UK General Discussion: Rishecession

[Joe Republic]

Hard to believe we still have two more years of this sh**t, isn't it?

[Filuwaúrdjan]

Ah a good old fashioned Sterling Crisis. Whatever else one can say of Liz Truss, she keeps her promises: did she not say that she was 'going to hit the ground' if made PM?

[Property Representative of the Harold Holt Swimming Centre]

Liz "George Canning" Truss?

https://twitter.com/Alan_McGuinness/status/1574323890272116739?s=20&t=FRIoCo...

[Filuwaúrdjan]

Tweet of the year, I guess.

https://twitter.com/CPhilpOfficial/status/1573240072060682240

Amazingly not yet deleted.

[Torrain]

When the media are using terms like “lowest value since the days of Pitt the Younger”, you might have made a slight miscalculation.

And in the middle of Labour Conference too - giving the opposition a chance to respond in real-time, in news-ready clips in front of a supportive audience.

[Filuwaúrdjan]

And in the middle of Labour Conference too - giving the opposition a chance to respond in real-time, in news-ready clips in front of a supportive audience.

Shadow Chancellor's speech today as well lol.

[Torrain]

And in the middle of Labour Conference too - giving the opposition a chance to respond in real-time, in news-ready clips in front of a supportive audience.

Shadow Chancellor's speech today as well lol.

Now that’s some timing. Wonder how many last-minute changes Reeves and her team have made this morning…

[afleitch]

The unionist press in Scotland are raging over not having the tax cut. Lot's of 'Sturgeon under pressure' pieces. Under pressure from who? She get's to do something left wing without any effort.

Meanwhile globally a budget designed to appeal to investors as looks them. They might be ruthless capitalists but they aren't stupid.

[CumbrianLefty]

When the media are using terms like “lowest value since the days of Pitt the Younger”, you might have made a slight miscalculation.

And in the middle of Labour Conference too - giving the opposition a chance to respond in real-time, in news-ready clips in front of a supportive audience.

Flashbacks to 1992 when Black Wednesday happened during the LibDems gathering.

[Torrain]

Of all the articles that have been written on UK politics this year, Matthew Lynn’s Spectator piece last month might age the worst. The first paragraph:

Who is Sunak kidding with his warnings about sterling?
There will be a run on sterling. The gilts market will be in freefall. And the FTSE will tumble as global investors take fright and sell off every form of British asset. It might take only a few days, or the government might stagger through until the end of September, but before long Liz Truss and her new Chancellor Kwasi Kwarteng will have been forced to call in the IMF to stabilise a collapsing economy. That is, at least, according to the former Chancellor Rishi Sunak. With just a few desperate days left in his doomer leadership campaign, he has declared his opponent's tax and spending plans so wild and reckless they risk a full-blown sterling crisis of the sort we have not seen since the 1970s.

https://amp.spectator.co.uk/article/rishi-sunak-s-petulant-attempt-to-start-a-run-on-the-pound/amp

Sure, we aren’t about to call in the IMF - but man, the schadenfreude.

[afleitch]

Of all the articles that have been written on UK politics this year, Matthew Lynn’s Spectator piece last month might age the worst. The first paragraph:

Who is Sunak kidding with his warnings about sterling?
There will be a run on sterling. The gilts market will be in freefall. And the FTSE will tumble as global investors take fright and sell off every form of British asset. It might take only a few days, or the government might stagger through until the end of September, but before long Liz Truss and her new Chancellor Kwasi Kwarteng will have been forced to call in the IMF to stabilise a collapsing economy. That is, at least, according to the former Chancellor Rishi Sunak. With just a few desperate days left in his doomer leadership campaign, he has declared his opponent's tax and spending plans so wild and reckless they risk a full-blown sterling crisis of the sort we have not seen since the 1970s.

https://amp.spectator.co.uk/article/rishi-sunak-s-petulant-attempt-to-start-a-run-on-the-pound/amp

Sure, we aren’t about to call in the IMF - but man, the schadenfreude.

Yes.

