General Election June 8th

[Chippy_boy]

Growth has been OK, not great. But it's what is fuelling the growth that's the problem. Ideally growth involves companies being more productive both absolutely (by producing more) and relatively (by productivity improvements, as well as consumers having more money in their pockets and spending it rather than saving it. So companies do better, they pass some of that info their workers and they spend it.

But that former part, particularly productivity improvement, hasn't been happening so it's consumer spending that's been driving growth. But unless real wages are increasing (and with inflation getting higher then that's not happening) then that spending will eventually run out of steam. And as I said yesterday, real wages in the UK have fallen overall since 2008 whereas those in many other Western countries have risen once recovery from recession got under way.

Real wages initially fell as a result of austerity, but as the government's actions brought the deficit down, we started to see real wages growth in the +2% range by 2015. It's fallen back since as a result of rising inflation, which must be controlled. Of course the BoE has been reluctant to increase interest rates since they do not wish to surpress growth. It's all a delicate balance isn't it.

My fear is that Corbyn has no clue about the concept of delicate nor balance.

 

[KenTheLandlord]

This is what the proposed corporation tax changes would achieve (from Full fact):

Claim: "No Labour government has ever left office with unemployment lower than when it started, despite the name of the party."

Fullfact: While the figures we do have back up the claim, some Conservative governments have also left office with higher unemployment

Gotta Love Fauxfacts Headed by Michael Samuel, the tory party donor. Are they still peddling the independent myth?

 

[Gaylord du Bois]

It's the neighbour. He looks shifty. Hang him.

(Good enough?)

 

[Prestwich_Blue]

I'm increasingly beginning to think that Theresa May has had or is close to some sort of breakdown. This would explain why she's being kept away from live appearances.

 

[vonkeynotvenky]

I'm increasingly beginning to think that Theresa May has had or is close to some sort of breakdown. This would explain why she's being kept away from live appearances.

You might not be far from the truth but even if you are not she's noticeably absent.

 

[BlueAnorak]

Right this Labour Money Tree. Can someone explain how this money can be obtained without:

1. Companies exporting profits overseas, reducing investment from already criminally low levels, putting their prices up or making major redundancies to increase profitability. Company profitability will decrease 7% as a result of Labour proposals so please tell me how it will not result in a major drop in reported profits, at least 5% inflation (thats a 5% cut in the earning power of your salary) or 5% redundancies, or a combination of all three - say reduced reported profits + 2.5% inflation + 2.5% redundancies.
I seriously doubt the proposed tax rise would raise anything like what Labour hopes as way back in 2011 the rate was 28% and the UK earned £43bn in tax and when the rate was recently 20% and we earned £55bn in corporation tax. For sure things were bad back in 2011 with reduced profitability but at worst the revenue increase Labour are hoping for could be very nearly non-existent. It could even tip the UK into recession.

2. Stealing 2% in the long term from every private pension pot by the transaction tax. 1% from those with less than 10 years to go to retirement. Ok it's not as bad as Gordon Brown's hidden pension heist that reduced my pension pot by about 10% and was the final nail in the coffin of most final salary schemes (after the ludicrous pension fund payment holidays of mid/late 80s) but it is bad.

3. Damaging the City way more than Brexit ever could. Trading would be done in countries that pay less tax. McDonnell's statement on enforcement of this is a complete joke. The only way enforcement could possibly work is if exchange controls are brought in (not possible to EU countries till Brexit completes).

Still looking on the bright side it means a Hard Brexit would be impossible as the Tories are relying on an increase in UK based business profitability as a weapon in negotiations.

 

[Chippy_boy]

I'm increasingly beginning to think that Theresa May has had or is close to some sort of breakdown. This would explain why she's being kept away from live appearances.

I think campaign HQ have simply realised that every time she appears, the polls narrow further. Out of sight, out of mind. Not a great advert for strong and stable I readily admit.

Back to our previous discussion, an increased minimum wage, combined with significantly increased government spending puts a lot into the "demand" side of the equation, and unless there is sufficient capacity in the economy to supply then that also would fuel inflation and encourage imports. Both of these would depress the pound further, make exports yet less competitive.

We saw a similar mistake (but caused differently) by Norman Lamont with his tax reforming budget where he slashed the top rate of tax. It pumped a lot of extra spending power into the economy and fueled a period of sustained high inflation. Ultimately eroding real pay much more.

 

[m7mcfc]

Right this Labour Money Tree. Can someone explain how this money can be obtained without:

1. Companies exporting profits overseas, reducing investment from already criminally low levels, putting their prices up or making major redundancies to increase profitability. Company profitability will decrease 7% as a result of Labour proposals so please tell me how it will not result in a major drop in reported profits, at least 5% inflation (thats a 5% cut in the earning power of your salary) or 5% redundancies, or a combination of all three say - reduced reported profits + 2.5% inflation + 2.5% redundancies.
I seriously doubt it would raise anything like what Labour hopes as way back in 2011 the rate was 28% and the UK earned £43bn in tax and when the rate was recently 20% and we earned £55bn in corporation tax. For sure things were bad back in 2011 with reduced profitability but at worst the revenue increase Labour are hoping for could be very nearly non-existent.

2. Stealing 2% in the long term from every private pension pot by the transaction tax. 1% from those with less than 10 years to go to retirement. Ok it's not as bad as Gordon Brown's hidden pension heist that reduced my pension pot by about 10% and was the final nail in the coffin of most final salary schemes (after the ludicrous pension fund payment holidays of mid/late 80s) but it is bad.

3. Damaging the City way more than Brexit ever could. Trading would be done in countries that pay less tax. McDonnell's statement on enforcement of this is a complete joke. The only way enforcement could possibly work is if exchange controls are brought in (not possible to EU countries till Brexit completes).

Still looking on the bright side it means a Hard Brexit would be impossible as the Tories are relying on an increase in UK based business profitability as a weapon in negotiations.

Not a political guy but What newspaper did you just copy and paste this from!

 

[BlueAnorak]

Not a political guy but What newspaper did you just copy and paste this from!

Non. I read the Labour Party Manifesto, John McDonnell's comments on how he is going to pay for it, read the Facts sites on Corporation Tax revenues, applied probable scenarios and did the Maths.

BTW I voted Lib Dem 2 weeks ago by postal vote!

 

[The perfect fumble]

I agree that UK productivity is very low by western standards (Japan aside). But whereas productivity can be helped by national infrastructure, what it really needs is sustained business investment in r&d, equipment, facilities and skills. You don't improve that by increasing labour costs and taxing businesses more; that would make it worse.

Short term return, it's the Anglo-Saxon model, we're hooked on it.

If business won't invest, incentivise them, if they still won't invest, tax them.