couple of days.
September 24, 2022
Now we have the government attempting to inject spending power into the economy, hoping the recipients will actually spend it and not save it, like usually happens to tax cuts. Meanwhile, telling the Debt Management Office to issue another Ā£72 billion of savings certificates (Gilts) to take spending power out of the economy this year alone. While the one-trick-pony Central Bank, persists with the theory (Phillips Curve) higher interest rates are needed because economic growth will cause inflation, by increasing employment and employee spending power. (The Phillips Curve Economic Theory Explained By THE INVESTOPEDIA TEAM)
September 24, 2022
The velocity of the money stock in Japan and China is very low, people are saving the government’s money not spending enough to create high inflation. The UK velocity is only a bit higher with high inflation, indicating the inflation is imported through multiple channels. Raising bank rate can only make it worse.
September 24, 2022
Some (paper) bank notes are being scrapped apparently. These to be replaced with polymer (aka plastic I think).
The B of E says that plastic money helps stop counterfeiting.
But what is QE then?
More counterfeiting than Frank Bourassa could ever dream of!
(Oh and of course it canāt cause inflation ā¼ļø)
September 24, 2022
The Ā£5, Ā£10, Ā£20 and Ā£5 paper banknotes have been replaced by polymer-based ones since at least October 2021. The old paper Ā£20 and Ā£50 are to be exchanged in banks before 30 September 2022, in a week from today.
It is thought (bankofengland.co.uk 23/09/2022) there are still 250 m Ā£20 paper notes (Ā£5 bn worth) and 110 m Ā£50 paper notes (Ā£6 bn worth) sleeping under mattresses. And Liz and KK expect growth rising from this type of people ā¦ Hilariousā¢ļø
September 24, 2022
Having watched the Budget Announcement (if it walks like a Duck & quacks like a Duck, it’s probably a Duck) I very briefly listened to some of the “informed” opinion on the various TV channels afterwards. I was struck by the seeming complete absence of any basic economic understanding (or even common sense) amongst the so called experts interviewed. One even stated that removing the cap on Bankers bonuses would cost millions – when clearly it has nothing to do with government, only the employer.
Much nonsense was also spoken about removing the 45% higher rate. Memories are obviously very short. The 50% tax was introduced in the dying days of Gordon Brown as a poison pill for the incoming Tory government. Unfortunately, George Osbourne didn’t have the balls to scrap it immediately, he just reduced it to 45%. There was no higher rate tax for most of the Blair/Brown years.
The most “expensive” tax cuts (NI & Corp Tax) should never have been levied by Sunak in the first place. It seems to have been a mashup to justify Johnsons claim that he had “fixed” social care for the elderly – when clearly he hadn’t. So frankly I don’t view them as cuts, just a return to a slightly better norm. Their introduction at a time when inflation was already on the loose, killed any regard I had for Rishi Sunak. I also heard the Stamp Duty cuts being described as inflationary but no one mentioned that new mortgages are already getting very much more expensive, so I very much doubt we are on the verge of a house price explosion (whatever the housing industry tells you)
The fact of the matter is that we are still highly taxed, mostly through fiscal drag, most obviously on tax thresholds but also on other less visible items. When the higher VET on cars was introduced on cars over Ā£40k in 2017 (?) that was quite an expensive car but not so much these days. I was amazed to hear recently that the annual take from Insurance Premium Tax (IPT) now exceds that from Inheritance Tax (IHT). If the government give pensioners a large rise next year, quite a few will have to pay income tax for the first time since retirement.
So all the experts rattling on about “unfunded” tax cuts should really be thinking about how much money goverment really sucks out of the economy these days and why we need so much ‘goverment’ in the first place.
I wonder how much employing Diversity Managers across Government costs and how much they add to productivity? I firmly believe few government organistions could survive as commercial entities, where cash flow and profitability make the difference between survival or bankruptcy. Not the same? Perhaps not – but where is the natural culling of the inefficent, the outdated, the non-essential that happens in the private sector?
I wish Liz Truss and Kwasi Kwarteng well, if nothing else they certainly have a great deal of courage to row into the political wind. However, there is so much more to do and I wonder if anyone is capable of reversing the years of dire political management we’ve suffered (from all parties). So, as a final thought (and lest we forget) that the alternative is the Labour party, which in it’s final day in office, left a note in the Treasury that simply stated “There’s no Money left” That summed it up quite nicely.
