| Kwarteng’s Budget 10:33 - Sep 23 with 18181 views | PatfromPoole |
Blimey.
Suicidal stuff politically, methinks. |  |
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| Kwarteng’s Budget on 15:22 - Sep 29 with 3197 views | Bazza |
| Kwarteng’s Budget on 12:04 - Sep 29 by franniesTache |
Well it depends, if you listen to the tory mp's the main reason is Putin.
If however you listen to economists, traders and the current and former head of the bank of England and the IMF it's the mini budget.
To put it in context the fallout from the mini budget was that the cost of borrowing vs the tax cut spooked the markets as they didn't believe the growth was achievable.
This lead to a run on the markets, gilt markets, FTSE, foreign currency etc.
This saw the pound drop to it's lowest every level against the dollar (but now risen) which in turn spooked the housing market as mortgage brokers assumed that interest rates would have to rise (not unreasonably because the drop in the pound increased inflation as cost of good purchase from abroad became more expensive).
They pulled new deals waiting for the market to settle and to see how the BoE would react.
The combined impact of all these, but in particular the drop in the gilt market, saw the pensions industry freefall - 40% knocked off in a day, with some pension providers looking like they wouldn't make it through the day - which forced the BoE to step in and effectively underwrite the economy to the tune of £65bn
Now it's also fair to say the war in the Ukraine and other geopolitical events had seen a raise in inflation anyway, but all of these things happened in the wake of the mini budget, and nowhere else in the world has the currency, markets, pensions and housing market all collapsed in the space of a week.
I'm hopeful the BoE have adverted the worst of this with the quantitive easing they did (though to be fair they were also doing quantitative tightening in the gilt market prior to this), but it also seems obvious that there will either need to be substantial pull or reversal from the budget or horrendous cuts across the public sector in the UK, and that will most likely come from the NHS
This is a good non politicised viewing btw
[Post edited 29 Sep 2022 12:09]
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Thanks for the full picture. I’m assuming the pensions panic is concerning the defined pensions which is invested in gilts. My contribution pension will be sinking along with current market, 😢 |  | | |
| Kwarteng’s Budget on 15:46 - Sep 29 with 3186 views | franniesTache |
| Kwarteng’s Budget on 15:22 - Sep 29 by Bazza |
Thanks for the full picture. I’m assuming the pensions panic is concerning the defined pensions which is invested in gilts. My contribution pension will be sinking along with current market, 😢 |
The pensions mostly hit are the final salary ones are they're the ones linked most tightly to gilts, though private pensions are obviously going to be hurt too as they're hit by the markets.
It's a bloody mess anyway you look at it, and personally i can only see a reversal fixing it, which i'm expecting to be forced by the budget not passing the house. |  | | |
| Kwarteng’s Budget on 16:07 - Sep 29 with 3154 views | JaySaint |
| Kwarteng’s Budget on 09:57 - Sep 29 by franniesTache |
The 45%-50% is deeply meaningful in this because it's what's spooked the markets.
Fundamentally the government have removed a significant revenue stream and replaced it with borrowing.
It's sort of the equivalent of you going to the bank and asking for a loan and telling them you're going to use to it to quit your job on the hope that you might get a better one later that will pay the loan back |
the hundreds upon hundreds of billions given away over the last couple of years has been fine. Throwing endless billions at our proxy war is fine.
However, the nasty tories give a relatively small tax-cut??
Is the fault of the tories too?
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| Kwarteng’s Budget on 16:23 - Sep 29 with 3131 views | Southamptonfan |
| Kwarteng’s Budget on 16:07 - Sep 29 by JaySaint |
the hundreds upon hundreds of billions given away over the last couple of years has been fine. Throwing endless billions at our proxy war is fine.
However, the nasty tories give a relatively small tax-cut??
Is the fault of the tories too?
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I think I understand.
We spent 400 billion on a covid pandemic, that was ok, no mention of going bankrupt.
We spent 150 billion on an energy bailout, that was ok with no panic from the markets.
We spend 50 billion more on tax cuts and we face ruin, suddenly. Like that was the very last pennies we had.
