Budget march 2021

[Lance]

A mate of mine in political circles is suggesting one or more of the following:

VAT increase
1-2p tax increase
reduction in the tax bands
usual assaults on things like booze, fags, fuel
corporation tax increase

VAT ruled out by manifesto.
Same for IT.
Reducing the tax bands is a rise in IT.
Pubs are closed. Nobody smokes. Nobody's driving anywhere.
CT will not rise enough to be worthwhile for anything other than political posturing, and that's not good politics when Amazon et al don't pay it.

This will be a borrowing budget, and will use QE to tax, by stealth, the wealthy.

Ask me again in 2 hours and I'll have a different answer...

[Pragmatist]

TLDR;

1. We're at the beginning stages of the worst recession in 300 years. Even before the true costs of Brexit are understood, this is the biggest economic challenge the UK has ever faced. Everything else pales in comparison.
2. No matter what happens, will see very painful successive tax increases and austerity measures for the next several years
3. The IT sector generally, and IT Contractors specifically will probably be among those hit hardest – jobs will be increasingly be replaced from cheap workers from overseas or outsourced
4. Runaway inflation will wipe out UK savers.
5. The Office of Tax Simplification's recommendations will end contracting permanently in the UK. The proposed CGT increases will drive investors away from the UK.
6. The government & BoE will do whatever it takes to prevent a deflationary spiral
7. It took Ireland 10 years to reduce Debt from 132% of DGP to 68% during the PIIGS crisis. Italy, Greece and Portugal have never recovered. The UK will have at least 130% debt before this ends. It will probably take the UK at least 5 years.
8. Interest rate increases will probably see people lose their homes if they haven't fixed their mortgage terms. If one of the UK banks goes to the wall and needs recapitalisation, add another year of hell onto the cost of this mess.
9. Brain Drain is going to become a huge problem in the UK
10. If Bond Markets stop agreeing to pretend that the BoE isn't a Special Purpose Vehicle to take Government debt off the balance sheet, then we might have to beg the IMF and ECB for a bailout.
11. Boris will not survive to 2024. There will be a political earthquake, arising from the economic earthquake. There will most likely be a Scottish Independence referendum by 2024.


What has happened over the last 12 months:

• Debt is over 115% of GDP (over £2.2 Trillion), with £280 billion already spent on Covid measures in the first 12 months.

• Unemployment trending toward 7.7% and 10% over a slightly longer timeframe. The true rate of employment is thought to be higher as 9.9 million people are on furlough schemes

• Estimates are that 1.3 million have emigrated. This is the largest decrease since WW2 and composed of a large amount of EU migrants. The UK’s foreign-born population decreased by 843,000 people to approx. 8.3million during the third quarter of 2020.

• Immigration monitoring tools were suspended last March, so immigration figures are not clear, but the UK has had a quite consistent immigration of 250,000 annually for the last 10 years. On average, over the last 2-3 years, 80% were non-EU. The 10-year average is 70% non-EU.

• The largest immigrant groups up until 2019 were from from India, Poland and Pakistan respectively. India has now become the most common country of origin for migrants in the UK, due to the emigration of Poles since Brexit. EU Migration was typically 50,000-60,000 people until Brexit. Non-EU immigration now composes most of the immigration since Brexit.

• Immigrants must now clear a reduced salary threshold of £25,600 per annum. This was reduced from £30,000 per annum. The IT and Financial sectors are predicted to be the largest beneficiaries of the new cheaper workforce. There will no longer be a cap on the number of skilled migrants who can receive work visas. The “resident labour-market test”, under which employers have to show there is no suitably qualified British candidate for the role has also been removed.

• Surveys have found that 1 in 3 people aged 16 to 35 are open to the possibility of leaving the UK to work. 1/3 of those in IT and telecoms (31%), real estate (37%) and media, marketing and advertising (33%) said the pandemic and uncertainty over the outcome of Brexit have made them consider moving to the EU to work. In contrast, those in manufacturing (70%), transportation and distribution (68%) and education (69%) said they will be staying in the UK for work.

• 9/10 Local Authorities are warning of impending bankruptcy and need an extra £10.1 billion to cover costs. 4 in 5 councils are warning they cannot avoid bankruptcy without bailouts or austerity programs over the next year, including Kent, Leeds, Manchester and Nottingham.

• Croydon Council declared Section 114 in November. At the time of writing, 12 Councils are in rescue talks with Central government due to bankruptcy. This number is predicted to increase.

• Figures from The Gazette, the official public record for the UK, found 3,126 businesses voluntarily appointed liquidators during the third quarter of 2020, the highest for any third quarter since 2000. The figure was up 52 per cent on the same period in 2019.