September 26, 2022
‘ If the government give pensioners a large rise next year, quite a few will have to pay income tax for the first time since retirement.’
Yes, with the Personal allowance frozen and the lowest earnings possibly rising, we can expect lots and lots of people protesting and voting about ‘why do I pay Income Tax?’
September 24, 2022
The Central Banks, who amply demonstrate Robert Conquestās second and third laws of politics, want more than a recession. They want economic collapse so they can ābuild back betterā ā viz feudalism where āyou will own nothingā.
Hence the economy destroying CAGW/Net Zero scam where energy is being deliberately made to be expensive and intermittent as evidenced by the ludicrous policy of wind and electrification rather than nuclear and gas.
There is no climate emergency. The planet is at about its lowest in temperature and CO2 levels since the start of the Cambrian explosion 570 million years ago. We have just exited from an ice age just 11,000 years ago (one of many in our era). Eight times over the last 800,000 years the CO2 has fallen to 180 ppm, just 30 ppm above the level plants need to survive. Fortunately the CO2 level has risen slightly, although no-where near past levels, so the planet is greener and we can grow more food.
September 24, 2022
I have never understood why central banks think putting up interest rates is a sensible policy when so much money is already being taken out of people’s pockets by elevated energy bills. I do not see how this can reduce inflation any faster, all it will do is make things worse by driving us into a recession. I posted about this here months ago.
The three main Central Banks now seem to have got into a pissing contest over how high interest rates should be, encouraged by markets driving down exchange rates by attacking currencies who are deemed not to be charging high enough rates.
Higher rates and lower exchange rates will certainly blunt the effect of the fiscal changes the government has sensibly adopted.
September 24, 2022
The predominately Socialist agendas we have seen from Government in recent years and beyond continues to demonstrate how inept our Political Class and their Civil Servant rulers are.
A āfree marketā as in let the market decide is always a great leveller. The Socialist run Conservative Party have been shouting that for years. They say it but then panic, they jump in without thought of consequences and attempt to manipulate the market directly or via their proxies. It always fails and does more damage than standing back and letting things sort themselves out. The Market is always bigger and better than any State. Just as the money Governments takes is always more productive and better spent than those they take it from
The BoE gives the appearance of kowtowing to what they see as their World leaders and always follow one step behind. As such they are acting for themselves and external political influence and not what is best the UK.
On another front the unaccountable unelected ruler of OfWat today in the media is suggesting that water metering is not enough it should be defined by device usage. This is the same OfWat that is there to protect the users from the monopoly market of suppliers. OfWat allows the leakages to go on while all the while creating extra dividend profits. OfWat allows the closure of reservoirs- no replacements planned then joins in and complains about shortages. The shortages are OfWat induced, does Government care, hold any one to account? OfWat is working for the suppliers and not the Consumer.
This is mirrored in all taxpayer funded entities OfGen, OfCom, Charities, the Charity Commission, the NHS and many, many more. All taking the Taxpayers money, all asking for more. All with out any ownership of responsibility and accountability ā the taxpayer is just the cash cow that always pays because Government enforces it.
September 24, 2022
What are US currency amateur speculators thinking? Would it be worth their buying pounds now?
September 24, 2022
Firstly congratulations on your campaign Sir J to see the repeal of the worst of IR35 rules, I am hoping Kwasi will be able to go further too, once he’s had a bit more time to settle in, however an excellent start!
Thoroughly enjoyed the growth mini-budget tax cutting and agree with Lifelogic’s comments about tax allowances, they too will need inflation adjusting next year on; some are ludicrously low as unchanged for decades.
The one area I felt the Chancellor was silent on, was spending. I would have liked a bold statement about cost cutting in all Government departments and especially the quango’s. Repealing swathes of EU regulations should enable Government to operate with a lot less people. 1000 people ‘attend’ in OfGem, really? He did promise fiscal control of the deficit, but no substance re his overall approach to spending, accepting this was a a de facto mini-budget, after a tumultuous 2 weeks.
September 24, 2022
I agree. Well done, Sir John. Now let’s get rid of the tax on jobs, Employers National Insurance Contributions.
