How much of a mess are we really in?
Discussion
Skeptisk said:
Are we really worse off than our nearest neighbours? Most EU countries have similar problems - look at the current political turmoil in Germany and all the protests in Spain about unaffordable housing.
One area we may be worse off is that our housing stock is very old. I was in Bristol recently and although the buildings in Clifton and Redland looked nice from the outside, they are clearly old and cold and energy inefficient and also have insufficient parking (so the streets are blocked by people parking on them). Similarly a lot of our infrastructure is old, because we industrialised first (and didn’t suffer massive destruction in WW2) and is not fit for purpose but we don’t seem to have the money to fix it.
Overall life is still good in the UK for most people. We are economically falling further and further behind the US and Asia though.
France, Italy, Spain and Belgium have higher national debt (as a % of GDP) then we do, they also have higher rates of unemployment.One area we may be worse off is that our housing stock is very old. I was in Bristol recently and although the buildings in Clifton and Redland looked nice from the outside, they are clearly old and cold and energy inefficient and also have insufficient parking (so the streets are blocked by people parking on them). Similarly a lot of our infrastructure is old, because we industrialised first (and didn’t suffer massive destruction in WW2) and is not fit for purpose but we don’t seem to have the money to fix it.
Overall life is still good in the UK for most people. We are economically falling further and further behind the US and Asia though.
The US has a much higher national debt than us (as a % of GDP) and higher inflation. Technically they have a slightly lower rate of unemployment, but they have such a vast amount of undocumented workers, it's really impossible to know the true figure. Trump won the election because the majority of average people in the US are feeling the pinch and getting poorer.
Germany has an enviable level of national debt, but they have pretty high unemployment at the moment, and they are standing on a precipice, their manufacturing sector is at risk, and they haven't invested enough in decades.
CraigyMc said:
People in the UK don't really discuss this because £125K is a lot in terms of salary for most people. It's f
king mindbending when you look at it from this angle.
I thought Truss/Kwarteng was going to have a stab at fixing thisk in but they went about it the wrong way. We just don’t seem to get the required calibre of politician in the top jobs.king mindbending when you look at it from this angle.CraigyMc said:
Very few people in the UK actually think about this fully.
For employees who have one job:
1. National Insurance (NI) is just income tax under a different guise.
The removal of the personal allowance for employees making £100000 to £125140 means their effective income tax rate jumps from 40% to 60% (for England) between these two salary amounts, before falling back down to 45% for amounts above £125140. This "bump" in the tax system is incredibly unfair -- why should people on £110K have a higher marginal rate than people making £10m a year in employment?
Adding Employers NI, Employees NI, Income tax rate, and withdrawal of allowances is the only REAL way to view income taxation, but it's hardly ever how this is described in the UK.
For someone making a basic £125K salary in England, their effective marginal tax bracket consists of 40% income tax, 2% employees NI and 20% to cover the loss of the personal allowance.
Employers NI at 13.8% on the threshold £9100 up to £125000 means they would be paid £140,994.20 base salary if employers NI didn't exist. ( [13.8% of ((£125000-9000)=115900) = £15994.2])
Their effective marginal tax rate is really 40% + 2% + 20% + 12.79%, in other words, the marginal tax take at this point is already 74.79% of what the employer is paying for that employee.
People in the UK don't really discuss this because £125K is a lot in terms of salary for most people. It's fking mindbending when you look at it from this angle.
Chuck in student loan repayments for some too. For employees who have one job:
1. National Insurance (NI) is just income tax under a different guise.
- It's not hypothecated (ringfenced) into pensions or a state wealth fund. It is just spent as general taxation funds.
- It doesn't affect your state pension much if at all since that would be topped up anyway via pension credit, whether you paid NI or not in your working life.
- The primary bit of NI is the "employer's NI" which most people don't really see as being their business -- it is a tax on your income as an employee so impacts what you take home in pay (if an employer has £100K to spend on a staff member, the highest they'll advertise the job at is about £87K knowing they'll have to pay employers NI on it, pushing the overall spend to £100K)
- This is also just another income tax, albeit with different bands than income tax that's actually called income tax.
