The Guardian reports today:

City sources believe that the biggest employers will absorb the cost of the tax rather than cut the size of the bonus pools they amass throughout the year. This will mean that while proceeds from the tax could top £2bn – more than four times the £550m estimated by the chancellor in the pre-budget report.

Earlier in the week we also learned that city rents are set to soar because of demand for office space from the finance sector.

Yet at the time of the pre-budget report we were continually told that the Chancellor’s modest tax on bonuses would drive finance away from the UK. Indeed we have been subject to this lecture every time the tiniest tax increase or increase in regulation is proposed. Read more »

   Filed under: Corporate governance, Financial crisis, Pre-Budget Report, Tax | 2 Comments »

Ireland has chosen a very different solution to its public finance problems than the UK.  It has effectively done what many on the right have been urging on the Chancellor: massive spending cuts to bring the public deficit down.  The resulting bitterness building up in Ireland is described very well in this Guardian report.  I was struck particularly by this paragraph which shows why the very different political discourse today from that of the early 1980s means this is not the point for a triumphant return of Thatcherite economics: Read more »

   Filed under: Pre-Budget Report, Public services, Public spending, Recession | 2 Comments »

   Filed under: Politics, Pre-Budget Report, Public spending, Recession, Tax | 1 Comment »

Fascinating to hear an interview (go to 8.40am slot) on the Today programme this morning with someone who actually works on the bond markets rather than just comments on them. In total contradiction of the claim that the markets are very nervous about levels of government borrowing and only remain calm currently because they expect George Osborne to be Chancellor in a few months, this Morgan Stanley employee sounded very sanguine. Read more »

   Filed under: Pre-Budget Report, Public spending | 2 Comments »

Today at the UN Copenhagen conference has been all about the vital role of active Government in tackling climate change.

We’ve had helpful reassurances here that the UK hadn’t signed up to the unhelpful “Danish text” that I blogged on yesterday. A big distraction from the real task at hand – securing a viable UN text by next Wednesday. Unions joined with other Major Observer groups this afternoon in a two-way dialogue with the UN chair, Michael Zammet. Read more »

   Filed under: Copenhagen, Environment, Pre-Budget Report | 1 Comment »

Today’s PBR contained some important policy announcements on welfare and labour market policy – but nothing earth shattering. The Young Person’s Guarantee will now be available to unemployed 18-24 year olds after 6 months of claiming JSA (with compulsory participation in the Community Task Force now starting after 10 months). However, there was no specific commitment to increase the number of Future Jobs Fund jobs, or to make the Guarantee a permanent feature of welfare to work policy. Read more »

   Filed under: Labour market, Pre-Budget Report | 2 Comments »

Bankers are up in arms about the one off tax on bonuses, but they still don’t get it. They have no divine right to giant bonuses every year. The Chancellor’s proposal today is at the modest end of what he could have done, and is only a single one-off tax.

Bankers would be well advised to stop complaining and spend today instead reading what happened to the boy who cried wolf.

Robert Peston has an interesting take on the bonus tax. He clearly thinks it is a clever move.

   Filed under: Pre-Budget Report, Tax | 2 Comments »

We were glad to see the extension of the Young Person’s Guarantee (the guarantee of a job, work placement or training for any 18-24 year old out of work for at least six months) in today’s Pre-Budget Report. It shows that the Government has learned the lessons of previous recessions and is taking decisive action to prevent another ‘lost generation’ of young people. Read more »

   Filed under: Pre-Budget Report, Recession | 1 Comment »

This is what I think has happened on the pensions front in today’s PBR.

Read more »

   Filed under: Pensions, Pre-Budget Report | 3 Comments »

In his updated Treasury forecasts, published as part of the Pre-Budget Report, the Chancellor demonstrated why we cannot take economic growth for granted and why action to begin repaying the fiscal deficit should definitely be postponed for the time being. Read more »

   Filed under: Economics, Financial crisis, Politics, Pre-Budget Report | 1 Comment »

The one-off 50% tax on bank bonuses is welcome.  Setting the qualifying level at median earnings underlines the absurdity of the fact that so many working in the City earn so many times more than average earners for doing – well, a variety of things, including contributing to the greatest financial crisis since the Great Depression.

However, if the Government wants to bring about a permanent change in the scale of City bonuses it will need to follow up this one-off tax with stronger, longer-term measures. Read more »

   Filed under: Financial crisis, Pre-Budget Report, Tax | 2 Comments »

Today the Chancellor had to maximise the chances of recovery, help the unemployed and make sure that when the time is right to close the deficit those who did most to cause the crash and did best from the boom make their proper contribution through a fair tax system.

On the biggest decision he is right. The Chancellor has ruled out big cuts in the near future. To have cut spending so soon after a serious recession would be gross economic irresponsibility. Instead he has concentrated on helping the unemployed and a welcome boost to investment in the green technologies of the future. This is not just good for jobs, but helps rebalance the economy away from our over-reliance on finance. Read more »

   Filed under: Economics, Politics, Pre-Budget Report, Tax | 1 Comment »