Tuesday, 25 November 2008

Pre-Budget report: Secret plan for VAT increase to 18.5 per cent


"Official documents show that Alistair Darling was originally planning to announce the £5 billion tax increase on Monday but the pre-Budget report was altered shortly before publication.

In the pre-Budget report, the Chancellor announced a 13-month cut in VAT from the current rate of 17.5 per cent to 15 per cent. The reduction is to be funded through a £12 billion increase in Government borrowing.

In January 2010, the rate of Vat will revert to 17.5 per cent. However, a legal document laid before Parliament states that VAT will "subsequently increase to 18.5 per cent in 2011-12". It is signed by Stephen Timms, a junior Treasury Minister"


Why Gordon Brown the manic meddler had to take such a massive gamble

Gordon Brown leads bankrupt Britain into the 1970s
The Organisation for Economic Co-operation and Development expects economic recovery in the UK in 2010 to be much slower than the Chancellor Alistair Darling suggested in the pre-Budget report.
This isn't about saving Britain. It's simply about saving Gordon!

Monday, 24 November 2008

Cutting VAT by 2.5% would be logistical nightmare and won't make any difference, say retailers

Daily Mail

"The VAT reduction will come into effect on Monday and is due to last for 13 months before going back up again in January 2010.However, the change will have only a small effect on day to day living costs as the sales tax is not applied to essentials such as food.At the same time, the Chancellor moved to cancel out the benefit of VAT reductions on petrol, alcohol and tobacco by imposing punishing increases in other duties."

Brown kills off speculation of early General Election after Tories take 11% lead

Daily Mail
"The prospect of a speedy election was further dampened by a poll which gave the Conservatives an 11 per cent lead over Labour despite recent surveys suggesting the gap had narrowed to as little as three points."

Labour's decade of high employment was propped up by public sector jobs boom, claims study

Daily Mail

"A boom in public sector jobs has propped up employment levels under Labour, according to research today.

The study by The Financial Times found that two out of three jobs created since 1998 were in economic sectors dominated by public services, raising fears that private sector firms may be less resilient to a recession than previously thought. "

George Osborne trashes Alistair Darling's Pre-Election Report


"Now we know Labour's recipe for dealing with a recession: increase national insurance contributions by 0.5%, at a cost of £4 billion to the very people who are expected to dig their way out of the crisis. As Osborne pointed out, that will add £100 million to the NHS wages bill. Then there was the classically tokenist 45% tax rate for "fat cats" earning over £150,000 - despite warnings from economists it will raise virtually zero revenue, damage GDP and cost 35,000 jobs.

The declared intent to increase total public sector debt to 57% of GDP by 2013 and raise the national debt to £1 trillion, when viewed in detachment, is an act of insanity. More than half of that - £518 million, if one accepts the usual Brownite over-optimistic growth forecasts (2% growth in 2010 - I don't think so!) - will come from today's announcements.

But, of course, the crisis Darling was addressing was not the recession, but the next general election. Osborne put his finger on it when he asked why 2011 had been selected as the date when the fiscal pain would start to afflict the nation. The transparent ploy is to give away £20 billion before the election and claw back £40 billion immediately after.

Darling's attempt to blame America for Britain's problems was pathetic: our recession is forecast to be much more severe than that of all the other major economies and the author of that disaster was sitting next to the Chancellor. Remember him standing at that same despatch box, six years ago, and disbursing £60 billion of taxpayers' money to the undeserving client state."

Saturday, 22 November 2008

Alistair Darling - you'll make things even worse

"Unemployment is at an 11-year peak. Confidence has not merely evaporated: it has been replaced by fear. And I have yet to speak to anyone in the financial world who imagines things can do anything except get worse."
"We shall watch Mr Darling on Monday to see whether he recognises that Labour's gravity-defying economic behaviour has to stop. I am not hopeful. If he doesn't cotton on, prepare to emigrate. As the song didn't go, things can only get worse.
The Prince of Darkness - and what price an early election?
"It is hard to exaggerate the scale of the economic crisis that is set to hit Britain next year, and the terrible pain it will bring."
"Ultimately, voters will realise that it was neither David Cameron nor George Osborne who got us into this mess. The architect of the economic disaster that Britain faces next year was Gordon Brown.
We said that the bail-out would fail (Telegraph)
"We tried to warn you. We said that the bail-out would fail. We pointed out that nationalisation never worked. We predicted that the seizure of the banks would be accompanied by heavy-handed state intervention in their procedures.
Gordon Brown is considering a 4 June election, despite his denial
"One thing we can say for certain, though: he is plainly considering the idea."

