Wednesday, March 23, 2011

The 1p budget


MPC © fintag

News comments:
If you were the CFO of a country and faced this scenario, what would you do? Please state your rationale and the time you would need to resolve the issues (if you believe they need to be resolved at all).

The country has 60m inventive people and has been run as a socialist state since the 1940s. Certain parts of the North have no private enterprise and it relies heavily on the finance industry and providing actors to hollywood. The country thinks it is bigger than it is and has a large chip on its shoulder following a long and grand history. It also has ....

Increasing unemployment, especially for those under 25, and currently about 10%.

Increasing inflation at about 5% with interest rates at 0.5% and competitor countries having half this rate of inflation.

A weak currency that is making imports very expensive and given it imports nearly everything from China.

Flat growth erring on the side on being negative.

High income, corporation, capital gains and sales taxes compared to most of its competitors.

10% of the country's corporation tax comes from banks.

Some of the most expensive transport in the world (trains, buses, haulage) and some ageing bikes called Boris.

A london underground transport system where people are allowed to eat in front of your face and stink the carriage out with Burger McCrap.

A public debt that is approaching wartime levels and a cost cutting programme that is only slowing down expenditure, not reducing public expenditure and so pushing up the LTV of the country.

A population that is 80% middle class and where the working class are immigrants who work harder than anyone else.

A population used to be being looked after by the state under all circumstances (housing, health, education, silicon implants etc).

Students who pay more for their degrees than at most US universities.

Its own currency and can print more (as it has been) if needed by a man who looks like a milkman.

Real Life
So the UK Chancellor published a budget. The media and other excited counterparties saw it as a great budget. The reality is it wasn't at all. 1p off petrol that costs £1.30 is an insult (Scots will just add it back). Dropping corporation tax 3% is pathetic (Ireland its 12%). Trying to implement a flat tax in a years time is ludicrous (inflation, inflation, inflation).

But the biggest scare completely ignored is the UK debt will rise. (cityam) ...

"UK national debt as a share of national income will be 60 per cent this year, before peaking at 71 per cent and falling marginally to 69 per cent by the end of the period."

Today's shorts:
Portugal eats itself (bbc)

Today's longs:
Big 4 collusion (cityam)

UK in denial that things are getting better.


Corp Tax said...

So what your saying is we in the UK are up sh*t creek with no paddle...time to emigrate?