- This topic has 917 replies, 155 voices, and was last updated 1 year ago by kelvin.
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mini budget thread
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KlunkFree Member
some think tank modelling in….
While support for household and business energy bills makes a material difference to economic growth in the short term, we find that the growth plan tax cuts have an almost negligible impact on the size of the economy by the end of the forecast period, with output only around 0.4 per cent higher by 2027–28 than it would have been without the tax cuts. The growth plan’s tax measures therefore look set to fall well short of the chancellor’s stated aim of boosting GDP growth back to 2.5 per cent from the OBR’s previous assessment of trend growth settling at around 1.7 per cent per year.
With the economy ending the forecast period 0.4 per cent bigger than it would be without the growth plan, additional tax revenue from this higher economic output pushes in the other direction. However, we estimate that this revenue boost is likely to be only around £6 billion by 2027–28 – a small fraction of the fiscal cost of the measures themselves.
KlunkFree Memberanother predicts…
+0.1% per year gdp for 82 billion in debt interest over 5 years
ernielynchFull MemberSo they are going to sit on the OBR forecast for over 6 weeks.
Surely this gives the opposition another stick to beat them with – can they really justify a lack of urgency?
The Guardian: Treasury will delay publishing OBR forecast by six weeks after it is delivered on 7 October – UK politics live.
https://www.theguardian.com/politics/live/2022/sep/30/liz-truss-kwasi-kwarteng-obr-mini-budget-uk-politics-liveKlunkFree MemberSo they are going to sit on the OBR forecast for over 6 weeks.
gives the Spivs in selected firms a chance to peruse it and formulate the asset grab.
andy5390Full MemberA handy little website created to give some scale of the cost of this budget. (be prepared for a lot of scrolling)
frankconwayFull MemberDelaying release if the OBR forecast shows utter contempt for the public, parliament and the OBR.
In that 6 week window truss and kwarteng will be hoping the markets find something positive in their plans, that BoE will provide unlimited support, that $ and € will weaken, that public anger will fade, that *something* will happen to distract.
Complete fantasy.
How long before the OBR forecast, or parts of it, leak?cheese@4pFull Memberandy – that’s gobsmacking (in a very bad way). I’d love to see it laid out flat in a single view. How long would it be?
Kryton57Full MemberThey are delaying it so they can can edit the next mini budget to suit / counter any negatives that come from it with minimal negative press. It’s pretty obvious.
But, it’ll leak anyway.
kimbersFull MemberI think they are just hoping for a miracle to distract from their ineptitude
I don’t think they have the first clue about how they’ll produce a balanced budget
doncorleoniFree MemberThis might sound like a stupid question on the subject of interest rates… I get putting rates up makes cost of borrowing more expensive so people spend less. But for people with existing mortgages, putting rates up (on money they have already borrowed) does sweet FA and only benefits the bank as they earn more money from the extra interest. I guess that also leave you with less money to spend which is the goal but basically free money for the bank to get richer..
What am I missing here?
thegeneralistFree MemberDelaying release of the OBR forecast shows utter contempt for the public, .
Ah well, looks like I agree with the tories on one thing at least 🙂
They did after all vote the tories into government.meftyFree MemberWhat am I missing here?
The fact that the bank has borrowed the money it lent you and its interest cost has gone up.
tjagainFull MemberAnd that by putting interest rates up itnmakes it more attractive to folk to lend to uk government this improving the exchange rate
finephillyFree MemberI did a ‘fag-packet’ calculation on the 2.5% growth target versus £45bn in reduced tax revenue.
UK GDP is around £2.2tn (2021)
2.5% of that is £55bn.
I will assume that figure is taxed at a flat rate of 20%, which is probably not far off reality.
That’s $11bn per year.
So, you may have another £50 in your back pocket but remember public services will be $34bn in the hole. Every year.
Feel free to contradict me.5labFull MemberThe growth should compound over time, so 2.5 then 5.1, 7.7, 10.5 etc. After 5 years I could see how it could add up
kelvinFull MemberWhat good is “growth” if 99% of people end up with lower real incomes, less access to essential services, worse quality of life… all while we deepen our dependence on climate change causing fossil fuels and leave the NHS stretched to breaking point?
ernielynchFull MemberWhat good is “growth” if 99% of people end up with lower real incomes, less access to essential services, worse quality of life…
I think you have answered your own question there……. it’s great news for the 1%
BillMCFull Member‘Growth’ is Labour’s re-wording of trickle down. Produce a lot more your bosses and you might get a few extra crumbs. There’s no suggestion of anything redistributive or compensating for inflation, inequality is preserved. The message is, ‘ don’t strike but work harder’.
roneFull MemberYou know the financial sector’s response to this budget was hugely disproportionate to what was *going* to happen – I mean some of these tax cuts aren’t going to happen for a long while.
Doesn’t add up to me. Tory comes in and offers Tory type *benefits* to society – sterling does a backflip – people do very well out of shorting and pumping.
