Tag: Chancellor Osborne
A Nice Surprise for Chancellor Gideon.
The UK economy grew 0.6% in the fourth quarter of 2015, higher than the previous estimate of 0.5%.
As a result, the economy grew by 2.3% for the whole of 2015, rather than 2.2% as previously thought, according to the Office for National Statistics (ONS).
Unsurprisingly, the figure came as a surprise to experts, who had forecast that it would remain unchanged.
One wonders whether Chancellor Gideon will blame the Global Economy for this morsel of good fortune.
Gideon’s Pensioner, Bingo & Beer Budget 2014
Above is the official “Budget Diagram” just issued by H.M. Treasury. Presumably we have to provide the crayons.
The most remarkable thing about this Budget was how small the numbers were – and I remember when ONE BILLION was a lot of money!
The ubiquitous “Scheme” was in there. This one was £3 billion to boost exports. As UK exports only represent a tiny percentage of GDP and because it is only “a scheme”…no harm done there!
UK potholes cost motorists about £730 million per year and cover a surface area of about 300 square miles. Therefore £200 million “made available for Local Authorities to bid for” seems a bit parsimonious…but nowhere near as mean as only £140 million for repairs and maintenance to flood defences. We not only need to patch up the damage but we need NEW flood defences. Presumably, the government’s resolve dissipated soon after the last COBRA meeting and when the last retina was reattached…..
The first “headline grabber” was scrapping VAT on air ambulance services and inshore rescue boats as well as scrapping Inheritance Tax for members of emergency services. As the current IHT threshold is £325,000 , THAT won’t bother too many firemen and ambulance drivers’ descendants and neither will the reform of air passenger duty!
We already knew about Ebbsfleet Garden City and PLANS for 200,000 new homes. Handy for the Ebbsfleet International Railway Station so that presumably, once HS2 has been completed,those pesky immigrants can be shunted-off to the North without even having to stop-off for a Starbucks.
Company-bought homes, valued in excess of £500,000 will now enjoy Stamp Duty of 15%. No doubt that can be recouped at the “sell” end of the process, which makes this a purely cosmetic gesture by Chancellor Gideon and a transparent attempt to create some egalitarian credentials ready for May 2015.
The Libdem-inspired tax threshold increase to £10,500 is a nice touch as is the freezing of Petrol Duty.
We have become used to the “let’s patronise the poor” section in which we have the cut in Bingo Tax, the freezing of whisky and cider duty and yet another PENNY cut in the price of a pint of beer!! ..which was negated (and worse) by the increase in cigarette prices. However, as all toffs know, the working classes smoke roll-ups so they will be unaffected!
By far the most important set of measures has all the electoral subtlety of a house brick through a crystal chandelier. It was for THE PENSIONERS (Gawd love ’em!).
When they retire, they will be able to get their liver-spotted hands on all of their Pension Pot and will NOT have to purchase an annuity. That sounds fantastic!! However, if a pensioner takes his pot of pension and blows it all on a Porsche 911….who is going to pick up the tab when there is no pension at the end of the money? Annuities are there for a reason.
In addition, when a pensioner cashes-in his or her pension, where can they keep the money? Why….a BANK, of course! Ideal! So it looks as if the banking system is due yet another windfall…but this one will be from the over 65s!
THAT is why there will be a PENSIONER BOND! The banks will be able to lock-in the money and pay 2.8% for a year’s use of the cash and only 4% for three years’. Win-Win!
The Premium Bond ceiling will be raised from £30,000 to £40,000! So, if you like your investment to REALLY be in the shape of interest-free eroding capital, then cash in your pension and give it to National Savings which, incidentally, is State-owned. Another Win-Win!
We won’t bother with the announced increase in tax threshold of a few hundred pounds for “middle income” earners because it is worth PENNIES.
The superficial generosity to the pensioners WITHOUT actually giving them anything is there for a reason!
Guess which section of the population has the highest percentage of voters?
He started it!
Economic Recovery: Fact or Faith?
Whenever man has struggled with solutions to big problems, he has turned to his God, who has consistently said that if man endures deprivations and suffering on this Earth, he will get his just reward in Heaven.
The weird thing is that here we are in the Year 5PL (Post Lehman) and our politicians are behaving just like those prophets of old. WITHOUT any proof and relying solely on faith, they say “Endure the austerity and soon you will be transported to the economic heaven.” Meanwhile they (the prophets) search for “signs”. For instance, a small statistical variation in economic data is seized upon as a “sign” that all will soon be well. (Chancellor Osborne did it again yesterday when he announced “encouraging signs that the economy is healing” HERE In fact, he repeats the holy phrase.)
Is that true? Have we been offered any proof? Do we have to accept the words of the prophets without question or are we being heretical and behaving like Doubting Thomases?
If the New Religion is true, then we have been witnessing the longest Resurrection ever!
There is much talk of “positive sentiment” and Central Bankers accept gifts and many sacrifices from the people and prophets….but, is there really room for faith in economic thinking?
Currently, it would appear that it is all we have.
(As you listen to the Chancellor, notice the total lack of numbers and dates in the affirmation of his faith)
The Eurocrisis isn’t just Financial.
The Eurozone crisis has managed to morph from a plain old currency crisis to a debt crisis, an economic crisis and now, a full-blown political crisis – although no-one seems to have noticed…….. and it’s not just the Eurozone:
In the United Kingdom, people are making increasingly indiscreet noises about the Prime Minister’s leadership capabilities and the Chancellor’s questionable competence, as the cold hand of political instability makes a (so far) half-hearted grab for No 10. Currently it looks as if there is already a swing to the right. Nigel Farage and UKIP no longer look like a bunch of extremist Right-wing loonies and as they gain respectability and seats, they will pose a genuine threat to the status quo.