It's all very difficult to fully understand. However, I don't agree with giving football players and very rich people a load more f@cking money (they don't need it and weren't asking for it), whilst people who can barely put food on the table, face higher bills to pay because of it. But I think I understand what your point is. [Post edited 29 Sep 2022 16:26]
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| Kwarteng’s Budget on 17:36 - Sep 29 with 3068 views | franniesTache |
| Kwarteng’s Budget on 16:07 - Sep 29 by JaySaint |
the hundreds upon hundreds of billions given away over the last couple of years has been fine. Throwing endless billions at our proxy war is fine.
However, the nasty tories give a relatively small tax-cut??
Is the fault of the tories too?
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The hundreds of billions you mentioned were offset by taxation and austerity measures, the quantitive easing done by the BoE over that period was in line with most other major nations and seen as a vital necessity to protect the economy, businesses and people's health.
The markets reacted to those in a way that expected the money to be re-couped in the long term so it didn't trigger a crash (in fact if that QE hadn't happened it would've triggered a crash).
The current round of cuts, coupled with borrowing for the energy crisis - instead of levying a windfall tax on energy profits - has spooked the markets as they don't believe it's sustainable.
Ultimately this isn't about "nasty tories" or "red labour" it's about the harsh realities of economics.
Or our economy, like it or not, is tied to the free market. If the free market loses faith in government policies it withdraws it's capital from the economy, or stops lending.
Both of these things alone are dangerous, but combined are catastrophic.
As someone more intelligent than me said the government have put their foot on the brake and accelerator at the same time.
There are some "ok" things in the budget, for example by itself ditching IR35 seems a sensible decision, as it means that you regain a fluid employment pool in the form of contract workers, and encourage growth for sole traders.
Likewise the doubling of the limit on stamp duty is a smart move, it currently doesn't represent the true cost of the housing market.
But both of those come with a cost to the purse, for most people working outside of IR35 the sensible route is to set up a holding company and pay yourself from that, you then take share dividends to increase your take home wage and right off other costs as tax deductibles.
Inside of IR35 you are closer to a PAYE taxation, and there's more difficult limits to how you pay yourself, that means that the government get more in tax, as well as more in NI and other contributions.
Likewise raising stamp duty means less money going to the public purse as you're not collecting from first time buyers in the same amounts.
Again each of these things are not in isolation, there's the massive tax cut to top payers and most importantly the borrowing.
If someone came to you and asked to borrow money for the bookies and they'd pay you it back later because they hoped they were going to win you'd be sceptical that it was it was sensible.
The markets have thought the same about the UK budget and decided that the debt is too risky, so they've dropped their investment in the country, this drops the value of the pound, drops the value of bonds and the knock on effects are those outlined in other posts.
I genuinely don't think Johnson would've done this, nor Sunak if he'd won, this is the influence of a small group of ultra free market thinkers, primarily those in the tax payers alliance think tank, and is actually outlined in the book Britannia Unchained, which i'd recommend people read if they want to know what's about to happen to the UK (as it was co-authored by Truss, Kwarteng, Raab and Skidmore)
https://www.amazon.co.uk/Britannia-Unchained-Global-Lessons-Prosperity/dp/113703 | | | |
| Kwarteng’s Budget on 18:49 - Sep 29 with 2996 views | grumpy |
| Kwarteng’s Budget on 16:07 - Sep 29 by JaySaint |
the hundreds upon hundreds of billions given away over the last couple of years has been fine. Throwing endless billions at our proxy war is fine.
However, the nasty tories give a relatively small tax-cut??
Is the fault of the tories too?
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Germany energy problems are one of main reasons,as Russia supplied 55% of their gas compared to the UK at 3%.
With North Sea Oil and Gas we should be better off. |  | | |
| Kwarteng’s Budget on 19:14 - Sep 29 with 2944 views | JaySaint |
| Kwarteng’s Budget on 18:49 - Sep 29 by grumpy |
Germany energy problems are one of main reasons,as Russia supplied 55% of their gas compared to the UK at 3%.