BoE does its thing and reminds us that everything is ultimately back-stopped by government money.
It doesn’t make sense – you can whittle on all you want about the OBR but these tax cuts are nowhere near being rolled out, and well within Tory values.
In fact the bond market is effectively controlled by the government – they set the rates etc.
ICYMI I wrote about the U.K. situation yesterday. Read it on a much calmer, more orderly Friday. You even get my commentary on a recently declassified 1960s Federal Reserve memo!https://t.co/FIkp7kaxIW
— Nathan Tankus (@NathanTankus) September 30, 2022
Why did it take a pound drop (which has been dropping for years) for everyone to shit the bed with the Tories? They’ve done far worse things and spent far bigger amounts of money.
I’ve done all the analysis I could this week being busy myself but I can’t figure it out.
Anyway my next guess for what could happen is for DXY (dollar dominance) to lose some of its strength – house prices to perhaps start to take a hit and that in and out of recession number to start to have a direction.
It’s all really odd.
I’m still not sold on this massive Labour lead either – all the shit that has happened and this week a massive jump in polling.
Also – proof that chucking pensions to the financial sector is just a lottery.
Like everything else.
This oldish Tweet from Kelton really hits the spot.
Thank GOD the private sector is saving enough to supply the federal government with enough money to support the private sector in this moment of crisis. 🙃
— Stephanie Kelton (@StephanieKelton) February 23, 2021
thecaptainFree MemberKeep it up rone, you’ll get to a fully-fledged conspiracy theory eventually.
roneFull MemberKeep it up rone, you’ll get to a fully-fledged conspiracy theory eventually
Cheers for that – there is a danger of that but if you can piece it together you’re a better person than me.
That wasn’t really where I was going though was it?
binnersFull MemberIt doesn’t make sense
There’s you’re problem, right their.
You’re looking for rationality and logic where none exists. It never has.
That way lies madness
roneFull MemberThere’s you’re problem, right their.
You’re looking for rationality and logic where none exists. It never has.
That way lies madness
Where people need to make money in markets there is definitely a logic, otherwise reconcile me a direction?
Your favourite topic -Brexitism for instance, you need to come down on a side – was it done because people were crazy or did some know they were going to make a boat load?
kelvinFull Member‘Growth’ is Labour’s re-wording of trickle down.
I think Labour laid out very clearly what their intentions were growth wise at conference, and it had nothing to do with trickle down. Their condemnation of trickle down nonsense has been robust. You couldn’t have missed it.
As for Rone’s posts… surely it can be both… some people connected to the decision makers making big money out of shorting where the decisions made create big opportunities there, and also people (sometimes the same people) wanting to redistribute money upwards from all of us and from our state to the rich and often out of the country.
binnersFull MemberYour favourite topic -Brexitism for instance, you need to come down on a side – was it done because people were crazy or did some know they were going to make a boat load?
Brexit happened predominantly because so many people thought David Cameron was a **** and thought that registering that fact with a vote would be a bit of a laugh
Sad but true
roneFull MemberThe only thing I can see is things are so much in tatters every free-loading millionaire is looking to milk the economic descent as much as possible.
I never thought Naomi Klein meant particularly this with the Shock Doctrine but clearly it is so.
roneFull MemberBrexit happened predominantly because so many people thought David Cameron was a **** and thought that registering that fact with a vote would be a bit of a laugh
Sad but true
But equally do you believe as you’ve said many times a lot of people were going to make a lot of money out of it?
I mean you can see some sort of evidence for that this week.
But on the flip side eurozone has massive inflation and weak to the dollar too.
Things perhaps simple culminate in all sorts of awkward ways.
I mean we were all talking recession (including the BoE) and yet the revised growth figures are not quite showing it.
I do wish these stupid central banks would realise they aren’t fixing inflation though.
roneFull MemberAs for Rone’s posts… surely it can be both… some people connected to the decision makers making big money out of shorting where the decisions made create big opportunities there, and also people (sometimes the same people) wanting to redistribute money upwards from all of us and from our state to the rich and often out of the country
Yeah I agree.
But my point from the outset is Truss offered a very Tory vision and the market shot off in the other direction.
After government money to prop it up?
kelvinFull MemberThe only thing I can see is things are so much in tatters every free-loading millionaire is looking to milk the economic descent as much as possible.
Agreed… we’ve been saying this since 2016… lots of money to be made out of instability. They would describe that as making the UK economy leaner and more responsive rather than a “descent”… but the deregulation, extraction of money from normal people and our country, and increasing job and financial insecurity for UK workers will look much the same to most of us in the 99%.
binnersFull MemberBut equally do you believe as you’ve said many times a lot of people were going to make a lot of money out of it?
Abso-****ing-lutely I do!
