Summary of a post.
Did Osborne miss a trick at the Spending Review?
It wouldn’t be a George Osborne speech in the House of Commons unless there was a dramatic headline, and he duly obliged at Wednesday’s Autumn Statement with a rubber-burning U-turn on his plans to slash £4.4 billion from the tax credits bill. Indeed, he floored all and sundry by defying expectation that the income threshold cuts would be “phased in” by instead scrapping the plans altogether.
It set the tone for what has been widely termed a ‘Blairite’ Spending Review, which was characterised more by unexpected boosts in spending and widespread sparing of the axe. Departments such as transport, sports and culture, energy and the Treasury would clearly argue to the contrary, while students, civil servants, landlords and second-home buyers will be reeling. However, the long and short of the numbers bandied about in essence brought an end to austerity with spending actually increasing; this at a time when Government debt is reportedly surging by £1.5 billion a week, with overall debt £550 billion higher than it was five years ago.
The battle of politics and economics
Politics inevitably meddles with economic ideals, and rarely have external global crises dictated to such an extent the requirement for spending in certain areas. But has the biggest political driver of all in this one been Osborne’s poorly-veiled desire to take over at No 10 in 2020?
Put in context, this was perhaps the best chance of all for the Chancellor to make the ‘tough decisions’ needed to balance Britain’s books. The Labour Party is, at best, in a state of transition, and with almost five years to go until the next election, the time to lay down the marker was surely now. Memories are short, and there will be ample opportunity in the coming years to make the sort of voter-appeasing Budget speeches that could put him in pole position to succeed David Cameron.
Most importantly, it could have secured his legacy as a Chancellor who brought long-term economic stability to a country that currently is still spending more than it earns.
Not all bad
Of course, it is easy to criticise in the absence of offering alternatives, and the only racing certainty of any forecast is that it will never please everyone. In fairness too, there were also some commendable announcements to emerge. The Chancellor was true to his word on the state pension and the NHS, while expected cuts to policing were avoided.
Far-reaching cuts in general were scrapped owing to a £27bn windfall courtesy of forecasts by the Office for Budget Responsibility, which suggested a better-than-expected future for tax receipts. And despite this, public spending is still set to fall to 36.4% of national income by 2021, which is a significant drop on the current figure of 39.7%.
But that appears to be where the fiscal discipline ends. In real terms, overall Government spend is set to rise by 0.8% over the next five years, while the shift in approach from austerity to increased taxation is underlined by projections on tax take rising by 2% of GDP by 2020/21. In terms of the national debt, this plan represents a gamble of sorts given its dependency on external factors like the volatile global economy, and (slowing) medium-term growth.
A chance gone a begging?
Not many of us are privy to the inner workings of what must be a frighteningly complex maze to negotiate, and we at Lending Works are no exception. But we do know a thing or two about debt and responsible borrowing, and the same principles apply whether it is at an individual level, company level or national level. Our debt is unquestionably the great Achilles heel of Britain’s economy, and while it is true that interest rates are currently low and that the overall picture is stable, this is all subject to change in an edgy global climate, and our high level of borrowing leaves us greatly exposed in the event of a downturn.
Let’s hope such things don’t transpire, let’s hope that more of those who need a helping hand from Government receive it, and let’s hope that in amongst it all, the fiscal deficit is indeed eliminated. But for this to happen, a lot of things need to go perfectly. And if they don’t, Osborne may well look back on this Autumn Statement – one where his party has rarely been in a greater position of strength - as an opportunity missed to deliver economic security to our country.
Related articles:
- UK Budget deficit: Why all the fuss?
- Corbyn, Clinton-Greenspan and Lady Luck
- Deflation, and a more expensive life
Get email updates for future blogs:
The 2019 ISA season is now in full swing, and it's as good a time as any to focus on financial planning - and, within that, looking ahead to your retirement years to ensure financial security.
The Lifetime ISA (LISA), announced in 2016, would prove to be one of George Osborne’s last flagship gestures to UK savers and investors as Chancellor, eventually launching against a backdrop of anti-climax a year later in April 2017.
- Summary of a post.
The issue of social care – and, more specifically, funding the cost of this care – is one which has become a major concern for our society.
Featured
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The idea of peer-to-peer (P2P) lending is a simple one; you lend money to those who wish to borrow, with a view to receiving a great return for doing so.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
Most popular
On 13th January, the open banking era completed its first year in existence, so it represents a natural juncture to reflect upon the past 12 months
Perhaps the word 'fanfare' would be overstating the recent response to an uptick in UK savings rates.
As 2019 moves into full swing, a big priority for every household should be to get their finances into the best possible shape.
Clearly there is one story which is dominating the headlines at the moment: Brexit.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.
