Wednesday 3 March 2021

What the UK budget should be in 2021...but won't be.

 Most of the budget this year appears to have been leaked, those running the Tory party can't resist speaking to Journalists - I guess when an ex-Journalist is the big boss, this culture is bound to arise (and Michael Gove is two, so 2 of the top 3 in Government - must be a first?).

Anyway, we can re-read the grim old news later. 

The key thing is what should be done. As I said on Monday, now is no time for a full budget in the midst of the pandemic, better to delay it. However, the outlines of good Governance and a way forward can be set out so that businesses have time to adapt:

1) A slow move away from property business rates to digital and sales volume rates. Less fixation on corporate taxes and more encouragement for companies to invest, employ and succeed. This will help re-balance the economy away from London too in the long-term

2) A real need to focus on productivity - the high immigration environment of the last 20 years has taken a big toll on productivity, investment is needed across UK PLC, including infrastructure to support it like 5G roll out etc. Tax breaks for business investment and research are essential. 

3) A debt re-organisation, the UK has massive debts but is paying record low interest. Longer term gilts with lower yields should replace short-term 10 year loans. the savings for the future are huge. 

4) Pension relief needs to be hugely improved, there is no point the state playing an ever greater role in older peoples' lives when they could be persuaded to save if it avoided a lot of tax.

5) Financial reforms - almost impossible with the sclerotic FCA - but a new funds structure to compete with Luxembourg, freer trading regulations for the City to entice more investment, simple regulation and encouragement for digital currencies - all these will help the City and its huge tax base thrive. 

6) Continue most of the support for the economy until after it has re-opened as this will pump prime it for expansion although it will stoke some inflation. 

I wonder how many of the the above will actually be done, worryingly I think only one or two at best.


Graeme said...

Hasn't it been leaked that they are going to tighten the pension lifetime limits? Sadly, I don't see this mob doing anything on your list

dearieme said...

Cancel HS2. Abolish greenery-wankery. Introduce a tax on socialism.

Matt said...

LOL, this is the wet Tory party. None of this will be in the budget because it makes sense.

dearieme said...

I have never met an economist who has actually primed a pump, or kick-started a motorbike, or catalysed anything whatever.

Graeme said...

They probably do kick the tyres though, for some reason

CityUnslicker said...

He kinda of managed two but ruined one. He managed to extend the fiscal support and encourage investment, but putting up corporate tax by over 20% will kill any investment incentives.

dearieme said...

"will kill any investment incentives."

Come now; it will reduce them, it will not kill them.

Charlie said...

Inflation it is then. Starting with wage and then house price inflation in the north.

E-K said...

This is not a Conservative government. The extension of furlough will not save jobs, it will just prevent rioting while they are destroyed.

We must be pretty close to the point where we have Focused Shielding by vaccine.

Why aren't we opening up the economy ? That's the only way to save jobs and get the debt under control again.

More and more I am coming to a conspiracy theory. Not that this is The Great Reset but that this is The Great Switch.

The Switch from West to East. Eastern workers - better skilled and harder working - earning 1/10 of Westerners is unsustainable both economically and environmentally.

What better way of making us accept poverty in a rice and bicycles economy than by telling us that it's for our own good. Protecting us from a disease (which is no threat to the vast majority) and protecting us from Global Warming in the self sacrificial Great Switch Off which is coming in under 9 years.

Easy for a billionaire Chancellor to say.

Anonymous said...

House price inflation isn't inflation, Charlie? Surely it's "a booming housing market"?

E-K - our children and grandchildren can live in pods and eat bugs, while beef and houses become unaffordable.

Makes you long for the early 1970s, demonised by TPTB precisely because the median working man could afford a house, a car, and a stay at home mum raising kids.

dearieme said...

"Easy for a billionaire Chancellor to say."

Is he? How come?

E-K said...

By marriage.

dearieme said...

"By marriage."

In other words he's not a billionaire. It's simply untrue. Unless you mean "by gift from his wife" our "by gift from his father-in-law".

Is his wife a billionaire or just someone who expects one day to inherit a billion? Because if the latter is true she probably doesn't have a billion to gift him.

And however fond his FIL may be of him I suspect he's unlikely to have gifted him a billion.

So it seems likely to me that the claim that Sunak is a billionaire falls into the category "utter bollocks".

Anonymous said...

E-K: "More and more I am coming to a conspiracy theory. Not that this is The Great Reset but that this is The Great Switch."

It's definitely the great bait and switch.

Vote Tory get Tyranny

Charlie: "Inflation it is then. Starting with wage and then house price inflation in the north."

Inflation,this is going to make the '70s look tame.

They've just put a whole years worth of GDP on tic, and are intending to put another ( bet you September ain't when we relax the control freakery ).

The only thing that might reign it in is if deflation gets the upper hand. But I don't really know which I'd prefer, and inflationary Bust or a deflationary Bust.

E-K said...
This comment has been removed by the author.
E-K said...

Dearieme said

Mr Sunak's father in-law probably doesn't like him enough to make him a billionaire:

"So it seems likely to me that the claim that Sunak is a billionaire falls into the category "utter bollocks". "


Mr Sunak's father in-law making me a billionaire would be *utter* bollocks but so may we compromise and agree that him making Dishi a billionaire is probably just ... well... bollocks ?

Let's put it this way.

Mr Sunak might not be a billionaire but so long as he's married to FIL's daughter he is never going to have any personal money worries and can just flit from Blighty unscathed and probably better off.

6:21 pm Delete

James Higham said...

TPA, though acknowledging that it's a tax raising budget, also wrote this Sunday morning:

There were much needed taxpayer wins following relentless campaigning by the TPA. Extending the cuts to stamp duty, business rates and VAT are warmly welcomed. So too a freeze in fuel duty which will help millions of households.

It was also good to see the Office for Budget Responsibility and media acknowledge that the tax burden is at its highest's since the 1960s. The TPA first published this statistic back in 2018. But as we revealed earlier this year, the sustained tax burden is now the highest since 1951.