With North Sea Oil and Gas we should be better off. |
We should, but we are pursuing a green agenda. | |
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| Kwarteng’s Budget on 00:05 - Sep 30 with 2759 views | franniesTache |
| Kwarteng’s Budget on 19:14 - Sep 29 by JaySaint |
We should, but we are pursuing a green agenda. |
The U.K’s problem isn’t access, we’d be pretty much self sufficient off North Sea reserves alone, the problem is storage. Compared to Germany I think we have something like 55% lower capacity for storage.
Also this looks like the beginning of the end to the mini budget
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| Kwarteng’s Budget on 01:36 - Sep 30 with 2747 views | Bicester_North |
| Kwarteng’s Budget on 00:05 - Sep 30 by franniesTache |
The U.K’s problem isn’t access, we’d be pretty much self sufficient off North Sea reserves alone, the problem is storage. Compared to Germany I think we have something like 55% lower capacity for storage.
Also this looks like the beginning of the end to the mini budget
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A knowledgeable geezer like yourself is what this f*cked up country needs. Are you involved with the government or the opposition at all? If not you should be.
What would your strategy have been from Day 1 of the covid time?l until now? | |
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| Kwarteng’s Budget on 08:56 - Sep 30 with 2629 views | kentsouthampton |
That's the Tories wiped out at the next GE.
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| Kwarteng’s Budget on 09:47 - Sep 30 with 2591 views | Berber |
| Kwarteng’s Budget on 16:07 - Sep 29 by JaySaint |
the hundreds upon hundreds of billions given away over the last couple of years has been fine. Throwing endless billions at our proxy war is fine.
However, the nasty tories give a relatively small tax-cut??
Is the fault of the tories too?
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Using the Chief Secretary to the Treasury’s argument. But the fact is, they are giving £2bn to the richest people in the country, ( how many new hospitals is that?) ON TOP of what they are giving everyone else. “One for you, two for me” of the worst kind. When the additional band was put in ( by the Tories), it was intended as a temporary measure to alleviate pain on the poorest during an economic slump. The slump is far from over, and now this government is claiming that giving it back to the wealthy will help the poorest? Hypocracy. |  | | |
| Kwarteng’s Budget on 09:59 - Sep 30 with 2588 views | kentsouthampton |
| Kwarteng’s Budget on 16:07 - Sep 29 by JaySaint |
the hundreds upon hundreds of billions given away over the last couple of years has been fine. Throwing endless billions at our proxy war is fine.
However, the nasty tories give a relatively small tax-cut??
Is the fault of the tories too?
|
Economics of the brain-dead, to put it simply, so you understand, the aforementioned were costed with a plan to pay it back.
Friday's insane effort was uncosted with no plan to pay it back, it's like you asking someone for twenty quid, so you can piss it up and telling them you have no idea how you're going to give it back to them.
Little wonder the markets got spooked. | | | |
| Kwarteng’s Budget on 10:27 - Sep 30 with 2571 views | PaleRider |
It's the fault of the media! They have been mispronouncing the guys name. It's not pronounced Kwasi - it's pronounced Krazy  | | | |
| Kwarteng’s Budget on 15:11 - Sep 30 with 2427 views | Bridders2 |
Maybe the markets over reacted...
Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research (CEBR), has an interesting comment on the ill-fated mini-Budget announced by Kwasi Kwarteng (pictured above).
He says the Chancellor's failure to show the Government's workings to markets (with complete costings and independent analysis) made the plans look more spendthrift than they really are.
It takes some explaining, but the CEBR's argument boils down to this:
The Government's own costings are "on the high side". For example the cost of abolishing the top rate of tax and the reintroduction of VAT relief for tourists will raise revenue, rather than cost it, the think tank says.
The estimates take no account of "fiscal drag". Fiscal drag occurs when tax thresholds do not rise in line with inflation and wages, meaning the Government pulls in more income tax simply by keeping rates the same.
Growth of tax revenues from goods that are rising in price and rising wages will be faster than the growth of public expenditure, which is being frozen on current plans.
The cost of the Government's energy support package will fall as the price of gas falls. The European benchmark price is about €193 per megawatt hour today, well below the high of €345 hit earlier this year.
