Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Meren Talks Money,
Speaker 1: the podcast in which people who know the markets explain
Speaker 1: the markets. I'm Maren zumsetweb listeners. As some of you
Speaker 1: will know, we have made a bit of a tradition
Speaker 1: of hosting a live recording of the podcast the morning
Speaker 1: after the budget. So earlier today I sat down with
Speaker 1: a familiar cast of Merin Talks Money guests to talk
Speaker 1: through our reactions to the budget and to take listener questions.
Speaker 1: Joining me in Bloomberg's London headquarters was John Steppeck, my
Speaker 1: co host and author of the Money Distilled newsletter, Stephanie Flanders,
Speaker 1: Bloomberg's head of Government and Economics, and Helen Thomas, CEO
Speaker 1: of Blonde Money. Now, this we are hoping is going
Speaker 1: to become a long term tradition. We did this last
Speaker 1: year the same panel. You were here last yearn you, Stephanie,
Speaker 1: John Bial's say me.
Speaker 2: Okay.
Speaker 3: And the idea is that we do a.
Speaker 1: Live podcast here the morning after the budget from Bloomberg
Speaker 1: headquarters here in London. So with me today Stephanie Flanders,
Speaker 1: head of Economics and Government at Bloomberg, Helen Thomas, you
Speaker 1: were here last your way, I was not worked. Okay,
Speaker 1: Well come every year please, founder and CEO of Blonde
Speaker 1: Money and John Steppeck, senior reporter and author of the
Speaker 1: award winning a multi award winning Money Distilled newsletter. I
Speaker 1: will say, by the way, that this podcast has also
Speaker 1: won an award, So there's an award winning podcast right now.
Speaker 1: Before I start, I just want to check the feel
Speaker 1: of the audience.
Speaker 3: Who is happy with the budget?
Speaker 1: Hands up the right, Oh, well, two hands have got free,
Speaker 1: hands have gone up. I think we've got about three
Speaker 1: hundred and fifty people in the audience who thought it
Speaker 1: was a good budget for Rachel Reeves more hands okay,
Speaker 1: good budget for young people, no old people, for more
Speaker 1: of their okay, for growth, not a single hand, not
Speaker 1: a thinker. That was my aim to go to a
Speaker 1: bit where not a single hand went up.
Speaker 3: Okay.
Speaker 1: So can we start Helen with you now? The question
Speaker 1: that a lot of people ask before this budget and
Speaker 1: after it is is this enough for Rachel? We used
Speaker 1: to keep a job for a.
Speaker 4: Few more weeks, maybe months at best, and she can
Speaker 4: thank the Fed's John Williams for that, okay, Because what
Speaker 4: we have had is the market giving her the benefit
Speaker 4: of the doubt because broadly the market now seeing potentially
Speaker 4: will rate cuts out of the US is sort of
Speaker 4: in a slightly more benign mood. So yes, benefit of
Speaker 4: the doubt for now, but it will unravel, It will
Speaker 4: unravel politically, and we'll probably come onto it.
Speaker 1: Okay, So as far as the guild market is concerned,
Speaker 1: everything's basically fine.
Speaker 4: For the next well for sort of the next few
Speaker 4: days and weeks. Okay, if you want me to read
Speaker 4: out the bit of the OBL report that means it
Speaker 4: isn't No.
Speaker 3: I don't want you to read it out. I want
Speaker 3: you to summarize.
Speaker 4: Okay, borrowing will be is higher, and the fiscal consolidation
Speaker 4: comes later. Yeah, that is a pretty toxic mix if
Speaker 4: anyone thinks they're going to do fiscal consolidation in the
Speaker 4: year before scheduled election.
Speaker 3: Yeah, so this is what the markets may be missing.
Speaker 1: There's a lot of spending up front, but the consolidation
Speaker 1: itself is backloaded, and we can't be absolutely sure that
Speaker 1: very many things those things will happen, and we'll come
Speaker 1: onto the mansion tags later, which is one of the
Speaker 1: things that I suspect the audience is super interested in
Speaker 1: and which I suspect will never happen.
Speaker 5: John, from your point of view, Yeah, I think.
Speaker 6: I mean, I agree with Hell and I do think
Speaker 6: the other issue is that possibly people I think they
Speaker 6: will get a little bit too excited about the gelp's
Speaker 6: market these days because of what happened to realized choice.
Speaker 6: And the thing that we have to remember is that
Speaker 6: when that happened, it was an extremely fair rail moment
Speaker 6: in global microeconomics, so interesting, it's shooting up. And on
Speaker 6: top of that, Britain had some kind of LDI leverage
Speaker 6: inside the system. So you can think what you like
Speaker 6: about Liz Trust, but she was throwing a Molotov cocktail
Speaker 6: at Agenda Tower. That's the point. So what has happened
Speaker 6: now is the guilts market is much more stable. Also,
Speaker 6: the Debt Management Office is managing the issuance much more so.
Speaker 6: For example, they canceled three scheduled thirty year guilt auctions,
Speaker 6: so that means there are fewer chunks of long term
Speaker 6: debt being issued, which means the supplies down, which is
Speaker 6: the reason that yield went down yesterday, because if you
Speaker 6: need thirty year gilts, that are a few of them
Speaker 6: kicking about So I think all of that stuff is
Speaker 6: easy to neglect because we do get obsessed with the
Speaker 6: politics and the ushi. But equally, as Helen said, it's
Speaker 6: also because they fed now looks as if it might
Speaker 6: cut interest roots. So it's you know, there's a big
Speaker 6: chunk of things going on that make her you know,
Speaker 6: she's throwing a Molotov cocktail. She's thrown it at like,
Speaker 6: you know, a skyscraper or you know, a kind of
Speaker 6: fireproof trump.
Speaker 1: Okay, and this was a relatively non inflationary budget, particularly
Speaker 1: relatively yes, well.
Speaker 6: Yeah, I mean relatively speaking, it still wasn't you know
Speaker 6: she was pushing back against you know, like she's sort
Speaker 6: of gaming the figures a bit over the next year
Speaker 6: by you know, poising the index and the train fairs
Speaker 6: and things like that. But certainly putting the minimum wage
Speaker 6: up by four point one percent is not.
Speaker 5: That's an inflationary younger people.
Speaker 6: Oh yeah, And it's also because you know, because supermarket's
Speaker 6: employer paid a lot of people who I mean to
Speaker 6: be through the supermarkets all pay above minimum wage. But
Speaker 6: if you're going to keep paying above minimum wage, and
Speaker 6: then every time minimum wage goes up, you have to
Speaker 6: bump up your staff salaries. I mean quite apart from
Speaker 6: the impact on kind of wage compression and you know,
Speaker 6: damaging people's motivation to work. The point is they need
Speaker 6: to pass that cost on somehow. In the Bank of
Speaker 6: England itself said, you know earlier this year one of
Speaker 6: these food prices have gone up. Isn't because global food
Speaker 6: prices are higher. It's because the kind of labor costs
Speaker 6: are having to get passed on by the supermarkets, which
Speaker 6: are extremely low margin businesses. As I suspect everyone in
Speaker 6: this room probably knows. So yeah, so yeah, I'm not
Speaker 6: particularly interest, but I think the reason she's got away
Speaker 6: with it is bequised. The envitement is much more forgiving.
Speaker 1: Yeah, definitely have any major surprises in their view.
