Emergency Budget - Hats off to wee Georgie
Posted by jdavis on June 23, 2010
Highlights of Osborne’s tirade against our dire level of borrowings:
- VAT up to 20% from January – when Labour reduced to 15% for a year it made no difference so this rise will do likewise (are people really going to buy fewer TVs because of a retail price increase of £10?)
- Capital Gains Tax rate up to maximum 28% - only 2 years’ ago it was 40% (with time of ownership relief). No big deal.
- Annual allowance held at £10,100 and will rise by inflation for 5 years. Doesn’t affect our clients much at all (if at all) due to the tax saving wrappers we use
- Corporation Tax rate to fall over 4 years – great for businesses large and small and for attracting international employers
- NI incentives for start up businesses outside of London – excellent innovative idea
- Public Sector cut 25% over 4 years – just great!
• Staff pay fixed except low paid – brilliant
- Income tax to come at higher income level
• Benefits cut / altered
- Great initiatives to help non-workers take up employment
- Housing benefit capped
- State pensions to rise again by earnings [or inflation or 2.5% - whichever is the higher] – brilliant
• State pension to start from age 66 in due course
(Tories previously suggested 2016)
- Practically nil extra borrowings during the year at the end of the parliament – fabulous!
Conclusions: (not necessarily in agreement with The Treasury)
- Great for much-needed rebalancing away from London
- Great for desperately-needed rebalancing away from Public to Private Sector
- Higher unemployment to be expected (c 500,000)
- House price crash continues – nowhere will be unaffected (except Buckingham Palace and Downing St (I accept they are unique! ?)
- Expected to be positive for Sterling, reducing effect of imported inflation, thus keeping Bank of England rates low
As we have said many times, now the man and woman on the street finally will know how dire is our position. Society will struggle to stay together ( :( ). Likely, there will be great unrest. Public sector staff will protest (or their union leaders will) even though it is obvious they have benefited greatly from 10 years of Brownonomics – and bankrupted us.
I cannot envisage a single one of our clients having much of a problem from all this partly due to the arrangements we have put in place for them. Millions of others however will have great difficulty. They are up to their eyeballs in either debt (which they cannot repay) or property (which is depreciating) or both. Wait till we hear ‘If only we’d known’ and ‘I agree there have to be cuts, but not round here! Our case is special.’ Well, we’ve been telling all and sundry, through the broadcast and print media and our own publications, for 5 years. If only they’d listened.
Please remember, investments can fall as well as rise. And they will!
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