The Government’s investments will be managed on a commercial basis by a new arm’s-length company, ‘UK Financial Investments Limited’ (UKFI), which is wholly owned by the Government. Its overarching objectives will be to protect and create value for the taxpayer as shareholder…
UKFI of course differs from other funds “managed on a commercial basis” in one important respect, it is unable to sell underperforming assets, and underperform they have, destroying value for the taxpayers as shareholders.
Barclays took petro-dollars to recapitalise, so could and should have these banks. Northern Rock should have been put into receivership and whatever was of value sold to other banks. Instead, somewhat pointlessly, taxpayers have been lumbered with an £8 billion loss to date. The government is no better at investing in banks than it was at investing in British Leyland.
Instead of being lost in the stock market, £8 billion could have been used to raise tax thresholds by £1000 per income taxpayer for a year with plenty leftover. Helping those on lower incomes the most.
“BBC political editor Nick Robinson said the fact that a series of countries now look likely to implement packages of tax cuts and spending increases would allow Mr Brown to claim the UK is in the lead when it came to dealing with the economic crisis.”
- The U.S. fiscal stimulus plan worth $150 billion went into play in February with bi-partisan support.
- The Chinese stimulus package is a $586 billion public works acceleration plan announced last week.
- The German Cabinet approved a stimulus package weeks ago, as did the French.
- Australia’s second stimulus package was announced last month – though they have the advantage of a massive budget surplus after a decade of Conservative economic policies.
- Spain’s fiscal stimulus package was announced in April.
- Conservative run Canada also has for years run a budget surplus and remains determined to balance the budget and cut taxes.
- Japan has been doing fiscal stimulus for two decades.
- To present himself as the respected elder statesman of international finance – never mind Sarko’s pretensions.
- To frame Britain’s problems in an international context. Sterling’s collapse is to be spun as nothing to do with Brown’s bubble.
- To frame any domestic tax cut U-turn as a co-ordinated international action. This will give him cover for abandoning everything he has told us is important for all his front-bench political life.
Why Gordon thinks it imperative to be portrayed as some kind of respected international finance genius eludes Guido. It won’t save anyone’s job, not even his own.
There is obviously an international angle to the credit crunch, but there are also domestic disasters which happened on his watch.. Sterling’s collapse is not random. Who for instance decided to exclude house prices from the Bank of England’s inflation target which meant we had a ridiculously loose monetary policy?
If the G20 endorses a policy of tax cuts – if – Gordon will have political covering fire to return to Westminster to cut taxes and bugger the deficit. The Pre-Budget Report on Monday week will be his chance to unveil an epic tax-cutting stimulus package U-turn. The Osborne-Letwin* designed response as it stands will be “we shouldn’t be here, you shouldn’t do that”. Preaching fiscal sobriety to the fiscally hungover after the party has finished and the house is already wrecked.
The Tories have boxed themselves into holding to a Brown orthodoxy on tax cuts to which he himself no longer adheres. Time to think outside of the box…
*Letwin’s aversion to tax cuts might have something to do with the 2001 election campaign fiasco when as a junior finance spokesman, he was forced into hiding after disclosing that the Tories had longer-term plans for £20 billion of tax cuts.
Are we now at the dead end of the New Labour era and Mugabenomics is a serious policy option? This is madness.
Alan Layng, a co-conspirator, sent Guido this neat piece of research* :-
I took UK stock market performance since 1902 assuming reinvested income and adjusting down for cost of living to give real terms equity market growth for each of the last 106 years.
I matched this up to the dates of each of the twenty prime ministers who have run this country since 1902 (interpolating to the right dates as required). This gave me a proxy for how much the equity markets had risen (or not) under their stewardship.
From there, it is a small hop to a comparable figure – compound annual growth rates – and, hey presto, we can compare the financial performance of each of prime ministers, and also of the parties, to see if one party has a better long term track record.
It makes interesting reading.
The FT reports that