Pre-Budget Report
- Thread starter djchewie
- Start date
Morbyd
Moderator
Ya, the Russians keep blaming it on us too (and they've been scaring the press into not reporting on the full extent of the problem here!)
That position, whether it comes from Downing St or the Kremlin, ignores the excesses in the global financial system.
And in the Russian case, it ignores the mistakes of big business which was expanding rapidly using short-term borrowed cash. Now that the liquidity in the system is gone, they can't refinance their loans (and their collateral, often shares, has devalued meaning the banks are making margin calls)
Ah, the interconnectedness of us all
Ah, the interconnectedness of us all
So when is the first Earth President due then?
I hear a guy called George W Bush will be on the lookout for a job soon.
Just worked out IF i spend my usual monthly outgoings and IF the retailers pass on the VAT cut im gonna be a whole £15 better off!
'Appy days...
dominicfiend
New Member
Just worked out IF i spend my usual monthly outgoings and IF the retailers pass on the VAT cut im gonna be a whole £15 better off!
'Appy days...
Agreed... what the fook? How on earth is Joe Bloggs on the street saving £2.50 in every £100 is going to "stimulate" spending, and miraculously save our economy? Its not going to be noticed in the slightest.
It will however cost the government £12.5bn (i think... don't quote me on that).
This government are so detatched from reality it doesn't bear thinking about. We need a change... I hear the BNP have got some interesting views!
As Vince Cable and George Osbourne have said since the annoucement, getting the sodding banks, the govt have bailed out to start lending again is the key!
Right I'm off for some lunchtime stimulus.
The saving is actually going to be less than that.
As a consumer you pay 117.5% (Cost plus 17.5%)
So you will instead pay 115% instead of 117.5%
The marginal change across the whole economy will provide the stimulus.
Even 1% of the country's disposable income is an enormous amount.
Using your figures, all those £2.50s will be spent elsewhere on "other things". The companies which make or supply those "other things" will have sales boosted. Those companies will go on to order more supplies. Those suppliers will do the same and so on and so forth. If you spend £400 and save a tenner you will spend that tenner on something else.
It's all based on small percentages. The UKs ecomony is set to contract by a small percentage.
This is obviously very simplified. But the success of this plan will pivot on retailers actually passing on the cost reductions.
dominicfiend
New Member
Mark,
I don't want to sound nitpicky or anything, but how do the figures not add up? I don't want this to into a maths class or anything.
PS. I admire your optimism!
The big ones probably will (on top of all the price cuts they're making anyway at the moment)
Not so sure the smaller shops will. Have you ever been in a newsagents who has ever lowered prices!
All this is a big gamble on Darlings forecasts, and IF the VAT cut will provide enough of an incentive for people to go out and spend (and spend more).
From my own personal experience of being in a big debt hole and speaking to various advice organisations, the first thing they tell you is to pay off your essential bills first, cut back on any non-essential spending, until you are in a position to do so.
With the hikes in energy prices, fuel (which is now coming down thank christ), mortgages, personal debt on cards, most people would have battened down the hatches long before yesterdays annoucements.
The whole VAT cut has the feeling of joy you get when finding 10p down the back of a sofa.
An small income tax cut would have had a more feel good effect, and would have left people with a choice of what to spend that on.
If it pays off, hats off to him, ill even wear a red rosette next election, stand on my soap box and repent my tory ways.
if it doesnt, we're all in the ****.
Morbyd
Moderator
That's what they tried in the States back in the spring. A lot of good it did!
Obama will fix it, he is Superman after all!
god knows what the solution is. lets hope we learn from the current situation and if and when things look rosy again, that the govt puts a little bit aside!
Do you mean the VAT?
When you buy anything (except stamps) you pay 117.5% as the VAT is included in the price we pay.
The 2.5% reduction in VAT will knock £2.13 off something that costs £100.
Sorry if this wasn't what you asked. And, I'm optimistic as I have no choice other than misery
.
Morbyd
Moderator
I say learn to embrace misery. And alcohol.Sorry if this wasn't what you asked. And, I'm optimistic as I have no choice other than misery
I say learn to embrace misery. And alcohol.
Haha, a good brandy is cheaper than the heating
Do you mean the VAT?
When you buy anything (except stamps) you pay 117.5% as the VAT is included in the price we pay.
The 2.5% reduction in VAT will knock £2.13 off something that costs £100.
Sorry if this wasn't what you asked. And, I'm optimistic as I have no choice other than misery
Hi Mark.
Unfortunately most companies, especially the retail based, won't do anything to lower their prices, it would be too costly for them to do so.
Be honest, can you see M&S marking their tea-lights (for example) down from £3.99 to £3.91 along with all new price labels, displays etc? We already know the answer don't we.
All they'll do is pocket the 2.5% less VAT they'll have to repay to HM Customs.
dominicfiend
New Member
Do you mean the VAT?
When you buy anything (except stamps) you pay 117.5% as the VAT is included in the price we pay.
The 2.5% reduction in VAT will knock £2.13 off something that costs £100.
Sorry if this wasn't what you asked. And, I'm optimistic as I have no choice other than misery
You are right, I am off to enrol in an adult learning course.
I agree, the plan is so all encompassing that for some, the administrative costs of reducing the VAT will prevent them doing so. I heard the example of a restaurant owner not wanting to reprint all of her menus.
But even if these companies don't pass on the savings they will still keep the 2.5% saved themselves making these companies better off, which will strengthen their financial positions and making them more stable employers.
(In Theory...
)