Friday, 21 November 2008

Another £3bn at risk in Northern Rock

"Another £3bn of taxpayer money has been put at risk in Northern Rock after the nationalised lender's off-balance sheet funding vehicle, Granite, was put in to run-off yesterday. "
"The "non-asset trigger event" means that roughly £3bn of taxpayer funds have been seized by Granite and will only be released once all the bondholders are paid back. One senior banker estimated that, at the current rate of repayment, the Government will not be able to recover the money until 2015 at the earliest."
When money is tight, people spend less. Are you listening, Mr Darling?
"Debt is at the root of our crisis. We did not arrive at this bad place because consumers and government were saving too much and spending too little. We will not escape it by carrying on as we did before. There will be no foundation for a lasting recovery until Britain rediscovers the virtue of living within its means."

Thursday, 20 November 2008

Darling-Brown spending row set to intensify as government borrowing soars in worst October for 14 years

Daily Mail

"The spending row between the Prime Minister and the Chancellor is set to intensify today after it was revealed government had to borrow more than it repaid for the first time in 14 years last month.

The public sector borrowed a net £1.4 billion last month - compared with a net repayment of £1.8 billion a year earlier, according to the Office for National Statistics (ONS)."

Wednesday, 19 November 2008

Immigration influx last year was second highest on record as 500,000 foreigners make Britain home

Daily Mail

"More than half a million foreigners moved to Britain last year, pushing migration to its second highest level on record.A massive 577,000 people moved to live here in 2007. Of those just 75,000 were Britons returning from overseas, according to new Government figures.The remaining 87 per cent or 502,000 were foreign nationals seeking a new life on British shores."


Consumer Price Decline Prompts Fear of Deflation in the United States
"In another sign that the struggling economy continues to slow, consumer prices tumbled by a record amount in October....A continued decline in prices could worsen the economic slowdown by making it harder to pay off debts and would negate the impact of interest-rate cuts"
UK take note - it could happen here too. (New York Times)

Tuesday, 18 November 2008

Millions of illegal immigrants could be in the UK after a visa watchdog revealed 300,000 people are allowed in every year who should not be.

"In a staggering admission, Linda Costelloe-Baker, who monitors visa refusals, told MPs around 15 per cent of short-term visas are wrongly approved because it is easier to let them in than reject applications. "

Sunday, 16 November 2008

Gulf stocks plunge as G20 fails to halt panic

Yahoo News

"Stock markets in the Gulf states plunged on the week's opener Sunday as panic from the fallout of the global economic crisis continued to dampen investor sentiment.

The slump came despite the approval by leaders of the G20 nations of an action plan on Saturday to restore global growth and prevent future financial upheaval while promising new spending plans and a set of reforms."

World Leaders Vow Joint Push to Aid Economy

New York Times:
"WASHINGTON — Facing the gravest economic crisis in decades, the leaders of 20 countries agreed Saturday to work together to revive their economies, but they put off thornier decisions about how to overhaul financial regulations until next year, providing a serious early challenge for the Obama administration."
"Despite broad support for economic stimulus, the leaders were not able to agree on a coordinated global effort. "

Still, for all the talk of action and history-making change, some experts said the outcome was disappointing.

This is plain-vanilla stuff they could have agreed on without holding a meeting,” said Simon Johnson, an economist at the Massachusetts Institute of Technology and a former chief economist of the International Monetary Fund. “What’s new, except that this is the G-20 instead of the G-7?”

“Anyone looking for the G-20 to issue a mea culpa on the global financial crisis will be sadly disappointed,” said Kenneth S. Rogoff, a professor of economics at Harvard. The leaders “curiously downplay the huge culpability of the political leadership in the U.S. and Europe.”
U.S. Shifts Focus in Credit Bailout to the Consumer
New York Times (12th November)
"WASHINGTON — The Treasury Department on Wednesday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system..."

'Dynamic provisioning' (BBC)

"Spain's system has attracted a lot of interest.

In effect, it requires banks to build up a financial cushion in the good years which can help them absorb losses in the bad times when increasing numbers of borrowers fail to repay.

The basic principle is not exactly financial rocket science, although the name it has - dynamic provisioning - makes sound as though it is."