September 24, 2022
Not just IR35 but making tax digital and endless other counterproductive attacks on small businesses and the self employed.
September 24, 2022
I may be wrong, but I thought the problem of inflation was that it can become entrenched if it leads to a wage spiral, as people demand higher wages which in turn feeds inflation.
To stop inflation becoming entrenched, you need to reduce the pressure on wages – either by reducing the number of jobs available or increasing the number of people looking for jobs.
The only cure for inflation is therefore to deflate the economy as painlessly as possible and hope for the best – or else pray this energy crisis ends soon, which I can’t see happening.
While I understand it is political suicide to say this, I am actually quite surprised at this article for someone of John Redwood’s standing. I thought this was fairly basic economics, but I am not an economist and happy to be corrected.
reply We needed to shift from inflation fighting to recession fighting. The huge energy price rise has hit incomes and will hit output quite enough without more pain from more rate rises.
September 24, 2022
Plus there is a general election coming soon.
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September 24, 2022
Inflation has been rampant with pay freezes. For example. Three years of pay freezes on the railways, profits to shareholders and directors and fares rising with RPI. Clearly wages weren’t the inflationary component of those rises.
The Tories are looking like they have a blind spot to what causes inflation. Anne Widdecombe (whom I like) made a fool of herself and made herself look rather unpleasant in her insistence that wages were the greater risk of causing inflation when people have held back on wage demands (without complaint until now) for the good of the country and in the belief that we were all in this together. Eddie Dempsey (RMT) was right to call her out on it and the video went viral because it struck such a chord with the public.
September 25, 2022
NLA, arenāt the pay freezes due to covid virtually closing the railways down, very few passengers for two years still 25% less passengers, any other business would go bump. How many railway workers were furloughed? If they were furloughed did they still get full pay and the bit over Ā£25k made up? I read they did. All that stokes inflation because there is no turnover to generate that wage bill.
September 24, 2022
It occurred to me that you could also reduce the pressure on prices to reduce inflation, but this is also means deflating the economy.
All roads it seems…
September 24, 2022
A central bank should not be ‘independent’. The government needs to have the bank’s actions coincide with its policy changes on taxation, borrowing, and spending. Not wait months until the changes start to have an observable affect. Gordon Brown had to declare his intention to give the Bank of England independence to lessen the concern about Labour being elected for the first time since the ’70s. Governments with independent central banks tend to ignore inflation and say it’s the bank’s problem allowing them to overspend. Andrew Lilico has a good summary of the pros and cons: https://conservativehome.blogs.com/centreright/2008/05/the-last-piece.html
September 24, 2022
Central banks have no viable policy options that do not cause pain, having erred egregiously in the past. The only choices are where the pain is to be applied harder. They have been complicit in allowing governments to trash their economies rather than pursuing productive outcomes.
We have a sea of debt, much of it held as a shelf issue a.k.a. QE, and another tranche privatised through borrowing against ZIRP asset bubbles. We are being forced to add to it, most obviously through the consequences of two decades of bad energy policy, but also through our chronic trade deficit enlarged by deindustrialisation, and other malinvestment and poor management in health, education, defence, transport… The Magic Money Tree has now lost its magic as our stock of real assets to sell and mortgage to feed it and maintain the exchange rate is depleted.
We have two problems: steering the economy back to a productive path, and handling the consequences of the bad debt mountain. We certainly cannot achieve the latter without the former. A sound bank evaluates its lending business by critically examining casflow forecasts. A central bank has the added responsibility of ensuring that its policies do not wreck the chances of a sound economy. ESG must be ditched. Back to basics.
