A grim day.

[Itsallaguess]

Anyone care to convince me otherwise?

Some snippets -

Confederation of British Industry response -

This is a turning point for our economy. Like Covid, the energy crisis has meant Government has had to spend massively to protect people and businesses. That means we have no choice but to go for growth to afford it.

Today is day one of a new UK growth approach. We must now use this opportunity to make it count and bring growth to every corner of the UK. Fifteen years of anaemic growth cannot be repeated.

Taking action to get Britain’s economy moving again by beginning construction on transport and green infrastructure projects shows immediate delivery. Planning reform is long overdue. A simpler, smarter approach to tax can pay dividends, and firms will be keen to make the most of the investment incentives on offer.

It’s not perfect - it’s just the beginning - but there’s plenty business can work with. The Chancellor signalled more proposals to come this Autumn and these will be vital to sustain momentum on growth.

https://www.cbi.org.uk/media-centre/art ... statement/


Adam Smith Institute response -

We are incredibly encouraged to see so many pro-growth policies announced by @KwasiKwartengin the Mini Budget - many of which we have advocated for over many years

Here's what we have to say:

In response to the cancellation of the corporation tax hike and changes to business taxation, @DanielPryorr, Head of Research at the Adam Smith Institute, said:



Commenting on changes to personal taxation and National Insurance Contributions, @MacdonaldJam, Director of Strategy at the Adam Smith Institute said:



In response to investment zones, @morgandelmeier, Director of Operations at the Adam Smith Institute, said:



Source - https://twitter.com/ASI/status/1573244740774072323

Cheers,

Itsallaguess

[Howyoudoin]

With the various changes announced by the chancellor earlier on, I think I've probably come out better than a lot of folk.

....but I cant help thinking that Today was a bad day for the UK as a whole.

And there may be worse to come.

Anyone care to convince me otherwise?

I’m a Tory Supporter but remain to be convinced how, in the current climate, tax cuts for the rich are a good thing.

Also, propping up the property market again with stamp duty cuts seems like folly. If you want property to be affordable, why not let the house market crash? That may seem impossible but I’m not sure that it is anymore if and when interest rates go over 5%. Mortgages will then become unaffordable to most.

HYD

[Newroad]

Hi All.

If attempting to address through tax rates, instead of going from

• 0/20/40/45%
  to
  0/19/40/[40]%

why not, say, go to

• 0/19/39/44%

or similar. And if that doesn't prove sufficiently stimulative, calibrate further to

• 0/18/38/43%

in the following year. Or something along those lines.

I believe the consensus view on "trickle down economics" and similar - which this appears to be a form of - is that it doesn't have legs. No doubt though, extreme views on both sides of the argument can be found.

Regards, Newroad

[Dod101]

Well the fact is that what has gone before has not worked so we needed to change something. It will not make much difference to me because I pay very little tax anyway although I quite like higher interest rates from the BoE. I do not know though why it is described as a ‘grim day’

Dod

[NotSure]

I do not know though why it is described as a ‘grim day’

I suspect because our currency and our government bonds have been trading like those of a developing country since the statement this morning? Currency sharply down and yields sharply up, simultaneously? Not meant to happen to developed countries.

But what's a day. time will tell.

[WrenChasen]

I understand, I think, the reasoning behind this budget: reduce taxes to put money into people's pockets in the hope of kickstarting the economy by increasing receipts.

However, unless the Government has managed to secure at very competitive interest rates the funds it needs to implement its strategy, bankruptcy must surely be a huge concern.

I have a sense of foreboding which I very much hope is wrongly placed.

[Dod101]

I understand, I think, the reasoning behind this budget: reduce taxes to put money into people's pockets in the hope of kickstarting the economy by increasing receipts.

However, unless the Government has managed to secure at very competitive interest rates the funds it needs to implement its strategy, bankruptcy must surely be a huge concern.

I have a sense of foreboding which I very much hope is wrongly placed.

Well bear in mind that Sunak’s tax increases were pretty well guaranteeing recession without much possibility of anything positive.

Dod

[Lootman]

I understand, I think, the reasoning behind this budget: reduce taxes to put money into people's pockets in the hope of kickstarting the economy by increasing receipts.

However, unless the Government has managed to secure at very competitive interest rates the funds it needs to implement its strategy, bankruptcy must surely be a huge concern.

I have a sense of foreboding which I very much hope is wrongly placed.

Well bear in mind that Sunak’s tax increases were pretty well guaranteeing recession without much possibility of anything positive.

Indeed. Most other governments would have pussy-footed around with a wishy-washy middle-of-the-road budget that totally lacks verve and inspiration.