Speaker 7: Well, so the surprise was actually the market reaction is
Speaker 7: at some level, and I think it also underscored the
Speaker 7: missed opportunity because you had a budget that was I'm
Speaker 7: not sure, at least for the purposes of today, I'm
Speaker 7: going to be slight. I'm going to try really hard
Speaker 7: to be a bit more positive because it just feels
Speaker 7: like otherwise we're going to be beating our stick over
Speaker 7: this budget for the next hour.
Speaker 5: But it's hard.
Speaker 7: I have to say, it's hard to find things to
Speaker 7: good say, but I think it was if you're looking
Speaker 7: at the UK and thinking is this, and you would
Speaker 7: many people were, obviously, and the global markets were thinking
Speaker 7: this when the Labor government came in, and were actually
Speaker 7: betting on the UK, putting money into the UK on
Speaker 7: the basis that this was going to be a government
Speaker 7: that was going to be more long term, certainly more
Speaker 7: stable politically, was going to take some of these tough
Speaker 7: choices after all this chaos, and instead you've had a
Speaker 7: series of budgets that made all the same sort of
Speaker 7: awkward short term compromises. I wouldn't say these I mean
Speaker 7: they're obviously in a labor direction. I wouldn't say they're
Speaker 7: fundamentally worse than some of the compromises that were made
Speaker 7: in the previous government. But you certainly haven't seen a
Speaker 7: step change in the quality of macro decision making or
Speaker 7: a government taking advantage of the fact that it had
Speaker 7: a full term ahead and a large majority. And I
Speaker 7: think in this case, you know you had and our economists,
Speaker 7: chief economists Dan Hanson had identified you know, you have
Speaker 7: that money on the table that you could have got
Speaker 7: from persuading the markets that actually you were going to
Speaker 7: you were willing to take some pain, that you were
Speaker 7: willing to have some front loaded fiscal consolidation, which also
Speaker 7: incidentally could have helped the more sort of fundamental way,
Speaker 7: Hey up the Bank of England to cut rates sooner.
Speaker 7: And when I saw how little the market had reacted
Speaker 7: to this one, you know, purely with the reassurance that
Speaker 7: there was more margin for error now, but not that
Speaker 7: we won't actually be making those errors, I thought, Wow,
Speaker 7: they really could have.
Speaker 5: They could have come away.
Speaker 7: We had what four basis points cut in yeals, it
Speaker 7: could have been twenty. We could have got halfway back
Speaker 7: to the US, potentially on a day where people, as
Speaker 7: we've all said, you know, the markets were feeling a
Speaker 7: little bit more favorable. Anyway, that gap with the US.
Speaker 7: There's no sensible reason for it, even if you look
Speaker 7: at the long term fundamentals, except this feeling that UK
Speaker 7: governments can no longer do difficult things, which is true,
Speaker 7: which you know, based on you know, all available evidence,
Speaker 7: seems to be true.
Speaker 1: What difficult thing do you think that she could have
Speaker 1: had to go at?
Speaker 7: I mean the obvious one, but it's funny because you know,
Speaker 7: it's a bad sign for a government that has this
Speaker 7: many years ahead that you're constantly going back to things
Speaker 7: they might have done a year earlier. Yeah, So, you know,
Speaker 7: this time a year ago, we were saying, why did
Speaker 7: she sign up to that national insurance cut that Jeremy
Speaker 7: Hunt or the two success of Jeremy Hunt national insurance cuts,
Speaker 7: and why hadn't she not just said we're going to
Speaker 7: reverse those, but we'll be back to where we were,
Speaker 7: will keep rates exactly where they were a year ago,
Speaker 7: but we don't think these cuts are affordable. That would
Speaker 7: have saved her twenty billion pounds of pain. Then we
Speaker 7: got to this budget, we said, well, why hasn't she
Speaker 7: done you know, why hasn't she been braver on saying
Speaker 7: the world has changed, you know, and actually tackled some
Speaker 7: of the things on income tax. Same with the spring
Speaker 7: statement that we had a complete change in the global
Speaker 7: environment with Trump and the intensification in Ukraine, and yet
Speaker 7: they still missed that opportunity. So I just think, you know,
Speaker 7: the real shame is that we are constantly saying she's
Speaker 7: missed an opportunity. She's just doing the minimum, and you know,
Speaker 7: we're going to look back and say, wow, there's just
Speaker 7: there's so many things that this government could have done
Speaker 7: that it's not done. And instead, as we're pointing out,
Speaker 7: the welfare bill is going up and the same physical
Speaker 7: challenges are there.
Speaker 3: Yeah.
Speaker 1: Well, we were talking about this earlier, about the signals
Speaker 1: that we're sending here, and one of the sort of
Speaker 1: extraordinary things that you can look at at the moment
Speaker 1: to see that the total welfare bill is remarkably similar
Speaker 1: to the total income tax bill. And you get to
Speaker 1: a point when you're looking at maybe young people working
Speaker 1: and working very hard paining their income tax and they
Speaker 1: can now look at it and go wow, pretty much
Speaker 1: every pound I pay an income tax is going one
Speaker 1: way or another into the welfare bill. And that's a
Speaker 1: terrible signal to send to our young people.
Speaker 7: And it's also just a weird signal that disc government.
Speaker 7: I mean, you've got a particular thing around.
Speaker 5: You know. I think it was.
Speaker 7: Really disappointing and you know, dereliction to not push harder
Speaker 7: on the welfare of formula, but to not push to
Speaker 7: not get anything in return for this kind of important
Speaker 7: contribution to child poverty. But you would always have said,
Speaker 7: given the downsides of that, you would always have said
Speaker 7: it had to go with some more serious reform and
Speaker 7: to end up with nothing.
Speaker 5: On the other side of the ledger, I think, well.
Speaker 1: There is something the return to face to face appointments well,
Speaker 1: and I think that sounds little bit and actually maybe
Speaker 1: quite big.
Speaker 7: I was actually yesterday someone asked me, you know, what's
Speaker 7: some sort of the opposite of an unexploded bomb, you know,
Speaker 7: the sort of positive things that might unexpectedly go well
Speaker 7: in the last year, And that was the while I highlighted.
Speaker 7: I think, I think there is a possibility that that
Speaker 7: will have a much bigger effect on the roles. But
Speaker 7: remember you've still got a lot of people who you know,
Speaker 7: the fixed number of people already on the rolls as
Speaker 7: well driving up the bills.
Speaker 1: Helen were let's let's pick up that, then let's go
Speaker 1: for something positive. Were there any hidden positive surprises in
Speaker 1: there for you? Do you think I have a horrible
Speaker 1: feeling the answer is going to be no.
Speaker 4: But well I want to give I suppose give some
Speaker 4: credit to Rachel Ruves that she was trying to square
Speaker 4: an impossible circle and it could have been worse.
Speaker 3: So it could have been worse that's not what I'm
Speaker 3: looking for, no.
Speaker 4: Okay, okay, so yes, all right, let me let me
Speaker 4: think about that.
Speaker 3: It's quite difficult, okay, John.
Speaker 8: I was.
Speaker 4: In terms of, well, I've got to go back to
Speaker 4: this thing about welfare, because the front page of the
Speaker 4: newspapers this morning pretty much singularly or negative.
Speaker 3: But you know, it's what is it?
Speaker 4: You know, the shirkers, the strivers are paying for the shirkers.
Speaker 4: So we just roll on all the time, and what
Speaker 4: is this government about? What is its strategy, what is
Speaker 4: its narrative, what is it s message? Where are its priorities?