September 24, 2022
Am afraid that this approach to saving the economy is not going to work – I can see the logic at first by encouraging FDI, scrapping bankers bonuses etc thereby increasing activity in the financials but we are still left with closed shops on the High Street, increasing energy prices , a scared people mentality and food banks. The people are not going to respond to this they are only going to get into their bunkers and tighten their belts. Likewise small busines will just shut down hoping to sit it out – thing is.. if we were not already in a recession and if world economies outside were OK we might have a chance, also If only we knew where we were headed trade-wise now that we have taken back control? Surely if we are looking for growth then we are going to need to reconfigure trade patterns and create opportunities with foreign others? Yes but with a bit more than WTO rules8.. I see the way we are going will only hasten the breakup of the Union itself- as I m sure the scots and the Irish will have something more to say when things bad enough which they will. The people not going to put up with this tory led madness ad nauseum
September 24, 2022
Buttercup, I believe supermarkets are one of the main reasons High Streets family shops are closing, they canāt compete with 2 hours free parking when local councils charge so much, one of the reasons we stopped going to Chester weekly, that 2hrs restriction doesnāt give people enough time to do their supermarket shop and go to other stores, plus the supermarkets want to trap them into buying flowers, clothes, and hardware from them, this is our town planners for you, soon weāll just have six supermarkets thrashing it out controlled by government and minimising the independent manufacturers offer to the public. Two of those supermarkets are German owned, go figure, all the profit going out of the UK. The French wouldnāt allow it to take over their boulangeries and overtake their supermarkets.
Our town planners seem more interested in turning shops into flats and building on car parks with more flats. Everything is just about the big store conglomerates. Even the department stores that offered smaller companies floor space have been effectively put out of business.
It sounds like youād be happy with the Union breakup so you should be celebrating, as long as you turn out to be correct. By the way Scotland sets their own income tax rates, they donāt have to apply the income tax and ni changes.
September 25, 2022
‘ local councils charge so much’ – I summarised for you.
September 24, 2022
No, central banks are draining liquidity from markets, this means the high street banks have to increase their lending rates and people stop borrowing money, high street banks need 2 year gov bonds below 10 year bonds otherwise they are losing money, no bank is going print money out of thin air to lose money, when the tide turns the frist thing HSB do is to buy gov bonds to lower rates along with others but if CB indicates to the banks that rates should be 3 per cent and no lower, that means that CB want less malinvestments and more money into real economy to rise growth, that mean building factories and alike but after years of bad gov regulations and no support from the banks who find it hard to lend to these businesses so they lend to markets, commercail and housing instead because it a safer bet. Nobody in their right mind is going lend money to real economy while policies like net zero are enforce. EU regulation was away of getting rid of the real economy and lending for malinvestments instead. If john is at home buying shares on his computer thats malinvestment because the money goes nowhere but if john goes out and buys something for 100 pounds in a shop and that shop buy something with that 100 pounds and then buys something before go to the bank, that called velocity of money as money goes round.
September 24, 2022
Excellent article in today’s DT by SJR, the best Chancellor we never got!
It seems the BOE want to negate the new growth Budget! Crazy.
September 24, 2022
If the timid tax-cuts fail to deliver growth, scuppered by the increased Central Bank rates rises which are universally cruel, then the left will cite it as proof that ālow taxesā are the wrong policy.
Sadly Iām pretty sure that there will be no positive impact, although the fracking will be a welcome new industry added to our bow, worth a trillion or so.
Poor Biden, an Irishman so with an interest, has no concept of what the Good Friday Agreement is about. He has weighed in on the wrong side. Should Truss not learn from that and not intervene in quarrels between foreign people far away that we (and definitely she) does not understand for fear of weighing in on the wrong side? Anyway, Boris maxed out the credit cards so we have nothing for Elensky and the Ukraine. (Zelensky demanded the world ban the letter Z which is used to mark the forces of the Russian Federation and its Allies, and Many EU countries have deleted the Zeds from their language and roadsigns etc. therefore he is āElenskyā).
September 24, 2022
Just so long as he doesn’t end up at the wrong end of Eugene Onegin’s duelling pistol like Lensky…
September 24, 2022
There seems a fundamental phylosophic difference between the way the BOE would wish to run the economy and that of the current government. Factually the BOE and Treasury under EU influence have not done that well. Our government deserves the opportunity to show that an incentivised population is likely to be more successful than one chained by taxes.
September 24, 2022
We are already in a recession due to 12 years of Tory incompetence.
For many they are in poverty.
Reply Not yet a recorded recession, unlike USA which was in a technical recession first half of this year, presumably owing to President Biden’s incompetence in your view .
September 24, 2022
If you don’t send them back – they’ll just keep coming
September 24, 2022
The data below is for the 24-hour period 00:00 to 23:59 23 September 2022.