Instead we get a bold move in the face of adversity to shake the UK out of its financially sclerotic stupor. Sure there are risks but then what transformational policy shift ever didn't involve risk, from Atlee after WW2 to Thatcher in the 1980s?

It's a shame the government only has 2 more years because often tough love strategies take time to prevail. But it is worth a shot in my view. I would now like to see a scythe taken to public spending but that is always psychologically difficult for politicians.

Of course I say that as one who holds no UK government bonds, few UK shares and a massive over-weight position in the US dollar and other foreign currencies and markets. But then to me that is a natural and prudent hedge anyway. There are always opportunities to prosper even in bad markets.

[doolally]

I understand, I think, the reasoning behind this budget: reduce taxes to put money into people's pockets in the hope of kickstarting the economy by increasing receipts.

I'm not sure I do. Reduce taxes to put money into people's pockets in the hope of kickstarting the economy by increasing receipts, while the BoE increases interest rates to take money out of people's pockets to reduce inflation.

I don't know the answer, but does not seem to be a coherent overall strategy
doolally

[88V8]

I understand, I think, the reasoning behind this budget: reduce taxes to put money into people's pockets in the hope of kickstarting the economy by increasing receipts.

I'm not sure I do. Reduce taxes to put money into people's pockets in the hope of kickstarting the economy by increasing receipts, while the BoE increases interest rates to take money out of people's pockets to reduce inflation.

I don't know the answer, but does not seem to be a coherent overall strategy.

Brown gave the BoE independence, but its mandate is a one-trick pony aimed at inflation.

Even with Bailey in charge, elected for his do-nothing skills, they have to do something.

So either the govt revises the BoE mandate or they are going to be at loggerheads. Yes, it is a bit barmy.

Otoh, about time some thought was spared for cash savers, the financially unsophisticated not represented on these boards, who have had a dire time of it for many a year. They may live to see a half-decent return at last.

V8

[NotSure]

Well bear in mind that Sunak’s tax increases were pretty well guaranteeing recession without much possibility of anything positive.

Indeed. Most other governments would have pussy-footed around with a wishy-washy middle-of-the-road budget that totally lacks verve and inspiration.

Instead we get a bold move in the face of adversity to shake the UK out of its financially sclerotic stupor. Sure there are risks but then what transformational policy shift ever didn't involve risk, from Atlee after WW2 to Thatcher in the 1980s?

It's a shame the government only has 2 more years because often tough love strategies take time to prevail. But it is worth a shot in my view. I would now like to see a scythe taken to public spending but that is always psychologically difficult for politicians.

Of course I say that as one who holds no UK government bonds, few UK shares and a massive over-weight position in the US dollar and other foreign currencies and markets. But then to me that is a natural and prudent hedge anyway. There are always opportunities to prosper even in bad markets.

Hardly putting you money where your mouth is then.

I take it that now our government is bang back on track (IYHO), you'll be selling all those US assets and piling into the FTSE 250 and gilts?

[UncleEbenezer]

What about all those gratuitously anomalous complexities that make for much higher rates (sometimes north of 100%) of effective tax?

Like,

• At low incomes, loss of benefits. Cascading benefits, with the number of handouts available if you're on a particular main benefit.
• At about £50k or more, child benefit.
• At £100k, loss of personal allowance.
• For senior doctors (and perhaps others with high pay and gold-plated pensions), pension penalties you can't opt out of.

[Lootman]

Indeed. Most other governments would have pussy-footed around with a wishy-washy middle-of-the-road budget that totally lacks verve and inspiration.

Instead we get a bold move in the face of adversity to shake the UK out of its financially sclerotic stupor. Sure there are risks but then what transformational policy shift ever didn't involve risk, from Atlee after WW2 to Thatcher in the 1980s?

It's a shame the government only has 2 more years because often tough love strategies take time to prevail. But it is worth a shot in my view. I would now like to see a scythe taken to public spending but that is always psychologically difficult for politicians.

Of course I say that as one who holds no UK government bonds, few UK shares and a massive over-weight position in the US dollar and other foreign currencies and markets. But then to me that is a natural and prudent hedge anyway. There are always opportunities to prosper even in bad markets.

Hardly putting you money where your mouth is then.

I take it that now our government is bang back on track (IYHO), you'll be selling all those US assets and piling into the FTSE 250 and gilts?

The point with the natural hedge I referred to is that if UK Inc. does well then I do well by osmosis. The mere fact of living in the UK represents an allocation and a commitment. A Corbyn government would have heralded my departure elsewhere.

