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Weekend reading: basic Britain

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What caught my eye this week.

You won’t find anything more ridiculous, than this new profile
Razor unit, made with the highest British attention to the
Wrong detail, become obsolete units surrounded by hail.

The Classical – The Fall

A side theme of this blog over the past few years – much more in these weekend rambles than our investing articles – is that Britain is not the super-rich country it’s been acting – and voting – like it thinks it is.

Not as experienced by the average Briton anyway.

It’s not only me. Contributor Finumus believes the same. The Accumulator largely keeps politics out of his articles as much for his blood pressure as to maintain the peace. And several of our most respected regulars in the comments have made the same point.

In his article Britain is a developing country this week, Sam Bowman marshals a few salutary facts:

  • By GDP per capita, adjusted for purchasing power, the US ($76,399) is 39% richer than the UK ($54,603). GDP growth since 2010 has been 47% faster – nine percentage points – in the United States (28% growth) than the UK (19% growth), despite being from a much higher level.
  • By productivity, or how much we produce per hour worked, the US was 38% more productive than the UK (UK $54.3/hour, USA $73.7/hour) in 2019.
  • France / Germany were much closer to the US than to the UK at $69/hour.
  • Between 2010 and 2019, productivity growth was twice as fast in the US (8% growth) as the UK (4% growth).
  • Americans could stop working each year on September 22nd and they’d still be richer than Britons working for the whole year.
  • Or, as Mike Bird pointed out, a car wash manager at an Alabama Buc-ees, a chain of gas stations and grocery stores, earns more ($125k/year) than THREE median UK salaries.
  • The average starting salary for a newly-qualified nurse in the US is over £42,000, compared to only £27,000 in most of England, and the gap only widens as their careers progress.
  • UK real disposable incomes are not forecast to return to 2021 levels until 2027.

Read Bowman’s piece to hear what he thinks we should be doing it about Britain’s semi-stagnation.

Spoiler alert: it’s nothing like what we have been doing for the past seven years.

Anglosceptics anonymous

I don’t agree with all that ex-Adam Smith Institute director Bowman writes, though his dour prognosis on the economic consequences of Brexit in 2017 pretty much mirrored mine.

In particular I’m more concerned about the consequences of fossil fuel burning than he appears to be here, though I seem to recall he sees cheaper energy today as a faster path to us being rich enough to afford a renewable grid. (I might be misremembering).

Also Bowman’s bullet point drive-by comparison would be even deadlier if it didn’t focus so much on the US. The 20th Century was the American Century. With its tech company dominance over the past 25 years, who’s to say the 21st won’t be too? It’s an unrealistic benchmark for Britain.

Still, it’s refreshing to read a right-of-centre summary that mostly describes Britain in 2023 as I would. Seemingly ex-growth, in the jargon of stockpickers, and possibly a value trap.1

Things can always get better. But change starts with admitting that we – especially the young – have a problem.

Have a great weekend!

From Monevator

Best global tracker funds – Monevator

Old dog, old tricks – Monevator

From the archive-ator: It’s too late to get into buy-to-let – Monevator


Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.

UK inflation slid to 7.9% in June, below expectations – CNBC

Interest rates forecast to rise less sharply following inflation drop – Guardian

Government plans to scrap income tax benefits for inherited pensions [Search result]FT

Private rents outside London have risen by one-third in four years – Guardian

User satisfaction with Financial Ombudsman falls as delays mount  – Which

UK watchdog proposes tougher rules on ‘finfluencers’ [Search result]FT

iMessage and FaceTime could be withdrawn from UK over law change – Guardian

Strike dates for July / August: when to avoid traveling or expect delays – Which

“Brexit to blame” says a cycle distributor shutting up shop – Cycling Weekly

Index funds may be riskier than you think – Morningstar

Products and services

Natwest launches two best buy cash ISA deals – This Is Money

What the new bank account closure rules mean for UK customers… – Guardian

…and how your bank could shutdown your financial life – Which

Transfer your SIPP to Interactive Investor in July and get from £100 to £3,000 in cashback, plus pay no SIPP fee for six months. Terms apply – Interactive Investor

Owners of Centre Point flats tell of distress at £240,000 repair bills – Guardian

Do you really need travel insurance? – Be Clever With Your Cash

Open an account with low-cost platform InvestEngine via our link and get £25 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine

