Is Anyone preparing/hunkering down for 'after the budget'

[IsUnemploymentRising]

The news is today seems to be full of headlines such as unemployment is going up, housing markets are softening, budget is make or break.

Lots of people such as Andrew Bailey quoting things like markets could crash due to debt and AI bubble etc

I just don't see how RR or anyone else for that matter can get us out of our current situation without considerable cutbacks and pain.

Raise Taxes - lots of people think this is maxed out now with rich leaving and businesses already hit (thus rising unemployment)

Cut Benefits - will they try this again. If so what will all the people on benefits actually do to live. Will they all get jobs. Is there jobs?

So are you hunkering down?

Me personally I wish they would just get on with it. I hope to move house in next few years and whilst I'm still committed to it I can see another frozen housing market coming where only forced sellers sell and everyone else sits tight.

I'm retired (although not getting any pensions yet as too young) and definately worried about pension values (ie stock markets, bonds etc). It's very difficult to plan when your pensions are dependant on things outwith your control. (not applicable to those with final salary/defined benefit schemes of course)

State pension is a good 14 years away for me (I'm fully paid up) but I worry it will be eroded when I have built it into my calculations for retirement not to mention the freezing of tax brackets which means we are all getting taxed more each year by stealth.

I'm probably in a better position that many to weather the storm as no mortgage or debts and holding cash etc but even then I worry about our currency being worth nothing soon if they go down the route of printing money again.

Am I being overly pesimestic. I mean how are they actually going to get us out of this. For those on benefits (apart from worrying, being scared etc) how will you actually cope if your benefits are cut.

We definitely tax more! For a lot less. There are no reliefs.
Headline numbers don’t spell the full picture. Lots of reliefs and deductions in other countries. Here once you earn over a certain amount there’s nothing- all wiped out. Even on investments- with the exclusion of a ISA where there’s a cap. Where’s the incentive to do anything but shelter it in a primary property and hope prices go up?

The reality is that we probably don’t have enough people paying tax because of our benefit culture….the fact you are in the top 10% at £60-65K (and get child benefit up until this) is bonkers! You’re getting the child benefit clearly because the gov thinks you might need it, but then that’s 90% (hypothetically) of parents! The equivalent too 10% in the US is $150K. Even after taxes they are wealthier.

And yes, everywhere is struggling (and I grew up in a far more developed place than the UK!) but some places don’t have such a hefty benefits bill- it’s a lovely idea until you don’t have anyone to fund it anymore. Again, I’m not opposed to it where it’s needed, but we have so many unnecessary payouts and no means to get people off benefits. I am infuriated when I see people post on insta about their “child benefit not being needed so is going into an ISA”. Okay, so why am I working so hard to fund a child benefit that I don’t get that others have the luxury to save? And this is just the icing on the cake- the problem is far worse than that! It doesn’t encourage any sort of ambition, just resentment.

Basically- our tax policies stifle growth. The more we tax, the worse it is. And lo and behold if you happen to save too much (pension- let’s not forget there are caps tied to income and pension investments), invest too much, and so on you’re taxed to the hilt. The UK stock market is struggling and not so attractive anymore because these policies stifle any investment from the top- which is desperately needed.

Unfortunately we are now in the position where we are not brave enough to make cuts (as the majority of the UK is on benefits) that would encourage the growth the UK desperately needs. Cut sales tax- increase spend. Instead we have 20% on most things- this is incredibly high! And so on.

There's public welfare spending and net total welfare spending. America spends 19.8% GDP on public spending but overall spends 33% because so much of it is privatised (health insurance). So the lower taxes in America don't tell the whole story. Plus they have the petrol dollar so can in theory borrow a lot more without needing to raise taxes. Even then, there are hidden costs as I said. But wages are higher and costs are higher in the US..its not that dollars=pounds anyway. Plus state taxes.

America is an outlier but even countries like the Netherlands where I lived for several years (and actually qualified for tax breaks ironically) has additional welfare costs because you have to pay for your own health insurance (unless you are super poor). This comes out of your wage packet the same way tax would so even with the tax breaks I wasn't like wahoo no costs here. And I still paid a lot of actual tax. It's a nice place to live, flatter society very good public services. But it isn't a place with lower taxes even with the breaks. And they spend more on other things like funded childcare.

