Labour has proved yet again that it hates employers/business.

[Batmanisaplaceinturkey]

Don't be surprised when your local pubs, restaurants, hairdressers etc close up shop.
Don't be surprised if your employer can't fund your next payrise, because their NI bill has increased. Workers will indirectly pay for these increases; employers don't have magic money trees.
I work for an employer that has charitable status. We work to improve the lives of others but now have to look at reducing headcount. Employers are not all fat cats driving Mercs.
BTW, I hate the Tories. This post does not make me a Tory before anyone starts that one.

Quite, we really need this government way less involved with our lives. Way less.

Yet, they think they know what’s best for me. What I say, how I spend my money, how I travel, how I heat my house. I am not a child that needs looking after, I really wish they’d back off.

What was that pre GE bumpf about 'we will tread lightly on your lives'

What a nonsense. Labour are trampling heavily

Labour governments, other than Blair, always have. It’s in their DNA. Look at how people loved Corbyn ideas. It was not going to be them who paid. It’s our dc who pay for borrowing and black hole expense. Business makes this country tick. No business growth, no money unless they borrow. It’s ridiculous to bash business and not understand the ramifications. Many areas of business are just about hanging on. Wages have increased but productivity is difficult to ramp up. Business needs encouragement, not taxation at a higher level.

Blair did get that right, he had some other issues but that encouragement was good at all levels.

This gov is very different in rhetoric and policy. A shame really I think a different kind of Blair response could have been sold in (by another cabinet) and we'd be seeing a different picture and outcomes. For whatever reason I don't think those people are in the party, maybe it's the length of time in opposition and lack of business experience

I think Tony Blair inherited a better economic position but they were relaxed about people making money because it increased the tax take. They were more prepared to let people line the lines they wished with their money.

What I do not understand is why this government could not have seen that increased costs for business (and many are struggling) is not a sensible policy at this time. No one thinks this budget will stimulate growth, Many businesses obviously want a better NHS but also see poor management and believe reform should come with increased money. This was a wasted opportunity and certainly was a budget for the public sector unions who will strike if they don’t get what they want. So I think a lot of this money will go on pay increases and not improve services. We shall see.

As if.

😅

You should stop using roads and all public services then.

Agreed. No one 'hates' anyone.

Which economists are you listening to? Of course public services drive growth, by public capital expenditure, ie spending by the state on the creation of fixed, long-term assets like roads, schools, hospitals, which all facilitate the growth of the wider economy. Also from current expenditure ie, on paying teachers, supplying drugs for the NHS etc.

Most economists have been calling for the UK to increase both public & private investment to address the chronic underinvestment across both the public and private sectors, which is a key cause of our poor productivity growth record.

But you're right, it's likely not going to be enough to address the problems this government has inherited.

news.sky.com/story/government-spending-plans-not-enough-to-stop-falling-public-investment-13240096?origin=serp_auto

I don't think it's that certain to say of course

The IFS is less positive

The Institute for Fiscal Studies (IFS) said the rise in employer NICs will affect larger firms hiring people on low wages the most, and could lead to fewer minimum wage jobs being available in future.

It also warned that lower pay rises could mean the measure raises significantly less than a forecast £25bn.

It highlighted a forecast by the OBR that it could end up raising "just" £16bn if, for example, businesses award smaller wage rises.

Paul Johnson, head of the IFS, also warned of likely further spending and tax increases part way through the parliament.

Mr Johnson described the forecasts as "pretty awful".

Where does the money come from to spend on public services? It is not generated directly by public services. It’s generated by business and taxes. The highest 1% of earners pay 29% of our tax take. They are the people who pay and business pays more tax. The state spends it but does not do enough to ensure good productivity and return in investment.

The IFS is the best commentator and ripped the budget apart. Look at their views. You might learn something. You cannot get growth by taxation at higher levels. It makes it harder to grow a business. It’s impossible to run a country when businesses are seen as cash cows and the state protects its own.

The last government didn’t help business either. The public services aid business but they are the worst performing in productivity and spending more and more on them never improves them. You must think where the money is generated - to not understand how the economy works is a big problem for socialists. Blair understood the need for bouyant business but now there’s little understanding that most employers are small and are not big conglomerates. Foolish and ill informed

Actually it is that simple. The concerns you've listed aren't about the levels of public investment or even public spending, they're about where Reeves has decided to raise funds.

The IFS are pretty clear on the need for increased spending/investment on public services simply as a key driver of economic growth, especially on health, education & infrastructure.

What Reeves has done doesn't satisfy economists like Krugmen, Stiglitz etc because the investment isn't enough, or the neoliberal economists because it likely adds downward pressure on jobs & wages.

It's a gamble, but for potentially small reward. Until we have a "grown up" discussion about the severity of our problems and the need for the levels of investment we simply cannot fund from tax or short-term growth, we're just going to continue to circle the drain.

