UK Tax Bombshell: 20% VAT

A rise in VAT is looming whichever party wins the general election, as Labour and the Conservatives draw up plans to balance Britain’s books.

Alistair Darling and George Osborne, the Shadow Chancellor, are both considering raising VAT to as high as 20 per cent — the European average — from the current rate of 17.5 per cent, The Times has learnt.

Doing so would raise an extra £13 billion a year at a time when financial markets are searching for signs that whoever takes power is serious about tackling Britain’s £178 billion deficit.

Though Labour and the Tories have denied having any current plans to increase VAT, neither will rule it out and The Times understands a rise in the tax is being considered by both parties.

One City source close to the Tory tax team said: “There is a view across the Conservative Party that VAT is going to have to go up.”

The Chancellor is also keenly aware that Britain needs to retain the confidence of the credit-rating agencies. He has privately ruled out either raising income taxes or increasing the scope of VAT, but has deliberately left open the possibility of increasing the sales tax in the next Parliament.

Read moreUK Tax Bombshell: 20% VAT

PIMCO’s Bill Gross: UK a ‘must to avoid’ as its debt lies ‘on bed of nitroglycerine’

Highly recommended:

PIMCO’S Bill Gross: ‘Let’s Get Fisical’ (… or why the US will not make it.)

Related articles:

Britain Faces New Souvereign Debt Crisis As PIMCO Pulls Out

Bank of England’s ‘nerves’ to be tested as inflation jumps most on record in December


Bill Gross deals blow to government with warning to his investors that Britain’s debt makes it a ‘must to avoid’

bill-gross-1

The government’s hopes of claiming credit for reviving the British economy suffered a severe blow today when the world’s biggest buyers of bonds warned that the UK was a “must to avoid” for his investors as its debt was “resting on a bed of nitroglycerine”.

The intervention by Bill Gross, co-founder of California-based fund managers Pimco, came on the day official figures confirmed that Britain had emerged from the deepest recession since the 1930s – but only by the narrowest of margins.

The economy grew by 0.1% in the final three months of last year, much weaker than even the most cautious expectations in Westminster and the City. The unexpectedly sluggish performance prompted Alastair Darling to warn that Britain could yet fall back into recession, telling the Guardian “there will be hiccups along the way”.

Read morePIMCO’s Bill Gross: UK a ‘must to avoid’ as its debt lies ‘on bed of nitroglycerine’

Bank of England’s ‘nerves’ to be tested as inflation jumps most on record in December

The Bank of England and the government have created this mess:

Quantitative easing is creating money out of thin air or “printing money.”

Quantitative easing increases the money supply, creates inflation and devalues the currency.

Inflation is a hidden tax. Quantitative easing is nothing more than stealing from the people.

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.“
– John Maynard Keynes

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan

See also:

Bank of England extends quantitative easing to £200 billion (Guardian)

Bank of England calls unprecedented emergency meeting of economists (Telegraph)

Pound Falls to Five Month Low as Bank of England Says Declines ‘Helpful’ (Bloomberg)

Bank of England: Recession will be the worst in modern history (Telegraph)

Bank of England to print extra 50 billion pounds (Reuters)

Beware Bank of England’s monetary con trick (Financial Times):

Economists have another term to describe the monetization of government debt (=Quantitative easing). The history of “seigniorage” goes back to the debasement of the coinage under the Roman emperors. Seigniorage is really a tax on holders of money and government debt which is paid via inflation. When carried to excess, it leads to hyperinflation.

The dangers of printing money: four lessons from history (Times Business)

Bank of England wants to print more money (Telegraph)

Bank of England sees slowdown deepening, prepares to deploy quantative easing (Financial Times):

Quantitative easing is aimed at increasing the money supply, getting banks to lend more, lowering interest rates and raising the level of inflation. (…and destroying the pound.)

And the UK has Gordon Brown, the savior, also known as debt creator, who will make sure that the UK will default on its debt and/or has to go through a currency crisis:

“A weak currency arises from a weak economy, which in turn is the result of a weak government.” – Gordon Brown

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” – John Adams

Britain Faces New Souvereign Debt Crisis As PIMCO Pulls Out

Fitch warns: Britain and France risk losing their AAA rating

Moody’s warns of ’social unrest’ as sovereign debt spirals … because of bankster bailouts

UK taxpayers face £2 trillion unfunded pensions liability, more than £80,000 for every household

Moody’s: Top US And UK Debt Ratings May ‘Test The Aaa Boundaries’

Treasury Pre-Budget Report Warning: UK ‘Faces Decades of Debt’

Morgan Stanley: Britain risks sovereign debt crisis in 2010

OECD warning: Britain risks ‘debt spiral’

Prepare for the worst, because it’s coming!