The removal of the personal allowance for employees making £100000 to £125140 means their effective income tax rate jumps from 40% to 60% (for England) between these two salary amounts, before falling back down to 45% for amounts above £125140. This "bump" in the tax system is incredibly unfair -- why should people on £110K have a higher marginal rate than people making £10m a year in employment?
Adding Employers NI, Employees NI, Income tax rate, and withdrawal of allowances is the only REAL way to view income taxation, but it's hardly ever how this is described in the UK.
For someone making a basic £125K salary in England, their effective marginal tax bracket consists of 40% income tax, 2% employees NI and 20% to cover the loss of the personal allowance.
Employers NI at 13.8% on the threshold £9100 up to £125000 means they would be paid £140,994.20 base salary if employers NI didn't exist. ( [13.8% of ((£125000-9000)=115900) = £15994.2])
Their effective marginal tax rate is really 40% + 2% + 20% + 12.79%, in other words, the marginal tax take at this point is already 74.79% of what the employer is paying for that employee.
People in the UK don't really discuss this because £125K is a lot in terms of salary for most people. It's f
king mindbending when you look at it from this angle.You can see why a SS Porsche Taycan suddenly looks very enticing.
I don't actually think you'd find anyone that did say that was a fair system. It really does need changing.
oyster said:
Successive UK governments have become obsessed with using tax revenue to buy votes rather than investing in either services or infrastructure which has diminished the economic stimulus that comes from government spending and reduced the long term productivity gains from it.
There are a lot of issues, but this is a big one. I'd add to that, ever increasing NHS and care spending which is enabling people to live longer although not actually at a good quality of life.
Other issues -
Privatisation of infrastructure, which of itself isn't an issue, but then governments have made the private companies focus on low prices to consumers instead of a price which offers long term investments.
An overly restrictive planning system which has hampered growth, resulted in a lack of housing, and makes any large infrastructure project prohibitably expensive.
Brexit hasn't helped, and the promised "freedoms" haven't happened. We less easy access to trade and it is undoubtedly slowing growth. Neither have we had a "bonfire of regulation" to help businesses. Seems like the worst of both worlds, we still have many of the EU policies we were apparently wanting rid of, but without access to their markets.
isaldiri said:
ATG said:
Might come true. Current government needs to hold its nerve in the face of the stirring. The government had said very, very little, which isn't particularly surprising as neither the PM or Chancellor are exactly great orators. This has ceded the ground to a handful of opposition politicians who themselves have precisely nothing to offer ... except criticism. The challenge for Labour is to decide if it's better to just let them prattle on in the hope the public get bored, or do you risk giving the criticism credibility by trying to counter it? Personally I'd suggest they just try to set the agenda themselves. Get another story out there. But they're a charisma vacuum.
You need to give a government about 2 years before you can begin to judge their impact on the economy because that's the sort of time it takes the economy to react to policy. That's reality. The news agenda has a half-life of about a week.
No wonder liz truss is still adamant she was always right all along and just needed more time and should have just 'held her nerve'.....You need to give a government about 2 years before you can begin to judge their impact on the economy because that's the sort of time it takes the economy to react to policy. That's reality. The news agenda has a half-life of about a week.
6th September 2022 Truss took office
8th September 2022 The Queen dies, parliament in recess
15th September 2022 "Emergency budget" in the works is reported in the press
21st September 2022 Household energy price cap for businesses announced
22nd September 2022 NI increase of 1.25% from April reversed
23rd September 2022 Social care levy scrapped (before mini-budget)
23rd September 2022 Mini Budget announced in the houses of parliament
23rd September 2022 Gilt Yields jump immediately (UK state borrowing gets more expensive)
26th September 2022 Sterling trading at USD$1.03
28th September 2022 Bank of England starts to buy Sterling bonds. Sterling trading at USD$1.05
29th September 2022 Mortgages being taken off sale at a huge rate
3rd October 2022 Reversed plans, Sterling trading at USD$1.13
14th October 2022 Kwarteng fired, replaced by Hunt
17th October 2022 Hunt reverses the majority of tax cuts
25th October 2022 Truss resigns, is replaced by Sunak. Gilts fall back to 3.6%
Holding her nerve would likely have led to a repeat of the IMF stepping in as happened in 1976 with basically a similar precursor of a Tory government borrowing in a wild fashion in order to grow the economy causing sterling to drop like a stone and borrowing costs to get out of control.
