UK News

Insights from the UK and beyond

In for a penny, in for £175 billion

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It may not be tax and spend exactly, but it’s definitely tax and borrow.

For the best part of 12 years, Labour has pursued essentially conservative (with a small ‘c’) economic policies, steadily underburdening itself of the ‘fiscally unreliable’ tag that some earlier Labour administrations were (wrongly or rightly) saddled with.

And for most of the past 12 years, as the global economy steadily expanded and Britain’s along with it, with aggregate wealth rising smoothly, Labour looked strong at the helm each time the budget came around.

But since the global economic crisis hit in late 2007,  it has become much harder for the government to keep a tight rein on the fiscal strings as growth has taken a hit, unemployment has risen sharply, and tax receipts have declined. 

Last April’s budget was a tough one for Labour, but Wednesday’s budget may well go down as the one that really showed the government reeling as it tries to keep a grip on the purse strings in some of the most challenging economic circumstances imaginable.

from MacroScope:

Watch out for the G20 spin

Be careful this week about buying wholeheartedy into any G20-related spin about supposedly savvy, free-spending Britain and America doing more to combat the world economic crisis than supposedly stubborn, overly cautious Germany and France. The actual figures show it is much more complex than that.

A Reuters calculation on discretionary fiscal stumuli and the International Monetary Fund's assessment show that, if anything, Britain is the significant laggard and that German spending almost matches the United States over the next two years. Here are the IMF's numbers (% of GDP):

Are women better with money than men?

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A major survey has found that women are more responsible with money than men. They’re less likely to get into debt and they work hard to become financially independent.

The global Reuters Synovate survey polled some 4,500 women in 12 countries about money matters. An equal number of men were also asked several questions related to finances.

Boosting the economy: lower taxes, higher spending or both?

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Prime Minister Gordon Brown has suggested he will push expansionary fiscal policies to help boost the economy. Brown’s comments were the latest in a series from him and Chancellor Alistair Darling stressing the importance of boosting the economy, which shrank in the third quarter of 2008 for the first time in 16 years and is expected to contract more sharply next year.

Bank of England Governor Mervyn King has also put his weight behind “some fiscal stimulus”, just as the Bank predicted in its quarterly inflation report that the economy would shrink sharply next year.

The death knell for bling?

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In these hard times, those whose job it is to part us from our money in the shops are beginning to describe the retailing experience as a family activity, a way of relaxing — absolutely nothing to do with conspicuous consumption, you understand.

The word “luxury”, we are told, sends the wrong message nowadays and is being quietly phased out of promotional material. Bling is over.

The hangover costs of “bling”

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bling.jpgThese days, “keeping up appearances” has less to do with the pompous Hyacinth Bucket (or should that be “Bouquet”?) of the British sitcom of the same name, more to do with “bling” and extravagant spending by the younger generation.

A survey of 1,619 consumers, commissioned by mobile banking service Monilink, found that 71 percent of 16 to 34-year-olds admitted secretly competing with their friends in the purchase of “luxury” products — cosmetics, gadgets, clothes and the like. Image concerns are the key driver of this “bling-itis”. Over half (56 percent) of those questioned say they believe people are judged on appearances and possessions in modern British society, rather than personality.

Is curry the latest for the spending chop?

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The Friday night take-away, Saturday shopping spree and summer get-away are in line for the chop, as consumers become increasingly nervous over looming recession. Almost nine out of 10 Britons say they will cut spending on non-essential items to cushion themselves against impending economic downturn, according to a poll of 1,000 people for Web site Fool.co.uk.

A British institution — the good old take-away — is set to receive the biggest blow, with over two-thirds of the nation planning to cut back on curries, fish suppers and late-night kebabs, the survey says. Other planned cutbacks include retail therapy (67 percent) and fewer holidays (49 percent), while 12 percent plan to stop smoking, 4 percent to put pension contributions on hold and 3 percent say they will even cut their kids’ pocket-money.

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