Wednesday, 25 May 2016

IFS

The Institute For Fiscal Studies has said today that we do give a 'gross' figure of £350 million pounds a week to the EU but we will not get it back when we leave at the Brexit vote because of the rebate negotiated by Margret Thatcher.

That statement is misleading.

When we leave the EU we will no longer hand over £350 million pounds a week to the EU, that is a fact, I realise that we will not get a rebate and we will not get subsidies, but we will still not hand over £350 million pounds a week to the EU.

Why has the IFS said this today?

One reason is that over 10% of it's income comes directly from the EU and will probably be affected when we leave, Paul Johnson director of the IFS for the past five years admitted this morning.

While the IFS might be politically independent it certainly knows how to protect it's income.

Monday, 23 May 2016

EU Referendum

Yesterday was exactly one month to go until the EU referendum and the people in Britain get to make the most important political decision they’ve made in generations.

The Treasury has launched its latest attack on the UK economy, warning of doom and gloom if we leave the EU. However, the Treasury has a history of getting forecasts wrong. Indeed, George Osborne created the independent Office for Budget Responsibility as he admitted ‘the public and the markets have completely lost confidence in government economic forecasts’.

The Prime Minister has made it clear that he wants Turkey to join the EU. This would give 76 million Turkish citizens the right to live and work in the UK, putting huge pressure on our public services. It is evident that the UK poses a significant ‘pull factor’ as our average salaries are far higher than in Turkey. However, this will also threaten our national security as crime levels are also higher in Turkey, as is gun ownership.

SNP leader Nicola Sturgeon has said "overblown" government warnings about the economic impact of leaving the EU risk alienating the public. The Scottish First Minister and Remain supporter said "fear-based" campaigning could have a negative effect on voters. She was speaking as Tory Leave backers dismissed a Treasury study suggesting Brexit would hit growth, jobs, wages and house prices as "more propaganda".

Exactly how democratic is the EU? What are the economic risks to Britain of the Eurozone crisis? Is EU immigration sustainable or unbalanced in the long term? This struggle remains a work in progress. I may have learned more about Britain’s tortured relationship with the EU in the past few weeks than in all my previous years, but even so my analysis is unlikely to be complete by the day of the vote.

Treasury Forecasts

Monday morning has started with a bang and another scare story from the government in the form of a Treasury statement concerning a plague of frogs, er sorry, I mean recession that would shrink the UK economy by 6%.

Naturally this can be put under the heading of 'dodgy dossier' as there have been so many forecasts [from both sides] which are just that forecasts. The FT has a nice story that the Treasury was so nervous that it employed Charlie Bean, the former deputy governor of the Bank of England, to cast a critical eye over the process and give it the stamp of approval.

Rumours from the conservative back benchers that a new nick name for David Cameron and George Osborne is the Chuckle Brothers I find rather amusing.

Of course the biggest surprise the week before last was when the governor of the Bank of England Mark Carney 'said that Brexit could "materially" hit UK growth and cause the pound to fall "sharply" and inflation to spike'.

caldariborderzone.blogspot.co.uk/2016/05/cheek-of-governor.html

Mark Carney will be questioned by the select committee tomorrow [Tuesday 24-Jun-2016] and I eagerly await that meeting.

Thursday, 19 May 2016

Queen's Speech

Out of 30 items mentioned yesterday, only two are new, it is the most recycled Queen's Speech that has ever been given. It is now hardly surprising that so much was leaked before hand as we have heard it all before.

One of the big things that was missing was the new bill of rights and no mention of sovereignty issues.

David Cameron was expected to announce a whole set of new laws in the Queen’s Speech. There will be consultation on a new British bill of rights, which would replace the Human Rights Act. This would assert the supremacy of the UK courts, but would still incorporate the European Convention of Human Rights to which Britain is a signatory. It was not mentioned.

David Cameron said back in February that the measures designed to tackle European Court of Justice powers would "put beyond doubt" the UK parliament's sovereignty. Plans for a new British Bill of Rights were also left deliberately vague while the new Counter Extremism Bill, expected to be one of the most controversial pieces of legislation in the next session of Parliament also had key details missing. Conservatives in favour of Brexit believe that the Government is intent on shelving any kinds of controversial legislation in the run up to next month’s referendum for fear of alienating support for the remain campaign.

So what did we get from the speech?

Digital Economy Bill, Transport Bill, Planning Bill, Jobs Bill, Markets Bill, Bus Services Bill, Pensions Bill, Education Bill, Prisons Bill, most of these are re-hashed from before.

Is the Westminster Government 'really' worried about Brexit, the answer is yes, but what will the public say on 23-Jun-2016?

