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What happens to the FTSE if the UK becomes Socialist?
Comments
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OP: Time is on your side. Those under 40 will have sufficient time to pay for the consequences of a left-wing government and those over 60 should have sufficient resources to withstand the hit to their investments providing that they have sufficient non-DC income. Those in-between - you have my sympathy.
Having lived through governments whose policies have ranged across the political spectrum I tend to rely on hindsight to gauge the likely impact on the economy of parties seeking power. It is notable that during GE campaigns parties omit mention of key intentions from their manifestos. These exclusions may have the most negative/positive impact on individuals. In addition, manifestos contain policies that are vulnerable to the law of unintended outcomes.
Some policies are so pervasive that they impact on every citizen. The already-mentioned dividend tax (Gordon Brown as chancellor) was onesuch. Stealth taxes were a much-used tool by the Blair-Brown government. Arguably more damaging than (say) income tax as they relied on the public's collective ignorance to avoid challenge. At least all of us understand rises in NI and income tax.
Manipulation of VAT rates is another example. In recent decades increases have been more common under Tory governments than Labour.
Another classic. The EU Referendum had an outcome entirely unforeseen by the Tory government that pledged to hold it.
Should Labour win this time then there will be an immediate knee-jerk as, historically, borrow-and-spend has not been good for the nation's economic health. Indeed, even Johnson's spending plans look iffy given issues such as the UK's poor productivity.
If the cost of public spending plus servicing debt, exceeds income then we are are in deep doo-doo. That was the position in the 1970s. The UK was bankrupt. The IMF refused to loan us more money. Think Greece. We were then known as 'the poor man of Europe'.
This is the biggest concern for investors and businesses. Hammering the revenue-generating sectors of the economy tends to result in capital flight, less jobs, less investment, lower salaries. I would guess that the first thing on the agenda of a Corbyn government would be controls on capital.
The good news is that he UK population is wedded to a mixed economy. Too much capitalism or socialism results in a collective rejection of these extremes and a move back to a more balanced middle way. However, that cycle may take a decade or two. The UK did recover from the last left-wing government and it would recover again. How long will it take? Ah.... there's the question.
Those with a diversified portfolio will not be very exposed to UK companies and there isn't much most of us can do to mitigate against the other threats.
I imagine that those who have carefully positioned their assets in order to pass down to the next generation will be cursing given that each child will be unable to inherit more than £125k without paying tax under Corbyn. That's certainly going to put-paid to one method of addressing the disparity in property ownership between generations.0 -
Thrugelmir wrote: »The West is progressively losing it's financial global influence. The UK has been running a capital deficit for years.
While what you say is true, not all Western countries run a capital deficit - Norway is in surplus for obvious reasons and Germany runs a massive surplus...explains why Germany is busy buying overseas assets while UK is selling off the family silver0 -
DairyQueen wrote: »OP: Time is on your side. Those under 40 will have sufficient time to pay for the consequences of a left-wing government and those over 60 should have sufficient resources to withstand the hit to their investments providing that they have sufficient non-DC income. Those in-between - you have my sympathy.
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There's also the possibility that any significant drop in asset prices (eg property) relative to wages, will act to reset the balance in favour of those who are selling their labour to purchase assets.
This is what happened in the 1970s - house prices were lower (relative to wages)*, hence the cohort of older generation who gained property asset wealth.
*Yes, I know interest rates were higher back then.0 -
As I understand the manifesto, getting rid of the £2000 zero rate dividend band, and then taxing dividends at 20% and 40% rather than 7% and 32.5%, and charging capital gains at 20% and 40% instead of 10% and 20% will impact a lot of unwrapped readers of this forum. Also scrap the married person allowance.
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Don't forget the effective removal of the Annual Exempt Amount on capital gains
- Labour said it would remove the annual exemption allowance, which currently sits at £12,000, and replace it with a threshold of £1,000.
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Don't forget the effective removal of the Annual Exempt Amount on capital gains
Ouch...!
Good job a Corbyn government is pretty unlikely, unless Johnson spaffs some foot in mouth crisis up the wall in the next few weeks.
OMG what a choice, the always stupid Labour party give us Corbyn, and the Tories give us the trustworthy man of his word Johnson.0 -
Don't forget the effective removal of the Annual Exempt Amount on capital gains
- Labour said it would remove the annual exemption allowance, which currently sits at £12,000, and replace it with a threshold of £1,000.
Would that mean a limit of £1000 gain when selling shares on a platform account, in order to buy different shares (or bonds etc)?
So if I bought Facebook shares for £1000.
Sold them for £5000 a few years later.
Then did not withdraw the money from the account, but bought some Tesco shares with the £5000.
Would I be taxed on the £4000 'gain'?0 -
CTG is due for the tax year you make the gain, what you do with your profit is immaterial. The 4 grand would need £800 paying in tax at the basic rate.0
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CTG is due for the tax year you make the gain, what you do with your profit is immaterial. The 4 grand would need £800 paying in tax at the basic rate.
That would be harsh.
You'd need to stay within an ISA, SIPP or maybe just stick to funds and not sell, to avoid getting hit.
Could be bad news for platform providers.0 -
John_Smith_2019 wrote: »maybe just stick to funds and not sell, to avoid getting hit.
Not selling doesn't get you richer in the future, unless you want to pass it all on, in which case another policy of scrapping the home allowance for IHT to children and replacing it with a lifetime gift allowance much less than the existing IHT threshold will mean many thousands extra in IHTax for those passing on anything above a tiny home plus some pittance in inheritance money.0
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