Budget 2016

[TheOstrich]

Pretty neutral, really, but some talking points ...

The sugar tax - yes, a good idea, and I wonder if it will be extended to all sugar-high products rather than leaving it at soft drinks. I would have thought they would have tried to tax sugar itself, either at the sugar-beet mills (are there any left? - I think Foley Park, Kidderminster was closed down some years ago) or at the port of entry on imports.

I wish Osborne would freeze state pensions for a year or two. The built-in 2.5% above inflation increase is getting embarrassing.

I don't know about all this turning schools into Academies lark. A privatisation step too far, IMO.

[Workingman]

I do not get the numbers...

There is an increase in the personal allowance, but some pretty hefty cuts in all sorts of other taxes plus a new NI rate for the self-employed equal to a £130 tax cut. He is then going to give those who are under 40 £1 for every £4 they save. Small businesses will also benefit from another £7bn due to changes in business rates. North Sea energy taxes will change or be scrapped.

Yet we learn that the forecast for growth is down to 2% from 2.4% and will keep going down till 2020.

I am going to have to wait for the financial wizards to do their in-depth analysis before I know what to think.

I could not care less about the sugar tax and if schools are in the same buildings with the same teachers teaching the same curriculum subjects then another name change will not effect the outcomes.

[Suff]

Yes I thought that too. Fuel prices frozen and also alcohol. But tobacco hammered again and loose stuff even heavier.

The devil must be in the detail somewhere.

The thing that bugs me mightily is that before the referendum talk it was all rosy and good growth and the UK was one of the best in the world. Now here's the fun thing. The EU market shrank and then stayed stagnant with virtually no growth and now is shrinking again. The UK made almost all of it's economic recovery out of trade outside of the EU, for which the EU has been piggy backing on by selling us a hell of a lot more goods than we are selling them.

So now we are looking at, maybe, leaving the EU, suddenly it's all gloom and no chance of decent growth....

I'm not that gullible!

[Suff]

The Guardian has done it's analysis.

The main potential losers are a married couple with two children both on JSA..... No real favours for anyone unemployed.

Biggest gainers; Pensioners.

Pretty bog standard Tory style austerity budget. Inflation kicks in and the losers are those who get money from the state.

[Aggers]

I didn't think much of it.

The sugar tax might help the obesity problem to a limited extent, but then again it might not.

There is also far too much fat in a lot of the food now on sale.
When one reads the small print on many of the single desert items on sale in the supermarkets, as Mrs A does, one finds that very often a single portion can contain 50% of my daily quota of fat. It is also an eye-opener to see how much fat there is in some of the recipes in the women's magazines. Another factor is the way that catering businesses have increased portion sizes over the years. No wonder there is so much obesity. These are the areas where action is desperately needed, but will probably not be considered to be within the scope of the Budget.

[Kaz]

I honestly think the sugar tax is a waste of time - if someone wants a sugary drink or a bar of chocolate the extra couple of pennies will just be shrugged off! It's just a way for us to be taxed more, and we are already taxed very heavily

As for the rest of the budget, it was what I expected from this government. Taking £30pw from those in receipt of disability allowance is low, but then that is what I expect from this lot too

[Workingman]

A telling comment from the Institute for Fiscal Studies says Osborne only has a 50:50 chance of hitting his self-inflicted targets and that they will only be achieved by a growing economy, which is not guaranteed.

Others infer that he has cut taxes too far, by increasing the thresholds they kick in. Putting the price of a cup of coffee into the pockets of tax payers every week is neither here nor there, but apply it to all taxpayers and it comes in at quite a price. They say that future chancellors will find it difficult to roll back the thresholds or raise tax rates, or both.

He has also had to revise his borrowing figures upwards instead of decreasing, as he promised, by an average of ~£3bn per year. Then there is the slowdown in reducing the deficit.

Unfortunately all this has been lost in the coverage of the "not worth the paper it is printed on" sugar tax. But hey, it will bring in £502m for sports clubs and facilities and helps to fill in the hole created by this government's cuts already applied to these services.

[Aggers]

He has also had to revise his borrowing figures upwards instead of decreasing, as he promised, by an average of ~£3bn per year. .

I am puzzled. Where do all these countries borrow money from - Mars or Venus ?
(I am being serious.) Shouldn't we be told?

[Workingman]

Aggers, I am also a bit lost. The total global debt is about $60 trillion, and rising! That comes to about $8,750 for every person on the planet.

I always thought that being good with money meant balancing the books, at least every once in a while. It appears that those rules do not apply to economists, bankers or governments. My conclusion is that the 'debt' is not actually in 'real' money so is nothing to worry about.

[Suff]

I am puzzled. Where do all these countries borrow money from - Mars or Venus ?
(I am being serious.) Shouldn't we be told?

They sell Bonds. Bonds are "promissory notes" on which they pay interest. IN America they call these Treasury Bills or T bills. In short it is another form of money printing. Because the interest on the T bills they pay is paid by increasing the money supply or digitally printing money. When they buy the bonds back, they do so with more printed money.

So, when they talk about borrowing money, they talk about selling "script" which they pay interest on and buy back some time in the future. Sort of like lots of small mortgages for the government.

The goal is to sell high (current rate) and buy low (pay back later after inflation).

This is what got Greece and the PIIGS. They kept on borrowing as if they were running 8%-10% inflation. When it came time to pay back the bonds, they could not because they had only run 1%-2% inflation. So their days of borrowing at face value today and paying back 10%-12% in real terms 10 years later, were long over.

Of course if we carried on with 1% inflation for the next 100 years everyone would adjust and they would stop borrowing more than they could afford to pay back.

If you have been following the bond markets, you would have seen Osborne created "perpetual bonds" or notes on which he pays interest at the going rate, forever, but never pays back the principal. Thus simply pushing debt onto future generations who have the choice to either keep paying the interest or pay it back. Of course even if we run 2% inflation for 50 years the sum would be so small that we could probably pay it back off the sugar tax.... But that's a whole other story...