Speaker 4: And then this tussle over welfare turned into a temic
Speaker 4: debate about the two child benefit cap, and now it's
Speaker 4: rolled into shirkers versus drivers, which is surely not what
Speaker 4: the government wanted it to do.
Speaker 3: So sorry, that's negative again.
Speaker 4: They okay, okay, Well, she has, as we started on this,
Speaker 4: given something more to the sort of labor. It's a
Speaker 4: labor budget for labor people. I'm a labor person doing
Speaker 4: progressive things.
Speaker 3: She said that. I think she's she has sold.
Speaker 4: That to some degree, so perhaps she has managed to
Speaker 4: bring a bit together. The splitting parts elements the Labor Party.
Speaker 3: Okay, brave Helen.
Speaker 6: It's really didn't work with the line Fell tax. There
Speaker 6: was a line Fell tax which was basically I'm not
Speaker 6: an infrastructure of gay, so then that I might change.
Speaker 6: They were going to like multiplayer by about ten teams men.
Speaker 6: You can never build our hose again in the entire country.
Speaker 5: So that was quite a good idea.
Speaker 3: Slash that would be.
Speaker 1: A much better idea because yeah, constructure and it's one
Speaker 1: of the reasons why we have dumping across the UK,
Speaker 1: because it's so expensive to move stuff to a land
Speaker 1: filled stuff there.
Speaker 7: Is I mean, what's ironic about this government is all
Speaker 7: the good stuff they're doing is the stuff they're really
Speaker 7: trying to hide not talking about very much at all.
Speaker 7: So as she did mention John Fingleton's report on the
Speaker 7: making it easier to build nuclear power stations, I mean
Speaker 7: that goes to this whole swath of things of why
Speaker 7: is it so flipping difficult to build anything in this country?
Speaker 7: And there has been quite a lot of active involvement
Speaker 7: if you.
Speaker 5: Look for my sins. I was actually looking.
Speaker 7: At some of the amendments in the remember it's called
Speaker 7: now Land Planning and Infrastructure Bill, which for some reason
Speaker 7: is still not got roll ascent. But anyway, there was
Speaker 7: an intervention actually by number ten to make that even
Speaker 7: tougher in terms of overruling local councils on big projects,
Speaker 7: a number of things that should make it easier also
Speaker 7: to do big infrastructure and those things. You know, if
Speaker 7: it becomes not impossible to build a nuclear power station,
Speaker 7: I think that's something that you know, future governments will
Speaker 7: benefit from. But it's an important change which you know,
Speaker 7: let's face it, all of those the planning, all of
Speaker 7: those things got much worse under the last fifteen years.
Speaker 7: There was no concerted pressure from the Conservatives on that,
Speaker 7: so you know, I think that kind of thing matters. Also,
Speaker 7: I know it's not very popular and many people have
Speaker 7: said it's something that might get reversed, but we were
Speaker 7: going to have to move to a way of taxing
Speaker 7: electric cars, and for them to have had actually been
Speaker 7: brave enough to say, okay, this is the system and
Speaker 7: it's going to come in in a few years time.
Speaker 7: You know, somebody was going to have to do that,
Speaker 7: and we don't want it to be another thing that
Speaker 7: governments are incredibly unbrave about that we have for the
Speaker 7: fuel levees.
Speaker 5: The other positive stick sticking with electricity.
Speaker 1: The other positive you might pull out is the beginning
Speaker 1: of a recognition that electricity builds them. You go too
Speaker 1: high because of the piling of green levels, green levees,
Speaker 1: on and on and on and on and on, and
Speaker 1: of course they will have to be paid. Shifting them
Speaker 1: into general taxation doesn't take away the fact they have
Speaker 1: to be paid, but it takes them off of electricity.
Speaker 1: But it probably should have been in general taxation. Yeah,
Speaker 1: it should be in general taxation in the first place.
Speaker 1: But it's a recognition that we have a problem with
Speaker 1: electricity prices. So that seemed that was a very minor
Speaker 1: positive that I could.
Speaker 6: Thing as well.
Speaker 1: Yes, that just irritated me, to be honest.
Speaker 6: I mean it's really it's really a limp because yeah.
Speaker 1: And this is this is the if you I p O,
Speaker 1: then you don't. There's no stam duty on the trading
Speaker 1: of the shots for three years, which you know is fine.
Speaker 1: But the reason people don't IBO in the UK is
Speaker 1: because they're not going to get a good enough price.
Speaker 3: And this of only three years.
Speaker 1: Sure you capitalize that into it, you get a small
Speaker 1: uplift possibly in your issue price, but but not much.
Speaker 1: And you know stamp duty should go across the board,
Speaker 1: don't you think. I mean, you've been listening, but can't
Speaker 1: take the big steps to make the proper change that
Speaker 1: is needed.
Speaker 6: I think that's that that is the problem, and it's
Speaker 6: kind of bog was doing a very FoST question that
Speaker 6: you asked here, and like the issue here is that
Speaker 6: this is our budget done essentially to see for the
Speaker 6: Chancellor's neck, and that means she's basically doing it for
Speaker 6: a tiny audience of labor MPs and that makes all
Speaker 6: of the difficult things even harder. I mean, it was
Speaker 6: always to have to promise that she wasn't going to
Speaker 6: put up income tax. I don't know why people are
Speaker 6: so obsessed with the manifesto because it's very clearly been broken.
Speaker 6: I mean, if you don't think physcal drag is putting
Speaker 6: up income tax on people, and I don't know what
Speaker 6: to tell you to We're absolutely honest, you know this
Speaker 6: stuff is you know, it's very loyally kind of like
Speaker 6: way of looking at things, But if you look at
Speaker 6: all the problems that we fundamentally have, it is about
Speaker 6: politicians being afraid to tell people hard things. And that's
Speaker 6: why they're hiding the planning stuff as well, because there's
Speaker 6: a cohort who really you know, the ymbies want to
Speaker 6: hear it, but the nymbi's don't.
Speaker 3: They don't want to be told it.
Speaker 6: And as soon as I mean even the ymbi's, as
Speaker 6: soon as it's actually in their backyard, very very quickly,
Speaker 6: I think.
Speaker 5: That's the problem. And I don't.
Speaker 6: I don't know how we get beyond that. Except for that,
Speaker 6: I guess they'll like that. It has to get source
Speaker 6: sick of the kiniscaliursis and the plaque building not in
Speaker 6: the arteries of the state, that eventually we get somebody
Speaker 6: who's got the vote online date total quilo.
Speaker 5: You get to crisis?
Speaker 1: Can I ask you Ellen about We're talking about fiscal drag,
Speaker 1: which is such a big deal in the UK and
Speaker 1: we worry a lot.
Speaker 3: We talk a lot John nine on the podcast.
Speaker 1: We talk about the rich leaving the UK, and we
Speaker 1: talk about the millionaires and the billionaires and they're all
Speaker 1: going to Milan and Luxembourg, in Dubai, etc. But I'm
Speaker 1: not sure we talk enough about high income young people.
Speaker 1: And so there's in fiscal drag like this so they're
Speaker 1: starting to pay higher levels of income tax very early.
Speaker 1: And then of course we saw yesterday the thing that
Speaker 1: I was I was surprised by. I didn't see that coming,
Speaker 1: with freezing preshoals for student loans and the freezing of
Speaker 1: interest rates for student loans.
Speaker 3: So you will see increasingly.
Speaker 1: Young people hitting this level where their marginal rate of
Speaker 1: income tax at fifty one percent, really remarkably early. And
Speaker 1: this seems to me to be one of the not
Speaker 1: particularly discussed problems in this budget.