[nimnarb]

Of course I say that as one who holds no UK government bonds, few UK shares and a massive over-weight position in the US dollar and other foreign currencies and markets. But then to me that is a natural and prudent hedge anyway. There are always opportunities to prosper even in bad markets.[/quote]

The link below, how someone from the US sees it and even on the news, "do they know what they are doing in the UK?". Rather laughable as the market in the US had another bad week and nearly went into bear territory, not seen like this since 2020 with many stocks making lows not seen for a few years, but I do agree with you re the dollar. Shame I couldn't get that rate a few weeks ago in London,1.08 now approx as opposed to 1.22. Parity soon or even worse? Think we all in for a modicum of pain, albeit there will be some great bargains out there. A few Warren Buffet quotes.

Price and value aren’t always the same: Don’t pay too much.“Price is what you pay. Value is what you get.”
Use a bucket not a spoon.“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold.”
It’s during hard times that the winners — and losers — get exposed.“You only learn who has been swimming naked when the tide goes out.”
Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.

https://www.marketwatch.com/story/the-u ... h_headline

[terminal7]

I assume 'grim day' relates to the UK economy and the future prosperity of this nation. I know we have a bunch of 'I'm all right Jack' Fools on these boards who see everything through the perspective of their own pockets and their incredible investing skills; but in terms of the vast majority of our fellow citizens and their families - in particular children - yesterday was a grim line in the sand and tomorrow will hasten the decline of this country. Can someone just tell me of how the leading shaman and her supporters have sat in Cabinet for years and agreed to a policy that totally belies this hocus pocus trickle down nonsense with the imprimatur of discredited economists such as Walters and Minford. Yes, a lot of us remember 'boom and bust' from the 70s and to some extent the 80s.

T7 (not smug because I called this market, that currency . . .)

[tjh290633]

I assume 'grim day' relates to the UK economy and the future prosperity of this nation. I know we have a bunch of 'I'm all right Jack' Fools on these boards who see everything through the perspective of their own pockets and their incredible investing skills; but in terms of the vast majority of our fellow citizens and their families - in particular children - yesterday was a grim line in the sand and tomorrow will hasten the decline of this country. Can someone just tell me of how the leading shaman and her supporters have sat in Cabinet for years and agreed to a policy that totally belies this hocus pocus trickle down nonsense with the imprimatur of discredited economists such as Walters and Minford. Yes, a lot of us remember 'boom and bust' from the 70s and to some extent the 80s.

T7 (not smug because I called this market, that currency . . .)

I think the answer to your question is that they were a minority in Cabinet. You might like to look at Alister Heath's article on the front page of today's Daily Telegraph. After 20 years of what he describes as neo-Brownism, a total change of direction was called for. Kwarteng has made a start, but there has to be more to come. Indexation of allowances and benefits have to come sooner than later.

The expectation is that the growth will come. I see a suggestion that the BofE may make a panic increase in Base Rate next week. Monday might not be too soon, and an increase to make a major step towards matching the Fed's rate is surely needed. The too timid increases have led to the fall in sterling.

TJH

[TUK020]

Hi All.

If attempting to address through tax rates, instead of going from

• 0/20/40/45%
  to
  0/19/40/[40]%

why not, say, go to

• 0/19/39/44%

or similar. And if that doesn't prove sufficiently stimulative, calibrate further to

• 0/18/38/43%

in the following year. Or something along those lines.

I believe the consensus view on "trickle down economics" and similar - which this appears to be a form of - is that it doesn't have legs. No doubt though, extreme views on both sides of the argument can be found.

Regards, Newroad

Reality is a bit messier than this
going from
0/20/40/60/40/45
to
0/19/40/60/40/40
and that is ignoring NI which has a different bunch of breakpoints and levels

Why leave the clawback of personal allowances if you want to incentivise people to work harder/earn more?

[NotSure]

..... You might like to look at Alister Heath's article on the front page of today's Daily Telegraph. After 20 years of what he describes as neo-Brownism, a total change of direction was called for.....

I just read it:

Kwasi Kwarteng's Budget is a moment in history that will radically transform Britain
With one move, Britain’s competitiveness, its investor friendliness and its attractiveness to top talent has been hugely amplified

In the same paper, a piece by Gordon Raynor:

...“People will keep their mouths shut for now,” one Sunak supporter said. “But she has just taken one of the biggest political gambles since the Second World War – and she is doing it without the support of a lot of MPs who backed others for leader, and even without the support of some of her own people.

“The fact is that if this plan fails it will burn the Conservatives’ reputation for economic competence for an entire generation. It feels existential.”...

Only time will tell..............

[Leothebear]

Yep - trickle down economics - a proven route to success just look at the US - lol.

[servodude]

just look at the US - lol.

Is the "US -lol" some sort of post modern aircraft carrier?