The place she went wildly wrong was beforehand, trying to avoid normal scrutiny of the plan via the OBR and subsequently the way it was implemented. It's why she was blindsided by what it did to pension funds. Surprise plans are a stupid idea for governments trying to fund stuff without causing financial carnage.
The single most annoying part about Truss's incompetence is that if she had actually used the normal levers to cut taxes like this it could have been done without freaking the markets out -- and the markets fund the UK.
Countdown said:
CraigyMc said:
In the US if you get chronically sick you're completely fked, economically speaking. That's a choice.
I wonder if that's why their productivity is higher than ours? Harsh as it is, if you're in a position where "if you don't work you and your family starve" you're less likely to pull sickies.ked, economically speaking. That's a choice.Humanely of course.
ChocolateFrog said:
CraigyMc said:
Very few people in the UK actually think about this fully.
For employees who have one job:
1. National Insurance (NI) is just income tax under a different guise.
The removal of the personal allowance for employees making £100000 to £125140 means their effective income tax rate jumps from 40% to 60% (for England) between these two salary amounts, before falling back down to 45% for amounts above £125140. This "bump" in the tax system is incredibly unfair -- why should people on £110K have a higher marginal rate than people making £10m a year in employment?
Adding Employers NI, Employees NI, Income tax rate, and withdrawal of allowances is the only REAL way to view income taxation, but it's hardly ever how this is described in the UK.
For someone making a basic £125K salary in England, their effective marginal tax bracket consists of 40% income tax, 2% employees NI and 20% to cover the loss of the personal allowance.
Employers NI at 13.8% on the threshold £9100 up to £125000 means they would be paid £140,994.20 base salary if employers NI didn't exist. ( [13.8% of ((£125000-9000)=115900) = £15994.2])
Their effective marginal tax rate is really 40% + 2% + 20% + 12.79%, in other words, the marginal tax take at this point is already 74.79% of what the employer is paying for that employee.
People in the UK don't really discuss this because £125K is a lot in terms of salary for most people. It's fking mindbending when you look at it from this angle.
Chuck in student loan repayments for some too. For employees who have one job:
1. National Insurance (NI) is just income tax under a different guise.
- It's not hypothecated (ringfenced) into pensions or a state wealth fund. It is just spent as general taxation funds.
- It doesn't affect your state pension much if at all since that would be topped up anyway via pension credit, whether you paid NI or not in your working life.
- The primary bit of NI is the "employer's NI" which most people don't really see as being their business -- it is a tax on your income as an employee so impacts what you take home in pay (if an employer has £100K to spend on a staff member, the highest they'll advertise the job at is about £87K knowing they'll have to pay employers NI on it, pushing the overall spend to £100K)
- This is also just another income tax, albeit with different bands than income tax that's actually called income tax.
The removal of the personal allowance for employees making £100000 to £125140 means their effective income tax rate jumps from 40% to 60% (for England) between these two salary amounts, before falling back down to 45% for amounts above £125140. This "bump" in the tax system is incredibly unfair -- why should people on £110K have a higher marginal rate than people making £10m a year in employment?
Adding Employers NI, Employees NI, Income tax rate, and withdrawal of allowances is the only REAL way to view income taxation, but it's hardly ever how this is described in the UK.
For someone making a basic £125K salary in England, their effective marginal tax bracket consists of 40% income tax, 2% employees NI and 20% to cover the loss of the personal allowance.
Employers NI at 13.8% on the threshold £9100 up to £125000 means they would be paid £140,994.20 base salary if employers NI didn't exist. ( [13.8% of ((£125000-9000)=115900) = £15994.2])
Their effective marginal tax rate is really 40% + 2% + 20% + 12.79%, in other words, the marginal tax take at this point is already 74.79% of what the employer is paying for that employee.
People in the UK don't really discuss this because £125K is a lot in terms of salary for most people. It's f
king mindbending when you look at it from this angle.You can see why a SS Porsche Taycan suddenly looks very enticing.
