Monday, 12 January 2009

Savers not spenders need the tax breaks

THE MOST numerous victims of the economic crisis are not, and will not be, the unemployed, or those who lose their homes. They are savers. The first people to suffer are not reckless borrowers, or greedy bankers, who are mostly being protected, at public expense, from the full consequences of their follies. They are those who committed the stupid mistake of acting responsibly.

If, as expected, Gordon Brown, sorry, the Bank of England, brings interest rates closer to zero this week, it seems very unlikely to boost bank lending, house prices, consumer confidence, or most of the other things it's supposed to do. But it will drop a bomb on millions of savers' living standards.

I should declare an interest. The income from my savings has already more than halved, and is sure to crash further. Luckily, I don't depend on it but for the vast numbers who do, including some of the most vulnerable, the outlook is truly bleak.

Britain's present crisis arose partly because we saved too little, and borrowed too much. Our vulnerability to the crisis is increased by our lack of savings to cushion us through the hard times. Yet the Government's long-standing policy of saver abuse has changed not at all.

If I choose to save, I am taxed twice for the privilege: once when it is earned and again on the interest I receive. With this burden, it is now becoming increasingly hard even to maintain the value of my savings.

One reason savers have been discriminated against is that spending is fashionable and savers are deeply politically unfashionable. Savers haven't sunk everything they've got into overpriced starter homes in key middle-England marginals; savers seldom splurge in designer-outlet malls. Many savers are old and unphotogenic.

Yet the fashion may be changing. In the kind of recession we're entering, it makes sense to retrench. Government policy, however, remains to deny us any trench-digging equipment.

They want us to spend instead but even if that was a way out of economic gloom (and it probably isn't), we don't seem willing to oblige. Spending may (or may not) be in the country's interest but it definitely doesn't feel, for now, as if it's in our interests as individuals.

Mr Brown has, it's now increasingly clear, wasted £12.5 billion on a VAT cut that has failed to pull us back into the shops. VAT, rather than income tax, was chosen for the giveaway precisely because it was believed that we would save the proceeds of an income tax cut. Since we now appear to want to save anyway, it seems perverse of the Government to place further obstacles in our way.

For as well as the VAT cut, it's clear that government policies to free up credit are failing. One thing that could, however, make banks more willing to lend is if they have higher capitalisation and more assets - in other words, more savers. Without them, the cycle of the last 18 months could repeat itself.

There are promises this morning that this year's Budget will help savers. It should include an end to taxing people twice on the same money, and a raising of the tax-free Isa limit, which has failed to keep pace with inflation. It probably won't, though. I'm placing my faith in interest-rate tartery, moving my savings promiscuously to snag the minority of decent rates which are still available.

Savers' treatment by the state has always been inexcusable. Now it is starting to look dangerous.

Doctor Boris for Time Lord

YOU KNOW you're getting old when intergalactic, sci-fi policemen start to look young.

Congratulations to Matt Smith, 26, the latest graduate from Time Lord medical school. A shame, however, that the BBC overlooked an even more convincing candidate for the role: Boris Johnson.

It strikes me that Boris (a child in the Seventies) has based his entire persona on the Tom Baker Doctor Who of that era: the same unruly hair, the same rumpled and jovial exterior concealing the same razor-sharp scientific brain, the same implacable hereditary enemies (surely John Biggs, Labour's deputy leader in the London Assembly, must be a Cyberman?)

To those who object that Boris already has a job, I reply that in fact he has about six, without notable ill effect. If you're already chairing TfL, the MPA, the waste board, the skills board and writing a Daily Telegraph column into the bargain, what's a little light acting on the side?

Gordon gets it right at last

HIGHLIGHT of the Gordon Brown interview in yesterday's Observer was when the Saviour of the World was asked what action his predecessor, the Middle East peace envoy Tony Blair, was taking to resolve the current conspicuous lack of peace in Gaza. “Tony's on holiday at the moment,” said the PM dismissively. “He issued a statement.” Brown is wrong about many things but how spot-on he is about Blair's total irrelevance to the tragedy now unfolding.

Δε θα μπορούσα να συμφωνήσω περισότερο. Από το thisislondon



Ωραίο άρθρο, αλλά φτιάξε λίγο την ανάρτηση σου, τις επικεφαλίδες κάνε τις bold γιατί για να καταλάβω τι παίζει, κοίταξα και το original άρθρο.

Panos Konstantinidis said...

Δίκαιο έχεις. Φαίνεται καλύτερα με τις εμφάσεις.

Γιώτα Παπαδημακοπούλου said...

Πολύ ενδιαφέρον Πάνο!

Panos Konstantinidis said...

Υπάρχουνε και λογικές φωνές στην Αγγλία. Όταν είχα ανοίξει savings account είχε επιτόκιο σχεδόν 4%, τώρα, με τις συνεχόμενες πτώσεις του επιτοκίου από την κεντρική τράπεζα, έχει πάει στο 1,19% (και προβλέπεται να πέσει κι άλλο). Αντί να τιμωρεί η κυβέρνηση αυτούς που φέρανε τη χώρα σε αυτά τα χάλια, τιμωρεί τους αποταμιευτές. Τελικά αυτά που συμβαίνουνε στην Ελλάδα συμβαίνουνε και στη βόρεια Ευρώπη.