'Pop' goes the Treasury

Chancellor of the Exchequer Alistair Darling announced the UK budget yesterday, and it was revealed that the UK would have to issue more debt (Gilts) in order to continue with their present plans, the debt levels will rise to a record level of 79% of GDP by 2013/14. The period of 2009/10 will see £220bn of gilts issued, a full 20% greater than expected, on one hand this might be the ‘shock and awe’ approach, on the other it is extremely inflationary and has had an instant effect on GBP long term interest rates.

Several factors fed into this, yesterday the Public Sector net cash requirement was forecast at £16.5bn but the actual requirement was £28.4bn. Two lessons that countries around the world will learn from the current financial crisis are firstly – the need for counter cyclical planning, the second is the extreme danger that a country is put in by having a bloated public sector. Britain is also facing deflation.

Sterling is likely in for some secular …

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‘Pop’ goes the Treasury

Chancellor of the Exchequer Alistair Darling announced the UK budget yesterday, and it was revealed that the UK would have to issue more debt (Gilts) in order to continue with their present plans, the debt levels will rise to a record level of 79% of GDP by 2013/14. The period of 2009/10 will see £220bn of gilts issued, a full 20% greater than expected, on one hand this might be the ‘shock and awe’ approach, on the other it is extremely inflationary and has had an instant effect on GBP long term interest rates.

Several factors fed into this, yesterday the Public Sector net cash requirement was forecast at £16.5bn but the actual requirement was £28.4bn. Two lessons that countries around the world will learn from the current financial crisis are firstly – the need for counter cyclical planning, the second is the extreme danger that a country is put in by having a bloated public sector. Britain is also facing deflation.

Sterling is likely in for some secular …

Read More →

Is London losing its head?

There was quite a fuss about the British budget budget yesterday especially because non-domiciled (non-doms) are going to face a 30k sterling levy, there is a fear (it is not certain whether it is real or supposed) that this will ultimately cause a ‘brain drain’ on the country and cause much of the foreign talent to flee to other places rather than pay a hefty fee.

This levy was only brought in because there are so many highly paid talents are living in the UK virtually tax free, and the likelihood is that they are not paying tax where ever they are domiciled. For the highly paid exec’s they can threaten to leave but they won’t. leave and go where? London is to finance what Rome once was to the empire, if you leave you’ll be paid 30k less to do more work in the new place. The outcry is purely from those whose vested interests may be hurt. Irish tax dodgers tend to be simple in their approach, you don’t pay and then when you are audited you get …

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