Annuities look sexy again: should Barbie buy one at 64? [Search result]FT

Homes for sale near UK beaches, in pictures – Guardian

Comment and opinion

Larry Swedroe: the extreme cost of active management – Wealth Management

You missed it – This Is The Top

The problem with valuation – Of Dollars and Data

How to get rich in the markets – The Big Picture

What drives investor behaviour? – Humble Dollar

The soul-sucking danger of comparison in personal finance – Forbes

Five career-related changes of mind – Young Money

Getting the investing basics right – Morningstar

Yet another 4% rule remix – Humble Dollar

Replicating investment strategies with the S&P 500 and cash – Finominal

What a writer [Makes Monevator look like Hemingway]Klement on Investing

Naughty corner: Active antics

Time to come home to UK equities – Temple Bar [UK equity fund manager]

Market resilience or investors in denial? – Musings on Markets

Does concentration in a fund improve performance? – Alpha Architect

Venture capital engages in predatory pricing – Business Insider

US ‘night return’ factor ETFs have bombed, will close – Wealth Management

Kindle book bargains

Money Men by Dan McCrum [On the Wirecard fraud] – £2.99 on Kindle

The Ride of a Lifetime by Bob Iger – £0.99 on Kindle

How to Own the World by Andrew Craig – £0.99 on Kindle

Environmental factors

‘Facekinis’ become popular in China as temperatures soar – Guardian

The problem with boating’s high-fibreglass diet – Hakai Magazine

Rampant heatwaves threaten food security of the entire planet – Guardian

Robot overlord roundup

Hollywood actors say strike is a battle for rights amid AI’s rise – Axios

How will AI affect investing? – Morningstar

Off our beat

How your house makes you miserable – Culture Study [h/t Abnormal Returns]

Seven Japanese concepts that can improve your life – Art of Manliness

Rich and anonymous – Morgan Housel

Some favourite stretches of coastline from around the UK – Guardian

Sperm fever: declining wrigglers are becoming big business – New York Mag

Winter is coming – Klement on Investing

The best days are ahead – We’re Gonna Get The Bastards

And finally…

“While catching up on the news is merely depressing to the citizen who has no stocks, it is a dangerous habit for the investor.”
– Peter Lynch, Beating the Street

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  1. I mean big picture Britain here, not the London stock market. Despite a little bounce over the past few days on lower inflation and a weaker pound, for the very little it’s worth I agree with those who think the UK market looks relatively cheap. []
{ 59 comments… add one }
  • 1 Neverland July 22, 2023, 10:13 am

    We’ve been here before most recently in the 70s

    The issues are simple enough taxation, planning, investment and trade

    All that is needed is the determination to fix them

    When Adam Smith wrote “there is a great deal of ruin in a nation” in the late 18th century he was writing about the uk after all

  • 2 B. Lackdown July 22, 2023, 10:14 am

    On the holistic UK citizen level your lede deeply concerns me, but as an investor it’s dead easy and has been for some time: I’ll have VUKE, VUKE, VUKE, VWRL and VUKE, with not so much VUKE in it. MUCH less VUKE, actually.

  • 3 PC July 22, 2023, 10:16 am

    ‘Britain is not the super rich country it thinks it is’ I agree. I think the huge dominance of the country by London is part of this illusion.

    London is one of the richest areas in Europe. Many of the poorest areas in Europe are in the rest of the UK. [In my head I can see a map illustrating this but can’t find it right now]

  • 4 Matthew July 22, 2023, 10:23 am

    In the UK you’ve got people taking all the robot’s jobs now – car washes by hand, dishwashing by hand in catering places, de-industrialisation, etc

  • 5 The Investor July 22, 2023, 10:24 am

    @PC — True enough, but remember also that some of the poorest areas of the UK are in London, or at least they were if their residents haven’t been gentrified out of the city since I last looked into this. Tower Hamlets used to be the big one for this, ironically positioned of course in the shadow of gleaming Canary Wharf.

    Before anyone starts shaking their pitchforks at London though, I prefer the build everywhere up versus pull the tall poppies down school of progress.