Gordon Brown is planning a ‘Christmas bonus’ for taxpayers in an attempt to kick-start the flagging economy.
Daily Mail

"The Prime Minister, who is attending the G20 Summit of the world’s leading economic powers, is keen to present himself as the central figure in international efforts to deal with the credit crunch.

"Although he refused to put a figure on the size of the handout – which is likely to be delivered in tax credits or winter fuel payments – he acknowledged ‘a general view was emerging’ that the Government should plough up to two per cent of economic output into measures to combat the slump.

That would mean spending up to £30billion.."

But these efforts have been driven by tensions. At home, the Treasury has counselled caution about ramping up borrowing to pay for a spending boom, while abroad the summit has revealed governments are reluctant to respond to Mr Brown’s call to co-ordinate his tax cuts.

Some Tories claimed last night that the handouts could mean higher taxes for middle-class families later on."

Saturday, 15 November 2008

Gordon Brown risks run on the pound, says George Osborne

The Times:

"The Shadow Chancellor’s warning of dangers to the pound came as sterling remained under intense pressure on currency markets.

The pound yesterday slipped to a 13-year low against a basket of other currencies. The dollar rate fell to below $1.48 and the euro rate to €1.17, a record low, capping its biggest weekly fall against the single currency."

Friday, 14 November 2008

Perils of Deflation

Daily Mail

"The Bank of England yesterday warned there is a 20 per cent chance the UK could spiral into deflation in 2010. Deflation is the inverse of inflation, and is seen as one of the worst economic diseases a country can catch.It involves a massive squeeze on lending, which leads to sustained falls in prices on the High Street.The costs of food, clothing, cars, electronic goods, and services plummet as companies are forced to repeatedly slash prices. This can drive thousands of firms out of business and send unemployment to stratospheric levels.For those with large debts, the consequences are disastrous. During inflation, debts become easier to service over time as the value of money is eroded.But with deflation the opposite happens, resulting in rocketing debt defaults and more trouble for the banking sector.This last struck the U.S. and European economies during the Great Depression of the 1930s."
The economic benefits from record levels of immigration to Britain are 'small and close to zero', the Lords was told today.(Daily Mail)

Wednesday, 12 November 2008

Britain is on the brink of 'meltdown'

"The former Chancellor said Gordon Brown has received undue credit for his role in attempting to shore up the global economy. "The idea that Gordon has saved the world is not true," he said. "We still have a major, major crisis in this country and... public finances are in a terrible mess".

New York Times (6th)
“The contrast with the Bank of England here is extraordinary,” said Jacques Cailloux, chief Europe economist at Royal Bank of Scotland in London. “To some extent, the British have simply adopted the Fed’s approach.

Daily Mail
"Any tax cuts by Gordon Brown to beat the recession will be short-lived, a Cabinet minister admitted yesterday. "

Return of the dole queue- unemployment heads for 3m

Vicky Redwood, from Capital Economics, said today's figures were only the 'tip of the iceberg' because the labour market lags behind the economy by several months.

'We have not seen the full effect of the recent slowdown in the economy, let alone the full force of the recession,' she said.

'Much worse is to come - we expect unemployment to peak in 2010 at around 3.3 million.'

Tuesday, 11 November 2008


Cross Party Group calls for immigration system to be toughened up

"Ahead of Wednesday’s unemployment figures, the Cross Party Group on Balanced Migration has published new research which shows that last year thousands of jobs went to economic migrants from outside the European Union – and not a single one of those jobs had to be advertised in the UK first. The Co-Chairmen of the Cross Party Group have written to the Home Secretary, asking her to ensure that all UK jobs are properly advertised in the UK, and to suspend Tier One of the new Points Based System, under which migrant workers are able to come to the UK without any job to go to."

Monday, 10 November 2008

How Britain should tackle its recession

Financial Times:
"As heads of government gather this week at US president George W. Bush’s invitation to discuss the economic crisis, I am sure all will agree that greater international co-operation is needed. What we require is positive action to address the world economic downturn and new architecture to ensure future global imbalances are better managed. Also needed is greater understanding of the massive regulatory and budgetary failures closer to home. Blaming the bankers does not amount to a policy.".....

