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When Lord (Mervyn) King made an appearance on Radio 4’s Today program at the weekend to talk about his new role as MCC chairman, he was ambushed with questions about the economy.
The former governor criticized his former Bank of England colleagues for failing to spot the cost of living car crash until too late and for going overboard on money printing.
There was also criticism of Chancellor Rachel Reeves and the Labor Party. By shielding three major tax groups (income tax, national insurance and VAT) from increases in the election campaign, the Government effectively walked into a fiscal policy dead end.
One such policy, which closes tax loopholes for non-domiciled taxpayers, is headed for a U-turn, as the country’s wealthy foreign residents, big spenders and investors in the UK head to Milan and Dubai.
Meanwhile, private equity magnates, who fear losing their special tax status (known as carried interest), are moving in the same direction.
Disgrace: Lord Mervyn King criticized Reeves and Starmer after the Government effectively forced itself into an impasse on fiscal policy.
The promised end to investment subsidies for already overtaxed North Sea oil explorers and extractors is wreaking havoc on jobs and, despite all the fuss, Great British Energy is not going to compensate .
Adding insult to injury, the clumsy way in which the winter fuel subsidy was removed is likely to generate far less revenue for the Treasury than originally anticipated, as pension claims rise and pensioners lose other benefit-claiming rights. subject to means testing. .
The disappearance of income and savings streams has left the Chancellor scrambling to close the alleged (but not certified by the Office for Budget Responsibility) £22 billion resource shortfall, around half of which has been created by pay deals. of the public sector without productivity conditions.
So how to find the missing billions and invest in public services as promised? King suggested it was a mistake for Reeves to have backed the Conservative cut to employees’ national insurance.
Instead, among the latest leaks in Whitehall is a proposal to increase employers’ national insurance: a payroll tax on jobs.
This is also not very bright at a time when the green transition in steel and energy is eating up jobs and artificial intelligence, another threat to jobs, is approaching.
The Labor Party has made much of fiscal integrity and the failure of Liz Truss’ unfunded tax cuts. However, it also puts fiscal stability at risk if it seeks to change the way the government’s balance sheet is measured by formally introducing the concept of public sector net wealth.
This expands the size of the economy by including assets such as public buildings and playing fields. This is a sleight of hand that carries market risks.
The defenses erected by Keir Starmer and Reeves in the run-up to the election are proving very weak.
sour grapes
There is nothing kind about News Corporation’s response to the firm rejection of Australian subsidiary Rea’s attempted £6.2bn takeover of Rightmove.
Four bids have been rejected by Andrew Fisher and the Rightmove board, showing the kind of stellar resistance to predators not seen often enough in British boardrooms.
Rightmove has profitably exploited the online residential property space and, with sensible investment, could expand its reach in the UK and abroad.
Robert Thomson, chief executive of News Corp, which owns 61 per cent of Rea, decided to throw his toys out of the pram following the rejection.
He praised his boss, Lachlan Murdoch, for his “smart” investment in Rea and the company’s “financial discipline.” He then sarcastically accused the British company of not making the “right move.” Regrettable.
sports life
Mike Ashley is not a person to be trifled with. Mulberry’s failure to consult the company’s 37 per cent shareholder over a proposed £11m fundraising by the luxury leather goods group sparked Ashley’s competitive spirit.
It submitted a bid of £83bn for the entire building. The founder of Sports Direct does not want Mulberry, a supplier to his House of Fraser department store chain, to fall into administration.
Ashley and her son-in-law Michael Murray have become lenders of last resort as the High Street, fashion brands and online businesses swoop in on struggling businesses. Discipline, who needs it?
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