Filling our faces with financial Haribo
23 Sep, 2022
Merriment all round today as Headmaster Kwarteng handed out some financial Haribo at the UK school fair, and every child got a handful.
Energy bills
First, he reminded us about what the Government is doing to help with energy costs.
The energy price guarantee will keep the typical annual bill to £2,500 a year for the next 2 years
All households will get £400 off this winter with an automatic monthly reduction of about £67 to bills
And businesses will get reduced energy prices in the way of a price guarantee
These measures will cost the Government about £60 billion over the next 6 months. My detailed technical analysis – and apologies for the financial jargon – is that this is quite a lot.
Tug of War with the Bank
Kwarteng dismissed any rumours about a tug of war at sports day with the Bank of England, confirming that their independence is “sacrosanct”. He reminded the crowd that he has a playdate with Governor Bailey twice a week and they were indeed besties. Hmmm. Governor Bailey is in the role of Bad Cop, increasing interest rates by 0.5% yesterday to 2.25%, with the unenviable role of stopping the global bully that is inflation. The essential and convenient narrative emerging here is that Headmaster Kwarteng is nice and Governor Bailey is mean.
Growth and squealing bankers
Growth is at the heart of the teachers’ plan. They want growth to hit a trend rate of 2.5%, quite a tricky thing for a Government to control. What’s the plan? They encourage all the children to do more, make more, spend more and be financially busy, and they have effectively done this by slashing and burning taxes.
When he mentioned ‘fiscal responsibility’ (which basically just means being sensible with how they tax stuff), the naughty Labour children loudly choked with laughter, as Ms Truss glared at them from the front row.
Next up in the Budget Assembly, banker bonus caps were scrapped. The fat bankers squealed loudly with glee and booked their January flights to the Caribbean. “Turn the Aga on again, darling, things are looking up.”
Solving the riddle
“Tax is central to solving the riddle of growth”, thundered Mr Kwarteng, warming to his theme.
Corporation tax will remain at 19% and NOT go up next year
They’ll simply IR35 rules for contractors
Digitally-enabled VAT-free shopping for overseas visitors – arriba!!!
Alcohol duty increases are cancelled YAY!!!! shouted Holly, waking up at the back
And then fistfuls of Haribo
The increase in employer national insurance contributions will be cancelled from November 6th – if you’re on £30,000 a year this is a saving of about £218 a year. Super swots on £75,000 a year will save about £377
Stamp duty will be cut effective today – there will be no stamp duty to pay on the first £250,000 (currently £125,000)
First-time buyers will not pay stamp duty on the first £425,000 (currently £300,000)
The headmaster then abolished the highest rate of tax (which was 45% on income of over £150,000) – 'YAYYYYYYYY' cried the bankers, now on a massive sugar rush – 'Darling, buy another bloody Aga! In fact stamp-duty-schmooty, buy a new house in Cornwall whilst you’re at it, charter a damn plane to Necker and buy the mistress a new… oops!'
Just as those in the front row were feeling left out, it was confirmed that from April 2023 the basic income tax rate will fall from 20% to 19%. Oooooo…
Is all this Haribo a good idea?
Outside of the hall, the grown-ups were not all amused. UK government bonds fell sharply, and the interest rate (‘yield’) paid on these is at an 11 year high of around 3.8%.
The top set in Maths has worked out that someone has to pay for this party, so the Government will offer and sell lots more bonds (which are basically loans which will fund all their Haribo).
The pound is also falling, and has hit a new 37 year low as I write, a clear “non merci” reaction from international markets, and reflects their lack of desire to come and play in the UK.
Although I love Haribo more than most, I also know that the Headmaster borrowed at quite high interest rates to buy them. And after the sugar rush comes the slump. And that inflation bully is at the school gates.
Oh well. Fingers crossed!! In brighter news… it’s Strictly tonight, when a whole bunch of people I have never heard of prance around badly yet bravely in sequins. Fab-U-Lous dahling.
Holly
Stay up to date!
Already have an account? Login
Post a comment:
This is an open discussion and does not represent the views of Boring Money. We want our communities to be welcoming and helpful. Spam, personal attacks and offensive language will not be tolerated. Posts may be deleted and repeat offenders blocked at our discretion.
