Property price crash if Tories win

kennyboy66_2

Generali wrote: »

Now let's say we're happy to run a deficit of 2% of GDP as that is slightly less than annual GDP growth so that keeps the ratio of deficit:GDP constant. Now we need to save say £60,000,000,000.

Tories decide to keep Labour's NI reforms so now we are down to finding £54,000,000,000. Lose 230,000 jobs through natural wastage @ £30,000pa each in wages saves another £7,000,000,000 so now we need to find £47,000,000,000.

Government spends about £600,000,000,000 so say they can shave off 2% in efficiency savings (don't increase pay with inflation, buy cheaper paperclips) which is another £12,000,000,000 saved, leaving another £35,000,000,000 to go.

That leaves the hard yards. You'll have to lose a million more off the Government payroll to make that up, or cancel or curtail some big programs.

Re Public sector pay freezes.

If (and its a massive if) they can be done for 2 or 3 years, the savings would be approx £11 billion, £22 billion in the 2nd year and £33 billion in the 3rd year.

However, like the private sector its really a choice between jobs & pay increases.

The tax that should be increased is VAT. I would increase to 21% (would bring in approx £18 billion) and extend the scope to bring in another say £3bn (hard to justify why books / newspapers / magazines / advertising leaflets / football programmes should be zero rated).

Capital Gains tax should be charged at the same rate as PAYE (bring in at least £6bn).

I would however, use some of the proceeds of the above 2 to reduce perhaps corporation tax and Employers NI.

HAMISH_MCTAVISH

Generali wrote: »

cancel or curtail some big programs.

Correct me if I'm wrong, but aren't public sector pensions paid from current revenue? There is no allocation made in previous years?

And if so, then surely raising the age to 70 would solve the problem.;)

HammersFan

carolt wrote: »

http://www.guardian.co.uk/business/2010/apr/19/conservative-victory-property-price-crash

And of course, big crash if they lose, as interest rates would go up under Labour.

One interpretation of this article is that, with it being in the Guardian, it's a plant by labour spin doctors. One of the key levers for the tories staying in power (if they win) would be to jack up house prices to cushion the blow of cut-backs. Of course, HPI is not 'real money' but it makes many owner-occupiers feel better.

kennyboy66_2

HammersFan wrote: »

One interpretation of this article is that, with it being in the Guardian, it's a plant by labour spin doctors. One of the key levers for the tories staying in power (if they win) would be to jack up house prices to cushion the blow of cut-backs. Of course, HPI is not 'real money' but it makes many owner-occupiers feel better.

Another interpretation is that George Osbourne simply doesn't know what he is doing.

I can understand the desire for lower taxes and for a smaller state, but whats really required is pragmatic choices. To raise one tax (VAT in the event of a Tory win) to fund cuts in inheritance tax and a £150 bribe to stay at home married mums seems bizarre in the current climate.

Generali

HAMISH_MCTAVISH wrote: »

Correct me if I'm wrong, but aren't public sector pensions paid from current revenue? There is no allocation made in previous years?

And if so, then surely raising the age to 70 would solve the problem.;)

It will happen. As a medium term measure to cut public spending it's too slow to work I would guess. Long term it's pretty much a nailed on certainty.

kennyboy66 wrote: »

Re Public sector pay freezes.

If (and its a massive if) they can be done for 2 or 3 years, the savings would be approx £11 billion, £22 billion in the 2nd year and £33 billion in the 3rd year.

However, like the private sector its really a choice between jobs & pay increases.

The tax that should be increased is VAT. I would increase to 21% (would bring in approx £18 billion) and extend the scope to bring in another say £3bn (hard to justify why books / newspapers / magazines / advertising leaflets / football programmes should be zero rated).

Capital Gains tax should be charged at the same rate as PAYE (bring in at least £6bn).

I would however, use some of the proceeds of the above 2 to reduce perhaps corporation tax and Employers NI.

Massive if on the pay freezes. Pay rises for 2 years slightly below inflation led to the Winter of Discontent (another era to be fair).

My fear is that if taxes are increased substantially then serious harm will be done to the UK's economy. For example if you raise VAT to 20% and have the top rate of tax at 50% then each pound extra you earn at that rate gives you an extra 40p to spend. Surely that must be getting into disincentive territory - why work harder? Enjoy some lifestyle instead.

Just to buy 2 hot dogs, 2 burgers, 4 pkts crisps and 4 small Cokes at New Wembley would mean you'd have to gross 65 quid! (link)

StevieJ

Generali wrote: »

My fear is that if taxes are increased substantially then serious harm will be done to the UK's economy. For example if you raise VAT to 20% and have the top rate of tax at 50% then each pound extra you earn at that rate gives you an extra 40p to spend. Surely that must be getting into disincentive territory - why work harder? Enjoy some lifestyle instead.

You may as well ask why Billionaires carry on working when they don't need the extra funds that they are generating

Thrugelmir

chucky wrote: »

is this how your prediction of the gilt strike that was going to happen interlinked with interest rates rising. yawn....

I never forecast a gilts strike. The market will absorb gilts, the question is at what price.

Generali

StevieJ wrote: »

You may as well ask why Billionaires carry on working when they don't need the extra funds that they are generating

It's not so much the very driven few as the hard working, aspirational quite a few.

Warren Buffet claims to tap dance into work and good on him. I know plenty of people on a couple of hundred thousand a year that really don't enjoy jumping through the hoops they do to maintain a life that means little more than work and a mortgage and at a certain taxation point will just say, "Fck it" and go do something more fulfilling or a job paying less with nicer hours to see the kids in the week.

ninky_2

Generali wrote: »

I know plenty of people on a couple of hundred thousand a year that really don't enjoy jumping through the hoops they do to maintain a life that means little more than work and a mortgage and at a certain taxation point will just say, "Fck it" and go do something more fulfilling or a job paying less with nicer hours to see the kids in the week.

and are you saying those jobs will just stay empty? or will it just make way for those who are more motivated?

statistically employees on more than 2 hundred k are a pretty small percentage. surely a more important thing to consider is those on low wages who are taxed to a position that they are worse off than when they are on benefits. a bigger number of people and a cost to the taxpayer as well.

kennyboy66_2

Generali wrote: »

It will happen. As a medium term measure to cut public spending it's too slow to work I would guess. Long term it's pretty much a nailed on certainty.



Massive if on the pay freezes. Pay rises for 2 years slightly below inflation led to the Winter of Discontent (another era to be fair).

My fear is that if taxes are increased substantially then serious harm will be done to the UK's economy. For example if you raise VAT to 20% and have the top rate of tax at 50% then each pound extra you earn at that rate gives you an extra 40p to spend. Surely that must be getting into disincentive territory - why work harder? Enjoy some lifestyle instead.

Just to buy 2 hot dogs, 2 burgers, 4 pkts crisps and 4 small Cokes at New Wembley would mean you'd have to gross 65 quid! (link)

I think you are right, however turning the government spending tap off will take a little time.

I begrudge spending £1.80 on a coffee when I go to the match - and always wear a 'big coat' which will be stuffed with drinks and snacks for my lad.

I guess if you earm more than £150k a year, then you can afford to squander £35 on junk food.


I must have attended over 500 matches and yet to buy a burger or hot dog at a match. Both trips to Wembley last year meant taking a mini-picnic with us.