I don't know which country you are from. I just have to take your word for it that it's a much more developed country, where noone scrounges everyone is an entrepreneur and the health and education system is excellent. I do suggest you Google it though because I highly suspect it's not quite how you imagine it. And unless they have a killing the old folks policy they will be spending lots of money on welfare.

There are lots of inconsistencies in the UK tax and benefit system. The cliff edge at about 100,000 is very sudden and it's crazy that you stop qualifying for a lot of things at exactly the point you hit a higher tax band. There are definitely things I would reform if I had a magic wand. But I also think you are idealising other countries own systems. And idealising what life on benefits is like. Most countries saw the money spent on sickness/disability shoot up post COVID. Most countries are now seeing that fall significantly. Most countries are also expecting to see the welfare bill rise sharply in the next decade(s) because of the aging population.

Don't be angry with me. I don't want to take your money. I don't qualify for any benefits and pay a lot of tax due to my income. But when I retire I will no longer pay tax and will benefit from the NHS, subsidise my pension with the state pension, and rely on younger people working to keep things going. People who earn more also tend to live longer so I guess that balances out me paying more tax fairness wise. Id still rather be rich and paying tax than poor and on benefits in this country.

https://en.wikipedia.org/wiki/List_of_countries_by_social_welfare_spending

@Melasmapatch is it Canada? They have huge natural resources but also, crucially,.a very open immigration.system so have a constant supply of new workers arriving. But even the immigration levels we have here are upsetting people so it's not replicable here. The only alternative to bringing in lots of young workers is tax.

Yes agree with you on this. Too much dependency.

Perhaps Canada's immigrants all work and contribute to society and pay taxes etc? From some of my clients who have moved to Canada, it's not easy to get work permissions etc.- it's not a "free for all".

I know a lot of UK's immigrants do come here to work and contribute, but there seems to be plenty who don't, hence all the complaints about Just Eat cyclists, hand car washes, Turkish barbers, etc., which also drives modern slavery, tax evasion, etc.

Definitely, too much dependency and also too many people claiming benefits they don't actually need such as state pensions for richer pensioners, child benefit for those who just put it into ISAs, free prescriptions for people who could easily afford to pay £100 or so per year for the annual prepayment certificate, etc.

@persephonia

There are lots of inconsistencies in the UK tax and benefit system. The cliff edge at about 100,000 is very sudden and it's crazy that you stop qualifying for a lot of things at exactly the point you hit a higher tax band. There are definitely things I would reform if I had a magic wand.

I agree. The tax and benefits systems combine to create a perfect storm to stifle drive and ambition. Work a bit more and you're hit with punitive tax rates as several different income levels, likewise benefit reductions. It's insane. A few years ago, I did a spreadsheet of the taxes/benefits at different income levels - the graph of it was like a mountain range - lots of steep peaks and troughs - it should be a straight upward line or a steady upward curve.

Trouble is that every government of the past 30 years or so has pledged to simplify the tax/benefit system, but every single government has made it more complicated! We even had millions spunked on the "office of tax simplification" initiative which achieved the square root of bugger all but cost a small fortune and wasted a lot of parliamentary time.

We need an intelligent politician (are they any?) and some intelligent Treasury officials (are they any?) to get rid of the cliff edges (both tax and benefits) and start to work towards a smooth upward line/curve for income related tax/benefits. Only then will we be able to start getting back to a culture of self sufficiency, drive, ambition, entreprenneurship, etc., which we so desperately lack.

I agree on most although state pensions and changing that needs a look at behaviour change if you limit it.

It really isn't easy to come here to work either. The conservatives introduced much higher thresholds for people wanting to bring their spouses over for example. We also post Brexit moved from an open borders policy with the EU to a points based system where workers usually from further abroad had to show they belonged to in demand skill sets to get a visa. This was what people had been saying they wanted for ages. It was Australia this, Australia that. But the changes meant that people were coming from further afield than Europe and staying longer. They are net contributers overall. The kerfuffle about immigrants being a net drain is exaggerated. However many of the same people banging on about Australian systems and wanting immigrants but immigrants who contribute are now angry at immigration overall. The goal posts moved.
And yes, those arriving by boat don't have to prove they earn a certain amount. They are a tiny fraction of overal migration.

