UK Closer to Losing AAA Rating
Yesterday's UK borrowing numbers pretty much confirmed what everyone suspected.
Whilst the rest of the economy struggles, cuts costs and makes sacrifices, the public sector continues along as though nothing is happening, and for them it isn't.
For politicians of all hues, nasty things, such as cuts, tax hikes etc, should always be implemented at some point in the future. This is in the vain hope that by the time they actually start, all the anger will have been spent.
No doubt tax payers from the top 5%, who pay 70% of the total income tax take, have started to baulk at having the bucket taken to their well once too often.
It has taken time for the clever accountants to come up with their plans, nevertheless you can bet your bottom dollar that the HM Tax Inspectors are struggling to get their hands on the cash.
In addition, the fact is that companies are just not making the profits they used to, so they would have less tax to pay anyway.
This, along with the mad 20% VAT rate that just puts consumers off, means that we are ending up with lower Income Tax, Corporation Tax and VAT receipts when the Government 'austerity' is anything but.
When a company goes through cost cutting exercises, it actually reduces expenditure
When a government does the same thing, it apparently just reduces the rate of increase
in the hope that GDP growth will make up the slack.
Well, with nothing in the way of positive GDP, we can all see the effect this is having on the deficit.
Unfortunately, the UK may not be a million miles away from those nice men at Moody's and S&P taking a sharpened pencil to our prized AAA rating.
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By Simon Denham, 22 August 2012