Tuesday, 17 May 2016

Smart money moves

The great gold rush of 2016 is gathering pace. Holdings in exchange-traded funds have now surged by a quarter, with investors taking advantage of lower prices over the past two weeks to enlarge stakes on rising concern about central bank policy making worldwide.

Gold is the best-performing major metal this year after silver amid rising concern over negative rates in Europe and Japan and whether the Federal Reserve will be able to tighten further. Demand jumped to the second-highest level ever in the first quarter, according to the World Gold Council, and billionaire hedge fund manager Paul Singer has said gold’s rally may just be beginning. Investors are being driven to gold on a structural shift in investment demand.

Firstly, the negative interest rate environment and quantitative-easing policies are reducing the pool of suitable investment options, and making gold less costly to hold, and while there may be more U.S. rate hikes in the pipeline, prevailing rates remain very low. Second, lingering fears of competitive currency devaluations and potentially fresh bouts of market volatility encourage safe-haven demand.

After the Fed raised rates in December, investors have been scaling back expectations of further increases amid concern about the strength of the global recovery. The chances of a hike at next month’s policy meet are just 4%, down from 75% at the start of the year, according to data compiled by Bloomberg. Higher U.S. borrowing costs typically hurt gold prices while boosting the dollar.

While central bank policies may have contributed to gold’s gains this year, some countries’ banks [notably in China, Russia and Kazakhstan] have also been substantial and consistent buyers. The World Gold Council estimates that nations are expected to buy 400 to 600 tons this year, compared with 566.3 tons in 2015.

Monday, 16 May 2016

Budget 2016

What is left from the Budget of 2016? Not a lot!

The first thing to go was disability change and it was nearly instant. People at the time were calling for a failed budget in the first week. The changes to PIP [personal independence payments] were listed in the Treasury document that adds detail to the chancellors statement. However on the following BBC question time the education secretary described the PIP cuts as a suggestion that was under consultation. The next thing we know is they have been cancelled.

Back in March just after the budget was released, the shadow chancellor called on the Budget to be ripped up and begun again, Mr McDonnell claimed the Chancellor “insults this House” with his no-show - while Labour MPs shouted "where is he?" and "frit" as Mr Gauke stood at the despatch box.

Then there was the wobble over the green tax or the rise in VAT from 5% to 20% for renewable energy specifically solar panels it would create a collision between the European Union and the British Parliament. Friends of the Earth highlighted, the solar tax would also have created the perverse situation whereby people ended up paying more tax on solar panels and energy conservation than on energy from polluting sources like oil and coal who would have their low tax rates retained, which would skew the energy market away from clean energy and send Britain’s energy policy in precisely the wrong direction.

Next on the hit list was Academies and this reverse change was released on what has become known as bad new day, slipped out amongst other bad news considered worse than changing every single school into an Academy whether they wanted it or not. The announcement was made at the height of the Junior Doctors strike where they walked out of emergency services.

Now the sugar tax is about to get squished. This looks as though it will come into contention with the EU as it breaches their rules. Oh dear!

Thursday, 12 May 2016

Cheek of the Governor

Bank of England Governor Mark Carney's warning that Britain could be forced into "technical recession" if it leaves the EU has sent a "very clear message" of the risks of Brexit, and appears to be a message straight from Downing Street. In the same breath Carney said it was his duty to be transparent, I think we can see through his transparency.

Supporters of EU leave campaigns accused the Governor of risking a self-fulfilling crisis, as the London markets fell on the Bank's warnings of depressed growth, increased inflation and unemployment and a fall in the value of the pound if Britain votes for Brexit on June 23.

The FTSE 100 closed at a five-week low, down 58.30 points, or 0.95pc, to 6,104.19 after Bank of England governor Mark Carney warned the British economy could fall into recession if the country voted to leave the European Union. Carney certainly knows how to back the odds. The market jitters prompted another dash to safe-haven assets. Gold producer Randgold Resources 1.2pc to £61.70. On the mid-cap index, Polymetal International surged 11.8pc to 780p. The precious metal miner also benefited from a rating upgrade after Goldman Sachs lifted it to “buy” from “neural”.

Speaking after the publication of the latest quarterly inflation report from the Bank's Monetary Policy Committee, the Governor said that Brexit could "materially" hit UK growth and cause the pound to fall "sharply" and inflation to spike, while the economy would suffer as households and businesses reined in spending.

Mark Carney pointed out that the MPC [Monetary Policy Committee] was 100% behind the analysis that a "Technical Recession" was possible after Brexit, how desperate are the remain campaign?