We do have a significant grey economy and problems with illegal working as well as money laundering. This isn't good and needs fixing. It isn't just immigrants though. I don't like the conservatives much but part of the reason Vape shops/barbers started popping up on the high street is because they cracked down on easier methods of money laundering. So the people cleaning cash changed tactics. But it became more visible rather than increased. Other forms of financial dodginess are also being cracked down on more by other EU countries too. That's why you hear stories of people in Bentleys being stopped at the border with bags of cash. A lot of movement of money over borders involves drug deals and other criminal activity. It hurts a lot of people. It needs dealing with. It isn't really that connected to the benefits system/people scrounging benefits as such.

Don't be so disrepectful to a man who came from severe poverty and yes lived a very frugal life and managed to save a lot of money.

You can believe it or not. It's true. RIP dad

I didn't realise we were 'fighting'. Sorry if you thought that. I thought we were just expressing different opinions and points of views.

You are right. People do tend to care about issues that affect them and care less about issues that don't (at the moment) impact them.
I certainly do anyway and I thought everyone did really. Perhaps I'm wrong.

2010 Tory austerity was a totally different time for me relationship wise, financial wise. I was working in contract jobs as permanent ones were scarce, I was living in a rented house which was unsettling. I had some money in the bank but not enough to buy a house. I was younger and to a degree unaware of alot of things that I now know about.

I don't think that taxation is the answer. I think the answer is made up of several elements.
Get rid or at least start to reduce our debt as this reduces interest payments
That can only be done in the short term by cutting spending
Revamp taxes to make working more worthwhile. Revamp benefits to make sure working is definately worth more than them by alot.
Sort out the basics - police, health, education, housing. That might mean moving to a subsidised paid health system.

Show world markets you are decisive and have a plan and recognise the need to return to financial viability.

I absolutely agree with you that people used to be able to buy a house on one wage and support a family. My dad did it in his very average job although it would be fair to say we were quite poor. The only way he managed to buy a house was through his tax fee lump sum that he got from his final salary pension. You are correct though - he had a council house which is scarce nowadays, he had a final salary pension which gave him a lump sum to buy a small house outright. From there on he had no mortgage, a pension he was taking and he kept working in part-time jobs till he was 80. I think he had a huge fear of poverty.

There is absolutely no doubt that things have gone wrong in the country and I think the housing market/prices was the start of it.

So I suppose I was hunkering down during the Tory austerity to a degree. Although it was more a case of forced hunkering down due to being in an insecure position. Now it's more that I am older and know more and know how scary it is and so self induced hunkering down I guess.

Todays telegraph said IMF recommend RR cut benefits to regain credibility. They are pretty much telling her what to do. If she does it I think the markets will calm down. If she doesn't well the markets will show their opinion.

That's only the start of course as per my thoughts above.

I don't think others are weak at all. I'm hunkering down to a degree because I am scared for the future. My own plus the country.

My dad bought his council house eventually then sold it for a profit (not that much about 20K but this was back in the eighties). He then used that plus his pension lump sum to buy a small detached bungalow.

He wasn't rich at that point. He got 'rich' from 55 to 80 when he had no mortgage, was taking his pension and continued to work part-time till 80. He lived very frugually and must have been saving like mad.

Without a doubt being able to buy his council house helped him raise some cash and then be able to afford a private owned house. I'm not arguing with you.
He also was lucky to have a modest but final salary pension.

I'm also not arguing that I've benefitted from a time where house prices were lower, a free uni education, a working NHS etc. I absolutely acknowledge that I was born at a time that gave me benefits that others don't have now (although not sure I recomend a 70's childhood in a freezing house with ice on the windows and a very meagre diet).

Is it fair that others who are now young don't have these things. No of course not. Where do you draw the line comparing generations. I mean my mum and dad spent their early childhood during WW2 which must have been scary. Is that fair that they endured that compared to the peacetime that modern children have had. Is it fair that they had lots of illness and no access to medical care as the NHS hadn't been invented yet. Is it fair their parents had no access to benefits as the welfare system had not been invented yet. So poverty meant real poverty - 1 pair of shoes with holes in them, rats in your house, no food on some days, walking miles to school each day etc. This is all real and things my dad told me about his childhood.

