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Moneyweek - The Good Thing About Gb Becoming The Next Pm.....

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From Moneyweek today. Can't work out how to use the quote stuff!

"Theres one good thing about the prospect of Gordon Brown becoming Prime Minister. It means he won't be Chancellor anymore.

The annual weigh-in of the latest edition of “accountants’ bible”, Tolley’s Tax Handbook shows that the latest tax guide runs to 9,800 pages, more than twice its 4,555 page length when Labour came to power in 1997.

When even the accountants are complaining about all the extra business Mr Brown is putting their way, you know things are bad

The Treasury, which more than any other Government department, has developed the ability to argue that black is white, said: “The Government takes the issue of complexity very seriously and has a good record on measures to simplify the tax system.”

We’re not sure how they found a spokesman capable of saying this with a straight face. How any Government that produced the lunacy of the tax credits system, which has swept a whole chunk of the working, middle-income population into the benefits system, can talk about simplification is beyond us

But then, brazen lying has become integral to the culture of the Treasury under Mr Brown. The tax system is now based on finding new ways to increase the tax take without the electorate noticing. That means no income tax hikes, but just about anything else is fair game.

For example, the housing bubble is now a key component of UK tax policy. It’s a taxman’s dream, in fact. While house prices are rising, people are happy, because they think they are becoming more wealthy. That means that no one really complains or notices that the ones really raking it in are the Government.

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But moving away from the squalid squabbling on Downing Street to the really important story of the day - what’s going to happen with interest rates? The Bank of England announces its latest decision at noon. Last month’s rate hike took most commentators by surprise, though we predicted it at the time. So what do we think will happen today?

The truth is, it’s too close to call. Almost everyone expects rates to remain on hold - but then that’s what they said last month. And the Bank would be more than justified in raising rates once again. Retail sales data has been surprisingly sturdy, even in the wake of the World Cup, while the housing market is still being over inflated by buy-to-let investors piling in as lenders keep slackening borrowing criteria.

And worryingly for the Bank, shop price inflation rose again last month. The British Retail Consortium said that shop prices in August were up 1.4% on last year. It’s the second month in a row that annual inflation has risen, and the general consensus seems to be that retailers have finally tired of absorbing soaring costs and are now expecting the consumer to shoulder some of the burden.

Of course, Kevin Hawkins at the BRC argues that this doesn’t mean there needs to be an interest rate rise. “Retail inflation...is still well below both the CPI and RPI and likely to remain so.”

But that’s not really the point, Kevin. The Bank has been relying on you and your colleagues to keep slashing prices, in order to offset the inflationary pressures hammering the rest of the economy. Shoes, soft furnishings and the like are about the only things that haven’t been rising in price for the past few years. Once shop prices pick up, there will be nothing left to offset the sharp rises we've seen in gas bills, electricity bills, and everything else that can't be imported from China.

And of course, Bank governor Mervyn King may well want to push through another hike before October sees the Monetary Policy Committee pushed back up to full strength with the appointment of another two Brownite candidates, who are bound to be interest rate doves.

So on balance, the only reason not to expect another rate hike is because it would shock the City and consumers. But given the spectacular levels of complacency demonstrated by both at the moment, that’s exactly what the Bank should be doing.

Edited by Buffer Bear

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...But then, brazen lying has become integral to the culture of the Treasury under Mr Brown. The tax system is now based on finding new ways to increase the tax take without the electorate noticing. That means no income tax hikes, but just about anything else is fair game.

For example, the housing bubble is now a key component of UK tax policy. It’s a taxman’s dream, in fact. While house prices are rising, people are happy, because they think they are becoming more wealthy. That means that no one really complains or notices that the ones really raking it in are the Government...

...The Bank has been relying on you and your colleagues to keep slashing prices, in order to offset the inflationary pressures hammering the rest of the economy. Shoes, soft furnishings and the like are about the only things that haven’t been rising in price for the past few years. Once shop prices pick up, there will be nothing left to offset the sharp rises we've seen in gas bills, electricity bills, and everything else that can't be imported from China...

Fair comment.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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