Speaker 4: Well, this is the the thrust of if you do
Speaker 4: a smagas board rather than be brave and do and
Speaker 4: do the big income tax rise on.
Speaker 3: Everybody that you then end up hitting.
Speaker 4: I mean, presumably that was done to scrimp back some
Speaker 4: cow work lard wire to get the numbers swab up
Speaker 4: in that year onwards, and so to actually, you know,
Speaker 4: I think that you know the risk of this unraveling.
Speaker 4: I mean we're here less than twenty four hours later
Speaker 4: is extremely high that this unravels. Don't forget that just
Speaker 4: because she made the statement doesn't mean it gets through through.
Speaker 4: You have to vote on each tax measure. Then there's
Speaker 4: a second reading. I mean this there is you know,
Speaker 4: the whole finance bill that goes through. Quite possible that
Speaker 4: if one of these becomes a totemic issue, that maybe
Speaker 4: it is something on that maybe it is something for
Speaker 4: young people that there's a big fuss about that various
Speaker 4: MPs aren't happy with, and that this is the issue
Speaker 4: politically now because of what happened on the welfare bill.
Speaker 4: Because of now this budget's moving slightly to the left.
Speaker 4: That side of the party is a veto it can
Speaker 4: it can it can push harder. So we're saying in
Speaker 4: other countries as well, look at France, other places where
Speaker 4: there's fragmentation politically.
Speaker 3: And so and so.
Speaker 4: Yes, it could, it could, it could unravel. And then
Speaker 4: we now know. What we do now know is her
Speaker 4: political capital is very low. It hasn't yet got lower
Speaker 4: as a result of what happened yesterday, but for it.
Speaker 3: To go up your d to see the polls shift.
Speaker 5: Okay, so she's done very well.
Speaker 1: She's hung on to a position as one of the
Speaker 1: most unpopular chancellors in the history of the UK and
Speaker 1: it hasn't got much worse.
Speaker 3: Yeah, yeah, that's right. But this is only going to
Speaker 3: get rid of the original sin.
Speaker 4: If you like was that we we've had a government
Speaker 4: with a huge majority but no mandate for various of
Speaker 4: the things it's done, and they are never getting away
Speaker 4: from that because really their real mandate was just don't
Speaker 4: be the Tories. And then actually some of the things
Speaker 4: they're doing are actually some previous government did and then that's.
Speaker 3: Not getting it going well with anyone. And so the
Speaker 3: only way you end up resolving they'll switch leader.
Speaker 4: That might give them a bit more romandic because that
Speaker 4: person will have some slightly different polished platform, but that
Speaker 4: still won't gather. That's not what every labor voter voted for.
Speaker 3: Yeah. Sorry, seven No, I was just going to put
Speaker 3: back a little bit on hell.
Speaker 7: I mean, I think it's maybe that's the parlor game
Speaker 7: that we should be playing, is what you've identified.
Speaker 5: Marin.
Speaker 7: I think the student the freezing of those threshold for
Speaker 7: student loads is actually one of the worst things that
Speaker 7: was done as sort of on the sly, But I
Speaker 7: also think it's one of the least likely things that's
Speaker 7: going to get voted down because all the evidence talk about,
Speaker 7: what the visible evidence for, all the evidence for is
Speaker 7: that you can really squeeze students for a very long
Speaker 7: time remember how long the fees stayed exactly the same,
Speaker 7: and you had the university sector students facing hard, worse
Speaker 7: and worse services, and there's been no pressure to change it.
Speaker 7: So I think that's it should be one of the
Speaker 7: ones the most content students.
Speaker 1: You can squeeze students, but can you freeze relatively high
Speaker 1: income thirty two year olds who suddenly look at their
Speaker 1: income and go fifty one percent?
Speaker 7: And it comes from having been fixed in terms of
Speaker 7: the basic rate, because as you know, we actually have
Speaker 7: in terms of the average tax rate on average earners
Speaker 7: in the UK is much lower than certainly any other
Speaker 7: countries in Europe.
Speaker 5: We're much more reliant on the high earners.
Speaker 7: But we've just ended up with this really skewed system
Speaker 7: where people are some rather than having the basic rate
Speaker 7: be higher for everybody. We're hitting these very high marginal thresholds.
Speaker 3: Yeah, and maybe they will leave, maybe they won't.
Speaker 5: We'll find out in a few years.
Speaker 3: When we.
Speaker 1: Okay, so let's talk about the thing that I just
Speaker 1: think everyone would like us to talk about, the mansion tax.
Speaker 1: We're talking about things that might not make it. So
Speaker 1: this is a tax that will take years to figure out.
Speaker 1: Quite a long time to implement, will be relentlessly challenged.
Speaker 1: Do any of you think that we will ever actually
Speaker 1: see a mansion tax on houses supposedly worth over two million?
Speaker 4: I do froll the point actually of me saying over
Speaker 4: all this labor MPs something manravel. I would think it's
Speaker 4: broadly extremely popular with labor MPs to do something on this,
Speaker 4: even if it's not very well designed, which does appear
Speaker 4: to be one of the key criticisms. So actually that
Speaker 4: I would put on the could get pasted absolutely easily.
Speaker 3: Are you talking about in the mechanics? Is it logistically possible?
Speaker 1: Is anyone ever actually going to pay an extra tax
Speaker 1: on their house that may or may not be worth
Speaker 1: two million pounds?
Speaker 6: I think so, John, I mean, I guess the problem
Speaker 6: is that the logistics are quite see it is because
Speaker 6: you've got it, You've got a guess at the valuation,
Speaker 6: and the tax itself reduces the value of the house.
Speaker 6: And then the top of that I've already heard conn
Speaker 6: appracially saying, is it's split in your hosts and in
Speaker 6: two different homes each one.
Speaker 1: I've already had two or three of those conversations literally
Speaker 1: yesterday off the basement, having got rid of themmultiple dwelling
Speaker 1: tax relief.
Speaker 7: Everybody's put their houses back together again and put.
Speaker 5: Them off atastic.
Speaker 1: Yeah, we're moving into a new age of tax dodging,
Speaker 1: bign any flights.
Speaker 5: Basically that sort of thing solve.
Speaker 1: The granny clap problem. I think we'll have an election
Speaker 1: before then. By the way, I do like that that's
Speaker 1: the commission. They don't make it because there was an
Speaker 1: election before it happened.
Speaker 7: Obviously, I'm sure we all think that council tax should
Speaker 7: be reformed and that it's a completely use tax at
Speaker 7: this point. And I guess if I was trying really
Speaker 7: hard to be somewhat sort of quick sostic about this,
Speaker 7: I would say they have now Remember we had even
Speaker 7: the first attempt ed Milliband's attempt to have a mansion
Speaker 7: tax was the kind of first effort. Now they've actually
Speaker 7: managed to break the first barricade in terms of saying, okay,
Speaker 7: we're going to have this high level You're quite right,
Speaker 7: theren it's going to have lots of technical issues, but
Speaker 7: there is now an opening if you say, well, okay,
Speaker 7: if we're going to revalue some of the houses.
Speaker 5: There's just the.
Speaker 7: Tiniest possibility that the mess that this causes, the clear
Speaker 7: need for councils to have a better basis for funding,
Speaker 7: may coincide into having some kind of cross party effort.
Speaker 5: And you know who could be the person who would
Speaker 5: do it be Nigel for.