I don't actually think you'd find anyone that did say that was a fair system. It really does need changing.
Glassman said:
Chrisgr31 said:
Has it really gone pear shaped? Ignoring what politicians, media, social media tell us have our lives gone pear shaped?
Are we all unable to afford what we could afford, are we all unemployed, are we all taking pay cuts etc?
Or is it all been stirred by a bunch of self interested parties who by stirring it are raising such uncertainties their prophecies will become true?
It's been brewing for a few years now but my field of fAre we all unable to afford what we could afford, are we all unemployed, are we all taking pay cuts etc?
Or is it all been stirred by a bunch of self interested parties who by stirring it are raising such uncertainties their prophecies will become true?
ks to give is now barren when it comes to living in this country. ChocolateFrog said:
Countdown said:
CraigyMc said:
In the US if you get chronically sick you're completely fked, economically speaking. That's a choice.
I wonder if that's why their productivity is higher than ours? Harsh as it is, if you're in a position where "if you don't work you and your family starve" you're less likely to pull sickies.ked, economically speaking. That's a choice.Humanely of course.
t, but it's one direct way to do it (does it count as inhumane? It's common in the US)More days working = more productivity.
In a given year of 260 weekdays, 28 days off (including bank holidays) is more than 10% of the available working days. The UK minimum entitlement is 28 days.
The same sort of thing exists with the "sick days budget" the USA has, so unless we're comparing with other countries productivity AND RULES it's a bit moot unless the rules are up for debate.
CraigyMc said:
<snipped for brevity>
Holding her nerve would likely have led to a repeat of the IMF stepping in as happened in 1976 with basically a similar precursor of a Tory government borrowing in a wild fashion in order to grow the economy causing sterling to drop like a stone and borrowing costs to get out of control.
Indeed it would have. and in the same way, Reeves 'holding her nerve' as the post I quote was adamant that today's government should do irrespective of what is happening or the hole they insist on digging themselves further themselves into because all the criticism is just 'stirring' and 'opposition politicians offering nothing' might also result in the same.Holding her nerve would likely have led to a repeat of the IMF stepping in as happened in 1976 with basically a similar precursor of a Tory government borrowing in a wild fashion in order to grow the economy causing sterling to drop like a stone and borrowing costs to get out of control.
I still think we are now mostly seeing the outcome of 10 years of Blair and 15 years of wet tories.
Plus the effects of being in the EU, but not in the euro, then leaving the EU without a plan.
I'm not optimistic.
I think there's a good chance we will see mortgage rates go up this year, and house prices go down.
Withdrawal from our borrowing and spending habits could be very painful for a lot of people.
I think Sunak probably played a blinder, getting out before things became obviously bad to the masses and the media,
The majority seem to be blaming everything on Labour, and they've barely done anything yet.
The problem is, government spending is about 45% of GDP.
Which means, if you cut government spending, you cut GDP significantly,
Which makes people point at the debt/GDP and mock.
Plus the effects of being in the EU, but not in the euro, then leaving the EU without a plan.
I'm not optimistic.
I think there's a good chance we will see mortgage rates go up this year, and house prices go down.
Withdrawal from our borrowing and spending habits could be very painful for a lot of people.
I think Sunak probably played a blinder, getting out before things became obviously bad to the masses and the media,
The majority seem to be blaming everything on Labour, and they've barely done anything yet.
The problem is, government spending is about 45% of GDP.
Which means, if you cut government spending, you cut GDP significantly,
Which makes people point at the debt/GDP and mock.
CraigyMc said:
ChocolateFrog said:
CraigyMc said:
Very few people in the UK actually think about this fully.
For employees who have one job:
1. National Insurance (NI) is just income tax under a different guise.
The removal of the personal allowance for employees making £100000 to £125140 means their effective income tax rate jumps from 40% to 60% (for England) between these two salary amounts, before falling back down to 45% for amounts above £125140. This "bump" in the tax system is incredibly unfair -- why should people on £110K have a higher marginal rate than people making £10m a year in employment?
Adding Employers NI, Employees NI, Income tax rate, and withdrawal of allowances is the only REAL way to view income taxation, but it's hardly ever how this is described in the UK.