    (One of the biggest of the ten gazillion motivations for the grab-bag pic-a-mix Brexit was an envy and frustration with London. As I wrote at the time, I heard people from my family’s corner of Britain basically say “it’s a chance to pull it down to size”. That frustration may be understandable, but I don’t think it makes any rational/economic sense, especially given the general global trend towards agglomeration and network effects etc. The UK is lucky to have London; overall it’d be far worse off without it. Which is not to say I haven’t voted for redistribution etc myself many times. But not kneecapping!)

  • 6 Chris July 22, 2023, 10:39 am

    Leading with lyrics from The Fall just doubled my RoI as a Mogul member.

    By all accounts Mark E Smith went on tour with a carrier bag full of cash – to cover all eventualities, you understand. Ah, the good ole days.

    Sadly the lyrics in The Classical also reflect a long past era. Heads up for the racist line early on. Believe the hype and he’s just making an oblique comment, which was his trade.

    End of public announcement.

    Footnote courtesy of the new edit function: ok, just realised that your click-through goes to an article discussing this very point. Good job I stick to passive investing…

  • 7 Andrew July 22, 2023, 10:56 am

    At the dinner table, where household politics begins, I think a lot of the problem is that the narrative tends to be that things are expensive, rather than wages and productivity being terrible.

    Inflation is a fact of life. Has been for centuries.

    The median UK house price, adjusted for inflation, is the same today as in 2007. Interest rates are also now, roughly, the same.

    Yet the discussion surrounding the UKs desperately bad performance on productivity, investment etc is all left to the fringes. It should instead be at the heart of almost every economic debate in parliament.

  • 8 old_eyes July 22, 2023, 11:40 am

    Read the Sam Bowman article with interest. Description of the problem good, prescription less so. Yes, our performance heading in the wrong direction compared to key comparators. Yes, we have to make better use of what we have to work with. However, I doubt the solution is (to paraphrase) “cut the green crap, and fuck consumers and workers!”. Other countries seem to be taking advantage of a rare switch to new forms of energy. We are not – despite relentless boosterism by the governing party.

  • 9 Hak July 22, 2023, 11:49 am

    As someone that has spent their time evenly between the USA, Japan, and Great Britain in the past 15 years or so I do not doubt that the economic gulf has grown considerably between the US and UK. However, there have also been a clear social downtown in the US in this period with many cities and towns being downright intolerable as they are afflicted with drug users, homelessness, and crime. I haven’t the data to support these observations but crime and social poverty appears to be much higher (and is growing) in the US compared to the UK (Japan is a completely different story which is almost “perfect” in comparison).

  • 10 tetromino July 22, 2023, 12:49 pm

    @ Hak – completely agree. It’s strange to see Bowman list inequality among his ‘distractions’ as if you can think meaningfully about growth and wealth without considering how evenly it’s distributed.

  • 11 Prometheus July 22, 2023, 1:29 pm

    As soon as some think tank person starts comparing the UK to the US, it’s a no from me.

  • 12 Time like infinity July 22, 2023, 1:34 pm

    Buc-ees ad on Mike Bird’s Twitter makes me think about moving to a high wage, LCOL area like Alabama. Sure, compared with our own NHS, US health insurance leaves much to be desired, and adapting to Red Hat / ‘MAGA land’ values would be a challenge (albeit, we’ve had some practice in the UK with BoJo); but housing will be cheaper and, if the ad reflects reality, then even modest managerial roles pay more ($100-$225k pa) than many or most UK professions, at least excluding London. Combined Fed & State taxes probably also bit lower than UK at equivalent incomes.

    Agree @old_eyes #8. Bowman’s described what’s wrong, not come up with credible answers. His prescription looks Trussite. A step which can help is rejoining the EU. Just because UK made a bad mistake in 2016 is no reason to persist with it. If we don’t rejoin UK will become a ‘value trap’. There’s no answer Brexit’s mad riddle.

  • 13 The Investor July 22, 2023, 1:55 pm

    @Chris — Yes, I linked to the analysis for that reason. 🙂 I do think Smith meant something more complex than mere racism by that lyric but I also think it *is* racist, quadruple-y through today’s ears.

    Thanks so much for signing up to Moguls! And glad the Edit function came in handy. (Members should note I’ve turned off ‘infinite editing’ following feedback here and over email. Everyone gets 10 minutes now!)

