James Carville has now probably an immortal place in recent political history, being the original source of one very famous quote, and also a second slightly less famous and equally powerful one. Carville, whilst working for Bill Clinton, coined the phrase, “It’s the economy, stupid”… And we all know what that means…He then went on later in his career to say, when speaking about reincarnation, “now I want to come back as the bond market. You can intimidate everyone.”
Rachel Reeves has taken quite some time in getting there, and she has in a sense, been complacent about the generally positive relationship exhibited by the bond market towards her Chancellorship. More than in many countries, the intricate dynamics of politics and economics are quite fast moving in the UK: look at what happened with the rapid succession of Prime Minister’s during the last Government. My own bet is out as to whether or not Rachel Reeves will raise income tax, as being one of the three core taxes that she indeed vowed not to raise.
However, it is a fairly large fiscal hole that she seeks to fill, circa £30Bn, and this will not be filled lightly. Equally given her series of notable political missteps (I have argued from the outset that she simply should have reversed Jeremy Hunt’s NIC personal reduction, given just months before last year’s general election – this, in one sweep, would fill roughly half of the fiscal hole); she has been on thin ice with Labour Party backbenchers. Her fortunes are inextricably linked with the Prime Minister, and backbench MPs would come looking for a scalp to feed their irate constituents, braying that the Government had backtracked on one of its key manifesto pledges. The Government itself would become vulnerable, just as Liz Truss’s Administration faulted, and she was defenestrated… Once a public gets a taste for taking heads, it’s usually quite hard to displace.
Brilliant rhetoric is never remembered, unless you’re Martin Luther King, Yet whether a family’s net income has gone up or down certainly is. Freezing tax bands, higher council taxes, capital gains exit taxes, higher gambling taxes and other measures can, if accumulated, get Reeves within a stone’s throw of her goal. The Timms Review has yet to report and may reveal achievable savings. Similarly there has been recent studies regarding empowering employers to reach out through their worries about their employee’s rights, to reclaim them back into their world of work, once a staff member is written off sick. Currently it is all too easy for this employee to simply disappear into the system, and slowly drift away from work itself. As a trained and valuable resource, organisations have the right to fight for their employees, even if at the time the employees don’t quite see it that way…
#tax #fiscalhole #politics #economics
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