8th March Spring Budget

[jiltedjen]

Only a month away now. 

Do we expect any more HPC treats? More BTL crushing?

go after incorporated BTL with tax?

[Conquistador]

There will be two budgets this year, after Hammond abolished the autumn statement and replaced that with the main budget. That could indicate not much happening this spring, but then Article 50 will be triggered around the same time, so expect there will be some cash splashing. Not sure what on housing... there will probably be more help for sellers disguised as help for FTB.

[A third of everything]

Wasn't the housing white paper supposed to be out before the Spring budget, which I thought may give us some hints, or have I missed that?!

[zugzwang]

"There's no money left."

[Dorkins]

3 minutes ago, A third of everything said:

Wasn't the housing white paper supposed to be out before the Spring budget, which I thought may give us some hints, or have I missed that?!

The housing white paper has been delayed multiple times, apparently a draft was presented to number 10 who said it clearly needs more work.

Maybe this is a good sign that the PM expects something better than Osbrownite tinkering.

[crashmonitor]

32 minutes ago, zugzwang said:

"There's no money left."

F%%k Liam Byrne's note, lets just borrow it anyway.

 

[Dyson Fury]

Mr Hammond should look closely at the 3% Stamp Duty surcharge for second homes and BTLers.

Quote

Last April, when the surcharge was introduced, the government predicted it would raise £630 million in the first year.

Figures published this week by HMRC show that in just the first nine months the tax had already raised £1.19 billion - some £560m more than forecast for the whole year. If this rate continues, revenue for the year will exceed £1.58 billion, nearly £1 billion more than projected

https://www.lettingagenttoday.co.uk/breaking-news/2017/2/stamp-duty-windfall-justifies-scrapping-buy-to-let-tax-changes--claim

Quote

In the last three months of 2016 HM Revenue & Customs earned £519m extra from the 3 per cent surcharge payable on stamp duty for second homes.

https://www.ftadviser.com/mortgages/2017/01/31/hmrc-s-stamp-duty-tax-take-soars/

The landlords and letting agents have tried to spin this as supporting the idea that the government is raising so much revenue from the Stamp Duty surcharge that they could afford to scrap S24. 

The correct conclusion is the complete opposite.  The purposes of the Stamp Duty surcharge were to: (a) discourage second home ownership and BTLism (b) raise additional tax revenue to reduce the government's deficit.  Clearly (a) is not working effectively, while (b) is being achieved and has scope to be improved still further.  Therefore, the most sensible course of action is for the Chancellor to increase the Stamp Duty surcharge from 3% to a higher level, perhaps 5%, and this could be announced on March 8th to be implemented on 6 April - or even overnight.

A few letters and emails to Mr Hammond (not ranty ones) making this point might have a useful effect.

[zugzwang]

7 hours ago, crashmonitor said:

F%%k Liam Byrne's note, lets just borrow it anyway.

 

That's from 2013.

The current (Jan '17) ONS forecast for 2017/18 is £1840bn.

[Lavalas]

8 hours ago, A third of everything said:

Wasn't the housing white paper supposed to be out before the Spring budget, which I thought may give us some hints, or have I missed that?!

It looks like the housing white paper might be published this coming Monday.

[dgul]

7 hours ago, crashmonitor said:

F%%k Liam Byrne's note, lets just borrow it anyway.

 

That's what you do in recessions.  You have to borrow to stimulate.  

The problem is running a structural deficit even when times are good

An even bigger problem is building structural problems into the system on some stupid premise*, which then bite you in the ass and are difficult to sort out.

(* eg, no more boom and bust, but also the equally idiotic pensions holidays just because things have been good for a few years, but which will ultimately put people off formal pensions schemes and into the BTL dream)

[dgul]

10 hours ago, jiltedjen said:

Only a month away now. 

Do we expect any more HPC treats? More BTL crushing?

go after incorporated BTL with tax?

I expect son-of-miras; IMO this is exactly why BTL were allowed to keep base-rate tax deductions.

But we're still a bit early.  Announcement this Autumn is more likely.

For now, we'll get some statements about fiscal stimulus; maybe a few big projects being announced but nothing too specific at this stage.

[saderic]

8 hours ago, Dorkins said:

The housing white paper has been delayed multiple times, apparently a draft was presented to number 10 who said it clearly needs more work.

Maybe this is a good sign that the PM expects something better than Osbrownite tinkering.

Heard that the white paper will outline supply-side solutions like relaxing planning restrictions and freeing up some of the green belt for building.

[jiltedjen]

Media do seem to be towing the 'build on the green belt line'

seems an early 'test the water' state. 

Even some HPC'ers don't like the idea of green belt building. 