  • 14 ermine July 22, 2023, 1:56 pm

    > is that Britain is not the super-rich country it’s been acting – and voting – like it thinks it is

    I think Dean Acheson nailed it at West Point in 1962.

    Great Britain has lost and empire and not yet found a role

    The problem’s not so much at the little people end, it is in the halls of power, the assumption that Britain is bigger and more powerful than it is. Because it was, and decline is a tough thing to preside over, so the presiding crew tell themselves it just ain’t so.

    Though I’m with @Neverland #1. We’ve seen this movie before in the 1970s

    Plus ça change, plus c’est la même chose was, after all, in the closing of your previous “old dog” post 😉 Woof, indeed.

  • 15 Hariseldon July 22, 2023, 2:13 pm

    We need to split the problems of the nation as a whole against our lived life in the UK.

    I see people getting very depressed by the news that they read , Daily Wail…. But their own lives are in fact good on an absolute level.

  • 16 Time like infinity July 22, 2023, 3:08 pm

    @ermine #14: 60 yrs & counting since Mr Acheson’s speech. GB’s taking some time finding that role….

  • 17 ermine July 22, 2023, 4:01 pm

    > GB’s taking some time finding that role….

    I can feel their pain, you walk around The Investor’s home town and all around you see the statues of the great and the good, at variance with being a peripheral island. One feels the shades of Ozymandias

    …Look on my Works, ye Mighty, and despair!
    Nothing beside remains. Round the decay
    Of that colossal Wreck, boundless and bare
    The lone and level sands stretch far away.

    GB doesn’t have to reprise that role, I’d imagine it might run into serious resistance from the current top dogs if it tried. But the traditions of the halls of power are still set up, that way, and the dissonance must be tough.

  • 18 ZXSpectrum48k July 22, 2023, 4:11 pm

    I’m no fan of the UK but comparing us with the global winner for at least the last 75 years is not a fair comparison. Moreover, we are not a developing country. We have aspects to our economy that are very EM like but we are still a developed country.

    My perception is that in 2022 the consensus finally got a bit too bearish on the UK. I’m struggle to want to own UK equities, property or infrastructure. I’m neutral bonds.

    Where I have been more positive over the last 12 months is Sterling, at least vs. the USD but also vs. AUD. I was definitely too early starting out thanks to Kamikwasi but it did offer some exceptional levels to add! Long term it’s hard to want to own GBP but it does mean revert to some degree against the trend deval. Plus the other leg of the bilateral can and do get expensive. It’s not a one way train.

  • 19 Prometheus July 22, 2023, 4:19 pm

    Perhaps, rather than make flawed comparisons to countries that are practically continental in scale and substantially different demographics we need to look at the fundamental issues with our institutions.

    Political structures. Elected upper chamber, separation of executive and legislative. Introduce PR which would allow a more nuanced reaction to a changing society.
    Education: a level playing field. How much talent is squandered by lack of access to a good education?
    Immigration……resolving demographic imbalances
    Restructuring of the 3rd estate (speaking of elites)

    Perhaps meritocracy would be a better foundation for success than the cronyism we’ve seen in recent years?

  • 20 Time like infinity July 22, 2023, 6:25 pm

    @ermine: #17: Looked like GB would reinvent itself after 1963: Beatles, Stones, Mr Bond and Carnebie St; White Heat of Technology, Roy Jenkins, and Britain into Europe in 1973. Then came 4 day weeks, strikes, IMF, a Winter of Discontent, and so many years under Mrs T.

    Seemed like we’d get a second chance with Cool Britannia, New Labour-New Britain, devolution, and peace in Ireland. Instead, after Iraq, we’ve ended up with a credit crunch, endless austerity, populism, nativism, and fantasism. Our own sleep of reason. You don’t need a watch in Britain now, because the time is always 1940.

    “When my eyes had learned to focus I looked out at sunshine on trampled grass and I saw vigorous people going about the sweet activities of their lives. Where…oh where has all of that vigor gone” (Frank Herbert, GEoD, 1981)

    “It eluded us then, but that’s no matter–tomorrow we will run faster, stretch out our arms farther. . . And one fine morning—-And so we beat on, boats against the current, borne back ceaselessly into the past” (F Scott Fitzgerald, the Great Gatsby, 1925)

  • 21 Adt July 22, 2023, 8:20 pm

    I first found this site when Bowman gave a link on his Substack about passive investing. Now he’s getting linked here. Lovely stuff.

