Wednesday 5 December 2012

Autumn Statement

As expected, rather a lot of ho hah about not very much. Some niggling with taxes around the edges and some more disincentives to build up decent pension pots - as well as some Brownite stealth in freezing benefit rises and also holding down tax thresholds below inflation.

Cunning, but not earth shattering.

The real issue for London is around the 15% proposed charge on non-person buyers and we won;t find out about this until next week. There are plenty of deals being held up by this and plenty of property dumping potentially linked to this issues.

For me the most interesting piece is the forecasting. We all know that Governments are trying to raise money today and for the future based on predictions of where the economy maybe. Yet here there is a huge amount of hot air and little light. The OBR has heavily revised and been wrong in virtually every prediction it has made since 2010, normally being too optimistic.

Without any real guidance, who knows what to do re the Government finances...more austerity, less austerity. With 20/20 hindsight it will be clear, but the reality today is that we don;t really know what it going to happen in 2 months or 6 and certainly not in a year or two.

Which is probably why the Chancellor is not doing much - it a conclusion to draw, but I doubt it's the right one.


Timbo614 said...

It's just "being seen to be doing something" and also to "be doing something" to the rich??? those earning 50K and "really rich" those that can get 1 millon plus into a pension pot by putting in 50K a year.

I've got over 10% of that - I have paid nothing in for 10 years and I've been taking it out as fast as possible :)

and I feel really rich expecting 4K a year after another 5+ years of inflation:(

Bill Quango MP said...

The last person to be fooled at a budget statement was Cameron. Gordon foxed him by announcing a totally unexpected income tax tax cut.

Cameron responded rather better than Balls, even though he pretty much had had to tear up his prepared statement as ShadChad Ed did.
Within 48 hours the lies and mis reporting in Brown's statement had been uncovered, even though they were largely ignored by the press. Brown was riding high, waiting to be crowned king unopposed. The tax rise on the lowest income group was overlooked by the media,and indeed his own MPs, as Brown had known it would be.

The following year the 10p tax rip off finished Brown's wavering financial credibility for ever. He never recovered.

We shall have to wait and see exactly what tricks Osborne used to fox Balls. See if they turn out to be worth more than a temporary 24 hours of glee.

BTW - Labour MPs today moaning that Osborne stole the pension from Royal Mail adding it to the current 'reduced borrowing' pile neglecting to mention the forever onwards off balance sheet debt this will add.

Its a bit rich by the labour MPs.. We reported at the time that Brown was trying this very same trick and was precisely the unusual reason why a Labour prime minister ordered the privatisation of a client, labour union, dominated industry. To get the £24bn of assets into the plus column of the books.
Gordon only failed because his own MPs wouldn't support it. He could never openly explain the real reason for the cash grab sell off and had to pretend it was 'for investment'.
Labour MPs either didn't understand or didn't believe him. So the sell off failed, only to fall into the coalition's lap when they took over. An industry labour didn't really ever want to privatise, except to get the sweet, sweet, cash in the billions in debt pension pot, fell into Osborne's grateful hands.

Another Gordon own goal from beyond the grave.

James Higham said...

So, the middle class are not to be slugged after all, CUS? That's a relief.

Jan said...

".....more austerity, less austerity...."

The focus has to be on decreasing the debt as so much of government spending is debt interest payments.

I would say more austerity is the way to go and put up with some business failures and the inevitable increase in benefit payments. The bloated government sector must also reduce gradually until as a country we learn to live within our means.

CityUnslicker said...

jan - oddly a tiny amount of spend is really debt finance. one becuase interest rates are low due to QE. two because QE is buying the debt and collecting the interest for the government anyway.

real UK debt has reduced by 33% in the past few years. One day it will either be cancelled or forever rollwed over.

or the markets may twig that the game is not straight and we move to a rather large devalution and hyperinflation story....

Electro-Kevin said...

CU - I am perplexed at why the markets haven't twigged already.

The BBC today.

The Tory front bench laughing to a voice-over narrative of hardship and austerity. Talk about mischevous editing.

Having said that. They should not laugh at all during budgets and mini budgets. I expect their PR people will be having kittens about it.

Blue Eyes said...

EK, the reason we have "got away with it" so far is the same as Japan. Japan has been printing money for twenty years yet has had zero inflation for most of that time. Why? Because savers have nowhere else to go. In the UK, Gordon changed the rules so pension funds HAVE to invest heavily in government bonds whether they are a sensible investment or not. Similarly, the banks have been doing so too because thanks to QE they are an excellent short-term investment (huge capital growth while the bubble lasts).

"At some point" this will all unravel leaving a ghastly mess but don't bet on it being on a particular day because as Japan has proved it might not happen anytime soon! Then again it might happen tomorrow.

It's an accident waiting to happen and we might wake up one morning to find the world economy and our standard of living has literally vanished. So enjoy it while it lasts!

Patrick Troy said...

3 key words..."less than inflation".

It seems that with everything pegged to 1% increase everything would look rosy if the much vaunted "deflation" took over. But it seems they are going for growth. Growth in inflation - to make the toxic loans perform better. Growth in tax intake - through fiscal drag. Reduction in the real cost of benefits as inflation takes hold.

QE was just the first salvo in debasing, devaluing and debauching the real value of the money in your pockets. Fix your mortgage quick.

Wonder if that Canadian is having second thoughts.

Anonymous said...

What we as a country need to do is to accept that most of the so called growth of the Brown era was simply a combination of faked stats and shortterm factors that could never last.

We need to realise that the size of the economy is smaller than the establishment wish to believe and that therefore the size of government we can sustain over the long run is smaller than they want.