Number of migrants detected in small boats: 656
Number of boats detected: 15
Just some more āstatisticsā, that the French didnāt see leaving their beach and our own Royal Navy didnāt see crossing the mid-point of the channelā¦.we spend billions on getting the best radar and surveillance equipment for our military and our planes & ships canāt detect a flotilla of boats on a clear day !
September 24, 2022
I think it’s good.
It shows that the Tories can’t be trusted with an 80 seat majority.
They ARE the problem.
September 25, 2022
our Royal Navy is broken down in the Solent and the other half over the pond.
September 24, 2022
What Central Banks seemed to have missed that after a rough few years in the market place, Covid, Idiot Governments etc. most responsible enterprises have a need to bolster and rebalance their accounts. Where there is a shortfall in sales volume, as no one was allowed out to make purchases, this has to be covered by increased prices or increased sales.
In the short term an element of inflation is inevitable, but left to their own devices (as in no Government or their surrogates(Central Banks) interfering) things will balance out. As in good āoleā competition will kick in.
Government/Central Bank interference just prolongs the situation ā people have to remember when taxpayer money was squandered defending the pound. It caused prolonged hardship all round, but the end result was always the same.
Governments are terrible when playing with other peoples money, they always loose and things always finish up being paid for twice.
September 24, 2022
Commercial Banks employ āmarket makersā for a reason ā to create movement. They donāt care if it is up or down as long as it moves. If Money Markets move the āmarket makersā earn, if they donāt they donāt.
September 24, 2022
In the old days people left school at 14 year of age, and had a job right way in most cases with lower rates for uni, now its 18 year olds with 50% going to uni and starting work at between 22 to 24 years old and that has been the case for 21 years, no workers needed, but this year and last they need workers but they have no infrastructure in place for training so they been importing hundred of thousand from India the last two years without you knowing which has lead to trouble in big cities. Woke all about training people for jobs that are not needed and at above average pay to buy 300,000 to 2 million pound new homes. If you go to the bank with a plan for medium to high pollution no money low to no pollution how much, that because of regulations on businesses. You will be happy and own nothing, well if rates go to six per cent that might well be the case for many in the top 50 per cent and as john does not control rates he has no idea where they are going. malinvestment is all that is left and that might be going on the altar of net zero. They always turn to wars when they loss the plot and have no way out because of their own policies, who wants to invest when this gov might only be in office for 2 years. They have 7500 economists working at the BOE and the treasury and they know nothing.
September 24, 2022
Blair pulled off the win win win trick, never to be repeated. Facing possibly millions of unemployed school leavers, sitting around causing unrest and taking benefits, he came up with (well somebody did – I doubt he was that clever) the idea that they should all have fun at uni, tell them about the skilled future, then oh you need to pay of course, but the Loan isn’t a problem for years and then you will earn mega bucks.
And it came to pass. All those universities, using the term losely, and all those cowboy landlords cashed in. The foreigners joined in, we’ll have some of that so fees escalated in line with lecturers pay. We now have shelf-fillers and baristas with degrees and Firsts. Oh and student debts to make our eyes water. Unrest? No not really for the hordes never really had a career in mind, it was party time after the boredom of school. Most have settled for what they have and Mum still looks after them.
September 24, 2022
Surely sometimes recession can be a good thing for the soul – it can give people a chance to think about things – where we’re coming from and where we want to go. Surely then budgets can be done by middle of the road economics and sound planning instead of all of this extreme tax cutting and reckless heavy borrowing. I Don ‘t know anyone myself who would ever think of running their home and private affairs in this manner ‘ so why is government doing it now on our behalf?
September 24, 2022
Meeting next week more likely with BOE and treasury to increase rates to one per cent instead half of one, if you go against the consensus of the unelected they will hit you even harder, Italy has been told by the EU, If you elect the wrong people to your parliament we have the tools to make you suffer even more, so each time you come up with more ideas of how to get growth they will hit you harder with higher rates, unions will be used to stop growth, I don’t think the new PM will last one year.
September 24, 2022
What is excess money? Why have CB’s pursued NIRP for such a long time?
The US is raising. If the BOE did not increase, the value of GBP would fall further relative to its position now, causing further import inflation and potential export opportunities were it not for a slowdown in place.
When the fiscal spending boost is needed . Please build assets in the UK , made by UK business & labour paying UK taxes. Especially if they reduce imports and or increase exports.
Can we have a UK government – not someone elses!