Examining the entrails

TWO potentially important reactions to the pre-budget report tonight:

  • the FTSE 100 has experienced a 10 per cent gain – the largest single day gain in its history; and
  • the Conservatives have announced that reversing the 45 per cent upper tax rate will “not be a priority” when they’re in government.


Does that mean the Tories support the 45 per cent rate? Or just that they don’t oppose it? And does this mean they disagree with all these CyberTories who swear blind that increasing taxes on the super-rich adversely affects the economy?


Filed under Conservative Party, Economy, Government

18 responses to “Examining the entrails

  1. John

    I’m certainly not a “CyberTory” and I agree with their sentiment.

    Firstly, everyone earning over £150,000pa is not “super rich” by any stretch of the imagination. Someone earning a few million, then sure, but £150,001pa? £200,000pa? Naff off.

    Secondly, the people who will have to hand over almost half their income in tax are both the most mobile of the workforce, and who’s activities bring in the most money and thus support a great number of jobs.

    Now, what do you think is going to happen as a result? The people at the top end of the scale are going to stick two fingers up to Gordy and his puppet Darling, and leave. This will cost the economy in the money their activities generated, and cost the jobs that their activities supported.

    So? Is it worth it? You tell me, this is expected to raise a few billion in taxation tops, yet the cost to the economy will be far greater. In relation to the effect it will have to government finances, if it helps by as much as 5% it will be more than anyone calculated.

    So no, it’s old labour “stick it to the man” policies, only it doesn’t really provide any measurable benefit, and harms the economy in the process. Great plan eh?!!

    It’s like the non-dom fiasco all over again. The government is going after people who’s activites contribute a great deal to the economy, and who don’t have to be here. There’s only one way that will end, and it’s not well.

  2. That 10% rise is more to do with the US bail-out of citibank, and the near 8% jump in metals.

    The CAC (France) and DAX (Germany) also experienced 10% rises.

  3. Mark

    More of a fart and roll over in its sleep. Are the poor supposed to celebrate the 2.50 reduction on the next 100 quid item they buy? Which will probably be the gas bill which HAD to go up by 35% earlier this year “due to the price of oil, dontchaknow” (which has since dropped by 70%).
    Get this type of theft out of the system if you really want to put money in the pockets of the ‘half who earn under 23K’ , rather than in the pockets of the bloody ‘investors’ who were so kind to see their way clear to buying part of our energy infrastructure for a song.
    Want to show that your party is really a party of social justice? Then be rid of this damn profit over people BULL SHIT, end it ,finish it, while we still have a society to claim.

  4. Johnny Norfolk

    Tom The whole thing is another labour con. Read the small print and find out. They have even conned you.
    Just wait a little longer and you will find out what the markets think.
    Looking back over Labours 10 years to where we were and where we are now, the whole thing has been a disaster.
    Just tell me one area you have created any wealth for the nation. I will tell you what has been spent and wasted.

  5. Rbrto

    Someone is being a bit selective with their figures this morning. The “9.84%” gain was in majority caused but the bailout of citigroup by the US and Barack Obama’s picks for his economic team, if you take in the whole picture instead of being selective you will see the DAX and CAC also up around 10%, as our most major markets in recording large raises. I pretty much doubt Japan cares about what Darling said in the PBR.
    The FTSE cares more about what is happening in America that what is happening over here.

    You want the real picture? UK guilts declined on Darlings news and the sell off is increasing, Investors are shorting the UK and getting out.

  6. Johnny Norfolk

    By the way Darling forgot to tell us in his speech that drink is going up from December 8%. It was hidden in the small print.

    This is what I mean when I call it a con. What else have we yet to find.?

  7. Johnny Norfolk

    Ah yes and another thing the FTSE is down 50 points this morning so far. Why is this then ?

    This will be market forces will it nothing to do with the government.

    The FT rose yesterday becasue of the City Bank bail out.

    Today is the reality.

    The problem is Tom you all believe your own spin.

  8. Good idea of Darling’s to tax the rich – so why didn’t he? If he was actually going to make those who can afford it pay more tax (and let’s face it, is there ANYONE out there who can’t live very comfortably on £100,000 a year, other than the Government who seem to want about £118 billion more than their income) why not do a proper job and charge it at 60%? It might actually have raised enough money to keep the awful borrowing in some sort of check.