Here’s a quick Grand Tour:
Greece’s political problems are well-documented and this is where the recent polarisation of national politics began with the success and increasing support of the right-wing Golden Dawn Party. Greece is on its knees.
In France there’s the scandal of a Minister and his secret Swiss Bank account with the consequent investigation of all Ministers – shades of the UK’s MP expenses outrage. President Hollande is keeping a very low profile because , let’s face it….he came to the table without any ideas. His mere presence has allowed Marine le Pen and her Right-wingers to re-emerge blinking into the sunlight, ready to build on her father’s legacy.
Germany’s Bundeskanzlerin Merkel is no longer odds-on to win her autumn election and so, in order to placate her detractors, countries such as Cyprus are being put through the debt-wringer and effectively having to bail themselves out! All in the cause of extra Brownie points for the Merkelator.
Many are anticipating more resignations from within the Cypriot government. Michalis Sarris, the Cypriot finance minister who negotiated Cyprus’s bailout agreement with international creditors has already gone.
Portugal’s Constitutional Court has kicked into touch some of the austerity measures imposed on the country by the Eurozone moneylenders. Now the politicians are wondering about how to plug the fiscal gap and Prime Minister Coelho may resign.
Belgium took 535 days to form a government after its last election and now has a 6-party Cabinet.
Italy is struggling to form a government and will most likely hold another election after President Napolitano comes to the end of his tenure as Head of State on May 15th. Goodness only knows what the reaction of not only the Eurozone but of the Markets would be should Silvio Berlusconi (again) rise from the dead! Italy’s political scene has become so surreal that ONE QUARTER of the vote in the recent election went to a protest movement headed-up by Beppe Grillo – a comedian!
Spain’s politicians, including its Prime Minister are mired in corruption scandals – and now there are anti-Royalist demonstrations as a direct result of the king’s daughter being implicated in a government financial rip-off. Mind you, affluent Spaniards have already pulled about $100 billion out of their Spanish bank accounts. They started running early. It’s only a matter of time before the Basques and Catalans start to make their separatist noises.
The difficulty is that one would normally expect the emergence of the Right to be counterbalanced by a strong showing from the political Left. But what Europe has are weak governments , compounded by even weaker oppositions. No European political party in government has over 50% of the vote……. and the less said about the European Union’s politicians, the better! They seem to have elevated ineptitude into an art form.
Currently, Britain’s Left is being driven by Ed Miliband and the New-Old-New-Who-Knows-Who-Cares Labour Party. They earn their salaries through the medium of being critical. They have shown themselves to be totally bereft of a coherent, cohesive strategy and will be directly responsible for the future success of UKIP.
Leadership (or a lack of it) within Germany’s Social Democratic Party will be the main factor which could give Merkel another few years of power. If that happens, the rest of the Eurozone should begin to consider itself as no more than a motley collection of Vassal States……there to do Germany’s bidding. Unless of course, Germany accepts George Soros’ advice and leaves the Euro.
France does not enjoy having a Socialist President and it is right to be sceptical. President Hollande is now totally ignored by Merkel and is doing what he does best – he keeps out of the way as Germany tightens its stranglehold.
Hollande could have been the Eurozone’s great hope but unfortunately is way out of his depth. France now has a negative bond rating by all three rating services and has lost much of its international respect. It’s precarious banking system is just waiting (like many others) to go “pop!”
The Main Event this year will be Merkel’s re-election so the Eurozone states must not expect any major policy changes until then – and when she wins? More of the same – but without the compassion!
What of Europe’s medium to long-term future? Without some sort of political quantum leap, it will inevitably descend into a collection of Third World states but with running water, TV and a banking system totally independent of its economy and probably with its own flag.
Mark Carney, the Governor-elect of the Bank of England is the perfect hire for this Government.
Over the last two years, it has become increasingly evident that Chancellor George Osborne and Business Secretary Vince Cable have no policy at all in respect of banking.
The Conservatives have known all along what they want and need from our banking system, whereas Vince Cable has been reduced to delivering the odd grumpy sound-bite.
It’s been nothing more than window dressing.
Because of the symbiotic relationship between politicians, retired politicians and banks, they had to hire someone who would more-or-less preserve the status quo but who was also a major international player.
Mr Carney, a Goldman Sachs-trained Investment Banker is the exceptional candidate for the role……..as long as he delivers what Chancellor Gideon expects and doesn’t overdo the Bank of England’s “independence” bit.
We can forget Banking Reform (remember “firewalls”, “good banks”, “bad banks”, “Splitting the banks”, “Too big to fail banks” and all the other buzz phrases from the last four years?)
Forget them all.
Mark Carney is the current Governor of the Bank of Canada and as such, responsible for the Canadian Banking system which is considered to be the safest in the world. However, the Canadian Banking system is dominated by five main banks and most importantly, these banks are not just retail banks but they are Holding Companies which also control activities such as credit cards, brokerage, mutual funds, insurance etc.
That is probably the model which appeals to our Chancellor and the government – and, most importantly, which will require the minimum amount of “tweaking” of the British banking system.
The Coalition government had absolutely NO INTENTION of ever reorganising our banking system and is now able to say: “Let’s wait until the new Governor is in place.”
Meanwhile, because ALL regulation will eventually land in the Bank of England’s lap, we should expect the FSA to atrophy and die – as it has been doing since inception and anyway, Lord Turner stands absolutely no chance against this guy – with the added “frisson” of Turner having also applied for the BoE Governor job.
Here’s the Chancellor’s slightly overdone sales pitch:
“Mr Carney is unique amongst the potential candidates, in combining long experience of Central Banking, huge international credibility in economics, deep expertise in financial regulation and a first-hand experience of private-sector financial institutions.”
He wasn’t the exceptional candidate. He was the only candidate.