For someone making a basic £125K salary in England, their effective marginal tax bracket consists of 40% income tax, 2% employees NI and 20% to cover the loss of the personal allowance.
Employers NI at 13.8% on the threshold £9100 up to £125000 means they would be paid £140,994.20 base salary if employers NI didn't exist. ( [13.8% of ((£125000-9000)=115900) = £15994.2])
Their effective marginal tax rate is really 40% + 2% + 20% + 12.79%, in other words, the marginal tax take at this point is already 74.79% of what the employer is paying for that employee.
People in the UK don't really discuss this because £125K is a lot in terms of salary for most people. It's fking mindbending when you look at it from this angle.
Chuck in student loan repayments for some too. For employees who have one job:
1. National Insurance (NI) is just income tax under a different guise.
- It's not hypothecated (ringfenced) into pensions or a state wealth fund. It is just spent as general taxation funds.
- It doesn't affect your state pension much if at all since that would be topped up anyway via pension credit, whether you paid NI or not in your working life.
- The primary bit of NI is the "employer's NI" which most people don't really see as being their business -- it is a tax on your income as an employee so impacts what you take home in pay (if an employer has £100K to spend on a staff member, the highest they'll advertise the job at is about £87K knowing they'll have to pay employers NI on it, pushing the overall spend to £100K)
- This is also just another income tax, albeit with different bands than income tax that's actually called income tax.
The removal of the personal allowance for employees making £100000 to £125140 means their effective income tax rate jumps from 40% to 60% (for England) between these two salary amounts, before falling back down to 45% for amounts above £125140. This "bump" in the tax system is incredibly unfair -- why should people on £110K have a higher marginal rate than people making £10m a year in employment?
Adding Employers NI, Employees NI, Income tax rate, and withdrawal of allowances is the only REAL way to view income taxation, but it's hardly ever how this is described in the UK.
For someone making a basic £125K salary in England, their effective marginal tax bracket consists of 40% income tax, 2% employees NI and 20% to cover the loss of the personal allowance.
Employers NI at 13.8% on the threshold £9100 up to £125000 means they would be paid £140,994.20 base salary if employers NI didn't exist. ( [13.8% of ((£125000-9000)=115900) = £15994.2])
Their effective marginal tax rate is really 40% + 2% + 20% + 12.79%, in other words, the marginal tax take at this point is already 74.79% of what the employer is paying for that employee.
People in the UK don't really discuss this because £125K is a lot in terms of salary for most people. It's f
king mindbending when you look at it from this angle.You can see why a SS Porsche Taycan suddenly looks very enticing.
I don't actually think you'd find anyone that did say that was a fair system. It really does need changing.
OutInTheShed said:
Then there's VAT, council tax, stamp duty etc.
Yeah, the point is that you see those, they are visible. In fact, for things like council tax I can look at a house and then go see what people are paying for it. Likewise for stamp duty. VAT similar.For employers NI, most people don't even think about it as being theirs in the first place.
Likewise with the effect of the "loss of allowance" being in reality "20% more income taxation for this slice of your pay".
OutInTheShed said:
I think Sunak probably played a blinder, getting out before things became obviously bad to the masses and the media,
The majority seem to be blaming everything on Labour, and they've barely done anything yet.
.
Just handed the baton over without a fight. They knew what was coming. The majority seem to be blaming everything on Labour, and they've barely done anything yet.
.
The economy was destroyed by the madness of the COVID pandemic response in this country. including the wheezes the government came up with in implementing their policies, such as furlough, to essentially finance the public sector payroll and dump the costs on the public. All whilst still feeling the effects of the GFC where the huge private losses were dumped on the public to pay.
Then implementing policies known to cause inflation to help inflate away long term debt whilst destroying yet more individual wealth.
No wonder the tax levels are where there are and living standards and service levels have dived.
The government and public sector have become a self serving and negative wealth destroying force in this country.
Then implementing policies known to cause inflation to help inflate away long term debt whilst destroying yet more individual wealth.
No wonder the tax levels are where there are and living standards and service levels have dived.
The government and public sector have become a self serving and negative wealth destroying force in this country.
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