    As it was, I think the 45% rate is sheer tokenism, a sop to the Labour left on the backbenches to stop them rebelling over the insane borrowing figures (and they are insane – they will AT LEAST DOUBLE national debt).

    As for why the Tories don’t want to reverse it – well, why should they bother? It’s not a significant tax either way, but they may want to keep their options open should they have to massively increase taxes (as they will) to pay for this pure lunacy when they win the next election.

  9. Of course other markets around the world jumped 9-10% as well, but are they reacting to the PBR or to the Citibank bail out? Surely the UK should have seen a 10% from the PBR AND an additional 10% from the Citibank if the PBR was so brilliant?

  10. The ftse has nothing to do with the Darling’s statement … the majority of analysis is attributing it to other factors in the market.

  11. Zorro

    Tom, do you /really/ think the 45% tax was remotely connected to the actual problem of raising total tax intake?

    Bullshit, it was pure political positioning/triangulation. It was designed for one thing, to put the Tories in an awkward place. Which they’ve neatly sidestepped. Gosh.

    Did you see the insane grin on Gordon yesterday?

    Do you think he’s going to have the balls to call an early election? No me either.

    So this country is f****d until 2010. Great. I tell you this Tom, Gordon will go down as the worst fool ever to run this once great country.

  12. iain ker

    Yoohoo, Alastair and Peter, come out, come out wherever you are. We know you’re in there in Tom’s blog lying and lying sorry spinning and spinning.

    Tom, try ejoocating yourself. If you really want to know what the FTSE All-Share thinks of eleven years of a Nulabour government, have a look at where it was when Princess Twinkletoes and Laughing Boy came into 10 and 11 for the first time. Then have a look at where it is now.

  13. I just don’t think this stimulus will work at all, the first indications of Labour’s failings will be very poor retail sales figures at Christmas.

  14. yozza

    Tom, why haven’t you blogged about your old mucker Lansley dropping himself in it for daring to suggest the recession may be a good way to fight obesity? Oh come on, you wouldn’t be human if you didn’t have a chuckle….

  15. madasafish

    I suspect Tom is rather upset because most reviews savage the PBR.. and he needs something to keep up his spirits.

    Of course, it may all work out for the best and this may turn out as one of the shortest and shallowest recessions ever.

    If it is so.. and given the deleveraging we have seen , it will be close to an economic miracle and Darling and Brown deserve every ounce # of credit for that.

    (or 25 ? grams).

    And Labour will win the next election. And Tom can say I told you so.

  16. Andy

    Why did the FTSE rise? Because the market knows that the 2.5% VAT reduction will be pocketed by most companies as they seek to extend their Ex-VAT profit and thus their attraction to share buyers. And their ain’t and a damned thing the Gorgon and Badger-face can do about it

    Long live the free market!!

  17. Amused/Disgusted Bystander

    It’s always good to see that the comments are more educated than the blogger.

    As one commentator points out the 2.5% will be pocketed by the companies as they’re not going to reprice everything are they.

    The movement in the FTSE was blatantly about Citigroup, as it was going up well before any announcements and was mirrored in other European countries.

    And Tom Harris claims it is not just a British phenomenon. Well done, how observant. However he might like to consider the method of Gordon Brown’s sustainable growth without boom and bust. It was built on unsustainable borrowing which created first a consumer credit bubble which went in the first quarter of 2007 and then a property one which popped in the 3rd quarter. All that stamp duty revenue was based upon sales and prices continuing at unsustainable levels.

    And what does Gordon want? Borrowing to return to April 2007 levels. Does he not appreciate what got this country in to this mess? And his solution is….more borrowing, on the basis that either Labour will lose and it’s not their problem or they fluke a semi-recovery and get another term. A term in which taxes which rise exponentially.

    Love the blog comments. Esp. Galloway. What a guy!

  18. richard

    Labour under Gordo seem to be utterly inept at keeping “on message”.

    After trailing / leaking the pre-budget report by a whole 2 days (giving Osborne more than enough time to work out which closet had the skeletons in it) now some muppet at the treasury has accidentally posted the govt’s plans to hammer the public with an 18.5% vat charge from 2011 onwards.

    Less than 24 hours after the pre-budget report the story’s already moving in favour of the Conservatives. Even Andrew “nose so far up Brown’s backside he can see daylight” Marr had to admit that the whole thing had played into their hands almost perfectly.

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