However none of us can change the past and all I am doing on this thread is saying fair or not fair this is where we are now as a country.

Whether we like it or not we are in a mess. Whether we like it or not we have to start sorting it. Whether it's fair or not we have to start sorting it.

Regarding the benefits bill, pensioners and the older generation do take a lot, though. And even the smallest attempt to control this is met with howls of outrage from the media. I am talking about the removal of Winter Fuel Allowance from most pensioners followed by the swift back tracking in response to public opinion.

Why on earth should pensioners who have plenty of money be given - is it £200 or £300? a year towards their fuel bills? They don't need it. My elderly parents have several hundred £k in the bank, my elderly uncle receives a pension of £80k, they most certainly don't need it and the country can't afford it. Yet of course we got all the moaning about 'the government doesn't care about old people:. They are untouchable it seems.

I do realise that the cut off was set too low though. Some poorer pensioners would have suffered. The whole thing was badly handled, but it should have been done. Properly. There needs to be more means testing.

But it is fine to slash benefits for struggling parents who are going to food banks and their children are suffering?

So I would hope that they would give you help to fix whatever is stopping you working and get you off benefits and back to work. That's a win for everyone.

If you are seriously disabled or have downs or something so you just won't ever be able to work then I don't think you will have your benefits completely taken away. I could be wrong though. I mean if the country has no money they are going into debt to pay you money. So really just shifting the problem from you to the country if that makes sense.

I will be really surprised if benefits are not impacted in the budget so if there is anything you can do to get yourself in a better position I would honestly be trying to do it.

Something is going to happen long before that.

IMF said today RR should cut benefits to regain credibility. If she doesn't do what the world and markets are telling her to do we will be up shit creek.

That might mean an IMF bailout where they impose rules as part of the payout or it might mean a new goverment (yes probably reform).

We absolutely need change whether it's fair or not.

absolutely. They are in last chance saloon. Show some backbone. Take the advice of the IMF and the markets and do what needs done.

Is Meloni in Italy a blueprint for what Reform may be like here? I have not been following it that closely and I know they got a lot of Covid EU bailout money as well. But she is going all out on attracting wealth including from the UK and is very chummy with Trump.

Sorry OP, you seem to have very little empathy. Apart from for dogs apparently, and your own parents whist they were around.

The poster has just told you she's UNABLE to work. Must be something serious, so why can't you do her the courtesy of believing her? Not every health problem can be fixed, you must realise that.

😸

I think they will cut benefits and that includes raising the pension age again (basically phasing out the state pension gradually).

I think they will raise some taxes (there is talk you will be taxed on gains from selling your own home. Only very expensive homes at first but that will be moved down each year till we all pay it)

I hope they will change some taxes to encourage working.

There is no way the markets will allow them to keep our spending as it is.

If they do our interest on our bonds will go up (that's if that can even flog them at all).

Tax bands are already frozen so soon pensioners on just the state pension will be paying tax soon anyway (so another stealth removal of the state pension)

I think we might have to start paying towards our NHS treatment.

Welfare will almost certainly be hit. Today's telegraph.

Rachel Reeves should cut benefits to regain credibility, says IFS

It isn't kind to tell people not to worry and their benefits will not be cut. It is much kinder to let them get used to the idea now so they can mentally prepare and hopefully put a plan in place.

I think they will stop care at home for old people (funded by council) and return to pay for it yourself or go into a care home or die alone.

I think they will stop all the taxis for special needs children and revise how they are dealt with.

No. Seen it all before. Things always get worse before they get better.

Did you and Labour expect growth to flatline?

I suspect in an attempt to only tax the ‘wealthy’ they will target properties in a way that will end up making a mess of the housing market rather than fixing it

I think she means that people are already starting to 'not move and stay put' in anticipation of rocky financial times.

I am certainly seeing it here in Scotland - more fixed prices or reductions. Some are still being snapped up though and some closing dates still. However landlords are selling up so renters might be getting forced to buy or be homeless.