Remember? Jim Rogers: ‘Sell any sterling you might have; It’s finished’

Update:

For sheer gall, Brown posing as saviour of the middle classes takes the mouldy biscuit (Daily Mail):

There’s been nothing like it since the wolf dressed up as grandma in order to turn Little Red Riding Hood into pot-roast.

Gordon Brown now claims to be a champion of the middle classes. Apparently, only he can be trusted to look after their interests.

And there were millions of us thinking that he was, in fact, the unreconstructed arch-enemy of the middle classes and of everything they hold dear.

This is what the UK government and the BoE are doing:

“When a country embarks on deficit financing and inflationism you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul


UK inflation jumped the most on record in December, fuelling fears that interest rates will have to rise sooner rather than later to keep prices in check.

quantitative-easing
Steve Bell, The Guardian

The sharp rise in the annual rate of consumer price inflation from 1.9pc to 2.9pc was driven by exceptional events in December 2008, as the VAT cut and high street discounting at that point were not repeated last month.

An increase in the price of petrol and new cars also drove the Consumer Prices Index (CPI) up last month, the Office for National Statistics said. Economists had expected a smaller rise in CPI to 2.6pc.

Howard Archer, chief UK economist at IHS Global Insight described the data as “a very nasty shock”.

It was the first time since May that inflation has risen above the Bank of England’s 2pc target, and economists predict inflation will rise above 3pc this month, reflecting the reversal of the VAT cut on January 1.

At that point Mervyn King, the Bank’s Governor, would be required to write a letter to the Chancellor, explaining why inflation was more than a percentage point above the target.

It comes at a difficult time for Britain’s consumers, who face the prospect of rising taxes, rising interest rates, and spending cuts as a fragile economic gets underway following the worst post-war recession.

The retail prices index (RPI) – which includes housing costs – rose even more sharply, to 2.4pc from 0.3pc in November.

Inflation in Britain has remained consistently higher than other countries during the recession, which economists partly attribute to the pound’s weakness, which has driven up the cost of foreign goods.

Read moreBank of England’s ‘nerves’ to be tested as inflation jumps most on record in December

Britain Faces New Souvereign Debt Crisis As PIMCO Pulls Out

See also:

Pimco move to sell gilts raises spectre of a UK sovereign debt crisis (Telegraph)

Gordon Brown accused of “fantasy” over public debt as changes tack (Times)


britain-faces-new-souvereign-debt-crisis
Pimco’s decision to sell UK gilts this year will be seen as a financial vote of no-confidence in the Government’s handling of the economy.

FEARS that Gordon Brown has left Britain on the brink of ­bankruptcy intensified last night as investors withdrew from backing the Treasury’s soaring debt.

US-based investment group Pimco, one of the world’s leading bond houses, said it will sell its UK government gilts this year.

It will be a hammer blow to the Treasury’s attempt to raise up to £200billion of government borrowing amid the deficit crisis.

The embarrassment is all the more acute because the younger brother of Cabinet minister Ed Balls is overseeing the gilt sale.

andrew-balls
Labour’s Ed Balls’ younger brother Andrew is overseeing the Pimco pullout

As head of Pimco’s European investment team, Andrew Balls is spearheading the exit from investment in the Government.

The Tories seized on the announcement as evidence that Mr Brown’s soaring borrowing is threatening the UK with the worst debt crisis since the 1970s.

Shadow Chief Secretary Philip Hammond said: “This announcement by the world’s biggest bond house is a damning verdict on Gordon Brown’s handling of the economy and raises yet more questions about where the ­Government is going to borrow the £178billion it needs over the next 12 months.

“To restore confidence to the bond markets, keep mortgages down and get the economy growing, Britain needs a credible plan to get the deficit down.

“Instead we have a Prime ­Minister and Chancellor at loggerheads over tax and spending. We can’t go on like this.” Concern has been growing in the City and on international money markets at the unprecedented scale of the British ­government’s debt crisis. The Treasury is on course to ­borrow £178billion this year and the national debt is tipped to reach a colossal £1.5trillion for the first time in our history.

Read moreBritain Faces New Souvereign Debt Crisis As PIMCO Pulls Out

UK taxpayers face £2 trillion unfunded pensions liability, more than £80,000 for every household

You better release those figures quietly!

Prepare yourself for the worst.

