It is not clear how much further the £ can fall, particularly against the $.
The last two Tory Governments (ok one was a coalition with the Lib Dems) are responsible for an unusually large build up of debt as a consequence of deflating an economy after a negative shock. I wouldn’t lose too much sleep about JMcD really, at least he will spend borrowings on capital items if he does Nationalise, so we will have something to show for the Debt, unlike the post-2010 shambles. (File under: They are all equally inept).
Personally, I would be very reluctant to have my superannuation assets in non-£ denominated currencies and my expenditure in £ as it means my disposable income is necessarily a tradable risk (and will accrue exchange costs as I would need to buy £ to pay the bills). You can invest in non-£ denominated assets without exposing yourself to FX risk whatsoever by using indirect investment products. For instance, a sterling denominated ETF tracking the MSCI (excluding the UK) would do the job crudely and cheaply. The reality is though that if the UK equity markets tank because of Brexit (or Labour or whatever other scary scenario you envisage), you are likely to see all the major EU indices go too.
In this bit, correct. Brown removed a reasonably small tax break which was partially covered by corporation tax reductions anyway (less giveaway on dividend income for pension schemes but theoretically more dividends.
Where he did get things very wrong, something that I haven’t ever seen proper comment on, is that there was consistent underestimation of tax receipts in budgets.
Nationalising won’t automatically increase the debt, in accounting terms at least. Most PFI deals are already on the government balance sheet under ESA95. Buying these back will actually just change the type of debt for a cheaper one, with a one-off hit to pay a purchase premium.
Any privatisation will be fairly open in terms of visibility of the numbers, so the cost of purchase versus annual saving will be clear, despite the obfuscation present in some industries. The market will be able to take a view as to the financial implications.
Doubtless there will be loads of argument over synergies and the like, but the principle of bringing national infrastructure into public ownership, essentially converting rental to ownership, is not necessarily bad from a financial perspective.
Personally I prefer a mixed ownership system - say 40% authority, 11% government, 9% workers and 40% shareholders. Some could have an element of customer ownership as well.
I wouldn’t call it any way small and the time value of money made it significant (pension investments after all are largely long term for most schemes)
I stand my ground - he was a poor chancellor and a worse PM
Actually not the debt which I didn’t mention as they won’t pay for what they take so you’d better hope that none of your pension investments are in the target companies. The last time this was tried in the 70s (which is where John McD economic thinking comes from) they ‘forgot’ to hand over cash so = no cash and no income did for the large engineering company that I worked for, which no longer exists
Of course the target companies may rely on the European laws and courts to protect them, oh wait . . .
If by some miracle of change of John McD’s politics and “smash them all” doesn’t happen but he pays for what he takes the PSBR will go through the roof, that will work out well
You may not have liked his policies, but Brown under Blair oversaw a fantastic economy for many years. Yes the global economy helped, but he didn’t fuck things up.
agree but the 1975 Pension Act killed final salary schemes stone dead, this was drafted to stop another ‘Maxwell’.
Now what he did was disgraceful, but it was also illegal, and so bringing a different law to make it illegal would not stop it happening again (see Philip Green) but politicians like to be seen to be “doing something” don’t they
Nationalisation under Jm will have nothing to do with economics and everything to do with authoritarian socialism, owning the means of production blah blah blah.
As a consumer, the real question is surely about improvement of service, value for money and investment. I expect Labour to invest a load of money into the railways, introduce new ways of working combined with new technology and run a reliable service. I suspect I may be waiting a considerable period of time for that to happen. It will takes years to build up the capability and capacity for public service and the civil service to actually run industries again, I suspect the first five years will be a complete cluster fuck.
I assume this was shipbuilding or aerospace? Those crossed over into Thatcher’s reign, who didn’t change anything, and went through a whole load of court processes, ditto. The payments were made according to a formula that doesn’t seem inappropriate.
I think it’s a great shame that we don’t build things much in this country. But nationalising infrastructure assets does not affect that. Nationalising shipping and aerospace was a shit idea as these needed to be commercial entities, but they’re not infrastructure so not relevant here.
