Is the Chancellor about to crash the economy?

[Startingagainandagain]

I will start by saying I voted Labour, but I am increasingly concerned about what the government has done so far.

Today there are warning that food prices could shoot up, the pound is going down, there were big jitters on the bonds market and government borrowing is higher than planned.

More generally Reeves seems to have spooked businesses and they have no will to expand or employ more people.

I agreed that the Tories left a total mess.

But Labour seems to just go from bad to worse and I am really starting to wish she could be replaced by someone more competent to restore some confidence.

Minimal growth, higher prices (NI and minimum wage used as an excuse) is what I think will happen. Not good but nowhere near the impact of Liz Truss and the fiscal event.

There may be lower funding from US to make up but recently Trump has been talking about higher GDP defence spending from others, with that pressure on its unlikely we can get there, is there much room left for it now?

As members of NATO we have a commitment to spend 2% of GDP on defence. America basically calls the shots in NATO and Trump is floating the idea of increasing the requirement to 5%.

I think she will be replaced-soon!

You failed to mention Brexit

The biggest economy crasher in living memory, but let’s not talk about that. Sovereign tea, Union Jack, they need us etc etc but no.. can’t possibly be a negative effect from that incredibly costly handful of magic beans that will never grow into a beanstalk could there.

No I disagree, it doesn't work anymore. I'm a proud Reform supporter (and qualified finance professional) and couldn't care less what a load of lefties who don't have a clue about economics or business say.

The but, but, but doesn’t matter. The private sector is making huge cuts to employment as a direct result of the increased costs of employing and business costs. The but, but, but is irrelevant. It has crushed any hope of recovery because they very thing needed to pay for everyone - employed people is going south.

How are they undoing the damaged? How? Explain specifically about the economy and business? What have they done to go in the right direction on growth for the country?

It’s all coming apart in every western economy. We have been running a ponzi scheme for far too long and no-one has ever had a plan other than to keep kicking the can down the road and hope they weren’t the ones holding the bomb when the clock finally ticked down to zero.

At worst, Labour have slightly increased the speed but it’s academic in the long run. All of this tinkering is only re-arranging the deckchairs on the Titanic - everyone is just ignoring the iceberg.

There is no right direction to go in.

The issue with that is larger companies simply move the money to more favourable tax jurisdictions via ‘management charges’.
I run an SME turning over £3M and one year, paid more Corporation Tax in the UK than Starbucks did. And trust me, our profit was not in the region of theirs 😂At least with the NI it broadly reflects your size. Not that I agree with putting more on the shoulders of smaller SMEs in the private sector who are still dealing with the after shocks of the Pandemic.
The main failure of successive governments has been the inability to get a grip of the aggressive tax avoidance that takes place if you are a large enough company or you can afford the right kind of advisors.

Edited to add
You can tell how common avoidance is - just look at the people who are feted for ‘paying all their tax in the UK.’ What - like most people running SMEs have to?

Starmer has already promised to increase defence spending to 2.5% of GDP from its current level of c2.3% in response to increased threats. This increase was in the Labour Manifesto. He has not said exactly when this will happen (weasel words) but he will not be able to go back on the pledge.

Trump is likely insist on NATO member states increasing defence spending to at least 3% of GDP. He may ask for more initially.

UK talks up the contribution on Ukraine. And it has indeed been significant. But we are by no means the biggest defence spenders in NATO. Poland,US, Estonia, Latvia, Greece, Lithuania, Finland and Denmark all contribute more on defence in terms of GDP. Poland is at 4%+, US at 3.5%+

Another major failing has been not tacking tax evasion and benefit fraud in the black economy which costs billions per year according to official figures. Not helped at all by the mergers of the previous tax and benefit government departments which caused huge numbers of qualified/experienced civil servants to be made redundant and replaced by call centre workers so huge amounts of experience was lost.

Agree perhaps pp can say. This is posted a lot but how is doing what @Newyearsamebs puts fixing the damage?

Is it that pp are removed from the private sector so they think there’s no issue

@Badbadbunny agreed.
Sometimes feel like the only idiot in the middle and fantasise about how I can engineer a move to somewhere crime and tax free 😂

Not "will she":she has. It's just going to take maybe 6-18 months to fully see how awful it is.

It also makes me laugh when the BBC reports on the uptick in the use of cash and puts it down to people using it so they can ‘budget better’
Are they really that naive? It’s fully down to the tax take being too high and people doing more work for cash. And an out of control criminal economy.

No.

You are absolutely right. My only excuse is that I am still so traumatised by it that I have tried to erase it from my mind.

Never sure who to blame though. It was Cameron who called the referendum -but he supported Remain. Corbyn supported a referendum but refused to support Remain. Only 53 MPs actually voted against the Referendum Bill in 2015, with over 500 supporting it. So although many are now trying to reinvent history, they can all share the responsibility.

They have generated tax revenue. Have they set the breakpoints correctly? Probably not, but these things need to be paid for somehow.

Are they trying something different than the Conservative government? Yes. Is it the right thing? Not necessarily, but the money needs to come from somewhere.

Will what they have done lead to growth? Not necessarily, but the Conservatives have led us into massive decline. As I said, there is no fix that is going to come within a few months for something that has been buggered up over 14 years. Brexshit alone will take decades to sort out.

It's definitely about to crash, no matter who was in charge, it would be crashing!
Whoever has the pot of money, there's more going out of it, than there is going in to it.
I've no confidence in any political party sorting it out, stick or twist, it's the same mess sadly.

Yes

I’ve listened to at least 4 interviews today about the current state of the economy, which shows things are pretty bad.
None of them said that Lettuce crashed the economy ( though they all said the delivery was terrible ), but they all said the situation today is worse than the Truss/Kwarteng ‘event’.
Personally I think rates are going up, up, up, because the UK is obviously not a safe bet.
The US will get stronger under Trump because he is pro business and growth.
US stronger = UK weaker.

The problem is we have been running a big deficit for years and getting more and more into debt. Tories increased it from just under a trillion (I think) to 2.7 trillion. They spent over 500 billion on covid with nothing to show for it (cost millions for each life mostly over 80 saved with no discussion). We are importing a million net more people each year most of whom are a net cost while 5 million are on out of work benefits. We need a DOGE like America. Reeves answer is to put a tax on jobs so more businesses go bust and more benefits have to be paid. I'm convinced she did this so she wouldn't break her pledge to increase income tax and is too stupid to think it through. We have one of highest energy costs in world because of mad eds net zero so cant compete with china etc. So alot of entrepreneurs or high skilled youth are going abroad )meaning net migration is even worse as losing these people and gaining low skilled. That is before you get to all the cultural issues these fools gave created.

We have one of highest energy costs in world

Strange that countries in the EU seem to have an awful lot lower energy costs than we do🤔

Plus the added bonus that their rivers and seas aren’t full of, literally, shit.