Speaker 7: Us, because he has twelve councils now who are all
Speaker 7: realizing that council tax is completely useless and actually they
Speaker 7: have a stake in reforming it in lots of different
Speaker 7: councils across the country. And if he's listening, I would
Speaker 7: say that would be a really good thing for him
Speaker 7: to show that they were a serious party that wants
Speaker 7: to do serious things to help local and central government.
Speaker 7: When to do something really complicated, I think it's really
Speaker 7: likely to happen. Okay, interesting pertect a positive almost a
Speaker 7: positive trying to think that, thank you for happening, and.
Speaker 3: John, let's talk about isis yes? Right?
Speaker 1: So you and I've talked a lot about how we
Speaker 1: don't approve of the twenty thousand pound allowance for tax
Speaker 1: iceis and this makes no sense and that's too much
Speaker 1: cash to have if you're rolling it up every zerashizers
Speaker 1: it's too much. Have you with docs and shares isis,
Speaker 1: and I think we were hoping and suddenly I was
Speaker 1: hoping that the cashized will be reduced and the element
Speaker 1: it was reduced by would be funneled into U k
Speaker 1: Rriston stocks, and that didn't happen.
Speaker 6: No, So it's like SINS twenty's still twenty thousand pounds,
Speaker 6: and I know it's people get quite confused about this.
Speaker 6: So from April twenty twenty seven, the ISA allowance will
Speaker 6: still be twenty thousand pounds, but rather than being able
Speaker 6: to stick it all in cash, you'll only be able
Speaker 6: to stick twelve thousand in cash.
Speaker 3: Unless you're an old persson, unless you're over.
Speaker 6: Sixty five, which is the other thing that we've made it.
Speaker 6: I mean, it's almost like they can't do anything, just
Speaker 6: adding a little quirk. And again, I mean I wouln't
Speaker 6: write about it, but it comes back to that idea
Speaker 6: that you can't have any losers, and it's like, you know,
Speaker 6: why are we leaving the three over sixty five? I mean,
Speaker 6: there's people under twenty who want to be saving cash
Speaker 6: for a property deposit and they don't need that to
Speaker 6: be in shares. That's one of the few times when
Speaker 6: I would say no, you know you need this soon,
Speaker 6: so you cannot stick it in something with a long
Speaker 6: risk horizon. But parking that. The only thing I will
Speaker 6: say is it's at least it's a signal, you know,
Speaker 6: it's a very again, it's kind of limp.
Speaker 5: Is a bit like the three year business.
Speaker 6: Yeah. And the other thing is people keep talking about
Speaker 6: who oh yeah, but I can put my money in
Speaker 6: a money market fund and said, well, that's not the point.
Speaker 6: To get to the point where you know there's a
Speaker 6: money market fund into which you can put cash, you
Speaker 6: need to have grappled to be getting an investment platform
Speaker 6: and going into their stocks and shares. So that's one
Speaker 6: thing why I would say that that's not a kind
Speaker 6: of a reasonable objection to it, because we're actually just
Speaker 6: trying to get people to engage with investing, which a
Speaker 6: lot of people in this country currently don't.
Speaker 4: Do you know why that this has happened with the
Speaker 4: LIMP measures. It's government by committee, it's a group of
Speaker 4: it's you know, treasure civil servants, bad others sitting around
Speaker 4: a table saying okay, right, we're going to definitely do
Speaker 4: this measure. I know, but hang on, what about this interest? Okay, Well,
Speaker 4: we'll give them a little bit of it, I know,
Speaker 4: but what about that long? Okay, well can we hand
Speaker 4: them back bits this way?
Speaker 3: Oh no, hang on. That's and that's what's going on,
Speaker 3: which is why it's leak.
Speaker 6: Are you saying I'm being on Trea by blaming Martin
Speaker 6: Lewis for that?
Speaker 3: It's interesting, yeah, isn't it?
Speaker 1: Because one of the big one of the groups that
Speaker 1: pushed back where the building society is you know, if
Speaker 1: you don't go to the guys, the mortgage rates will
Speaker 1: go up. So you definitely can't do that, and that's
Speaker 1: one of the reasons why we ended up with this
Speaker 1: measure manage.
Speaker 4: Yeah, and you get the interest group depending how good
Speaker 4: their lobbying is. And now I thought that was quite
Speaker 4: a smart angle to take because when you're lobbying, you
Speaker 4: then need to go for well, what what is really
Speaker 4: going to worry or upset this government? Oh well, they're
Speaker 4: quite obsessed about mortgage mortgages and mortgage costs because well,
Speaker 4: because you know, that was the story for rich Reeves's mind,
Speaker 4: you know, truss led to higher mortgage rates which led
Speaker 4: to her losing her job. Yeah, I don't want to
Speaker 4: do my job, so don't do that.
Speaker 3: And the one thing we.
Speaker 1: Haven't talked about is salary sacrifice and how John isn't
Speaker 1: going to be able to buy the new bicycle they wanted.
Speaker 7: Oh I didn't supoot that gone and everyone thought it
Speaker 7: was going to go.
Speaker 5: Did it go? I think so she didn't. She didn't check.
Speaker 5: I assumed that.
Speaker 6: I thought it was just pension wrong. I haven't looked
Speaker 6: at the absolute microdatail thought.
Speaker 5: It was okay, you can have the bike up.
Speaker 6: Can not tell you know, the salary sacrificing. The thing
Speaker 6: I've been most interesting is the fact is not coming
Speaker 6: in until April twenty twenty nine. And part of that
Speaker 6: I'm wondering as if because by even just by signaling
Speaker 6: she's going to do it, everyone who was using it
Speaker 6: is going to have to go back and have a
Speaker 6: chat with her employer. Other employer is going to have
Speaker 6: to have a chat with her staff and explain about
Speaker 6: how this is going to affect their overall compensation. And
Speaker 6: so I'm wondering if it's one of those things that
Speaker 6: she's kind of thinking, well, this is just going to
Speaker 6: unravel itself, rather than be something that we need to
Speaker 6: legislate for aggressively I don't know, but it kind of
Speaker 6: feels like, I mean, because you're going to start talking
Speaker 6: about it now because it is complicated, very complicated, you know.
Speaker 7: I think that's the length of time is actually I
Speaker 7: think they were told that it's just because employers were
Speaker 7: actually going to have to rework a lot of their
Speaker 7: contracts and they all systems for their payments and so
Speaker 7: I think or the internal approach to company pensions all
Speaker 7: of that was going to have to change. So I
Speaker 7: think she was told, you cannot rush this, you can
Speaker 7: ask too hard, but.
Speaker 5: It should be said.
Speaker 7: You know, it's way more money, ten times more money
Speaker 7: than you're going to get from the mansion tax.
Speaker 5: That's just something that will just probably.
Speaker 1: Note and something which which doesn't mean much too many
Speaker 1: people initially. They'll only find out later howlets is going
Speaker 1: to cost them.
Speaker 9: No questions from the audience, given the dependence of this
Speaker 9: country or the income tax on high net worth and
Speaker 9: super high networths, has this budget done anything to deter
Speaker 9: people from who are considering leaving but yet haven't from leaving,
Speaker 9: you know, in terms of capital incentives for their investment
Speaker 9: to stay.
Speaker 1: Is there is there any reason given by this budget
Speaker 1: stay in the UK.
Speaker 5: Is the question, John, what do you think?
Speaker 3: I mean, I don't think so.
