It was a part of the "Thatcher economic miracle" IIRC - run up the debt paying all those millions to do nothing then let inflation devalue the debt.
porterclough - MemberAre we really going to have 5 years of Labour complaining about all the things that they would have had to have done anyway if they'd won the election?
Oh, of course. Silly me of to expect anything different.
I've just checked, and I can't see that the shadow chancellor Alistair Darling, has said anything at all about possible VAT increases.
What are you on about ?
There is indeed. [EDIT] 3 posts up!
But to return to your original point remember that if relying on inflation to wipe out a debt interest rates will tend to be higher to try to keep the inflation under control and it may not reduce as quickly as one was expecting.
Jeremy Vine on radio2 was discussing this the other day and I was suprised to hear what doesn't have vat on it. As previously mentioned helicopters and art, collectable gold coins, super yachts. All items bought by your average person!
TJ pressed the "Thatcher's fault" button!
Who had that post number in the sweep?
Didn't Thatcher copy Pinochet's economic policies? That was why she was so defensive of him when he came to Britain a few years ago.
I believe that we have to call printing money "quantitative easing" nowadays
Just look at Zimbabwe, a whole country full of billionaires.
The term "quantitative easing" originates from Japan - not Zimbabwe.
Didn't Thatcher copy Pinochet's economic policies? That was why she was so defensive of him when he came to Britain a few years ago.
I thought that was because he was reasonably helpful during the Falklands war. More so than our American friends anyway.
The term "quantitative easing" originates from Japan - not Zimbabwe.
And the Japanese have no problems at all with hyper-inflation.
porterclough - MemberTJ pressed the "Thatcher's fault" button!
Who had that post number in the sweep?
I mentioned her first.
I mentioned her first.
That's 'cos you lurrrve her.
And the Japanese have no problems at all with hyper-inflation.
No, [i]deflation[/i] .......hence "quantitative easing".
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Did anyone notice anything get cheaper when it was at 15%? I didn't. Can't see that I'll notice much difference at 20%.
Did anyone notice anything get cheaper when it was at 15%? I didn't. Can't see that I'll notice much difference at 20%.
Not even petrol. They put the duty up to compensate, but forgot to reduce it again when VAT went back to 17.5%, and of course one pays VAT on duty for some bizzare reason.
Example, cost 40p, duty 60p price inlcuding VAT = 117.50p
Duty rises 5p
Cost 40p, duty 65p, price including VAT = 123.375p
5p duty increase has pushed price up nearly 6p
(figures are for illustrative purposes only)
The VAT on fuel (and the VAT on fuel duty) puts the price of fuel up, which puts up the price of pretty much everything; food included.
Well it would do if it wasn't for the fact companies can reclaim VAT on fuel, hence in reality it should make no difference at all.
Did anyone notice anything get cheaper when it was at 15%? I didn't. Can't see that I'll notice much difference at 20%.
For once I agree with coffeeking 🙂
Everyone whined that the cut to 15% would make no difference, so I don't see how this will make much difference either.
Except that companies will doubtless use it as an excuse to whack prices up by 5% 🙄
In reality of course, the price of imported goods (which is surely most of what we pay VAT on, isn't it?) is far more affected by the exchange rate than the VAT rate. Signs of a commitment to reduce the deficit could improve exchange rates by more than 2.5%.
"Well done for voting Conservatives-bike bits will go up in price again..."
Hold on is it not the labour government who got the country in to this mess in the first place?
Both times when labour have been in power recently they have left huge deficits
The Conservatives have been in power 8 days.
You'd think they'd brought the country to rack and ruin in that short time.
Both times when labour have been in power recently they have left huge deficits
And what deficit did the Tories leave last time they were in power?
was it a defecit of morals last time?
In fairness global events did for the economy what the govt did either helped or hindered this. The same will be true for this government. they are not responsible for the debt but they are for what they do to try to lower it whilst not ruining the recovery/making it worse.
Be prepared for vat to be applied to stuff that is currently exempt as well
Inflation will rise and then interest rates will rise and then we will return to recession - that will be much deeper and more unpleasant then before
I didn't want the Tories in power, but I'd rather seem them in the job than the spending, lying, spinning, warmongering, privacy eroding wunch of bankers who were in office a fortnight ago.
New Labour really were [i]that[/i] bad.
Inflation will rise and then interest rates will rise
Well they're both inevitable anyway. I mean RPI is up to 5.3% for April (when Labour were still in charge). If we do get a double dip it will be just because Labour have shoved lots of stuff to the right in an attempt to keep things vaguely OK before the election.
aracer - but the tory cuts will make it worse - much worse.
However its all a bit academic as its this lot we have - just hope the lib dems can moderate the worst of the excesses. Bloody Osbourne - I bet he makes Lamont look good. He is such a lightweight
but I'd rather seem them in the job than the spending, lying, spinning, warmongering, privacy eroding wunch of bankers who were in office a fortnight ago.
To be fair, I think all you will notice is the colour of the rosette has changed, well minus the spending bit.
