Do We Really Need the VAT Hike?
Osborne’s budget has convinced the bond markets that this coalition is serious about tackling the deficit. The rally in gilts since the election and budget has been strong, taking 10-year yields down from 4% to 3% in three months, bringing down long term borrowing rates for mortgage holders and capital hungry growth businesses alike.
There has at the same time been a slew of negative-to-soft data on the economic front, given that the deficit cutting credibility of the government is firmly established, to the nigh on elation of the bond markets, Osborne has now earned a bit of leeway. Having already achieved fiscal credibility, if we do get more soft numbers on the economic front, he could afford to suspend the VAT hike due in January. If he goes ahead with the VAT hike and we do see a double-dip, Ed Balls will be well justified in blaming him for adding to the woes of the consumer. The VAT hike will take £13 billion of spending out of the economy.
David Smith, chairman of the Shadow Monetary Policy Committee group of independent economists, says his budget model calculates the move could increase unemployment by 235,000 over the next decade and reduce GDP by 1.4% over the same period. Do we really need to be reducing GDP at this time? The fiscal flagellation is no longer required to appease the gilt market…
Steve Hilton’s Question – FT
Stop the Graduate Tax Bullshit – Dizzy
National Debt is £4.8 Trillion – Mark Littlewood
“Spending Challenge” Website Ruse is a Nonsultation – Andrew Gilligan
How to Save Labour From Bankruptcy – Iain Dale
Labour On the Verge of Bankruptcy – Guardian
Council Staff Waste 2/3 of Day - Telegraph
Dave: Baby Kicks Like Beckham – Sun
Oh, Do Shut Up Simon – James Cleverly
Nick Clegg says…
“The Labour Party has become consumed by collective bile towards … the Liberal Democrats. That portrays a rather nasty arrogance. They can’t believe that [we] could have done anything but fall into line with them. I get the impression, listening to the juvenile vitriol of the leadership candidates, that they can’t believe the Liberal Democrats decided to make up their own minds. I just think their leadership contest has been very dull and very dispiriting. You get the impression that none of them is up to the task of asking what’s happened to them as a party and to Britain. They seem strangely conservative, if I dare say it.”
Posts