  • 22 ZXSpectrum48k July 23, 2023, 8:45 am

    @Prometheus. I can agree with an elected upper chamber and PR.

    I struggle though with a level playing field in education. We tried that. I’m a product of the comprehensive system and it was bloody awful. We only know how to level down, not to level up. Since we wont accept the tautology that 50% are people are lower than average, everyone will end up with A**.

    As for elites, the problem is that is it’s totally in the eye of the beholder. Nobody sees themself as an elite.

    We need a fairer political system. We also though need to accept our starting point cannot afford such an expensive state. Slimming down the NHS, the pension system (DB pensions for public sector and triple lock to go). The demographics are clear. The state needs to be only for those really in crisis. More private medical care and more private education. Less support for the elderly. Not more.

  • 23 Neverland July 23, 2023, 9:59 am


    “I was a product of the comprehensive system and it was bloody awful”

    It seems to have worked out just fine for you though

    And somehow I expect you have no recent experience of the state system

    State education is one of the few areas where the last thirteen years have seen some progress

    There is a state school near West Ham’s old ground that sent more kids to oxbridge last year than Eton

    Just simply because the government put some more money into London schools a decade a half ago

    State spend about 120 bn a year on pensioners and 80 bn on all education (pre school, school and higher ed) imagine the results we could achieve if that spending was reversed

  • 24 Barney July 23, 2023, 10:59 am

    @ Ermine 14 ….Great Britain has lost an empire and not yet found a role.

    But we have. To ensure a place at the top table, we send our ever decreasing, and ill equipped armed forces to any global trouble spot. We give £Bn to regimes who have their own emerging space and nuclear programmes. Whilst telling the old, infirm, and the “50% with lower than average” to join the hip and cataract queue.

    UK productivity will never catch up until spending on R&D and Infrastructure is increased to at least the same level as France, Germany, US, and South Korea. Demoting the plethora of low skilled managers, making it financially harder for the work-shy, and realistically incentivising the work force would be a start. Then maybe, the UK could compete with the rest.

  • 25 Time like infinity July 23, 2023, 11:24 am

    @Prometheus, ZX & Neverland #19, 22 & 23: Closer to Prometheus and Neverland than to ZX on this one.

    Potential needs to be developed. All of it. And health needs to be promoted. For the many, not just the very few.

    Part of Britain’s long term malaise is it’s self perpetuating elite with the means to opt-out privately. Any civilised society is built on some notions of universality and fairness. Limiting health and education access makes things worse for the many.

    For education, we should elevate the standing, status and funding for technical schools and for STEM, just as has been done in the most successful continental economies, like in Germany. Instead we look down on them.

    Sadly, ours is a unimaginative and archaic society and culture, especially in England.

    It’s one which, deep down, when it even tries, struggles to reconcile to modernity.

    Look at the our deference to class (in what other country could an absurdity like JRM become ‘leader of the House’ & head up the Cabinet Office?).

    We hark back to history, to our traditions. We are hostile to criticism of royalty and the establishment.

    And we’re uncomfortable with change and difference, even when it’s necessary or inevitable. Think of the culture wars, the hysteria about ‘the boats’, the shrill opposition towards both Europe and globalization, and the hostility to the green transition.

    We distract ourselves from what needs to be done, even as other, more successful countries, just get on and do it:

    We need to have different approaches for different problems. Not yet more ideology from left or right. Pragmatism. Realism.

    But it’s a realism and pragmatism which still needs some underpinning by basic moral values. Not a Hobbesian free for all.

    We can’t just leave the poor behind and abolish social protections, trashing the environment in the process. We need some balance.

    But we also need a relentless focus on modernising what is, in truth, still a rather moribund and backwards looking country.

    Otherwise, we’ll end up just getting yet further behind, at least on a relative basis.

  • 26 ZXSpectrum48k July 23, 2023, 11:32 am

    OECD average for govt spending on education is around 80%. UK is over 90%. Asking some to pitch in for their kids’ education is not unreasonable.

    Countries like Australia have a health system that is 67% funded by govt. UK is around 80%. The old age dependency ratio increases by a third between 2027 and 2042. It will put an intolerable burden on our health system. We cannot afford a free NHS.

