MoneyWeek has absolutely slammed the politics behind the PBR. MoneyWeek - written by journalists - can say things that orthodox chartered institutes really ought not to say. Not yet available on the public website, the magazine's latest editorial is entitled, "Ignore Darling, buy gold". The caption says, "We think Brown and Darling of shamelessly incompetent idiots."
The magazine is expecting an on-going deflationary recession (a decline in economic activity where prices fall due to lack of demand), a give-away PBR for an election in 2010 or 2011 (a government trying to spend its way out of recession, this time by borrowing during a borrowing crisis: duh), followed by a rising tax burden to repay debt during a continued deflationary recession (where does the money come from?).
Meanwhile, with spare public sector cash chasing too few goods in a recession, inflation and rising interest rates - during a recession! - are still on the cards.
And, just to spite everything, the PBR introduced a headline new rate of tax (45%) for high-income earners, with enough lead time for them to leave the UK. Without an exodus, the measure will raise only £670m: basically next-to-zero.
And they will have good reason to want to leave. Their pension lifetime allowance will be frozen at GBP 1.8m for 5 years. So, once again, the government is going to raid pension funds (this time at the point of contribution or investment) to plug a small part of the gap in its own finances.
If a company ran its finances like this - or even let them get into such a state - the business would go bust or be subject to a fraud investigation.
ps: TPA was quoted in MoneyWeek on 28-Nov-08: page 39, "The fattest fat cats in Whitehall."
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