He tweeted this

https://mobile.twitter.com/telebusiness/status/1574353295413501952

Which makes me fear this will now happen.

[Torie]

I think it's grand that the euro, pound and dollar are now close to all having the same value. It makes the maths so much easier.

[Property Representative of the Harold Holt Swimming Centre]

The government is actively humiliating itself so far. This isn't surprising given Truss's, ahem, preferences.

[Torrain]

Of all the articles that have been written on UK politics this year, Matthew Lynn’s Spectator piece last month might age the worst.
https://amp.spectator.co.uk/article/rishi-sunak-s-petulant-attempt-to-start-a-run-on-the-pound/amp

Sure, we aren’t about to call in the IMF - but man, the schadenfreude.

Yes.

He tweeted this

https://mobile.twitter.com/telebusiness/status/1574353295413501952
Which makes me fear this will now happen.

Man. I had a brief skim of the article, and it's almost impressive how inconsistent it can be, while retaining a staggering level of self-assurance. To summarise:

• The Kwarteng budget will drive growth.
• Growth will be popular
• It might lead to a bust
• It probably won't because the fundamentals are OK
• But it might.
• Turkey is a good example
• Scratch that, Turkey is a bad example
• Eh, Truss will probably lose the 2024 election anyway, so none of this matters.

The Telegraph is such a frustrating paper - competent at investigative journalism, and basically c**p at most other stuff.

[mileslunn]

Its basically your classical supply side economics budget.  Problem is while supply side economics was super popular in 80s, its not now as has been tried in enough places and the results are not like those pushing it claim.  Tax cuts mainly aimed at wealthy don't lead to growth.  Kansas experiment, Reagan tax cuts, Bush tax cuts, and Trump more recently largely show this. 

The bottom rate cut which was more expensive may help in that lower income tend to spend most although timing may be not best.  But Labour smart to say will keep it.  Scrapping additional rate won't cost a lot of money, but rational for it is weak.  Cutting additional rate from 50% to 45% as George Osborne did had some logic as UK was still in EU then and 50% is on high side although not highest and worry was might drive away some high earners.  But UK is no longer in EU so that risk less and most countries in EU are either close to or over 45% and those under are mostly in Eastern Europe where average wages a lot lower so any savings on tax cuts more than offset of lower wages.

California's high top marginal rates has lead to many leaving, but Canada has just as high and is not seeing mass exodus.  Reason is US is a country with free mobility, while Canada is a separate one.  So since UK does not have free mobility with anyone save Ireland thus rational gone.  And besides looks totally tone deaf.

On corporate taxes, yes Ireland shows low corporate taxes can work.  But UK is a lot larger and is more comparable to France & Germany who have corporate tax rates of 25% and 29% so I would argue being a member of EU does far more to encourage businesses to locate there even if corporate taxes slightly higher. 

Finally it is all deficit financed and I learned in my university economics deficit financed tax cuts don't stimulate more investment as most investors price in that higher deficits mean higher taxes down the road so already priced in.  A lot instead probably going on idea Labour will win at some point and with massive deficit, taxes will go up.

[If my soul was made of stone]

Of all the articles that have been written on UK politics this year, Matthew Lynn’s Spectator piece last month might age the worst. The first paragraph:

Who is Sunak kidding with his warnings about sterling?
There will be a run on sterling. The gilts market will be in freefall. And the FTSE will tumble as global investors take fright and sell off every form of British asset. It might take only a few days, or the government might stagger through until the end of September, but before long Liz Truss and her new Chancellor Kwasi Kwarteng will have been forced to call in the IMF to stabilise a collapsing economy. That is, at least, according to the former Chancellor Rishi Sunak. With just a few desperate days left in his doomer leadership campaign, he has declared his opponent's tax and spending plans so wild and reckless they risk a full-blown sterling crisis of the sort we have not seen since the 1970s.

https://amp.spectator.co.uk/article/rishi-sunak-s-petulant-attempt-to-start-a-run-on-the-pound/amp

Sure, we aren’t about to call in the IMF - but man, the schadenfreude.

