Current politics and markets

[roarfeckingroarr]

Please could someone explain to me why "the markets" stabilised to an extent after the u-turn on corporation tax (so businesses will be taxed more)? Wouldn't that be the opposite of what businesses want?

And why so many Tory MPs are so opposed to what were, essentially, classic conservative policies of lower taxes?

I don't get it. Thank you.

I also don't get how markets are suddenly so important. And when they rose after Boris Johnson election I'm sure many of the people using them to criticize Liz weren't celebrating the good news for the market. Markets like free market capitalism they like low tax what they don't like is having to fund government debt in large amounts at once. Markets certainly don't act within the interests of the general worker.

If you destabilise the £, it makes your investments worth less- there's no point worrying about a relatively small change in the tax you pay, if the total value of your investment drops by more because it's in £ rather than USD for example.

By cancelling tax cuts, the new chancellor showed he was willing to make unpopular changes that will keep the UK economy stronger, so even if the changes aren't directly in favour of businesses, the markets at least know they won't lose huge amounts as the £ crashes.

But the pound being low is because the bank of England is slow in raising rates compared to the federal reserve.

That was not a classic Conservative budget. It was, as described on tv this morning, a coup by libertarian jihadists who border on derangement. Their bonkers proposition destabilised this country's reputation for economic caution and stability, undermined the pound and forced the Bank of England to take action that it could have avoided if LT and KK had let it know what they planned. It made lots of dosh for their gambling friends in the City, those friends who were toasting KK at a champagne reception later that day. He and Liz Truss should be in prison, they've cost the people of this country billions for years to come to satisfy the greed of a handful of bankers. That's putting it mildly.

That's really helpful, thank you.

@newnamethanks really? I think it's beyond hyperbolic to talk about "libertarian jihadists". They planned to abolish the 45% tax rate and cancel a planned increase to corporation tax - not abolish income tax. The last Labour government only introduced the 45% top rate it its last year or two of govt and the tax increase isn't a change from current policy as is.

I think the 45% cut was silly given state of economy - far better to increase personal allowance or 40% threshold if you want lower taxes. But let's not be ridiculous.

Please could someone explain to me why "the markets" stabilised to an extent after the u-turn on corporation tax (so businesses will be taxed more)? Wouldn't that be the opposite of what businesses want?

The market just means all the pension funds and investors who buy shares in companies, currency and also buy UK Gov debt.

Generally when companies are taxed less the shares in companies go up- hence Johnson being elected over Corbyn leading to a rise in share prices.

Generally shares fluctuate but that makes little difference to the UK economy or Gov spending. Obviously big crashes impact the overall economy. Generally Gov debt is expensive because it is a much safer bet than shares.

'The market' is worried that the UK Gov may go 'bankrupt' and be unable to pay it's debt because the Gov announced huge tax cuts for the rich and for companies without any info about how to pay for them.

That lead to the Gov debt being worth less and so the Gov has to pay more to borrow the same amount- increasing the chance we can't pay our debts, causing the price to drop further and so on. Any benefit from the cut in corporation tax was overshadowed by the vast risks of the country being 'bankrupt'.

The two U turns got rid of the main tax cuts- reducing the risk of 'bankrupcy'. The Gov also promised to figure out how to pay for the debt within two weeks. So Gov debt prices and the pound are recovering now.

The country will still pay billions more to service the debt and the Bank of England spent a lot of money buying UK Gov debt to stop a total market collapse.

The last Labour government only introduced the 45% top rate it its last year or two of govt and the tax increase isn't a change from current policy as is.

The problem with that is that in the 10 years of austerity the Gov has still actually increased spending as a share of GDP, so we don't have the money to cut taxes because our debt is now so high.

@donquixotedelamancha this is very helpful, thank you. Is there a (non politically loaded) reason why debt is so much higher after austerity - or is it down to COVID and now additional world-stage shit show like energy?

@roarfeckingroarr That description came from Robert Halfon, Tory MP for Harlow. Take it up with him.

He has an agenda. Like many of them.

What? A Tory with an agenda? Whatever can you mean? What do you think is on his agenda? Does it involve reducing this country to the international economic status of Italy or Greece? No, can't be that because that's what LT and KK have achieved and shamed us with. Must be something else then. Hope you can still afford your mortgage. For now.

The problem was not the tax cuts per se, but the fact it wasn't made clear how they were going to fund them.

If they'd have said "we have found X, Y & Z savings in the budget and we will pass these on to the public as tax cuts" that would have been on thing. But instead they essentially said "we're making X, Y & Z tax cuts and, erm, give us a couple of months to work out how we're funding them" .

Maybe you could get away with the latter if you have credibility and there are obvious cuts to be made. But neither of these things were the case for the government.