Thursday, 25 March 2010

Budget 2010

Government Budget Statement
Spring 2010 – c. number 24

“Securing the Recovery”

…..…despite everyone pointing out the iceberg we had just hit amidships, Chancellor of Titanic suggests we should sail on without making repairs as it will all be fine

We set out below comments on the Spring Budget presented by our Chancellor in April 2010. The Budget was as always, waffle by the uninformed (i.e. non-accountants/economists) imposing on the masses what they don’t want.
The good news is that he changed very little, mainly because with a looming election anything complicated will be binned as part of the Dissolution horse-trading to skim through a quick Finance Act before they all collect their pay-offs, and make way for a new lot of chancers.

Thankfully we are not at present being asked to pay back all the ludicrous government borrowing incurred since c. 2000, and now accelerating out of control at an astounding rate. This does show the foolhardiness of borrowing to your limit when the going is good – 1997-2007 – as there is now no cushion to use up when the going gets tough – oh and who was holding the fiscal reins when this was done in our name? - it was Gordon B, who got promoted for his devoted efforts.
Our national debt as a % of gdp should have been running way below the max allowed by our masters in Bruxelles when the going was good, so that we could now notch things up a bit without hysteria in all quarters. Did you know that in the next 5 years the government is going to double the entire extant amount of the government debt i.e. all the money ever borrowed net before.

And yet we quote from ons ( UK Office for National Statistics ) “The public sector recorded deficits between 1991/92 and 1997/98 before moving into surplus in 1998/99. Deficits have been recorded since 2002/03.”
So what went wrong from 02/03+?

We should really be being clobbered by tax increases now for those on over £200k. pa, supported by a massive reining in of the ridiculous levels of government spending which we have incurred over the last few years. Even in this appalling economic situation the government has merely reduced the real rate of growth of government spending, not even halted it. In 2010/11 the Real level of government expenditure is STILL going to rise by yet another 2% above inflation, and even in 2011-12+ it is predicted to rise at 0.8%pa in REAL terms i.e. that plus whatever inflation comes in at each year - encroyable…

When you look through there is no clear statement of how we are going to clear the unbelievable amounts of debt being incurred, really because no one has a clue how we are going to manage it within a vaguely imaginable timeframe.
And the thing we don’t get here is :- what is it that is actually driving this massive PSBR surge for several tax years? Think it through – the dozy banks screwed up biiiig time so we nationalized them / bought shares in them / lent massive amounts of dough to them all amounting to £billions. Yep all fine, but that’s a one-off, what’s pushing the borrowing in 2010/11 onwards?

The only real hope is that the ‘astute investments’ in the bombed-out British banks come good, and we can flog the shares for massive profits in about 5 years time to pay it all off. Otherwise plan B is that we will have a PSDR liability of £10bn. per year for the lifetime of our grandchildren.

Our commentary highlighting the points in the Budget you need to know are here

These notes are subject to change in the light of errors being detected, or facts being found, on government websites ©MMX Abell Morliss Limited.

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