Speaker 6: If you were already saying they're doing it, then I mean,
Speaker 6: there isn't anything. You know, if if you can see
Speaker 6: that eating on the wall, you know it's going to
Speaker 6: go left before it goes right again.
Speaker 5: For one of the words, it's going to go.
Speaker 6: Big tax before it goes lower tax again. And so no,
Speaker 6: pretty straightforward, I don't think so.
Speaker 3: No headshake from Stephan.
Speaker 7: I mean there have been some pressure, there have been
Speaker 7: some question marks whether whether you could unpick some of
Speaker 7: the most damaging changes from the removal of the non
Speaker 7: dom but she's obviously not listened to those.
Speaker 6: So yes, I inheritance tax is the big thing. It's
Speaker 6: like people do not want to give forty percent of
Speaker 6: the global assist to the UK government just because they
Speaker 6: stayed here for ten years. I mean, what's his name
Speaker 6: likes me? Mittau just left and that's why. That's exactly why.
Speaker 1: Yeah, so that would be a very straightforward fix. But no,
Speaker 1: it hasn't happened. So I think that that'll be a no.
Speaker 1: That'll be a no.
Speaker 3: Can we have back here, white shirt? Please?
Speaker 5: Thank you?
Speaker 1: I'm fraid all these questions are depressingly easy to answer.
Speaker 10: That's great as a London parent who is trying to
Speaker 10: provide a bedroom for my three children and has just
Speaker 10: purchased a two million pound house to do that, they
Speaker 10: still don't have a bedroom because I've got two lodgers
Speaker 10: to pay the bills. Am I being punished for not
Speaker 10: having a vasectomy? And is there a ify name that
Speaker 10: you can give to this tax for my situation? Is
Speaker 10: it the London family tax or the vasectomy tax or
Speaker 10: you know what these books?
Speaker 1: Anyone've got a snappy name for the having too many
Speaker 1: children in central London and not being on welfare tax?
Speaker 6: I'm glad my legs are already crossed.
Speaker 3: Again.
Speaker 1: I've read that one was depressingly easy to answer as well,
Speaker 1: and I'm sorry. Maybe you should have bought a tuber
Speaker 1: house or moved out of London, or personally I would
Speaker 1: just give up your job at this point, Peter.
Speaker 11: Here in front, I just want to be go onder
Speaker 11: John sir, because this does feel awfully like nineteen seventy
Speaker 11: to me what I mentioned in the panels. Do is
Speaker 11: this ninety seventy four or is it ninety seventy six?
Speaker 11: Or is it nine seventy nine where we actually get
Speaker 11: a revolt against the current services.
Speaker 1: Oh interesting, nineteen seventy six, Helen, I think what was
Speaker 1: your nineteen seventy nine?
Speaker 4: No, well, no, I'm thinking what was it year with
Speaker 4: the two elections nineteen seventy four? Yes, well, I mean
Speaker 4: it's nice to do the historical parallels, and actually it's
Speaker 4: good because we need to think that that when everyone
Speaker 4: gets frustrated with politics, it's quite useful to know there
Speaker 4: were other times when things were very fractious for very
Speaker 4: understandable reasons. But I think you know, history rhymes doesn't repeat,
Speaker 4: does it. So the key thing now, of course, is
Speaker 4: dead to GDP at one hundred percent, So we're still
Speaker 4: actually sitting on a knife edge here of at any minute.
Speaker 3: I know she's built in more headroom.
Speaker 4: I mean the ABR sensitivity SOD I think it was
Speaker 4: a one percentage point moving guilt yields would clear that headroom,
Speaker 4: and last time I think it was point six, So
Speaker 4: you know, she has got more space. But we are
Speaker 4: in a greatly volatile world, Assel has admitted, and so
Speaker 4: the House of cards could fall apart politically.
Speaker 3: And economically at any moment.
Speaker 4: So I think actually it's not quite analogous to the seventies,
Speaker 4: not least because news travels so much faster, markets move
Speaker 4: everything so much quicker, quicker. Yeah, crypto markets ripened on Saturdays.
Speaker 4: And of that ninety seventy six.
Speaker 5: There is something.
Speaker 7: I mean, I certainly if you look at the dynamic
Speaker 7: in the Labor Party currently, there is something that feels
Speaker 7: a bit reminiscent of that whole period. I don't know
Speaker 7: if i'd dated to whatever, but where you started to
Speaker 7: have you could imagine a leadership battle at some point
Speaker 7: we might disagree about when it is that that show
Speaker 7: that is the sort of establishment center, sort of Callahan
Speaker 7: type figure or Heally as it was then and the
Speaker 7: Michael foot You can imagine that kind of battle happening
Speaker 7: quite easily, actually, given the concerns around the support for
Speaker 7: Green Party.
Speaker 5: And I did think yesterday's quite interesting.
Speaker 7: I mean, we look, you know, obviously run econoised politics globally,
Speaker 7: we're used to thinking right and left are no longer
Speaker 7: the key fractures in politics.
Speaker 5: It's much more complicated than that.
Speaker 7: And that's all true, and we see that when we
Speaker 7: look at the opinion polls. But actually yesterday was opened
Speaker 7: up a very old fashioned space for the Conservative Party,
Speaker 7: which actually I think Kemy did quite a good job
Speaker 7: of walking into. You know that we're suddenly back to,
Speaker 7: at least between the two main parties are very old fashioned.
Speaker 7: Do you want to spend more on high tax and
Speaker 7: welfare or do you want to shrink the state? And
Speaker 7: if she if the Conservatives kind of lean into that,
Speaker 7: that actually makes it quite difficult for a form I think.
Speaker 1: Yeah, thank you, right, more questions that they've got one here,
Speaker 1: Given the number.
Speaker 12: Of policies that were trailed in advance of the budget
Speaker 12: around the housing market, there were rumors about stamp duty,
Speaker 12: potential capital gains being applied to primary residents, an all
Speaker 12: new annual property tax, council tax pans being doubled at
Speaker 12: the higher end, and then on the big day it
Speaker 12: was a big nothing.
Speaker 5: That was a surprise to me.
Speaker 12: I wondered if and also surprised that there was very
Speaker 12: very little that happened in the housing market, given what
Speaker 12: a big impact the housing market is having one way
Speaker 12: or other almost everybody's lives.
Speaker 6: Yeah, John, I mean I support that didn't surprise me.
Speaker 6: And as much as they're not going to want to
Speaker 6: do in that kind of makes housing like house prices
Speaker 6: go down any more than they already are in real terms.
Speaker 6: The mansion tax is obviously just a sop to the left.
Speaker 6: It may or may not happen. I mean, the real
Speaker 6: problem is obviously the innability to get you know, house's
Speaker 6: being built, and that is partly a function of the
Speaker 6: fact that house prices aren't going up anymore. And probably
Speaker 6: the main focus if she wanted to help the housing
Speaker 6: market was more in pushing back against inflation so that
Speaker 6: interest rates can come down a bit. And to be fair,
Speaker 6: I mean, one thing it did happen yesterday as a result,
Speaker 6: like gult yield's going down, is that you've you've actually
Speaker 6: seen mortgage rates take ever so slightly lower over the
Speaker 6: last two months. And I suspect that, I mean, that
Speaker 6: will continue for as long as you know, the boind
Speaker 6: market remains roughly kind of happy with what's going on,
Speaker 6: so we'll see. But yeah, no, it didn't surprise me
Speaker 6: because there's so much other stuff, and I think you
Speaker 6: could raise a lot of money from those in the
Speaker 6: market in a way that we wouldn't meet the voters
Speaker 6: just abail.
