The US economy doing rather better than expected with higher last quarter growth and GDP now up at 3.5%. This all appears to be linked to the upturn in consumer spending for last quarter. The fiscal decision to keep the Dollar down is paying off big bucks at the expense of the stronger pound, UK Economy which has taken the worst last quarter possible with 0.5% down on growth figures with consumer spending at an all time low.Although too early to pin this UK market retraction on VAT (20% Consumption TAX) increase of 2.5% this clearly appears together with bad weather during the critical consumer spending period pre Christmas period.
Banks appear to be doing well and the debate soon to re-start as the big bank bonuses are announced will re-emerge in the press any week now.
Conclusion: US doing better than predicted with a lower expectation of the US people for recovery, but spending at steady level. UK doing not so well and certainly less than predicted with a retracted consumer spending, but paradoxically a higher expectation of the UK people for recovery.
The UK ConLib coalition clearly needs to work more on giving out realistic expectations to the country. In many ways too many Conservative (and including coalition partners) taxation policies designed to help reduce to the deficit are having a quite opposite effect short-term.
The decision to TAX NonDom’s a fixed annual charge of £30,000 on long-term residents claiming non-domicile status may have been popular with voters pre election but indications are already showing a considerable exodus of extremely wealthy NonDom’s out of Britain to more TAX friendly Nations. Our loss their gain!
It is predicted that the overall (deficit reducing benefit) money gained from this new £30,000 charge will pale into insignificance by the overall loss that the UK economy ‘would’ have achieved had the NonDom’s been encouraged to stay in the UK in the first place!
More the case of the right hand not knowing what the left hand is doing and probably motivated in pre-election voter pleasing campaigning! Time for moving on and working out 'sensiblel' deficit reducing policies.
Author: Nigel Rumble
