Not out of the woods |
The great news is that since the start of this year we have we enjoying the first signs that this rebalancing has worked. Growth is up, employment is up, inflation is down – so it might be a good time to take stock and think about those who have made the sacrifice to turn things around.
The
basic numbers are frightening but simple.
To stabilise the economy the Labour Party initially and the coalition
latterly have:
1. Increased taxes on
income and sales to the tune of £110bn since 2009
2. They have raised duties
and tune of £9bn since 2009
3. And they have bought
government securities to the value of £385bn in the same period
In
an act of extreme foolishness and cruelty both governments decided that they
would raise the money from one source and one source alone – the British middle
class. Generally speaking the poor (on
benefits or poorly paid) have been protected with inflation linked increases to
benefit and tax credits. At the other
end the rich and owners of capital have done pretty well as corporation taxes
have been eased. Amazingly the
sacrifices made will the minimum of fuss and complaint – people have just got
on with it. There have been no petrol
bombs no manning of barricades just the stoic suffering in silence!
It’s
pretty obvious how this plays out on the direct taxes and benefit deductions,
which have left working familes £119bn worse off (that £6,000 per family per year); what is less obvious is the impact
of years of ultra-lose monetary policy has been on the winners – and losers.
Whilst there are few surprises in the report (published by McKensey in the FT) it does attempt to put numbers on the winners
and losers. The cost of QE |
In addition to these other penalties we also had to take a 20% devaluation of our currency, the impact of which is not in these numbers but would amount to a significant loss in investment income to the same group of hard working savers.
The middle class tax hike has raised a stagger proportion of the total cash needed to the turn things around and has rightly been described as the great British bail-in. It is therefore no wonder that Ed Miliband has focused his loving attention on this group of the electorate and no mug is he!
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