It shouldn’t come as a surprise that taxpayers benefit from tax cuts and benefit recipients lose from benefit cuts. But today’s mini-budget goes to show that the current UK government is on an ideological road to nowhere.
In Liz we Truss?
Despite being in charge for 12 years, the new government run by Liz Truss is determined to change the course. Obviously the last 12 years weren’t working well enough, so we need more extreme policies – and since the leadership can only remember as far back as their own youth, aping Margaret Thatcher’s policies is the only thing they can think of doing.
The idea that we need to cut taxes, reign in spending and grow the economy is not new but these guys take it to the extreme. When it comes to how they plan to achieve growth, it’s by tax cuts for the rich and crumbs for the poor (that’s if you are not forced into work).
The Queen of England died recently and the country closed down for a week or two. Apparently it’s impolite to express anything other than uncontrollable grief that would make a North Korean blush with embarrassment.
But this did give the government a bit of time to think carefully about their plans for running the country. Would Liz’ team really do all the crazy stuff that they said during the election campaign – surely not? Are they mental? We’ll never know because mental health services are stretched so thinly, it might not be before the next general election before we find out that Truss and gang were a deluded collection of empty-headed idiots.
To A Dress the Economy
The problem with macro-economics is that everyone sees things differently – like that dress from 2015 – back then we only had optical illusions to argue with one another about – remember 2015 (before Brexit) – but since then, the government has made a really bad job of running the country and the economy. I am an optimist (yellow and white for me), but I get a really bad feeling about how this will turn out.
But the current government probably don’t share the same version of reality as everyone else. They probably cling to the view that Brexit can somehow still work for the country and we’re on the up. It doesn’t feel like it.
The pound is down, the FTSE is down, confidence is down, debt is piling up, the deficit will balloon, and, in the meantime, the UK’s creaking economy is getting weaker and weaker.
Yet the government cheerleaders are oblivious to it all.
Glad to be in Scotland?
Scotland has its own government and its own set of challenges. Largely thanks to a population that hasn’t grown as much as England and the Barnett Formula, Scotland benefits from higher public spending than England. You’d imagine you’d want that to continue?
Well, apparently the SNP’s decision for income tax devolution is set to cost the government a fortune here – as says John McLaren in the Scotsman.
I’m all for debate on Scottish independence but the independence argument is let down by not engaging in the economic reality. I think that Scotland has the right to be independent but with the terrible finances and the SNP ignoring them, I really think that they shouldn’t be. It’s economic suicide.
Good News on IR35
I suppose that a few readers of this blog are contractors like me. I’m glad that the rules on the hokeypokey of IR35 are getting easier for us. Loathed IR35 reforms scrapped by the Chancellor.
That might be the best takeaway from the mini-budget for me. I value my freedom and don’t want to be shackled to a desk working 9-5 ever again.
Thoughts on Financial Independence
The big winners from the budget are those that are high earners but what you didn’t see if that unearned income gets a tax cut (dividends) and wealth escapes. The poor are getting nothing or less (in real terms).
If you have savings, investments and your spending is under control, you are already ahead of most people. If things get too bad in the UK, you’ve got the freedom to escape – don’t you? Just don’t keep too much money in the pound – down almost 20% against the dollar ytd.
It was a terrible mini-budget from a group of people who are not only tone deaf to the country’s needs (no mention of net zero, expanding UK renewables…) but are using yesteryear’s mantras to solve 21st century problems.
Expect worse to come (unless you are a banker).