The Shock Doctrine was prophecy! We are now Pinochets Chile, economically. A free market experiment
Kwatangs budget on Friday was a logical post-Brexit staging post. As will be the huge cuts to public services, further tax giveaways to the rich and corporations and massive deregulation
It’s all part of ‘the project’ and they’re only just getting started
roneFull MemberAgreed… we’ve been telling you this since 2016… lots of money to be made out of instability. They would describe that as making the UK economy leaner and more responsive rather than a “descent”… but the deregulation, extraction of money from normal people and our country, and increasing job and financial insecurity for UK workers will look much the same to most of us in the 99%.
Then you would be simply ignoring what went before – in 2008 for instance.
(I can tell you now though the asset class prefer bull markets to make cash in.)
Economic collapse is not simply a Brexit watershed.
roneFull MemberAbso-****ing-lutely I do!
The Shock Doctrine was prophecy! We are now Pinochets Chile, economically. A free market experiment
But Klein was not particularly an EU advocate if I remember correctly. She just writes about the economic aftermath of catastrophic events. I get the connection though.
As I’ve just pointed out to Kelvin – free-market self destruction did not start with Brexit.
In fact there is way way too much emphasis put on that.
roneFull MemberKwatangs budget on Friday was a logical post-Brexit staging post.
In no way shape or form.
It was simple traditional Tory misunderstanding of growth by tax cuts, because that’s what they believe.
I keep pointing out to you Ireland has a very low corporation tax rate in the EU. (12.5%)
TiRedFull MemberIt’s all really odd.
When the herd turns…
It’s just this is not the political herd. I think there was a relatively widespread view that interest rates needed to rise and the BoE were dragging their feet. That the fundamentals of the economy weren’t great. The announcement of an unfounded cut in taxes (quantitative easing) without any evidence of forethought was enough to push the market. Whether a costed projection would have helped, who knows?
Interestingly, people mocked epidemic projections that are subject to exponential error rates, but they swallow economic forecasts. Economics ought to be relatively linear over the short term, but now I’m not so sure!
kelvinFull MemberThen you would be simply ignoring what went before
Not all. Perhaps rewind and play the BBC’s far too late Radio4 piece on the IEA etc, and their role in earlier stages in this process, especially in wake of 2008. Same people, same combination of ends. The pressure to reshape UK politically and economically is ongoing. It didn’t start or end with Brexit. To paraphrase another forum member (Bruce), Brexit is not the destination, it’s just part of the journey. The acceleration of the redistribution of wealth upwards, the defunding of public services, deregulation in terms of financial services, employment, the environment and public health… it’s all an ongoing project.
binnersFull MemberIn no way shape or form.
It was simple traditional Tory misunderstanding of growth by tax cuts, because that’s what they believe.
I keep pointing out to you Ireland has a very low corporation tax rate in the EU. (12.5%)
Corporation tax is a red herring. A distraction. Of little or no consequence as it’s generally avoided anyway
It’s all the other stuff that’s the issue.
Shrinking the state. Ultimately these lot see the UK government being a central office in London, where they dish out contracts to private companies to provide the lowest possible base level of ‘services’
Meanwhile a deregulated financial sector acts as money launderers for dodgy international capital and a sweatshop economy, stripped of workers rights, undercuts our neighbours
Once you accept that this was (and is) very much the plan, and the whole point of Brexit, it all makes a lot more sense
Brexit was just the necessary beginning as they needed to be ‘free’ of the EU to make their dream a reality, which Truss and Kwatang just demonstrated; it now is
roneFull MemberThe announcement of an unfounded cut in taxes (quantitative easing) without any evidence of forethought was enough to push the market. Whether a costed projection would have helped, who knows
That’s what I’m hearing.
The trouble is for them is the were going to unwind Q/E very shortly and couldn’t say they were doing more. But it was on the cards they absolutely had to. That was the main error.
I guess it’s just the contradictions involved to pretend the government doesn’t have money of its own.
Best just to sit back and realise tuff doesn’t go positive forever. I mean how long ago the last proper house price crash?
tjagainFull MemberWhat gets me is Germany has a high tax highly regulated economy and has been stable and prosperous. Can they simply not see that.
As for first world economies that are similar to what truss wants look to the us. Yes its happened slowly there but look what a low tax low regulations economy brings. People without effective healthcare and eff all public services with massive poverty and a huge drug problem
roneFull MemberMeanwhile a deregulated financial sector acts as money launderers for dodgy international capital and a sweatshop economy, stripped of workers rights, undercuts our neighbours
Once you accept that this was (and is) very much the plan, it all makes a lot more sense
Thought you said there was not really a plan and it’s all just crazy?
Corporation tax is not a red herring otherwise we wouldn’t have spent ages discussing it in previous posts. Most companies don’t avoid it. Some do. And it’s as easy to avoid income tax as corporation tax if you’re loaded. Trusst me – my mate’s wife was a top avoidance specialist to the rich and famous.
We have operated on sweatshop economies for years as we import nearly everything.
This is not news.
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