Treasury

‘It’s now clear that Britain’s economic reputation is on the line at the next general election, another reason for bringing the date forward and having that election now … For the first time since these ratings began in 1978, the outlook for British debt has been downgraded from stable to negative.’ So said George Osborne when S&P placed Britain’s AAA credit rating on a negative outlook in May 2009, when Labour were in power. But guess what? Another credit-rating agency — Moody’s — has just done the same to our rating this evening. Given how much Osborne made of Britain being a ‘safe haven’, it’s rather a tricky one for

Remember those Lib Dem calls for a mansion tax at the weekend? I said at the time that, ‘the Lib Dems appear to be drawing more attention to which of their own policies they are fighting for within government, whether those policies make it to the statute books or not.’ Well, now they’re at it again. Nick Clegg is giving a speech this morning in which he’ll urge George Osborne to go ‘further and faster’ in raising the income tax threshold to £10,000 a year. It was the stand-out policy of the Lib Dem manifesto, so it’s hardly controversial that Clegg should want to see it enacted ASAP. But it’s

James has already blogged the Sunday Telegraph’s interview with David Cameron, but some other things stand out from it — and not just the PM’s unthinking attack on Ed Balls either, for which he has since apologised. Take these paragraphs on tax, for instance: ‘The Prime Minister effectively rules out any move towards a “mansion tax” — a levy on high-priced properties proposed by the Liberal Democrats — or indeed any new tax on wealth. “I don’t believe, generally speaking, we should be looking at endless additional taxes.” However, he signals that the 50p top rate of income tax, on earnings above £150,000, will remain for the time being, despite

The real story, as everyone expected, wasn’t in the Pre-Budget Report ‘Green Book’ — but in the supplementary document produced by the Office for Budgetary Responsibility. Growth forecasts have taken a dive. And while that is both unsurprising and not all that revealing, it carries grim implications for so much else. I mean, just look at the graphs we produced in our last post: forecasts for debt, unemployment and borrowing are all up. It is not a pretty picture. But despite the dreariness of it all, I suspect that the numbers are far too optimistic. The clue comes at the start of the OBR report: ‘The central economic and fiscal

Growth plans are a high growth industry — with every day bringing yet another set of ideas, from one quarter or another, for how the government can fix the economy. And one suggestion pops up quite frequently in all these plans: bring forward spending on infrastructure. This is often presented as a simple thing to do, with few (if any) downsides. But how realistic is this? We know that infrastructure is important for growth. Economic texts generally suggest that the ‘multiplier effect’ (when government spending leads to more private spending later on) from is higher for infrastructure spending than for spending in other areas, such as health and welfare. We

In the latest issue of the magazine, a flock of politicians, commentators and economists offers George Osborne some advice for growing the economy. There are ten contributions in total, but here are three for CoffeeHousers’ consideration: Arthur Laffer Chairman, Laffer Associates Cut the 50p tax Reducing the burden which government places on the economy, through tax cuts, is the surest way to promote growth. I have never heard of a country that taxed itself into prosperity. Yet Britain last year raised the top rate of income tax from 40 per cent to 50 per cent. For more economic growth, and more tax revenue, this rate should be lowered immediately. This

One letter, that’s all it takes. After 38 City types wrote a letter to the Daily Telegraph this morning, urging George Osborne to drop the 50p rate of income tax, Westminster types have been chirruping on about it ever since. All three party leaders have had their say, except, so far as I can tell, Ed Miliband — although Ed Balls stood in for him anyway. Of all the responses, it is David Cameron’s that is the most noteworthy and perhaps even surprising. Speaking about deficit reduction on the Jeremy Vine Show earlier, the PM was unequivocal: ‘We have to try and do this in a way that is fair

George Osborne’s attack on the European Commission and his fellow finance ministers, for wasting time talking about a financial transactions tax when it is not going to happen, is quite a significant moment. It marks an attempt by Britain to knock this idea, which would hit this country far harder than anywhere else in Europe, off the agenda.   The Treasury, the Foreign Office and Number 10 have become increasingly exasperated about how this issue keeps coming up again and again. This feeling has been intensified by the fact that this issue is being discussed even as the crisis in the Eurozone is worsening by the hour.   Osborne’s remarks