Budget

Granny23 why don't they just combine income tax and NI, then we would all have a better picture and possibly save a little on the cost of admin?

My youngest son is paid £1 above the minimum wage and he is pleased his employer has told him he will keep his wage at £1 above minimum and he will also benefit from being able to earn more before paying tax. He is happy with that. 32 million people would also benefit from this. My dh will benefit from higher threshold going up so will pay less higher rate tax so he is also pleased even though will pay more NIC. I genuinely think Hammond really did try to give a bit back to all in employment and to things people care about also like NHS, potholes, internet for rural areas, air ambulance to get some money, duty on fuel frozen again on fuel to help drivers and schools got an extra boost with one off payment and additional money for defense, also counter terrorism. He has not got unlimited money and has to keep some for Brexit issues. I think I would have struggled to do much better to be honest. You can't please everyone but I think there will be a lot of people who think that budget is ok. If you could do better what would you have done?

Just remembered also there was 1/3 cut to small businesses on high street to encourage small local shops not to close that will benefit us all.

why don't they just combine income tax and NI, then we would all have a better picture and possibly save a little on the cost of admin?

Because then you would be able to see that the public have been conned. Give it with one hand in raising the tax free bands and take it away with the other by raising NI contributions.

Higher employment, more people have more money to spend, global markets doing well

Is that an explanation of where the money comes from, newnanny? If so, what drives higher employment? Where does the money come from which enables established businesses to employ more workers or new ones to start up?

I appreciate that you believe what you say but I don't agree and don't think we will ever agree.

Fair enough, Nonnie. I'm only basing my view on what I've been reading on the subject of economics over the past few years.

I'd be interested to know which economists you base your view on.

* Maizie* money circulates. Most businesses get the money to expand from increases in turnover. Many new businesses start with the entrepreneurs own savings or a small loan from friends, family or the bank. It is very hard for new businesses to get money from commercial sources until they have a proven track record. Money supply is not a fixed amount but, like employment expands to meet demand.

As an economist, I base my views not on just one economist but on a broad education in economics, a career in business as an economist and a continued interest in the subject.

It is very hard for new businesses to get money from commercial sources until they have a proven track record

Almost impossible with a good track record either M0nica the truth is that banks don’t really want small businesses on their books and very rarely lend without huge securities.

Money supply is not a fixed amount but, like employment expands to meet demand.

What I am trying to focus on is how it expands; what is the source of 'money'.

Do you agree with the 'austerity' policy, MOnica?

It is very hard for new businesses to get money from commercial sources until they have a proven track record

That's why the evil Labour Party propose setting up a National Investment Bank.

A United Nations special investigator is launching a two-week inquiry into rising levels of poverty and hardship across the UK, saying he hopes the government is ready for proper dialogue over the human consequences of austerity cuts.

Philip Alston, the UN’s special rapporteur on extreme poverty and human rights, is to embark on a tour of some of the UK’s poorest town and cities on Monday, visiting food banks and community groups and meeting MPs, government officials, academics and families in hardship.

Alston, who has a reputation as a fearless, plain-speaking critic, will gather evidence on the impact of universal credit, welfare changes, local government cuts, and rising living costs before publishing an interim report on his findings before he leaves the UK in mid-November.

Evidence to UN highlights extreme poverty in UK. “I think the UK is at a crossroads, partly because of Brexit, and partly because of the comments made by the prime minister and the chancellor in terms of austerity [being over],” he said. “My hope is that there is a real possibility for a dialogue about future policy direction.”

www.theguardian.com/business/2018/nov/05/un-rapporteur-philip-alston-uk-austerity

Haven't opened the link but I do hope the UN is not just picking on the UK. What about Italy? What about the poverty of the Calais migrants, including children?

If we leave the EU there will be even less money to help the poor, the sick, the disabled etc.

I do hope the UN is not just picking on the UK.

Why are supposedly mature elderly people using the language of children?

I quote Mr Micawber: Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought shillings and six pence, result misery.

Yes, we needed to reduce expenditure, but whether the Conservatives went the right way about it, is a quite separate question.

As for Labour's National Investment Bank, We have been there once already and it was a failure. In the 1970s Tony Wedgwood Benn's National Enterprise Board spent money on all kinds of failing companies and industries like British Leyland and British leather. Meanwhile other industries not affected by Benns favourite project flourished. Nothing the National Enterprise Board invested in went well.

There is no reason to think that a rebranded version of Benn’s failed project would do any better. It would just spend taxpayer’s money on projects run by those with political connections, creating futureless jobs in Labour seats.

As I have said many times. I have no time for either of the major parties and have never voted for either.

There is no reason to think that a rebranded version of Benn’s failed project would do any better.

There's no particular reason to think that it would do as badly, though. There is such a thing as learning from experience.

Nice quote from Dickens, but surely, Monica you know that a national economy is not the same as a household economy?

You've ignored my question on the source of money. As you are an economist I'd really like to know your take on this. In 1972 I was earning £12 a week. The same job now would pay very much more than that. The working population has also expanded hugely since then. Where has the extra money to pay them come from?

Petty Maizie designed to show your superiority or to stop me from posting?

MaizieThese are the main ways of increasing money supply:

1) Print more money
2) Quantitative easing – the electronic creation of money by Central Banks.
3) Increased bank lending – banks lending higher % of their deposits.
4) Central Bank purchasing bonds from private individuals which can be spent.

For more detail go to: www.economicshelp.org/blog/1143/economics/increasing-money-supply/

Post away as much as you like, nonnie, I'm not stopping you.

Interesting, MOnica and somewhat at odds with the Dickens quote.

1) Print more money
2) Quantitative easing – the electronic creation of money by Central Banks.

Aren't these two essentially the same thing? If by 'printing money' you mean issuing the physical medium of cash and coin which, despite our increasingly cashless society (enabled by electronic transfers) is still needed for some buying and selling transactions, isn't this just backed by the electronic balance held by the BOE?

3) Increased bank lending – banks lending higher % of their deposits.

But even Adam Smith, way back in the 18thC recognised that banks don't lend from their deposits. that in fact they lend far more than they hold in deposits in the expectation that their depositors won't all demand that their deposits are returned to them on the same day? When they did the consequent run on the bank actually led to bank failure because the bank didn't have enough money to repay their creditors. Wasn't that a big problem in the 2008 financial crisis, illiquidity.

4) Central Bank purchasing bonds from private individuals which can be spent.

I don't quite follow this. It's the government, via the BOE which creates bonds. If they buy them back doesn't that extinguish the 'money', not add to the supply? Or are you meaning that the former bondholders then have money to spend in the economy?

I can see that extending the period of the bond makes available for a longer period the money which the government would have had to expend in redeeming them at term.

However, the point I have been trying to make in all this is that the supply of money is not finite as is implied by the commonly held (and encouraged by governments) belief that a national economy is the same as a household economy. That governments can (with certain constraints) create as much money as they wish. With the result that so long as there are the resources available to be purchased with that money (goods and services) putting extra money into the economy is not a problem. (Adam Smith recognised this, too; he said it was only a problem if the money supply exceeded what was available to buy)

Of course, I know that it is more complex than this, but I'm only trying to get across one simple point about the national economy.

maizie I didn't draw these definitions up, nor have I any power to change them.

I am also not a monitary specialist. I worked at the practical end providing commercial and market intelligence to managers in industry. A bit like asking a Cardiologist questions about orthopaedic problems.

Sorry, Monica. I get carried away. I do like a bit of a discussion

But I do think that anyone should be able to have a basic understanding of how money 'works' as the economy is quite fundamental to politics and 'austerity' is destroying our country.