Category Archives: economy

Politics: Simple breakdown of UK Economic policy

The new coalition Government provides many opportunities, and some problems, for the financial services sector. The economic policy for both parties was top of the agenda throughout the election campaign, and now that the talks between David Cameron and Nick Clegg have achieved an agreement between the two parties – legitimised by an in-depth publication of the deal last week – the country can begin to benefit from the Government’s pledges.

With the public outcry over bankers bonuses, particularly for those who reported significant losses on the year, the Government has said it will reform the banking system in its entirety, introducing a levy on banking bonuses to avoid the level of bonuses seen in the past, as well as a proposal to split up the banks into investment and retail in order to reduce the risk of another financial crisis.

The idea to break up the banks is one which Vince Cable, the new Business Secretary, has long supported, and he said “The banks that have been rescued or underwritten by the taxpayer must be treated as the servants, not the masters, of the economy” (BBC).

Britain’s debt, another key concern for politicians, is set to be reduced by cutting costs rather than raising taxes, in an attempt to keep the electorate on side after over a decade of increasing Government spending, particularly in areas such as the NHS.

The Government has promised a full Spending Review this Autumn, while creating £6billion through cuts between now and 2011, as well as reducing spending on Child Tax Fund and tax credits for higher earners.

In an attempt to stabilise British business and encourage businessmen, particularly those in European Union, that Britain is a safe and attractive place to invest, the Government has pledged to simplify business taxes and create the “most competitive corporate tax regime in the G20 “. Also Regional Development Agencies will be replaced with Local Enterprise Partnerships, to leave more power in the hands of local businesses rather than the Government.

The biggest concert for the financial services sector is whether the coalition will make good on its promises, and if it will prove to be the decisive and effective Government the sector needs to fully recover from some of the hardest times in decades.

Initial reaction to the plans has been positive, with many considering the plans to be the best of each party’s manifestos, but the stock markets have not faired well in recent days as the FTSE fell for the fourth consecutive day this morning, amid news that the Bank of Spain was taking control of commercial bank, meaning the Euro debt crisis isn’t coming to an end as analysts had hoped.

The effectiveness of Britain’s own recovery efforts are still uncertain, despite George Osbourne detailing the £6billion in cuts this morning, and it will take some time before the business world, as well as the public, have faith in the economy.

James Michael Parry

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Health and the NHS

The hot topics in the health agenda this week are the NHS, unsurprisingly, but also the day to day health of Britons.

The Tories have vowed to outspend Labour on the NHS, but I thought that NHS standards were still falling even though New Labour have put more money into the NHS than ever before? In fact Gordon Brown has increased spending on the NHS overall by £40billion since 2002.

Surely the clever thing to pledge is to make existing money go further to economise and improve efficiency in the service.

According to the Telegraph some Tory right wingers agree with this view:

It risks angering Tory right-wingers who think Labour has wasted taxpayers’ money on public services and want David Cameron to fight the next election promising tax cuts. Source: http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/02/28/ntory428.xml

These tax cuts however, are looking less likely because shadow Health Secretary, Andrew Lansley, has said the Tories plan to increase NHS spending by £28billion a year.

One question of course, is where this money will magically come from, but according to Mr Lansley the funds will come from “tough” cuts in other government services, though the report doesn’t make it clear which services or what “tough” means.

Along with this announcement comes news that the NHS faces a £1.8billion surplus, a mere 2.8% of turnover, according to details released by the Department of Health.

The issue raised here, aside from why the Tories would want to put more money into a service already underspending, is why patients are being refused vital treatments on financial grounds if there is ‘money to burn’.

Though no one seems to have an answer, the Times reports the NHS has turned a £547million deficit in 2005/6 into a £515million surplus in only a year, and because increases in efficiency have been to effective the surplus has reached these recently announced unprecedented high levels. Source: http://www.timesonline.co.uk/tol/news/politics/article3479152.ece

Therefore the Tories proposals, which are likely to put David Cameron and his Shadow Chancellor George Osbourne under a lot of pressure from back-benchers, will most likely be re-thought since more money in a service in surplus makes no economic sense without a complex re-structuring of the distribution of funds.

The second issue in the press is the fact people are not going to the gym as much as they used to, partly because the celebrity mums on TV make women feel bad about themselves (http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/03/02/nyummy102.xml).

The golden age of the treadmill has passed, and the British public has turned to eating healthily as a replacement for working off those problem pounds.

The Times reports:

Five years ago, when gyms and health clubs were at the peak of their popularity, 8.7 million of us in Britain were members. But statistics from the accountancy firm Deloitte reveal that 54,000 fewer people took out gym membership during 2007 than they had 18 months previously.

The real question at the end of all this is: are people becoming less interested in their health and more in whether things are healthy or not? (regardless whether they are eating them or doing them)