......."Nowhere was this tendency greater than in Britain during what is now dubbed “the age of irresponsibility”. Gordon Brown, chancellor of the exchequer throughout the period, even claimed he had “abolished boom and bust”. The result was not just a disastrous failure to curb growing levels of personal debt in the UK, which had reached the highest level recorded in any large economy by last year. It also meant the Labour government ran the highest budget deficit of any leading western country. It is little wonder that last week the International Monetary Fund joined the European Commission in predicting that Britain would suffer a deeper recession than any of our competitors.

So our response must be both international and domestic."

Sunday, 9 November 2008

The day the Bank of England cut interest rates to 3pc is the day it lost its marbles


"Thanks to the wisdom of Gordon Brown, the UK has endured a decade of grossly irresponsible fiscal policy. This is the start of a period of zero-credibility in terms of monetary policy too.

We are kidding ourselves to say "inflation is dead". Fiscal policy and now monetary policy are wildly expansionary. Across the Western world, multi-billion dollar bail-outs are being funded by issuing debt and printing money - which will generate a new wave of inflation, making it even harder to escape the slump.

Suddenly, a consensus has sprung from nowhere that the Western world faces "deflation" - a situation where prices fall. Deflation is dangerous. Debts rise in real terms and price signals stop working."

Saturday, 8 November 2008

Setback for the 'Brown bounce' as new poll gives Conservatives 13-point lead

Daily Mail:

"However, today's poll underlines the dangers of going to the country next year, giving the Tories a comfortable lead on 43 per cent, against 30 for Labour and 18 per cent for the Liberal Democrats.

If repeated in a general election, the figures would give the Conservatives an 80-seat majority in the House of Commons, the Sunday Telegraph said.

In another boost for Mr Cameron, he was rated the British leader best-placed to build a new relationship with US president-elect Barack Obama, beating Mr Brown by 40 per cent to 35 per cent."

Friday, 7 November 2008

Britain will suffer more than other countries in global recession, says IMF

Daily Mail:
"Britain is spiralling into the deepest recession of any leading nation, the International Monetary Fund said last night. "
"But Britain's collapse will be particularly painful, dwarfing those in the U.S., Germany, France, Spain, Russia, Brazil and six other major economies."
"The IMF added that the banking mayhem could be getting worse, not better.
And in an alarming passage, it said that the credit crunch is showing signs of becoming 'impervious' to the vast sums of taxpayer money being spent to support the banking system."

Thursday, 6 November 2008

The Brown model has collapsed

"A giant rate cut, the biggest for 27 years and much bigger proportionally than when rates were coming down in 1981 from above 12%. This is the MPC and the Bank putting up its hands and saying: ok, we’ve made a terrible hash of things and reacted too slowly in the last year, let’s cut rates as fast as we can in a desperate attempt to stave off the worst effects of recession. What a humiliation.It also means that one of the last remaining pillars of Gordon Brown’s rickety temple is collapsing."

Saturday, 1 November 2008

Gordon's Fibs

Daily Mail:

"Chancellor Alistair Darling has at last stated publicly that the Government is now committed to one of the most significant U-turns in British history.

He told an audience at Cass Business School in London on Thursday that the Brown administration is set to throw overboard its entire economic strategy."

"The British economy is facing one of its gravest crises, and Gordon Brown's economic framework has been shown up as a sham. It worked well during the good times, but imploded when put to the test."

"Brown has used three tricks to ensure his survival. First, he has turned to the oldest and cheapest gambit in the political lexicon: he has blamed Johnny Foreigner"

"The Prime Minister's second tactic is deception.

In a stroke that must have brought a gasp of admiration even from his notoriously untruthful predecessor Tony Blair, the Prime Minister now denies that he ever claimed to bring an end of 'boom and bust'.

He insists that he only meant 'Tory boom and bust'.

But it is his third response to the economic collapse that is truly remarkable.

Having abandoned his supposedly immutable economic framework (in April 2002 Gordon Brown declared that 'at all times - now and in the future - we will never compromise our commitment to meet our fiscal rules and disciplines'), he has replaced it with the exact opposite.

Instead of tight controls on borrowing, the Prime Minister and the Chancellor this week made clear that the Government will respond to the downturn with unlimited Government spending."

Brown debts are a 'ball and chain' on Britain, says IFS
Daily Mail:

"Gordon Brown's boast that Britain is well placed to weather the recession was dealt a serious blow last night.

A report by the influential Institute for Fiscal Studies claimed Government finances are in a far worse state than the Prime Minister admits.

It said the budget deficit is more than four times as high as under the Tories in the early 1990s."