See also: Darling’s Pre-Budget Report: Middle Class Hit With £7 Billion Tax Bill


Taxpayers are facing a £2 trillion unfunded pensions liability, equivalent to more than £80,000 for every household in Britain, according to figures quietly released by the Government yesterday.

uk-taxpayers-face-2-trillion-unfunded-pensions-liability
The National Institute of Economic and Social Research has said that in order to fight the rising pesnion deficit, the Government ought to raise the retirement age for both men and women to 70 Photo: Ian Jones

In a document released on its website only a few hours before the Chancellor’s pre-Budget report (PBR) statement, the Office for National Statistics (ONS) laid out the definitive cost taxpayers will have to bear for both the state old age pension and public sector pensions.

The document reveals:

  • The total public sector pensions bill is now £810bn, a figure confirmed later in the day in the pre-Budget report. The majority of the state employees are on generous final salary schemes unattainable elsewhere in the UK.
  • This bill for key public sector workers’ pensions has rocketed by 20pc between 2006 and 2008.
  • The Government Actuary’s Department’s estimate of the cost of the state pension due to all workers is £1,350bn as of 2005 – equivalent to almost 100pc of Britain’s annual economic output.

The entire bill of around £2.2 trillion would more than triple the size of the national debt overnight. It is entirely unfunded, so will have to be paid directly by future generations of taxpayers, rather than out of a pot contributed to by the pensioners themselves.

The revelations, contained in the ONS’s Pensions Trends document, underline the scale of the long-term fiscal crisis facing this and future governments – even before the added costs of the economic and financial crisis are taken into account.

The Treasury itself has never published its own comprehensive calculation of the size of Britain’s unfunded pensions liabilities.

Read moreUK taxpayers face £2 trillion unfunded pensions liability, more than £80,000 for every household

Darling’s Pre-Budget Report: Middle Class Hit With £7 Billion Tax Bill

Aren’t you glad your government bailed out the banksters?

“When a country embarks on deficit financing (incl. bankster bailouts) and inflationism (The BoE is still printing money like mad.) you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul

Now the taxpayer will have to pay the bill and this is just the beginning.

Welcome to Gordon Brown’s ‘New World Order’, where you will not have to worry about the middle class anymore, because there will be only the elite and slaves.

See also:
UK taxpayers face £2 trillion unfunded pensions liability, more than £80,000 for every household


The middle classes and the better-off are to be hit with £7 billion a year in new taxes, Alistair Darling has disclosed in his pre-Budget report.

alistair-darling
Alistair Darling delivers his pre-Budget report

The Chancellor announced increases in national insurance contributions for workers, while freezing a key income tax threshold to push more income into the 40 per cent tax band.

The Treasury will also take more money in inheritance tax and levy a new tax on financial workers’ bonuses. Pension relief will be cut for some high earners and taxes will rise on company cars and workplace canteens.

Read moreDarling’s Pre-Budget Report: Middle Class Hit With £7 Billion Tax Bill

Treasury Pre-Budget Report Warning: UK ‘Faces Decades of Debt’

See also:

Morgan Stanley: Britain risks sovereign debt crisis in 2010

OECD warning: Britain risks ‘debt spiral’


Britain faces decades of rising public sector debt, increasing taxes and, potentially, falling living standards unless it tackles the growing costs of its pensions and health bill, the Treasury will warn this week.

hm-treasury

In a paper to be printed alongside the pre-Budget report (PBR), the Treasury will warn that the costs of paying for state pensions and the National Health Service are set to rocket between now and 2059 unless action is taken to reduce the bill.

The paper on long-term fiscal challenges, which will accompany the shorter-term forecasts in the PBR, is intended to focus politicians from both parties on the risks faced by Britain unless they contemplate radical actions such as increasing the retirement age or cutting back on free healthcare provision.

Although the paper is likely to be over-shadowed by the PBR, in which the Chancellor is expected to accompany broadly unchanged spending plans with new taxes on the wealthy, it will sketch out a worrying picture for Britain’s fiscal future.

Read moreTreasury Pre-Budget Report Warning: UK ‘Faces Decades of Debt’

OECD warning: Britain risks ‘debt spiral’

Britain’s banksters and their bonuses have been momentarily saved, but the taxpayer has been looted like there will be no tomorrow.

The UK is broke and the pound sterling will soon go through a real currency crisis, thanks to the spend the UK into oblivion team Brown/Darling and to the printing press King of the Bank of England.

Mission accomplished!


Britain is at growing risk of a “public debt spiral” unless the Government takes “drastic” action to cut the deficit, according to the OECD, world’s leading economic institution.

hm-treasury Britain faces having the biggest deficit in the developed world until 2017.