Speaker 5: Also, I mean, a.
Speaker 3: Lot of the rumors were obviously nonsensical.
Speaker 1: I means, we're never never going to abolished down duty
Speaker 1: for example, It's never going to happen.
Speaker 5: That was a very bizarre float.
Speaker 1: I know we'd all love it, but it's never gonna
Speaker 1: get worst worse tax in the UK give will take
Speaker 1: and there's a lot of competition right with another one
Speaker 1: in the front here.
Speaker 13: Yeah, if I could just come back to John's comments
Speaker 13: about cash ices and whether that's actually going to work,
Speaker 13: I would have thought that if Rachel Reaves wants ordinary
Speaker 13: working people to invest more in stocks and shares, and
Speaker 13: you mentioned that you've got to get your head around
Speaker 13: the money market sort of approach to do that, wouldn't
Speaker 13: it make more sense to do that in the safest
Speaker 13: long term way, which is to put more money in
Speaker 13: their pensions through salary sacrifice. And yet that seems to
Speaker 13: be cut So I don't know if you have any
Speaker 13: insight into those two seem to work against each other,
Speaker 13: you know they do.
Speaker 6: I mean, so there's absolutely doubts, a completely confused.
Speaker 5: So it's not confused.
Speaker 6: It's basically again it's a sock to the idea that
Speaker 6: they support investment, but everything that they're doing in the
Speaker 6: tax system pushes against that. You know, it's kind of
Speaker 6: you know, so the tax on savings interest properly, we
Speaker 6: could basically got NI imposed on earned income yesterday. You know,
Speaker 6: We've got lots of measures that the dividend taxes, that
Speaker 6: sort of thing.
Speaker 5: And you know how.
Speaker 6: The fact that pensions constantly have the rug pulled out
Speaker 6: from under them is another thing that militates against private
Speaker 6: sector pensions constantly. So I think nothing's absolutely right. I
Speaker 6: think that if we spent more time focusing rather than gimmicks,
Speaker 6: making the tax system simpler, but that's not going to
Speaker 6: happen because I think yesterday had something like I should Bloomberg.
Speaker 6: I did it up and it was like over eight
Speaker 6: hundred different measures unless I'm getting that long, but we
Speaker 6: had a chat. I need to get my glades when'm
Speaker 6: leading these charts. But it's just just it was more, exactly,
Speaker 6: it was more than anyone for a very long take.
Speaker 6: And they have been getting more and more complicated as
Speaker 6: we go on, and again that's partly duck in difficult decisions,
Speaker 6: but just.
Speaker 5: The direct response.
Speaker 7: So I was just checking it in the thinks, not
Speaker 7: that I'm a Treasury spokesman but it's the cost of
Speaker 7: the salary sacrifice are predominantly I mean, was going up
Speaker 7: to eight billion, and a huge chunk of that was
Speaker 7: going to not just higher rate taxpayers, but the very
Speaker 7: higher end. You know, people who are putting their bonuses
Speaker 7: in other things. They claim, judged on the current thing,
Speaker 7: at seventy four percent of basic rate taxpayers will be
Speaker 7: protected by the CAT because they're not saving, they're not
Speaker 7: putting more than two thousand pounds in.
Speaker 5: So, just as a direct response.
Speaker 6: That always it comes back to this thing people not
Speaker 6: seeming to realize that the fort basically tax pills, know,
Speaker 6: aren't basically tax pills for the entire lives. And it
Speaker 6: was like the number of people who hit forty and
Speaker 6: hit forty five during their life cycle is much greater
Speaker 6: than the current number. And so what we're actually doing
Speaker 6: is we're punching people in the face when they get
Speaker 6: to the point where they should be when they're at
Speaker 6: peak earnings and should also be at peak savings, because
Speaker 6: that's kind of the big issue. You know, everyone probably
Speaker 6: hits kind of forty or fifty and starts to look
Speaker 6: at their pension, assuming they're not working for the public sector,
Speaker 6: and goes, oh my god, I'm going to be poor
Speaker 6: when I retire, and that's why you need that kind
Speaker 6: of thing when people are on forty or forty five percent.
Speaker 6: So it's not enough for the government tongue and say,
Speaker 6: oh yeah, but we're protecting this lot. We're getting to
Speaker 6: the stage where, I mean, the minimum a lot.
Speaker 7: Of money did that say, is getting to people who
Speaker 7: were on maybe half a million.
Speaker 6: It's just as sorry, but I think that there's too
Speaker 6: much of this again. It's that sort of zero some
Speaker 6: thinking as opposed to why don't we stop worrying about
Speaker 6: how this guy's got this and start thinking about, you know,
Speaker 6: why is the econ source and complexities?
Speaker 7: All in these I mean, I'm partly saying Devil's advocate,
Speaker 7: but in these conversations we do tend to think of
Speaker 7: tax relief spending as great spending that is somehow very
Speaker 7: different from other forms of public spending. You're deciding to
Speaker 7: spend eight billion because you're foregoing that you could have
Speaker 7: spent it or something else you are spending. You're deciding
Speaker 7: to spend eight billion on people being able to do
Speaker 7: these pension savings.
Speaker 5: Well, we all just remember that it is exactly I'm
Speaker 5: going to stop this one here. This is extent.
Speaker 1: Extent to which how much easy you have an event
Speaker 1: and all that kind of thing. We'll come back to this,
Speaker 1: but we've got a very enthusiastic question answer at the
Speaker 1: back here.
Speaker 3: Hi, good morning.
Speaker 7: Thanks.
Speaker 6: You are now selected as our new chancellor and you
Speaker 6: have one wish.
Speaker 5: This is pre budget.
Speaker 3: What would your one major policy be cut welfare spending?
Speaker 1: Yeah, exactly what I was going to say, Just fine,
Speaker 1: in a way to cut welfare spending.
Speaker 4: Or try and even do what she tried to do,
Speaker 4: which was reduce the rate of growth, which is what
Speaker 4: she was trying to on that.
Speaker 5: John, Yes, it's a good question.
Speaker 6: If I'm trying to thank you, Paul, I'll see then
Speaker 6: I mean something I've always been mainly attracted to as
Speaker 6: I can align the value tax.
Speaker 1: And if you no, no, no, no, no, no, nor John.
Speaker 7: Definitely I think you have to. I mean, well, it
Speaker 7: has to be welfare. Although do you think of this
Speaker 7: ships in particularly.
Speaker 1: If there was outside wealth for one thing that I
Speaker 1: would really would have loved to see and it wouldn't
Speaker 1: have been hard and it would have sent a brilliant signal,
Speaker 1: would be the full abolition of the stamp duty on
Speaker 1: equity trading, and we've talked about it on the podcast.
Speaker 5: Over and over and over.
Speaker 1: It's not a big money thing five billion here or there,
Speaker 1: and it's a huge signal to the rest of the
Speaker 1: world that we were taking our equity market seriously. That
Speaker 1: would have been I think that the one and so easy,
Speaker 1: so easy, so quick, such a signal here in the front.
Speaker 5: You've had your hand up a long time.
Speaker 2: Thank you, given that physical drag seems to be a
Speaker 2: very good way of raising revenues without letting people know
Speaker 2: you're raising revenues. How long, particularly given what's happening in
Speaker 2: the States with do we have Kevin has it coming
Speaker 2: in as a fetchair? How long until we have QE
Speaker 2: back in the UK?
Speaker 5: Ooh?