    Nor can we afford a triple lock. Or DB pensions for the public sector.

    Something has to give. Instant productivity improvements or taxing the “elite” is magical thinking.

  • 27 Sean July 23, 2023, 1:18 pm

    I didn’t notice a link to Marina Hyde’s article this week so here it is in case she, or her subject matter and the well-deserved taste of his own medicine that he is currently receiving courtesy of https://bylinetimes.com/ , of are of any interest.


  • 28 Barney July 23, 2023, 1:30 pm

    The 2021 figure for developed world pensions, lists the UK 31 out of 38. The triple lock started in 2010 and was suspended for the 2022/23 tax year. It’s a fair bet that Lord Sugar and others would forgo any pension rights, so should those above a predetermined retirement income forgo their state pension too.

    For a start, the NHS should confine prescriptions to medication, not aspirin or paracetamol. And charge for missed GP and Hospital appointments, medical treatment for fights, drunks, and vehicle accidents. And either cancel prescription charges for England, or make them mandatory for the UK.

  • 29 Time like infinity July 23, 2023, 1:51 pm

    @ZX #26: Means testing is one thing, but not covering those who simply cannot afford to pay is another one entirely. Similarly for abrogating the contractual rights of those who are either already in receipt of, or currently accruing their DB pensions, versus simply closing all such schemes to new entrants. The former is a breach of the rule of law and unfair. The latter may be unavoidable and necessary.

    One way or the other, for better or worse, whether with the Tories or Labour, we’re going to see higher taxes in the coming decades. It would seem logical and fair that those with the broadest shoulders should bear the greatest share. Leaving fairness aside, if the State needs money it’s going to find it amongst those who have it, not from those that don’t.

    On that basis, I’d anticipate a wealth tax and equalisation of tax rates on income, dividends, capital gains & carried interest by the first next Labour government.

    I very much liked your idea of taxing those who voted for Brexit £2,300 p.a. each to make up for the £40 bn p.a. tax shortfall which that singular act of self harm has left; but sadly there’s no way to implement it.

    Whether such increases will actually be spent wisely is rather doubtful. Priorities are longer term investments in education, funding R&D, upgrading and repairing essential infrastructure, and in getting the long term sick well enough to get back into work; rather than on either current spending on welfare or on over budget white elephants like HS2 and aircraft carriers which we can’t afford to put planes on. Imperial delusions are their own form of magical thinking.

  • 30 Neverland July 23, 2023, 2:00 pm

    Before people start talking about what can and cant be afforded it’s eye opening to educate yourself about where the ukgov money comes from and where it goes


    Interesting facts
    – less than 5% of revenue comes from capital taxes
    – corporation tax only accounts for about 7.5% of government revenue
    – nearly 45% comes from income tax
    and NI
    – less than 3% is spent on defence
    – we manage scrape a 7% investment rate
    – there is a shortfall forecast of 130bn between income and receipts, over 10%

  • 31 159F July 23, 2023, 3:31 pm

    Virtually none of the coverage this week on the 3 UK by-elections mentioned electoral reform. So much for the Fourth Estate and that’s a major problem right there. All regurgitated safe patterns of reporting. Carry on as you were. All very comfortable all round for the few not the many. If ever the UK seems constipated on optimism, growth, investment etc – shaking up the electoral system would provide a decent laxative it would seem to me.

  • 32 Time like infinity July 24, 2023, 12:27 am

    Torygraph now joined Guardianistas in bemoaning Britain’s diminished status:
    Rare post-Brexit cross party accord, albeit only as to status, not cause or remedy.

  • 33 ZXSpectrum48k July 24, 2023, 8:26 am

    @TLI. The issue with wealth taxes is that they don’t raise much if you exclude all the wealth! People want their house excluded, their pensions excluded. You can’t do that. That leaves very little to tax in the UK since it’s those houses and those DB pensions that are the bulk of the wealth.

    Plus that bit people are willing to tax — financial securities – are too easy to move. We’ve all had plenty of time to prepare!

    There is plenty to tax. We could afford UBI if we wanted to without increasing income tax at all. It means though taxing those houses with an LVT. Taxing those pension incomes by adding NI to them. Taxing principal property. Getting rid of the £40bn tax credit for pensions etc.