 

[saderic]

27 minutes ago, jiltedjen said:

Media do seem to be towing the 'build on the green belt line'

seems an early 'test the water' state. 

Even some HPC'ers don't like the idea of green belt building. 

 

It will be baby steps as they will struggle getting it past nimby MPs but I think it's a move in the right direction.

They won't have the balls or brains to do anything truly impactful... like changing the BoE remit (eg away from bank stability and toward something like preserving purchasing power of the population).

[zugzwang]

3 hours ago, dgul said:

That's what you do in recessions.  You have to borrow to stimulate.  

The problem is running a structural deficit even when times are good

An even bigger problem is building structural problems into the system on some stupid premise*, which then bite you in the ass and are difficult to sort out.

(* eg, no more boom and bust, but also the equally idiotic pensions holidays just because things have been good for a few years, but which will ultimately put people off formal pensions schemes and into the BTL dream)

 

 

UK came out of recession Q3 2013, according to the ONS and George Osborne.

http://www.telegraph.co.uk/finance/economics/11071938/UK-exited-Great-Recession-nine-months-earlier-than-thought.html

Quote

Britain's recovery from the Great Recession was faster and stronger than previously thought, according to official figures that suggested the economy returned to its pre-crisis size almost a year ago.

The Office for National Statistics (ONS) rewrote economic history on Wednesday as it published revised growth estimates for the period between 2010 and 2012 that showed the economy shrank by 6pc in the wake of the financial crisis and not 7.2pc as previously thought.

This puts Britain’s recession much closer to other G7 nations and means the initial recovery was stronger than the bounce back following the late seventies recession. However, growth stalled in the wake of the eurozone crisis, and Joe Grice, the ONS’s chief economist, said the Great Recession still remained the deepest since records began in 1948.

The revisions, which bring the UK in line with international standards, showed that by the end of 2012 the economy was 1.7pc below its pre-recession peak compared to 4pc previously, with up-to-date figures published at the end of this month.

Assuming that growth rates from 2013 remain unchanged, this would suggest the economy surpassed its pre-recession peak in the third quarter of 2013, and not in the second quarter of this year as previously thought. Output would stand 2.7pc above the pre-crash high, compared to the 0.2pc previously.

George Osborne hailed the figures - which equate to an average upward revision to annual growth rates between 2008 and 2012 of 0.5 percentage points and 0.1 percentage points per year since 1998 - as a “double dose of good economic news”. The Chancellor said the revisions showed that the Government was “tackling our problems head on [and] building a stronger economy”.

 

Edited February 4, 2017 by zugzwang

[dgul]

8 minutes ago, zugzwang said:

 

 

UK came out of recession Q3 2013, according to the ONS.

http://www.telegraph.co.uk/finance/economics/11071938/UK-exited-Great-Recession-nine-months-earlier-than-thought.html

 

It is just mucking about, though, isn't it.  Do you think the country would be in fine health if the gov. support was reduced to zero and interest rates went back up to (a low) 4%?

Even with this massive stimulus the UK economy is only just in the black.  I'll accept that they could wind down the stimulus fractionally and end up with zero growth, which wouldn't be dreadful, but it is a fine balancing act and it is helpful if the economy doesn't actually start sinking again.  I would agree that Carney was premature when he reduced interest rates after the Brexit vote -- this was a political move and bad economics.  Nevertheless, he is right when he says that the time for monetary stimulus has passed, and it is time for fiscal stimulus; I doubt we'll UK gov debt going down any time soon.

I don't know why people here argue about reducing the stimulus and returning to a balanced budget regardless -- that would just crash house prices, but also kill the working economy while preserving the wealth of the wealthy.  Okay, a few overleveraged BTLs would go bankrupt, but for every one of them there would be two wealthy people desperate to take their place.  The way to sort the UK economy out is to reduce the wealth of the unearned wealthy, while increasing the purchasing power of those in work.  The current policies are more likely to do this (through a bout of inflation and other effects), compared with the crash-the-economy approach.

[Tapori]

Help for renters apparently in the press to be announced next week.

[MARTINX9]

17 hours ago, jiltedjen said:

Media do seem to be towing the 'build on the green belt line'

seems an early 'test the water' state. 

Even some HPC'ers don't like the idea of green belt building. 

 

Yes. The housing minister claimed only 13 per cent of the U.K. By area was green belt.

A large proportion of it is in London and the south east.

[durhamborn]

15 hours ago, dgul said:

It is just mucking about, though, isn't it.  Do you think the country would be in fine health if the gov. support was reduced to zero and interest rates went back up to (a low) 4%?