Well getting money to spend is the reality, you can't just magic up what you want to spend. You have to get it from somewhere and wherever that is will have an impact.

If it's debt, too high and you get into France territory which economists have commented on as problematic plus the cost of debt goes up

If it's taxes you'll need to make a case about behavioural impact and / or growth. If people opt out or growth goes down it stores up more problems that will necessitate more borrowing or taxes

Both of which is why I agree with you on this budget being a drain circler

I can't see there being a divorced from impact solution where you do not actually have to find the money. Where should it come from?

@EasternStandard We have a substantial portion of the public who really do not understand where investment in the state is generated. It’s either tax or borrowing. We already have huge borrowing and it’s unfair on our DC to keep recalibrating what we borrow and pile the issues on to our DC. DC of course are in short supply. It’s vital to look at what we spend and what productivity we get out of it. Essentially we want a quart out of a pint pot with people who do very well on decent pensions refusing to pay for what they need. Too much being expected of younger workers and business stifles growth. We did not have a budget for growth. It was miserable for lots of employers.

Assuming that returns on investment for heathcare to the economy is £4 for every £1 and for education £3 for every £1, from borrowing.

The problem with this is results take a long time to be realised, so you'd need the sort of longterm consensus we had after WWII to rebuild the country.

Or look at what America did with their fiscal stimulus package I'm 2021.

Ok so we have increased the debt already and you'd like to do more of that borrowing?

So we are more like France?

https://www.euronews.com/business/2024/09/27/french-debt-soars-reinforcing-concerns-about-its-budgetary-control

One of the leading rating agencies, Standard & Poor's, downgraded France's creditworthiness at the end of May 2024. This was the first time France's rating had been lowered since 2013.

Just this week, France's 10-year-old bonds were briefly priced as a riskier investmentthan Spain's. This means that the country has to pay an increasing amount to refinance its debt.

As for French five-year bonds, the interest rate on them surpassed that of Greece's on Friday.

No, not like France. The French budget is expected to see spending cuts and tax rises for wealthy individuals and large corporations. Not massive public investment aimed at stimulating growth.

I'm suggesting we do it like the UK did in 1946, when we managed to reduce our very high ratio of public debt from 250% in 25 years to around 62%, while running a budget deficit throughout the 50s & 60s.

Or like the USA did in 2021.

I'm not sure we could replicate it abslotely now, the free market has messed up a lot of the conditions that made it possible & the economic conditions are different, but, if we gamble on growth exceeding real interest rates then we absolutely could. It's a better gamble than Reeves is making and with much greater rewards.

We couldn't go higher on borrowing the markets have already reacted to such a narrow risk margin

We have very little room to react to a major event and you can't rule that out.

Yields would shoot up and we'd spiral even more than we did last week.

What is your faith that the the IFS "is the best commentator" based on?

When it comes to policy issues, it is very far from the neutral think tank it pretends to be - it is an ideology-led advocate of economic neoliberalism and the flooding up of wealth and squeezing the poor

It has long campaigned for corporation tax to be reduced or eliminated and replaced with an extra sales tax - which would be like raising VAT by at least 25%.
Thus would benefit shareholders and mean poorer consumers paying a much higher proportion of tax.

There's a good analysis of the limitations and political bias of the IFS here:

www.opendemocracy.net/en/oureconomy/we-need-talk-about-institute-fiscal-studies/

The markets will settle down. Unless Trump gets in and actually does what he claims, then interest rates will likely rise, a lot, over the next couple of years.

There's no more room for borrowing.

What would the UK do if it faced an event that required extra spending?

That is what the IFS and others have pointed out.

The IFS is the most respected commentator. They are neutral and have first class researchers.

Most people recognise we cannot keep borrowing. We also get nowhere near growth being higher than interest rates, assuming you mean BofE base rate. No forecaster thinks we will get near this! Or even close. This budget is not a budget for growth.

I asked you to say what you base that assertion on. And provided you with some informed analysis detailing why being neutral in terms of political parties is not the same as being ideologically neutral - and how the IFS budget evaluations are both limited & biased in method and overall scope - and how they are campaigning organisation lobbying for unfettered corporation tax free markets forces to be given priority over other approaches that are supported by many economists that consider budget effects more comprehensively.

And you've answered with nothing. Is there a chart somewhere ranking how much each economic think tank is respected? Who is doing this respecting?
There's a strong element of lazy journalism that has elevated the IFS to its current trusted though unjustified position - and they do push the negative commentary as it gets way more attention.

theconversation.com/uk-election-2019-why-the-bbcs-approach-to-the-ifs-is-a-threat-to-its-impartiality-128032

I don’t agree with you. The IFS is widely reported on by all sides of the media. I’m frankly not that bothered but the BBC reports on their research too. There might well be others but many media outlets quote them and respect their findings. You are free to read and believe what you want to read and believe. I don’t have time to research all the researchers!

Also OBR and Institute for Government are respected commentators.