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Gov A Disaster 4 Investors


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If you've been frustrated by your stockmarket performance in recent years, don't be too hard on yourself. Assessing business models, reviewing profitability and lokking at other company fundamentals might serve you well in a free market, but this is a New Labour gov in power. Their last vestages of socialism are alive and kicking in their approach to business and so we have had to put up with windfall taxes, massive 3g licence costs, red-tape, workplace social policies, an annual £5bn tax on pensions and countless stealth taxes and credits, all of which have profound effects on the business environment. In short, if you want to know how goes th emarket, keep a firm eye on government policy.

Their latest ill-conceived wheeze (excuse the pun) is a ban on smoking.... but only in enclosed places where food is served.. The fact that this will prove unworkable hasn't stopped them launching this salvo. Rather than hitting smokers however, it has hit the usual New labour targets: Business and Investment. Enterprise Inns has been hit for ~6%, gallaher by 4%, imperial Tobacco by 3%, with only BAT maintaining some sense of decorum, dowmn 1%. For whilst smokers may be resolute in their determination to remain baccied-up, the business and investment community are suffering from shellshock, brought about in many respects by a 4 year long blitzkreig of government meddling. Consequently nerves are frayed. Furthermore, because of th enature of the ban, it poses more questions than it delivers answers. That means uncertainty and business has enough of this already.

So instead of an outright ban in public, we have a ban on enclosed spaces and pubs where food, beyond snacks, is served. It doesn't take a genius to figure out that huge sums will be spent on lawyers who will effectively find ways to castrate this legislation. Pubs who want to serve food will develop new meals based on a legal definition (itself costing a fortune) of the term "snack". Others will erect partitions or separately incorporate dining areas separated by partitions that "legally" separate smoking from non-smoking ares. Chipper vans will consider expanding their operations to take th ephantom business, which will more likely end up benefitting lawyers. People will still puff, smoke will still drift.

The only lasting effect will be the nervousness of business and its effect on business investment. We'll all be the poorer (apart from lawyers).

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