    We won’t do any of that. So we have to cut services instead. A smaller NHS, smaller education system. Less social services. DC replaces DB. Britain will get back to basics by salami slicing everything without ever grasping the nettle.

  • 34 Time like infinity July 24, 2023, 8:55 am

    @ZX #33: the Wealth Tax Commission (Chaired by former CS head Lord Gus O’Donnell) and Patriotic Millionaires UK have each looked into design and impacts (pros and cons, inc. difficulties) of a UK Wealth Tax, with some very detailed work by the Commission in 2020:



    The Commission concluded even a 1% p.a. rate on over £10 m would raise £11 bn p.a. after allowing for avoidance and evasion, whilst the same rate for £1 m plus per couple / £500 k per person would raise £260 bn over 5 years / 1 Parliament.

  • 35 Alan S July 24, 2023, 10:17 am

    The Tyranny of Nostalgia – Half a Century of British Economic Decline by Russell Jones (a review is at https://spe.org.uk/reading-room/book-reviews/the-tyranny-of-nostalgia/) is an interesting book broadly covering this topic. with (after a rather depressing read), some thoughts for the future in the final chapter or so.

  • 36 Time like infinity July 24, 2023, 11:14 am

    For a really long take on the British Isles’ cyclic rise & fall: recommend “Geography is Destiny” by historian + archeologist Ian Morris (pub. 2022). Basically an eight millennia run up to Brexit, from the flooding of the land bridge to Eurasian peninsula through to now. TL:DR is we weren’t important from 6,000 BCE to c. 1500 CE. We became important between then & 1870, since when we’ve been in relative decline & are likely to continue.

  • 37 ZXSpectrum48k July 24, 2023, 11:16 am

    @TLI. £ 11bn is a drop in the ocean. Not even worth the hassle given how long it would take to implement and the legal battles.

    Now £50bn/annum might be worthwhile but that means taxing everything – house, pension, businesses etc above £500k per person. Never going to happen. You would needs to value millions of peoples’ assets. Plus financial assets are only 19% of that. So once we exclude house and pensions (which voters will want and politicians will accede to) we are back to another drop in the ocean.

    Taxes will rise. We may get a wealth tax on financial assets but if I’ve taken avoidance measures then i’m deeply sceptical how much that would raise. Reckon it will come back to higher VAT and income tax as normal.

  • 38 ermine July 24, 2023, 11:47 am

    As a counter to the counsel of despair in this post/comment thread, I was tickled to read in the “You May Also Like” links a post written by a somewhat more chipper The Investor about how we’ll die rich but irrelevant.

    There’s a theory that happiness is u-shaped across life in rich countries as long as you don’t run into too much health flack, which you lot probably have better chances, being better off than most, given you’re reading about investing. I look forward to reading TI’s more chipper notes in 10 years’ time that it’s working out OK for him in the end, even as the UK slides further down the slope of irrelevance. Sort of Hariseldon #15 writ large.

  • 39 Time like infinity July 24, 2023, 12:38 pm

    @ZX: Not sure IT increases work either practically or politically. Raising the AR to 50% and dropping the starting threshold to £100k; or even, in addition, introducing second AR of 60% starting at £200k, would probably not be enough. There’s just too few highest (£100k plus) earners in UK (about 700k persons) to raise sufficient extra tax from. Even at elevated levels, incomes play second fiddle to wealth gains. As for the HR, once you increase for those on below £80k you’re getting into the 90% bulk of the electorate, meaning big negative political consequences.

    And as for VAT, increases there are a great way to take money out of people’s day to day discretionary spending in order to reduce the RPI measure, but it would manage to be both a super regressive measure in effect and a highly unpopular one with almost everyone, especially Labour MPs, members and voters. So that option, I think, would end up being a last resort for a Labour government.

    Similar issues, of course, for a wealth tax below £1 m per person. There are 2.85 m $ equivalent millionaires in UK (Credit Suisse, 2021), taking account of homes, actuarial valuation of all DB pensions, all DC pots (including SIPPs), and ISAs. That’s 5% of the electorate, which is getting iffy, especially in blue marginals in SE, which Labour will want to win over and keep.

