December 16, 2008
We often hear that it is only after alcoholics and drug addicts admit to their addiction can they really be helped. Until they admit they have a very serious problem, a remedy that will effectively help cannot be provided.
I suppose the same principle applies to an economic crisis – until the Government admits to the scale of the problem, an effective solution cannot be found. It is therefore interesting to note that two Government Ministers have admitted that the recession is likely to affect us more severely than ever before and more than other countries.
Tessa Jowell, the Olympics Minister, expects the recession to be ‘deeper than any that we have known’ and Chancellor Alistair Darling notes that ‘…we are likely to be more severely affected as a result of the profitability being reduced and I’ve made that point on many occasions’ – which he actually hasn’t but one more fib by a Minister to go with the many Brown tells doesn’t make much difference.
Now we have these admissions is there any chance the Government might put forward policies that are likely to help people struggling to cope with the economic downturn instead of the ill thought out measures of the PBR and reckless plans of borrowing based on the premise that we are better placed than others to deal with the economic slump?
November 24, 2008
The Labour Government is going to borrow a mind boggling £118 billion in 2009 to help it pay for the economic mess that it has got us into. That is the long and short of today’s pre-budget report. This figure is sufficient to understand the trouble our nation’s finances are in and why the promised stimulus was such a letdown and more worryingly, why Labour will significantly raise taxes in the coming years.
Everything else that the Chancellor announced pales into insignificance when compared to next year’s borrowing figure. Bearing in mind that borrowing figures for this year have had to be revised twice upwards by the Chancellor, the estimated borrowing figures cannot be accurately relied upon.The borrowing figures for the next five years are;
£78bn in 2008/09
£118bn in 2009/10
£105bn in 2010/11
£70bn in 2011/12
£54bn in 2012/13
The promised fiscal stimulus to stave off a deep recession was nowhere to be seen. A £20 billion giveaway including the cutting of VAT from 17.5% to 15% for 13 months was off set by a £40 billion tax rise including a 0.5% increase in national insurance contributions for employers and employees alike from April 2011 and a new 45% tax rate for those earning £150 000 or more.
Today we saw the return of Old Labour. The politics of taxing everyone as much as possible but taxing the rich until the pips squeak returned with a vengeance. Prudence, stability and other such sentiments espoused by the PM for so long were all binned for a tax and spend binge and it was shame that it fell to Alistair Darling to deliver the Pre-Budget Report and not Gordon Brown as it would have been pleasing to witness him contradicting everything he has said previously about the economy under his watch. The Chancellor blaming global problems for the state of the UK economy at each and every turn was frankly embarrassing.
George Osborne gave an excellent and perfectly pitched response by heavily focusing on the hypocrisy and sheer incompetence of this Government. It was a very hard hitting rebuttal of Labour’s and especially Gordon Brown’s profligacy and the reckless tax and spend policies that have left the economy in such a mess and the country facing a national debt of £1 trillion.
If the measures in the pre-Budget Report were what this Government thought would get the economy moving again, then it is badly mistaken. If it thought that these measures would win the next general election then it is surely living in cloud cuckoo land.
November 24, 2008
Pre-Budget Report later today. There is talk of VAT being cut by 2.5%, income tax increases for those earning more than £150 000 and a slowdown of public spending. We’ll know the exact details later this afternoon after which I’ll do another post.