Even with this massive stimulus the UK economy is only just in the black.  I'll accept that they could wind down the stimulus fractionally and end up with zero growth, which wouldn't be dreadful, but it is a fine balancing act and it is helpful if the economy doesn't actually start sinking again.  I would agree that Carney was premature when he reduced interest rates after the Brexit vote -- this was a political move and bad economics.  Nevertheless, he is right when he says that the time for monetary stimulus has passed, and it is time for fiscal stimulus; I doubt we'll UK gov debt going down any time soon.

I don't know why people here argue about reducing the stimulus and returning to a balanced budget regardless -- that would just crash house prices, but also kill the working economy while preserving the wealth of the wealthy.  Okay, a few overleveraged BTLs would go bankrupt, but for every one of them there would be two wealthy people desperate to take their place.  The way to sort the UK economy out is to reduce the wealth of the unearned wealthy, while increasing the purchasing power of those in work.  The current policies are more likely to do this (through a bout of inflation and other effects), compared with the crash-the-economy approach.

They are,and its exactly what we will get.I dont know why people cant see it.Going forward we will see huge fiscal spending here,the EU,Japan and the US.We have left the deflationary monetary stage designed to save the banks/financial system.Now we will get the inflationary fiscal spending.The only way out is inflation.The government here and elsewhere know they need to boost wages.Inflation running at 3%/4%+ with interest on savings of 0.8% and slowly falling house prices will do the trick.The rich will suffer as well as bonds run below inflation.Of course this might all take us into a big deflation in risk assets etc sometime in 2018.Government has benefits frozen for four years.Public sector wages at 1% etc.Thats the window for inflation to do its work.Its 100% certain the BOE (and FED,ECB etc) will make sure they are well behind the curve.

[spyguy]

1 hour ago, durhamborn said:

They are,and its exactly what we will get.I dont know why people cant see it.Going forward we will see huge fiscal spending here,the EU,Japan and the US.We have left the deflationary monetary stage designed to save the banks/financial system.Now we will get the inflationary fiscal spending.The only way out is inflation.The government here and elsewhere know they need to boost wages.Inflation running at 3%/4%+ with interest on savings of 0.8% and slowly falling house prices will do the trick.The rich will suffer as well as bonds run below inflation.Of course this might all take us into a big deflation in risk assets etc sometime in 2018.Government has benefits frozen for four years.Public sector wages at 1% etc.Thats the window for inflation to do its work.Its 100% certain the BOE (and FED,ECB etc) will make sure they are well behind the curve.

Youd need indexing remived from oubluc sector pensions.

The only bit of prudence in the last 20 years was Gidiot tweaking the pension inflation index, moving public pensions to career averages and bumoing a few years on retirement.

Its still going to be a long miserable 10 year adjustment.

Expect tax crefits to be removed for non brits. Maybe a school charge for kids.

Then hours bumping up to qualify for tax credits.

[winkie]

On 04/02/2017 at 10:38 AM, zugzwang said:

"There's no money left."

Unless you can artificially create it.

 

[mathschoc]

Here is an idea, ban foreign investors from buying property in the UK, heavily tax or even ban second home purchases, not exactly difficult. Will they do this?-I am much more likely to in the lotto jackpot.

[dgul]

22 minutes ago, mathschoc said:

Here is an idea, ban foreign investors from buying property in the UK, heavily tax or even ban second home purchases, not exactly difficult. Will they do this?-I am much more likely to in the lotto jackpot.

Yes.  That is what I meant by using tax changes to affect house prices.  The effect on house prices is exactly why they won't do it (or, at least, won't do it sufficiently to kill the problem).

But I don't think we'll need to worry about it too much as, as Spy says, we're in for a miserable 10 year adjustment.

[zugzwang]

27 minutes ago, dgul said:

Yes.  That is what I meant by using tax changes to affect house prices.  The effect on house prices is exactly why they won't do it (or, at least, won't do it sufficiently to kill the problem).

But I don't think we'll need to worry about it too much as, as Spy says, we're in for a miserable 10 year adjustment.

Only ten? The Japanese have endured twenty-five years of Keynesian fixes and are no closer to recovery than they were in 1992. If anything they're in an even bigger hole. The crisis is may be less acute today but it many ways it's more profound.

[sleepwello'nights]

4 hours ago, zugzwang said:

Only ten? The Japanese have endured twenty-five years of Keynesian fixes and are no closer to recovery than they were in 1992. If anything they're in an even bigger hole. The crisis is may be less acute today but it many ways it's more profound.

I spent a few weeks in Japan last year. Naturally the pound had fallen to its lowers level against the yen before rising after I had returned from my trip!, from what I saw most people were well fed and dressed. I didn't see any beggars on the streets, unlike Italy and Spain when, again I visited last year. Is the Japanese experience of Keynesian fixes so bad?