Yes.

He tweeted this

https://mobile.twitter.com/telebusiness/status/1574353295413501952

Which makes me fear this will now happen.

Do we need to bring Idi Amin back from the dead so he can organize another Save Britain Fund?

[Torrain]

UK's Virgin Money, Skipton temporarily withdraw mortgage products - emails to brokers
British lenders Virgin Money and Skipton Building Society on Monday temporarily withdrew their mortgage ranges for new customers because of the volatility in sterling funding markets, according to emails sent to brokers.

"Following a number of changes in the market, we have made the decision to temporarily withdraw all our products for new customers at 8pm tonight," Virgin Money said in its email to brokers, seen by Reuters.

Everything is fine. It's only 3.6 roentgen. Not great. Not terrible.

[Helsinkian]

Breaking: Labour conference has endorsed proportional representation.

[OSR stands with Israel]

Its basically your classical supply side economics budget.  Problem is while supply side economics was super popular in 80s, its not now as has been tried in enough places and the results are not like those pushing it claim.  Tax cuts mainly aimed at wealthy don't lead to growth.  Kansas experiment, Reagan tax cuts, Bush tax cuts, and Trump more recently largely show this. 

The bottom rate cut which was more expensive may help in that lower income tend to spend most although timing may be not best.  But Labour smart to say will keep it.  Scrapping additional rate won't cost a lot of money, but rational for it is weak.  Cutting additional rate from 50% to 45% as George Osborne did had some logic as UK was still in EU then and 50% is on high side although not highest and worry was might drive away some high earners.  But UK is no longer in EU so that risk less and most countries in EU are either close to or over 45% and those under are mostly in Eastern Europe where average wages a lot lower so any savings on tax cuts more than offset of lower wages.

California's high top marginal rates has lead to many leaving, but Canada has just as high and is not seeing mass exodus.  Reason is US is a country with free mobility, while Canada is a separate one.  So since UK does not have free mobility with anyone save Ireland thus rational gone.  And besides looks totally tone deaf.

On corporate taxes, yes Ireland shows low corporate taxes can work.  But UK is a lot larger and is more comparable to France & Germany who have corporate tax rates of 25% and 29% so I would argue being a member of EU does far more to encourage businesses to locate there even if corporate taxes slightly higher. 

Finally it is all deficit financed and I learned in my university economics deficit financed tax cuts don't stimulate more investment as most investors price in that higher deficits mean higher taxes down the road so already priced in.  A lot instead probably going on idea Labour will win at some point and with massive deficit, taxes will go up.

Reagan Tax Cuts did work but there still is a major difference between doing them in the 1980s and now. Tax Rates were much higher when Reagan took office so the economic effect of them were greater than doing them now.

[mileslunn]

https://redfieldandwiltonstrategies.com/latest-gb-voting-intention-25-september-2022/ first poll out post budget and doesn't exactly look good for government.  Truss needs to hope that her plan for growth materializes.  Yes Truss can still win the next election, but not off to a good start and seems to be doing everything to help Labour so far.

[mileslunn]

Its basically your classical supply side economics budget.  Problem is while supply side economics was super popular in 80s, its not now as has been tried in enough places and the results are not like those pushing it claim.  Tax cuts mainly aimed at wealthy don't lead to growth.  Kansas experiment, Reagan tax cuts, Bush tax cuts, and Trump more recently largely show this. 

The bottom rate cut which was more expensive may help in that lower income tend to spend most although timing may be not best.  But Labour smart to say will keep it.  Scrapping additional rate won't cost a lot of money, but rational for it is weak.  Cutting additional rate from 50% to 45% as George Osborne did had some logic as UK was still in EU then and 50% is on high side although not highest and worry was might drive away some high earners.  But UK is no longer in EU so that risk less and most countries in EU are either close to or over 45% and those under are mostly in Eastern Europe where average wages a lot lower so any savings on tax cuts more than offset of lower wages.

