Today’s Mini Budget.

Just been chatting to Himself about it. He says yes, the very rich will benefit. But the main aspect isn’t about the mega rich. It’s about the workers who earn £50k and above - say a deputy head or a doctor. Now the reduction in tax means they will be £1k a year better off in their pocket due to 40p in the £1 in tax and not 45p in the £1. The hope is that these people will use the extra money to say have their bathroom tiled - generating flow of money from many households into the economy.

Is he right? I think this is a simplistic analysis for my benefit!

JaneJudge yes Sweetpeasue is ok. Lovely of you to ask. She’s on the Black Dog thread if you wanted to post her a message.

Urmstongran. Sadly he's not right. The 45p rate was for those earning £150k or more. Not £50k.

Oh right. Thanks volver. He’s wide of the mark then if it only benefits those on 3x what he thought.
I wonder where he got that in his head?

Urmstongran

Just been chatting to Himself about it. He says yes, the very rich will benefit. But the main aspect isn’t about the mega rich. It’s about the workers who earn £50k and above - say a deputy head or a doctor. Now the reduction in tax means they will be £1k a year better off in their pocket due to 40p in the £1 in tax and not 45p in the £1. The hope is that these people will use the extra money to say have their bathroom tiled - generating flow of money from many households into the economy.

Is he right? I think this is a simplistic analysis for my benefit!

No, you're right, Ug. It's simplistic. Though your DH probably knows best what level of complexity you can cope with.

It's going to need a bit more than a few doctors with an extra £1000 pa to boost the domestic economy. In fact, that £1000 probably won't even pay their extra mortgage repayment as a consequence of the interest rate rises.

And the people on lower incomes gain such pitifully small amounts, or nothing at all that all their spending in the domestic economy will be restricted to the cheapest foodstuffs, heating and housing costs. There won't be anything left for further purchases.

I think that Truss and her chancellor are living in cloud cuckoo land and haven;t the faintest notion how the domestic economy works. Surplus cash supports thousands of small service businesses, hospitality and vaguely 'luxury' products. This budget isn't going to do a thing to bring them the extra business boost the economy needs.

Urmstongran

Just been chatting to Himself about it. He says yes, the very rich will benefit. But the main aspect isn’t about the mega rich. It’s about the workers who earn £50k and above - say a deputy head or a doctor. Now the reduction in tax means they will be £1k a year better off in their pocket due to 40p in the £1 in tax and not 45p in the £1. The hope is that these people will use the extra money to say have their bathroom tiled - generating flow of money from many households into the economy.

Is he right? I think this is a simplistic analysis for my benefit!

They will benefit as all those paying tax will do from the reduction in Basic Rate Income Tax to 19%
However, that will be more than swallowed up by increase in mortgage rates, heating, food prices etc.

Throwing a crust to keep the masses happy.

Urmstongran

That Krugerman report is very worrying.
Who is he?
The best thing for purposes of balance would be to find an alternative viewpoint by another economist.
Reading that one the UK is up shit creek without a paddle.

I think the problem is there is no alternative view at the moment, Urnstomgran. Those who understand these things seem stunned and shocked.

However, I imagine something made to sound more positive will come out in the client newspapers before long and then we can chew it over.

To me, this government - the Truss takeover - is still trying to make Brexit something it never was, an extreme most could not believe anyone would try and inflict on this country. I am sure we will soon see that they have gone for this mad budget to prove their point about their dream of Brexit, which was always unreal. This government comprises idealogues and idiots, but they will not be the ones that suffer.

Yes, DaisyAnne, and the take over for Brexit extreme is the ERG. And still so many, including here, just cannot see the huge danger they present.

Urmstongran

That Krugerman report is very worrying.
Who is he?
The best thing for purposes of balance would be to find an alternative viewpoint by another economist.
Reading that one the UK is up shit creek without a paddle.

He is no fool, and very experienced:

Paul Krugman joined The New York Times in 2000 as an Op-Ed columnist. He is distinguished professor in the Graduate Center Economics Ph.D. program and distinguished scholar at the Luxembourg Income Study Center at the City University of New York. In addition, he is professor emeritus at the Princeton School of Public and International Affairs.

In 2008, Mr. Krugman was the sole recipient of the Nobel Memorial Prize in Economic Sciences for his work on international trade theory.

Mr. Krugman received his B.A. from Yale University in 1974 and his Ph.D. from M.I.T. in 1977. He has taught at Yale, M.I.T. and Stanford. At M.I.T. he became the Ford International Professor of Economics.

Mr. Krugman is the author or editor of 27 books and more than 200 papers in professional journals and edited volumes. His professional reputation rests largely on work in international trade and finance; he is one of the founders of the “new trade theory,” a major rethinking of the theory of international trade. In recognition of that work, in 1991 the American Economic Association awarded him its John Bates Clark medal. Mr. Krugman’s current academic research is focused on economic and currency crises.

At the same time, Mr. Krugman has written extensively for a broader public audience. Some of his articles on economic issues, originally published in Foreign Affairs, Harvard Business Review, Scientific American and other journals, are reprinted in Pop Internationalism and The Accidental Theorist.