• The government have brought in a profits-based “digital services tax”. Treasury proposals are thought to include an additional tax on consumer deliveries or a levy of 2 per cent on all goods bought online. These measures will primarily hurt US businesses and are expected to significantly undermine the possibility of a UK-US Post-Brexit Trade deal.

What looks probable over the next 12 months:

• Debt on track to hit 130% of GDP before vaccinations go over 70%
• Covid debt on track to hit £394 billion by mid-2021.
• UK Unemployment to pass 2.5 million by mid-2021
• 4 million unemployed within the next 12 months once Furlough and bailout schemes end.
• Demand on Social Welfare will surge over the next 6-12 months.
• Property Crash: The Centre for Economics and Business Research (CEBR) has issued a forecast of a 13.8% drop in average house prices next year.
• Stamp duty holiday Bubble bursting: The UK Nationwide house price index fell 0.3 per cent in January.
• Surveys indicate the majority of business bailouts have been used to prevent a default on commercial rents. Once bailouts are withdrawn there is a high probability of a commercial sector property market crash.
• The collapse in business rates will probably crash Councils. UK borrowing is already out of control, so the gaps must be plugged through taxation or austerity – most likely both.
• UK Companies will have borrowed more than £60 billion to help them to survive the pandemic by the end of this year

I expect the March budget will be very mild and testing the waters, but I think the November budget will see the pain begin.
March Budget

• Increase in Corporate Tax Rate to 22%
• Green taxes on fuel etc.
• Excise duty increases
• Vat increase to 23%
• Freeze on tax credits but tax bands altered
• There is a good chance that Stamp Duty and First Time Buyer incentives will be used to try to prop up the failing property market

November Budget

• CGT rates will be increased to match Income Tax rates, which would see CGT increase to 20%, 40%, and 45%.
• The annual allowance for CGT will be reduced from £12,300 to between £2,000 and £4,000.
• Corporate Tax Rate will increase to 25% and eventually match Germany at 30%
• Pensions triple lock will be broken
• Inheritance taxes modified and increased
• More "Green taxes"
• Excise duty increases
• Vat increase to 25%
• Government will announce Tax credits must be reduced over several years to pay for the bailouts.
• Austerity Round 2 will start in one form or another, but mainly through the Councils.
• Stamp Duty and First Time Buyer incentives will have to be withdrawn as the government will no longer be able to afford it

I think every budget thereafter for the next 3 years will be more extreme than anything seen here for decades (unless you remember the 70s and the IMF crisis perhaps).

[Paralytic]

TLDR;

I think you need to re-check the definition of that in your dictionary

And I think you're way out in your predictions - tax increases are coming, but not that soon.

[eek]

VAT ruled out by manifesto.
Same for IT.
Reducing the tax bands is a rise in IT.
Pubs are closed. Nobody smokes. Nobody's driving anywhere.
CT will not rise enough to be worthwhile for anything other than political posturing, and that's not good politics when Amazon et al don't pay it.

This will be a borrowing budget, and will use QE to tax, by stealth, the wealthy.

Ask me again in 2 hours and I'll have a different answer...

Covid makes anything in the manifesto now fair game.

That doesn't mean they will be doing anything (it's better to keep things going and see the new landscape before identifying what you can and can't do) but just because manifesto says no that won't stop them.

[Lance]

Covid makes anything in the manifesto now fair game.

That doesn't mean they will be doing anything (it's better to keep things going and see the new landscape before identifying what you can and can't do) but just because manifesto says no that won't stop them.

I hope you're right, but that does depend on BoJo having some independent thought. And even with an 80 seat majority he is still terrified of the backbenchers and the ERG.
He lacks the gravitas to push real change that isn't on their agenda.

[ChimpMaster]

TLDR;

1. We're at the beginning stages of the worst recession in 300 years. Even before the true costs of Brexit are understood, this is the biggest economic challenge the UK has ever faced. Everything else pales in comparison.
2. yada yada yada

This is 90% bulldung and reads like something right off HousePriceCrash or a Crypto site.

Also: you are Scooter and I claim my £250,000 short bet price.

[ladymuck]

This is 90% bulldung and reads like something right off HousePriceCrash or a Crypto site.

Also: you are Scooter and I claim my £250,000 short bet price.

But I have bookmarked the post for checking against

[Pragmatist]

This is 90% bulldung and reads like something right off HousePriceCrash or a Crypto site.

I'd be interested to know which points you think are bulldung?

[Pragmatist]

I think you need to re-check the definition of that in your dictionary

And I think you're way out in your predictions - tax increases are coming, but not that soon.

Which predictions do you think are way out?

[Paralytic]

Which predictions do you think are way out?

Any of the ones that say major changes are coming in March, and most of the major changes you say are coming in November. Johnson doesn't have the gumption to go against any manifest promises as he's just a puppet for the more right-wing back-benchers driving the government agenda.