Economy

SIR ROCCO FORTE – There’s no incentive to work for the budget

The inscription at the Gates of Hell in Dante’s Inferno reads, “Abandon all hope, ye who enter here.” I have to think about that when I think about the recent budget.

What element of encouragement is there for the ideal of free enterprise? What motivation is there to strive and strive?

Winston Churchill told his constituents in September 1959: ‘There is great confusion among our socialist opponents. Some of them view private companies as a predatory tiger that should be shot.

Sir Rocco Forte: ‘Much of the ‘black hole’ talk in the latest budget is pie in the air’

‘Others see it as a cow they can milk. Only a handful see it for what it really is: the strong and willing horse that pulls the cart.’

It’s pretty clear how our current government sees it – as the cow they can milk.

The story is that things had to be regulated more, the economy had to be stabilized. But there is simply no vision for the future.

Much of the ‘black hole’ talk in the most recent budget is a pipe dream and the idea that the UK economy is unable to cover its costs in the medium term is nonsense.

If there was any instability, it was largely caused by the Bank of England. First, by raising interest rates by 0.5 percent instead of 0.75 percent. This destabilized the markets.

Then by announcing quantitative tightening on the same day as Kwasi Kwarteng’s mini-budget. It compounded the mistake by failing to act decisively in the LDI debacle – the pension fund funding crisis – and then announcing quantitative tightening on the same day as Kwasi Kwarteng’s mini-budget. It compounded the mistake by failing to intervene decisively in the LDI debacle – the funding crisis in pension funds – when it should have ensured that the support was indefinite rather than temporary, allowing market speculators to withdraw.

That is, without going back to continuing quantitative easing long after it should have ended and allowing the LDI situation to develop as it did.

Now monetary policy is finally under control. The money supply has stopped growing and interest rates are at a realistic level. There is finally pressure on domestic inflation and the economy is already in recession.

On top of that, a tax burden was completely unnecessary and it is completely counterintuitive to raise taxes during a recession. What we will see is a much deeper recession as a result. Many small businesses, the lifeblood of the economy, will disappear and any recovery will be much more muted going forward.

Brexit is being challenged and before we know what happened we will be back in the European Union. I work in the European Union and things are even bleaker there than here. Inflation is just as high, there is no growth and the energy situation is worse than ours.

1669501988 3 Sir Rocco Forte There Is No Motivation To Strive For

“Unfortunately there doesn’t seem to be Mrs Thatcher around today,” says Sir Rocco Forte

Nothing has been done, partly because of Covid, but mostly because of officials’ unwillingness and government’s weakness to change anything since we left. European laws we don’t need are still in the law books and we generally run our economy in line with the EU.

Raising the corporate tax rate at a time when you are trying to encourage investment in the country is a fundamental mistake – and that is from both an internal and external investment point of view.

Dismantling the tax-free havens that are being created to make them less attractive to investors, giving up business zones in those parts of the country that need investment is equally damaging.

The Treasury argues that this policy merely transfers investment from one part of the country to another, and that it loses its tax revenue in the short term. But that doesn’t hold water. Creating new businesses and jobs in areas where there are none will pay off enormously in the medium term.

In Sicily I built a resort, Verdura, on 550 hectares of land with two kilometers of coastline in an area where there was no employment. The resort provides direct employment for 500 people.

When the mayor of Sciacca, the local municipality, granted me honorary citizenship, he said that more than 1,000 small businesses had been set up on Verdura’s back. I wouldn’t have had the development if I hadn’t received a substantial government grant, but the region is reaping a huge reward.

Back in Britain, personal tax thresholds were already too low before this latest budget and have been compounded by being frozen for six years – and, in the case of the top tax rate, reduced – the scandal of which is all highly documented in the pages of The Mail on Sunday.

The people affected by this are not rich. They may be considered wealthy by some, but they are now being picked clean by the Treasury for their hard work. For example, in the US, the top tax rate is 32 percent and only starts at $500,000 per year.

Here, fighters are being hit with a 40 per cent tariff for just over £50,000 – which many more will soon be swept up in thanks to the double curse of frozen thresholds and rapid inflation.

We are talking about junior and middle managers. What incentive is there for them to work harder?

I could go on, but the whole thrust of the budget was against the creation of an entrepreneurial economy. What Liz Truss and Kwasi Kwarteng wanted to do was right. Here was finally a glimmer of light away from the economic policies we’ve been following for the past 20 years.

Their over-exuberance in wanting to implement them, as well as the actions of the Bank of England I’ve described, forced the termination of those policies. The so-called establishment is against them anyway, so they probably shouldn’t have happened under any circumstances.

We are told that we are now in the hands of the adults. I know plenty of adults who have never achieved anything in their lives, who have had no ambition and are willing to go with the flow.

There were a lot of adults in the 1970s when the country was in a bigger mess than it is now and when decay was accepted as it is today.

It took a visionary to come along and change it. Unfortunately, there doesn’t seem to be a Mrs. Thatcher around today.

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.

Show More

Jacky

The author of what'snew2day.com is dedicated to keeping you up-to-date on the latest news and information.

Related Articles

Back to top button