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Nowadays, party manifestos come with costs. After Liz Truss’ unfunded tax cuts in fall 2022, no one wants to disrupt the bond markets.
The conservatives’ desire is to reduce the tax burden.
The paradox is that the immediate freeze on tax relief and the jump in the overall corporate tax rate from 19 per cent to 25 per cent means that taxes as a percentage of output continue to rise.
Rishi Sunak and Jeremy Hunt are persisting in a push to scrap employees’ National Insurance Contributions (NICs) with a further two percentage point cut.
Economists believe that reducing payroll taxes is a good thing because it helps make work worthwhile.
Rishi Sunak and Jeremy Hunt persist in an effort to scrap employee national insurance contributions with a further two percentage point cut.
But in British political terms, it has so far not had the same effect as the tried-and-true penny or twopence in income tax.
The end of NICs for the self-employed, which will cost £2.6bn by 2029-30, encourages entrepreneurship.
The triple plus lockdown and the discontinuation of stamp duty for first-time buyers speak to both ends of the generational spectrum.
The reduction in national insurance should provide a supply-side boost by boosting growth. More difficult to assess is how conservatives will pay for the gifts.
Hunt has begun the process of welfare reform by encouraging people leaving health benefits to work or opt for cheaper plans.
The £12 billion saved at the end of the next Parliament is more aspiration than reality.
Hunt and Sunak believe there is cash – up to £6bn by year five – that can be extracted from tax evaders. Rachel Reeves of the Labor Party uses a similar figure.
This may seem credible and new technologies, particularly AI, should help. What is missing is the economic context. If, as happened in the first quarter, growth is sustained, revenue should flow into the nation’s coffers.
The need to reduce spending on unprotected services could be avoided. Phew.
London calling
Microcomputer maker Raspberry Pi’s IPO may be modest, but it demonstrates the London stock market’s appetite for innovation. The shares rose to an initial premium that gave the company a value of £770m.
This isn’t exactly Arm Holdings, which reached a value of £41bn on the Nasdaq in September 2023 and has since advanced to £114bn on the back of AI prospects.
The potential for London IPOs is growing. The biggest potential launch, online fast fashion group Shein, has run into ethical waters.
Boots owner Walgreens is turning down a float. There are several financial groups in the queue, including Starling Bank, OakNorth, Klarna and Zopa.
Big names that could come the city’s way include Unilever’s ice cream division, Waterstones and a revamped De Beers. There are also losses. Ashstead looks west. Royal Mail could soon be owned by Czech sphinx Daniel Kretinsky.
A rally in UK shares could still rescue London listings. However, the betrayal of Britain by UK pension funds and the lure of undisputed executive rewards is hard to resist. The City could become even less attractive if Labor penalizes entrepreneurs by raising capital gains tax.
soccer roulette
The imminent start of Euro 2024 and the Copa América has caused a boom in fan tokens, a form of cryptocurrency.
The tokens, issued by national clubs and franchises, offer perks such as raffle entries, merchandise discounts and ticket access.
The value of the tokens has increased to £835 million from £537 million at the beginning of the year. Fans are warned that purchasing volatile tokens puts them at financial risk.
Not unlike online betting sites that attract bettors during big games.