The approval rating for Sage Sunak has dropped since he issued his spring statement a fortnight ago.
The public may be able to forgive the Chancellor for the rising cost of living. He cannot be blamed for Vladimir Putin’s war or fugitive inflation, which is exactly the job of the Bank of England.
However, he will have to take responsibility for last September’s mini-budget. He caught the public and the business unaware with a 1.25 percent-point increase for National Insurance Contributions (NICs) for citizens and employers, effective from today, at the beginning of FY 2022-23.
Gamble: The public may be able to forgive Sage Sunak for the rising cost of living, but he must take responsibility for his bad mini-budget last September.
The £ 14 billion in extra revenue, combined with rising wealth taxes and the extra cash that comes with frozen allowances, could be devastating for public finances, as detailed in the Budget Red Book.
But taxpayers need to refrain from the notion that NIC increases will be reflected in the next pay-slip as ‘NHS and social care tariffs’.
The money will not be ring-fenced and the idea that it is going to solve the problems of the NHS, from anxious maternity care to advanced treatment of cancer, is pure fantasy.
For social care, the ball has been kicked off the road for at least two years. Even with the public skepticism adopted by the NHS, 39 per cent of British social attitudes surveyed complained that it was a waste of money.
It would be much more prudent to set about cost, waste and efficiency than to throw money into the problem. The main reason for canceling the NHS and increasing social care is economic.
If you don’t see the sage from his apartment in Santa Monica, there is a terrible fire in central Europe, high electricity prices are putting a huge strain on real incomes, and there is a history of rising oil prices after the recession.
And if you don’t think it’s the 1970s again, look back to 1914, the obstacles to globalization, and what John Maynard Keynes observed was the culmination of “an extraordinary period of human economic progress.”
At a time when globalization is receding and central banks are finally participating in fugitive inflation by easing pressure and raising interest rates, the recession of sticking people with higher taxes is receding.
There is a risk that it will bankrupt businesses and hinder tax revenue, which has increased with the lifting of the Covid restrictions.
In his sub-octane statement, Sunak began to admit that he had made a mistake by providing a national insurance and promised to reduce an income tax. Treasury and bankers are also looking at credit guarantee schemes to help enterprises that are hampered by high energy costs.
The British Chamber of Commerce, representing small and medium-sized businesses, is calling for this growth.
With the exception of the United Kingdom, none of the larger democracies in the free world are raising taxes in wartime situations.
British exceptionalism can shape a growing economy.
Ruble rebound
Russia may be losing the war on Ukraine, but there is a small victory. The ruble plunged 30 percent when its brutal onslaught began, and central bank governor Elvira Nabulina wanted to get out.
Putin has used his persuasive power and he has stayed. Nabilulina kept his shoulder, raising interest rates from 9.5 percent to 20 percent, imposing shaky exchange controls and barring foreign investors from trading in Russian stocks.
Recovering the ruble gives Putin a breakthrough as he faces economic sanctions. The reality for Russian citizens is food prices, recession and the impossibility of taking their money with them if they try to flee the country.
Since the ruble is the global face of Russia’s economy, Putin can claim victory. However, like the battlefield, it is a piercing victory.
Sugar rush
Addicts of the BBC’s The Apprentice may question whether Alan Sugar’s engagement disappointed him in 2022.
New business partner Harpreet Kaur plans to use Baron Sugar’s 250,000 capital to expand its delicious dessert retail offer.
She failed to see the value of Stephanie Affleck’s plan for an online, kitemarked market for used children’s clothing.
The opportunity for M&S is probably to help him run his new peer-to-peer marketplace, so that they can recycle growing children’s clothing.
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