No they weren't you numpty!
aracer - but the tory cuts will make it worse - much worse.
Yes of course they will. Of course we'll never know how bad it would have been under labour (thank god).
Of course we'll never know how bad it would have been under labour
😕 Really ? You didn't know what Labour's spending cuts were to be ? How did you manage to decide who to vote for then ? Labour's cuts were very well publicised and covered by the media throughout the election campaign. Just to remind you, Labour planned to introduce cuts of £11bn a year from 2012.
The main difference with the Tories spending cuts is that they pledged to introduce the cuts straight away, and not wait a couple of years until the economy was expanding/booming. I doubt whether it was for any reason other than, to create some sort of difference between New Labour's economic policies and their own.
Because it would hardly have inspired people to go out and vote Tory, if they had agreed with New Labour's economic policies - so false differences had to be created.
Now they are in power, they have brought [url= http://www.guardian.co.uk/politics/2010/may/17/conservative-spending-cuts-labour-plan ]forward £6bn Labour cuts[/url]. Had they changed their minds and chosen the slightly more sensible option of waiting a couple of years, it would have suggested that the economy wasn't [i]that[/i] bad after all.
And talking down the British economy is their number one priority right now. In fact David Blanchflower a leading economist on the BoE's Monetary Policy Committee said :
[url= http://www.guardian.co.uk/politics/2010/may/16/george-osborne-cut-spending-blanchflower ]"Why the government wants to scare everybody and talk down the economy I really don't know. Why would you want to talk down the economy? I don't understand it.[/url]
It's politics my dear boy, "politics"..........obviously he doesn't understand politics.
Of course the irony of it all is that it is [i]precisely[/i] because the economy isn't [i]that bad,[/i] that the Tories feel that they'll get away with an immediate £6bn cut. If they don't and there is a "double dip", they will simply blame Labour for it - as you just have aracer.
[b]Someone please tell me what country has raised VAT recently in this downturn.
Erm the UK did... from 15% back to 17.5%
And Greece just has.[/b]
New Zealand will announce a rise in GST (their VAT equivalent) from 12.5% to 15% in their budget tomorrow
Prity typical of the Torie Party But some prats, just keep on voting
them in! just dont know why.
Just stop the benifits and keep the NHS but run it better and look after people when they reach around 65 when help is truly needed, and you'll probaly pay back a third of the debt each year.
Also put the Tax up a third for Migrant workers as approx 6-7 million
a week is not being spent in this country.
But putting VAT up is just going to kill any recovery after bailing out the banks. And the next thing will be intrest rate rises the Tories love doing that.
Just smell Tories of old and here comes the 80's God help us all!
Labour planned to introduce cuts of £11bn a year from 2012
Now they are in power, they have brought forward £6bn Labour cuts. Had they changed their minds and chosen the slightly more sensible option of waiting a couple of years, it would have suggested that the economy wasn't that bad after all.
The [i]deficit[/i] is £165bn FFS, not the debt, ie the debt is growing by £165bn a year. It's going to take cuts/tax rises well in excess of £100bn a year to have any noticable effect, ideally over £200bn but no party seems to have the balls to do it. The Tories were closest but still miles short of where they needed to be, just drops in the ocean, but the Liberals will just hold them back even more. We need a good few years of pain to sort this mess out but with a 4-5yr time horrizon for most politicians (5yr fixed term? Anyone think it will last that long?)they all have to think what will be popular, not what is right.
dont wory the tories have promised to cut corporation tax
and woo overseas exiles back here
and encourage entepreneurs to do new start ups
not raising employers NI contributions, making 1st 10 workers NI free for employers
im assuming this will all be via further tax cuts
are they protecting the economy
or just looking after their mates in big business at a time when we desperately need all the taxes we can get?
Possibly that might help employment....
Well done for voting Conservatives-bike bits will go up in price again...
Was suggested Labour had considered going from the 15% VAT break rate direct to 20%, so likely it is irrespective of who now holds the keys to number 11, 20% was always going to be on the cards.
🙂For once I agree with coffeeking
Quick, I'll find something we can disagree on again, this feels un-nerving!
aracer - but the tory cuts will make it worse - much worse.
But that's all speculative and based on what you think some (generally untrustworthy) politicians might have done if they had remained in power. Madness.
Indeed, reminds me of how I used to play sim city, drop the taxes to stimulate growth for a year, then whack them with a 5% rise for a year, watch everything fall apart and do it again.
You didn't know what Labour's spending cuts were to be ?
Well I knew about the ones they decided to publicise - though like all parties they were careful to keep quiet about as much as possible. What we have no way of knowing is what the results of their policies would have been - I'm unconvinced that putting off any attempt to address the deficit would have played well on the global financial markets (like it or not, they do have a big say in how things work - not least because the exchange rate has had far more effect on prices than a piffling 2.5% rise in VAT).
If they don't and there is a "double dip", they will simply blame Labour for it - as you just have aracer.
You're so right, that is totally unfair, because the rise in inflation to 5.3% and the increase in unemployment of 50k for April was all the incoming government's fault.