McWilliams says this means that CEBR's estimate for borrowing in 2023/24 falls from £154bn to £64bn after adjustments, with the figure for 2024/25 falling from £80bn to a "tiny surplus". He adds:
It would appear that the Chancellor has managed to burn his reputation for fiscal prudence for no good reason at all. He would have been so much better advised to have done his sums before presenting his budget to the markets. | | | |
| Kwarteng’s Budget on 16:35 - Sep 30 with 2377 views | kentsouthampton |
Companies have invested in the UK for years because: it is politically and legally stable and safe, our internal market is or was second to none. Making low and average incomes poorer adversely affects the market. Fear kills it. This government has lost 3 of the 4 legs in a week | | | |
| Kwarteng’s Budget on 16:48 - Sep 30 with 2362 views | Bazza |
| Kwarteng’s Budget on 16:35 - Sep 30 by kentsouthampton |
Companies have invested in the UK for years because: it is politically and legally stable and safe, our internal market is or was second to none. Making low and average incomes poorer adversely affects the market. Fear kills it. This government has lost 3 of the 4 legs in a week |
Pity the UK still has poor productivity relative to similar economies | | | |
| Kwarteng’s Budget on 17:07 - Sep 30 with 2353 views | grumpy |
| Kwarteng’s Budget on 16:48 - Sep 30 by Bazza |
Pity the UK still has poor productivity relative to similar economies |
UK was 13th in the world for productivity in 2020,ahead of France,Italy,Spain etc. | | | |
| Kwarteng’s Budget on 19:23 - Sep 30 with 2242 views | Bazza |
| Kwarteng’s Budget on 17:07 - Sep 30 by grumpy |
UK was 13th in the world for productivity in 2020,ahead of France,Italy,Spain etc. |
Well I’ve opened a can of worms here. Your 13th place is valid in some tables.
In others eg output / worker UK is below Italy and Germany or on output / hr below France. So I think I’ll withdraw comment, think it’s too complex. | | | |
| Kwarteng’s Budget on 08:17 - Oct 3 with 1698 views | PatfromPoole |
Well….
It appears today is the day of the U-turn.
I’m not convinced the markets will react any more positively to this.
They are doomed. | |
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| Kwarteng’s Budget on 08:30 - Oct 3 with 1616 views | Bicester_North |
| Kwarteng’s Budget on 08:17 - Oct 3 by PatfromPoole |
Well….
It appears today is the day of the U-turn.
I’m not convinced the markets will react any more positively to this.
They are doomed. |
The country is run by the media. Absolutely mental times | |
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| Kwarteng’s Budget on 08:59 - Oct 3 with 1567 views | cocklebreath |
| Kwarteng’s Budget on 08:30 - Oct 3 by Bicester_North |
The country is run by the media. Absolutely mental times |
No it’s run by a bunch of c£nts |  |
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| Kwarteng’s Budget on 09:35 - Oct 3 with 1509 views | Bicester_North |
| Kwarteng’s Budget on 08:59 - Oct 3 by cocklebreath |
No it’s run by a bunch of c£nts |
Yes c*nts with no balls who bow to media opinion. Terrible government | |
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| Kwarteng’s Budget on 10:40 - Oct 3 with 1458 views | franniesTache |
| Kwarteng’s Budget on 08:17 - Oct 3 by PatfromPoole |
Well….
It appears today is the day of the U-turn.
I’m not convinced the markets will react any more positively to this.
They are doomed. |
Acted far too late, though why the hell they thought the budget was a sensible move in the first place i'll never know.
The irony is if they hadn't done it all at once they'd probably have gotten away with it, it just screams of pure arrogance that they thought it was ever a sensible tactic. | | | |
| Kwarteng’s Budget on 18:42 - Oct 3 with 1350 views | dirk_doone |
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| Kwarteng’s Budget on 12:56 - Oct 14 with 1007 views | franniesTache |
And Kwarteng is gone...
Genuinely has to be the worst chancellor of my lifetime, he basically destroyed the 6th largest economy in the world in just over a month.
That's a hell of a way to fail your probation period  | | | |
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