California's high top marginal rates has lead to many leaving, but Canada has just as high and is not seeing mass exodus.  Reason is US is a country with free mobility, while Canada is a separate one.  So since UK does not have free mobility with anyone save Ireland thus rational gone.  And besides looks totally tone deaf.

On corporate taxes, yes Ireland shows low corporate taxes can work.  But UK is a lot larger and is more comparable to France & Germany who have corporate tax rates of 25% and 29% so I would argue being a member of EU does far more to encourage businesses to locate there even if corporate taxes slightly higher. 

Finally it is all deficit financed and I learned in my university economics deficit financed tax cuts don't stimulate more investment as most investors price in that higher deficits mean higher taxes down the road so already priced in.  A lot instead probably going on idea Labour will win at some point and with massive deficit, taxes will go up.

Reagan Tax Cuts did work but there still is a major difference between doing them in the 1980s and now. Tax Rates were much higher when Reagan took office so the economic effect of them were greater than doing them now.

Very true and top rates were 70% when Reagan came to office which most economists would say is on wrong side of Laffer Curve.  UK was 45% now 40% and while peak of Laffer curve is unknown, its probably higher than 40%.  One UK economist put it at 48% so if you include NIC it was pretty close to that before cut.  Another put it at 55% which it is well below and even Labour is not silly enough to put it that high.

Sweden 2 years ago cut top rate from 57% to 52% and Netherlands from 52% to 49.5% so in both cases above 50% mark where I think there is strong argument from dropping them down as idea of state taking more than half your earnings for each additional dollar above a certain point probably has some negative but degree unknown.  But at 45% still keep most and most wealthy make their income in dividends or capital gains anyways which are/were taxed at 38.5% and 20% respectively.

If goal was to encourage wealthy to move to UK, likely fail as places like Monaco are significantly lower.  Rich may move if massive savings but not a few points.  So essentially 45% not high enough to push rich out and 40% not low enough to bring many in, in big numbers like tax havens do.  It would probably need to be 50% or higher to cause some to leave and likewise be under 20% to cause lots to move to UK.

[Filuwaúrdjan]

The Telegraph is such a frustrating paper - competent at investigative journalism, and basically c**p at most other stuff.

It's a shame: it used to be a paper with a firm and very right-wing editorial line but with high quality journalism across the board (including very good sports coverage) so perfectly readable even if you strongly disagreed with its politics, but, well, long ago and far away now. It's an extreme example, but the general pattern holds across our newspapers.

[If my soul was made of stone]

The Telegraph is such a frustrating paper - competent at investigative journalism, and basically c**p at most other stuff.

It's a shame: it used to be a paper with a firm and very right-wing editorial line but with high quality journalism across the board (including very good sports coverage) so perfectly readable even if you strongly disagreed with its politics, but, well, long ago and far away now. It's an extreme example, but the general pattern holds across our newspapers.

Boris Johnson Telegraph editorial on Blair's Congo visit [FOR THE LOVE OF GOD DO NOT RESEARCH]

[Alcibiades]

The Telegraph is such a frustrating paper - competent at investigative journalism, and basically c**p at most other stuff.

It's a shame: it used to be a paper with a firm and very right-wing editorial line but with high quality journalism across the board (including very good sports coverage) so perfectly readable even if you strongly disagreed with its politics, but, well, long ago and far away now. It's an extreme example, but the general pattern holds across our newspapers.

That was always the classic excuse for anyone a bit embarrassed by what other people might think of their political leanings when they saw them reading it: “I only buy it for the cricket!”

[If my soul was made of stone]

The Telegraph is such a frustrating paper - competent at investigative journalism, and basically c**p at most other stuff.

It's a shame: it used to be a paper with a firm and very right-wing editorial line but with high quality journalism across the board (including very good sports coverage) so perfectly readable even if you strongly disagreed with its politics, but, well, long ago and far away now. It's an extreme example, but the general pattern holds across our newspapers.

That was always the classic excuse for anyone a bit embarrassed by what other people might think of their political leanings when they saw them reading it: “I only buy it for the cricket!”