Speaker 7: Definitely, really long time, I think actually, I mean that's
Speaker 7: one of the things. That's one of the missed opportunities, right,
Speaker 7: I mean, inflation has narrowed her room for maneuver in
Speaker 7: some ways. And obviously she was sort of punished a
Speaker 7: bit for doing things last year that increased inflation because
Speaker 7: then that slowed interest rate cuts. But one of the
Speaker 7: advantages we have in the current environment from the higher
Speaker 7: inflation is that the Bank of England has plenty of
Speaker 7: room to cut and if you look at the revisions
Speaker 7: that were made in the next few years growth, I mean,
Speaker 7: one of the reasons why we haven't got into the
Speaker 7: fact that she wasn't faced with a hole to fill
Speaker 7: thanks to the Office of Budget Responsibility, because their reset,
Speaker 7: their lowering of real growth was actually largely offset by
Speaker 7: them deciding actually inflation and wages were going to be
Speaker 7: higher over the next few years, and that they hadn't
Speaker 7: fully factored that in in their nominal GDP cash GDP estimates.
Speaker 7: So without getting too much into the sausage making, I think, yeah,
Speaker 7: I don't think Q. Well, we can see in a
Speaker 7: few years time, but I don't think q's on the horizon.
Speaker 5: Helen Quey coming.
Speaker 3: I think it could come back.
Speaker 4: Sorry not q E, but as it purchases could come
Speaker 4: back if we do get to a dysfunctional point in
Speaker 4: the bottom market, which I do still yet to see
Speaker 4: there being a risk of purely because huge amounts of debt,
Speaker 4: as we know throughout the world, huge amounts of issuance.
Speaker 4: Inflation broadly speaking is higher now than it was in
Speaker 4: the sort of fifteen year decade before fifty a decade,
Speaker 4: fifty a period before and so at some stage, you
Speaker 4: know there's going to be a serious case of indigestion,
Speaker 4: and then they may well need to sort of step
Speaker 4: in with bomb purchases just to stabilize things.
Speaker 3: Okay, not qui all.
Speaker 1: Right, there's a sort of maybe for you more questions
Speaker 1: on the aisle here that's close by.
Speaker 8: Thank you, thanks, Yeah, it's just a quick question on unemployment.
Speaker 8: So unemployment rate's been ticking up the last two years,
Speaker 8: even a little bit before the last ge, from like
Speaker 8: four percent to five percent. Given John mentioning the minimum
Speaker 8: wage going up and everyone mentioning the fiscal drag, do
Speaker 8: you think this budget is going to sustain keep ticking
Speaker 8: up an unemployment rate, will perhaps even accelerate it.
Speaker 14: Anyone wants to say anything beyond yes, Well, don't you think
Speaker 14: that there's We've not been much discussion of recession risk there,
Speaker 14: but a lot of stuff talk about procesession in the US.
Speaker 3: I mean, I know, were sort of bumbling along at
Speaker 3: pretty much zero a bit above it.
Speaker 4: OBR said, this doesn't really change the growth outlook that
Speaker 4: much this budget, but you know what if there is
Speaker 4: some sort of shock, could be external could be here.
Speaker 3: What if on the salary sacrifice.
Speaker 4: Element, I think that's going to be a hit to employers.
Speaker 4: The cost for them will be going up, you know,
Speaker 4: the minimum wage as you mentioned. So, God, I now
Speaker 4: sound really gloomy. I didn't mean to sound. I mean,
Speaker 4: obviously we be going to a session. We'll have loads
Speaker 4: of bagging and rate cuts, so that will that will help.
Speaker 5: But we have in the new workers riots, et cetera.
Speaker 3: So there's a lot going on.
Speaker 1: Of course that doesn't necessarily move in the direction of
Speaker 1: making people think themselves. Got I'll go and employ another
Speaker 1: ten people next week exactly.
Speaker 3: Yeah, I think it's a risk.
Speaker 7: I mean, I think you've obviously one of the big
Speaker 7: factors that's been supporting employment has been immigration, and if
Speaker 7: that we're now on, so that's something which is kind
Speaker 7: of offsetting some of this.
Speaker 5: But you know, we get back to the welfare reform thing.
Speaker 5: It's not the unemployment rate that matters. It's the huge
Speaker 5: number of people in activity rate active inactive.
Speaker 1: Okay, because someone please ask a question which we can
Speaker 1: give an upbeat answer. Can we go in the front here, Well,
Speaker 1: whatever the question is, we're going to have an upbeat answer.
Speaker 5: Okay, I'm not sure if this makes sense of them.
Speaker 1: I wrote it down, how much is fiscal drag affecting
Speaker 1: how much people spend, especially since households have a high
Speaker 1: like marg margin oppropunity to consume. Well, I mean, any
Speaker 1: any reduction in your income is going to affect how
Speaker 1: you spend, right.
Speaker 6: Yeah, I guess it's because it's kind of in the
Speaker 6: future that people maybe don't think about it in the
Speaker 6: same way. Because actually, going back to your point the
Speaker 6: Henry the point about fiscal drag, I think people are
Speaker 6: aware of it, but I do not think that they
Speaker 6: fully understand what it means in kind of number terms,
Speaker 6: and so I don't think that people will sit there
Speaker 6: and think, in five years time, my income is going
Speaker 6: to be lower by this amount, therefore I'm not going
Speaker 6: to spend today. My own view tends to be that
Speaker 6: if people have got money in their pockets, they spend it.
Speaker 6: But I'm not an economist, and I know the economists
Speaker 6: have slightly different views of expectations. I think people are
Speaker 6: a lot more short term perhaps than economists.
Speaker 1: And I'll say this is an interesting one because it
Speaker 1: means people need to have an understanding of how inflation works.
Speaker 5: To understand how physical drag works.
Speaker 3: It's visible either.
Speaker 6: It's like inflation. You go to the supermarket every week
Speaker 6: and that's why the Bank of England people care about
Speaker 6: food place inflation because when the place of food goes up,
Speaker 6: people do notice it and they will change their behavior.
Speaker 6: Beyond that, some of this longer is kind of hard
Speaker 6: to do, especially if your wages have grown up as
Speaker 6: well and you can't quit work. Got how much more
Speaker 6: you get and compare to how much more your life
Speaker 6: course than you It was a good question.
Speaker 7: Sorry, just on the comparison, because there was a lot
Speaker 7: of discussion around whether they would raise the basic rate
Speaker 7: of tax and then offset that with a reduction in
Speaker 7: the National insurance and that would have actually been slightly
Speaker 7: better for lower income All sort of basic rate taxpayers
Speaker 7: actually people in the lower brackets and they tend to
Speaker 7: spend more. So on your point, I think this is
Speaker 7: going to have a bigger impact on spending potentially than
Speaker 7: if they've gone that route.
Speaker 1: I apology to those you didn't get your question asked, Well,
Speaker 1: we'll be around for a few minutes afterwards, so do
Speaker 1: ask them then. And all there is to say, thank you,
Speaker 1: So much for joining us today.
Speaker 3: Hugely appreciated it and thank you you wonderful gust.
Speaker 1: Thanks for listening to the special post budget episode of
Speaker 1: Merrin Talks Money. If you like us show, rate, review,
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Speaker 1: w and John Underscore Stepic. This episode was produced by
Speaker 1: Summersadi and Moses and Dunn. Special thanks, of course to
Speaker 1: Stephanie Flanders, Helen Thomas, Vic Wakely and all those at
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Speaker 1: show email is Merrior Money at Bloomberg dot net