Urmstongran

Just been chatting to Himself about it. He says yes, the very rich will benefit. But the main aspect isn’t about the mega rich. It’s about the workers who earn £50k and above - say a deputy head or a doctor. Now the reduction in tax means they will be £1k a year better off in their pocket due to 40p in the £1 in tax and not 45p in the £1. The hope is that these people will use the extra money to say have their bathroom tiled - generating flow of money from many households into the economy.

Is he right? I think this is a simplistic analysis for my benefit!

Sorry Urm Himself is forgetting the personal allowance so anyone earning £50k is taxed at 20%. The 40% band starts at
£50271.

I forgot the reduction to 19p. That results in reduction of tax of £374.30. Not really enough to encourage an increase in spending

Apparently Liz Truss is aiming to slash more taxes. We are in for a very bumpy ride it seems. It’s a plan to turbo boost the economy which is stagnant. Doing ‘more the same’ isn’t an option according to some articles this morning in the newspapers.

To my simple mind, when inflation is very high, further tax cuts next year for anybody other than very high earners will make no difference at all for the majority, because they will be swallowed up paying for the basics like food and power, mortgages, rent and fuel. I can’t see how this strategy has any chance at all of success.

Fleurpepper

In the meantime, insider traders, mates of Truss, Kwarteng and co, are making an absolute fortune betting against the Pound. Perhaps that is why Kwarteng was laughing his head off at the Queen's funeral?

'Odey's hedge fund soars 145% on bets against UK bonds - sources

By Nell Mackenzie'

this is of course FRAUD, 100%, and we are paying for it.

Apparently it isn't fraud at all but a perfectly acceptable and commonly used procedure in the financial markets. (I am not being sarcastic, this is absolutely true)

Insider dealing is illegal in the market for shares, but it doesn't apply to currency.

Casdon

To my simple mind, when inflation is very high, further tax cuts next year for anybody other than very high earners will make no difference at all for the majority, because they will be swallowed up paying for the basics like food and power, mortgages, rent and fuel. I can’t see how this strategy has any chance at all of success.

It's a basic fact which most economists, and folk who can think logically, recognise.

Analysis of historical financial data has shown that it never works and is usually economically destructive.

Unfortunately Truss and Kwarteng have zero economic expertise, are run by ultra right wingers whose sole objective is to increase the wealth of themselves and their wealthy associates, and are advised by Patrick Minford, a superannuated 'economist' who is usually wrong in his predictions* and who should have been put out to grass decades ago.

*Interestingly though, Minford got it absolutely correct when he predicted, in his paper which SUPPORTED the Leave campaign, that Brexit would destroy the UK's farming and manufacturing industries. A little fact that was completely ignored by leave supporters and called 'project fear' when quoted back at them. Their own pet economist told them how it would be and they still went ahead and did it???

'They' didn't. The voters did.

I wonder how long it will take for the pack of cards to come tumbling down.

MaizieD

Fleurpepper

In the meantime, insider traders, mates of Truss, Kwarteng and co, are making an absolute fortune betting against the Pound. Perhaps that is why Kwarteng was laughing his head off at the Queen's funeral?

'Odey's hedge fund soars 145% on bets against UK bonds - sources

By Nell Mackenzie'

this is of course FRAUD, 100%, and we are paying for it.

Apparently it isn't fraud at all but a perfectly acceptable and commonly used procedure in the financial markets. (I am not being sarcastic, this is absolutely true)

Insider dealing is illegal in the market for shares, but it doesn't apply to currency.

Context is everything.

We know that Crispin Odey, British Hedge Fund Manager, has donated vast sums to the Leave Camp and made 220 mio betting against the Pound at the time.

He gave Johnson and Rees-Mogg very large sums, and 1.7 mio to Brexit supporting parties.

And this is just a glimpse, for 1 Hedge Fund Manager.
Insider Trading is fraud- and we all know that it is very difficult to prove.

As for shorting the Pound, and taking bets on it- yes I know it is not illegal, and very profitable for many relatives right now.

I caught a swift glimpse - in the Times I think- (perhaps someone can confirm or not?) that Truss has more massive tax cuts in the pipe line at the November budget, together with easing the rules on immigration.

What chance spending on the NHS and social care?

The FT is reporting that investors are fleeing the U.K. because of the economic state we will be in.

Yet apparently financial traders are forecast to be heading to London now from Edinburgh and New York.

Who is forecasting that Urmstongran?

(Remembering of course that Edinburgh is in the UK...)

Liz Truss is in big trouble with her own backbenchers who have threatened to revolt if the £ falls below the value of the dollar! It seems they will refuse to vote for her finance plan!

The crash in the £ will mean everything we import will increase in price - food, clothes, cars, washing machines, petrol etc etc

vaccines, essential medicines and isotopes, energy, parts for industrial chains (what little we still have) and so much more.

It could be good for exports, but due to Brexit exports have slumped hugely due to extra costs, tons of paperwork and self imposed restrictions of all sorts.

These policies are not only outrageous, but no one has actually voted for them. Bankers bonus cap, fracking, removal of protection of parts of the countryside, increase in migration, deregulation of planning consent. Apparently more to come.