Sunday 30 November 2008

See that there economy thingummyjiggerybobcat?

It would appear that Alistair Darling has a sense of irony unparalleled in modern politics - claiming that an independent Scotland might face some economic problems (no doubt it will) while admitting that he doesn't have a scoobies what to do about the incredible economic mess of the UK.

People really do look to him like some Moses figure who is going to lead them away from this economic mess to the promised land.
Imagine being able to say that with a straight face! I've just been listening to Norman Lamont on Straight Talk on the BBC News channel critiquing Labour's atrocious handling of the economy and the running of consecutive enormous fiscal deficits. He should know - he grew up on a croft near Lerwick called Loot ...

The person making the real movement, is Kevin Rudd, the Australian PM. Australia is so much better off than we are that there are Australians complaining that their budget surplus (yes, surplus) is only $5.2 billion (Oz dollars, so about £2.218 bn). The UK ran a £38.7 bn deficit last year. Likewise, Australia had a trade surplus of $1.5 bn in September while the UK had a deficit of £3.9 bn in the same month - which was a narrowing deficit.
Now then, advice for Ally the Chancellor from my position as pontificator to the wall -
1. There won't be a retail solution to this recession, people don't have the confidence to spend and a pitiful reduction in VAT for the first year of a three year recession just makes you look unambitious.

2. Small businesses will be the driver of the recovery but they'll have to survive first - then they'll need to have the space to grow - that means that they'll need plentiful and long-lasting help.

3. People on low incomes are suffering and deserve consideration by their Governments, they need to cop a real break.

So, here's what to change your rescue package to:

1. Sod your silly VAT cut. EU regulations won't let you cut it below 15%, so let's leave it where it is, eh? Instead, cut the basic rate of income tax for the lowest earners and give them a wee break, you could cut it to, perhaps, 10%. An increase in the top rate is fine - as would be an extra couple of percent on the basic rate for those on the average wage.

2. Let's not have that rise in corporation tax for small businesses. Instead, let's be brave, cut it by a percent or two. Even better, cut it for the smallest businesses by a good 5% and then start looking at ways of making it easier for them to grow - that'll require flexibility; different solutions for different business sectors and different regions.

3. There's action needed to cut food prices and heating prices - what about support for food co-ops, for example?
I'll be back later with more sage advice.

Mind how you go.

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