The Organisation for Economic Co-operation and Development said that even if Britain reduces its deficit in line with other leading nations, it will still have the rich world’s biggest deficit from now until 2017 and potentially beyond, casting serious doubt on its economic credibility.

The warning coincided with shock public finance statistics showing that public borrowing in October was 88 times what it was in the same month last year, making it likely that the Chancellor will miss his £175bn borrowing forecast this year.

The double blow is acutely embarrassing for Downing Street, coming ahead of next month’s pre-Budget report and only 24 hours after it pledged to create a Bill to halve the deficit within four years and to reduce debt every year for the coming decade.

In fact, the OECD predicted in its annual Economic Outlook, Britain’s deficit was likely to be even higher next year than this year, at 13.3pc, raising the prospect that the Government could break its own law in its very first year.

Britain’s deficit will remain higher than any other major country, including even Iceland and Ireland, unless the Government takes far more drastic action to repair it, said the OECD’s acting chief economist Jørgen Elmeskov.

“Halving the deficit would be a start, but since the UK is starting out from a deficit which is in double figures, one should go further still,” he said. “The concern is that there could be a cost spiral – where debt increases, hitting confidence in the market, which pushes up interest rates, and this leads to even higher deficits.”

The prospect of interest payments on Britain’s rapidly growing debt rising to 12pc of tax revenues has already prompted Standard & Poor’s to issue a warning about the security of the UK’s credit rating.

Read moreOECD warning: Britain risks ‘debt spiral’

Bank of England extends quantitative easing to £200 billion

Quantitative easing is creating money out of thin air or “printing money.”
Quantitative easing increases the money supply, creates inflation and devalues the currency.
Inflation is a hidden tax. Quantitative easing is absolute stealing from the people.

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
– John Maynard Keynes

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan


BoE warned that UK banks are still failing to provide enough credit to businesses and households as it held interest rates at 0.5%

quantitative-easing
Steve Bell, The Guardian, Friday 6 November 2009

The Bank of England will expand its programme of money creation by £25bn over the next three months to boost Britain’s recession-hit economy, Threadneedle Street announced today as it left interest rates unchanged again.

Warning that UK banks are still failing to provide enough credit to businesses and households, the Bank said it would increase the size of quantitative easing (QE) to £200bn.

The Bank’s nine-strong monetary policy committee also pegged bank rate at its record low level of 0.5%, where it has been since March. It said cheap borrowing and QE were needed to prevent inflation falling below its 2% target.

In a statement, the Bank said: “On balance, the committee believes that the prospect is for slow recovery in the level of economic activity, so that a substantial margin of under-utilised resources persists.”

Although the Bank said there were signs of recovery in the world economy, it added that output in the UK had dropped by 6% since the start of a recession that has now lasted for six quarters, the longest period of decline since records began in 1955. “Households have reduced their spending substantially and businesses investment has fallen especially sharply,” the statement said.

Offiicial data released today showed that manufacturing output improved in September, and the MPC said that there were signs a “a pick-up in economic activity may soon be evident”.

Under the QE programme, the Bank of England buys bonds from the commercial banks, thereby providing lenders with extra cash to lend. It received permission from the chancellor, Alistair Darling, to extend the scheme.

Read moreBank of England extends quantitative easing to £200 billion

Alistair Darling warns RBS could still need more money after biggest bailout in history!

Darling warns RBS could still need more money after £33.5bn bailout

Royal Bank of Scotland may need more taxpayer funds to nurse the state-controlled lender back to health, Alistair Darling said yesterday hours after announcing a £33.5 billion bailout package for the bank — the biggest of its kind in the world.

Unveiling details of increased bailout funds for RBS and Lloyds Banking Group, the Chancellor told MPs that RBS “may need more capital” in order to help the bank to return to stability.

The Treasury said that it would inject a further £25.5 billion of taxpayers’ funds into RBS to prop up the lender, along with a new £8 billion pot of reserves intended for emergencies only. Mr Darling also announced a new capital injection of £5.7 billion for Lloyds, in which the Government holds a 43 per cent stake. The total bailout for the two banks now stands at £76 billion, the equivalent of almost 17p in the pound for every taxpayer.

George Osborne, the Shadow Chancellor, said: “They [the Government] went around boasting that they had saved the world, and they are still trying to save the British banks and they haven’t got on to saving the British economy.” He added that the extra financial help for RBS represented a “new world record” as the single biggest bailout.

Read moreAlistair Darling warns RBS could still need more money after biggest bailout in history!