    On the other hand, with a £10 m wealth tax starting threshold, and using the same all inclusive basis for assets; then it’s only 22k – 25k persons affected, which is just 0.05% of the electorate, so no obvious popularity impacts.

    Credit Suisse also reports there are 4,180 UK $ centi-millionaires and the Sunday Times gives figures of 171 £ billionaires who are worth over £600 bn collectively.

    Those no’s of people are so small and the pool of assets so large it’s hard to see how Labour would not give taxing them a go. Whilst it’d only be £11 bn p.a., it’s a start. And are people really going to flee the UK for 1% p.a. rate applying for 5 years?

  • 40 The Investor July 24, 2023, 1:23 pm

    @ermine — Hah! But as I also said about Brexit (which my critics couldn’t get my head around) this isn’t about me. 🙂 I have seven figure wealth and no heirs. I have no questions asked Plan B options abroad.

    None of that helps the UK’s plight though. If anything, the fact that people with means/options can use them to avoid the pain is if anything another problem (as per @ZX’s counter to the wealth tax proposals).

    Thanks for another great debate everyone! I’ve read along with interest on a busy weekend. 🙂

  • 41 SemiPassive July 24, 2023, 2:36 pm

    I’m all for taxing the financial assets of the rich, as long as they exclude sub £1 million homes, DC pension pots, SIPPs, Stocks and Shares ISAs and at least let us earn a couple of grand in interest on cash tax free.
    And keep it with no CGT on gilts, so I can park my house sale cash in near zero coupon gilts for a while while the house price crash plays out.

    To paraphrase Sun Tzu, “appear poor when you are rich”.
    Keep your taxable income under £50k if possible, and certainly under £100k, when the Labour bunch get in. They’ll be after the likes of ZXSpectrum48k so will hopefully leave us plebs alone.

  • 42 Time like infinity July 24, 2023, 2:49 pm

    @Semi Passive #41: Avoid falling into the £100k – £125k tax ‘death strip’ at all costs. With NI, it’s a 62% effective rate, and who wants to keep 38p in the pound when most £125k jobs involve significantly more stress and sacrifice than roles at just under £100k? Not as bad though as for those suffering HICBC and the like at just over £50k. All courtesy of one George Osborne.

  • 43 Barney July 24, 2023, 3:32 pm

    Us plebs would consider you rich, so watch out, the bogey man cometh.

  • 44 Boltt July 24, 2023, 3:52 pm


    I’m beginning to regret not seeing out my phd in the states – their mindset in different to ours. More hustle, more personal responsibility, lower safety net (food stamps not cash)….

    Optimisation on tax is tempting, I’m a sucker for it too (no more 40%) but for us to be a successful country we need more ambition and aspiration. Too many cap their hours, manage their earnings/pension contributions – and some simply take a free ride on the tax payers

    Everyone should have more skin in the game – lower tax free allowances, some element of giving from the unemployed, limits on DLA etc etc.

    Our current approach simply isn’t affordable and the sooner changes are made for better.

    If I was younger I’d be off abroad

  • 45 Time like infinity July 24, 2023, 4:39 pm

    @Boltt #44: thing is, humans aren’t well adapted physiologically, psychologically or culturally for sustained hard work. We spent 200k yrs hunting prey a few hrs a day in small groups & the rest of the time socialising, eating and resting. The era of agriculture & settled populations is far too recent to have altered us fundamentally, and so the capitalist mode of production doesn’t come to us naturally. All of our innovations, tools and tech essentially allow us to do more for less, or the same for much less. We’re wired to optimise for Total Factor Productivity, not productivity per se. So telling people that they can take home much less per extra earned £ for considerably more hours, exhaustion, stress and responsibilities (perhaps not unreasonably) sounds a rather poor deal.

  • 46 Boltt July 24, 2023, 5:01 pm

    @ TLI

    3 hours work is ok if you can live for free in cave, and don’t want the same living standard as those willing to work 3+ hours.

    The idea of flat tax rates is appealing to manage disincentives eg 35-40% for everyone from the ground up (perhaps with a UBI style allowance for all of about £50 per week).

    On the subject of UBI, I prefer UBServices – free prescriptions, free buses, free basic medical services, free basic accommodation, perhaps even free basic food

  • 47 ZXSpectrum48k July 25, 2023, 8:58 am

    @TLI. “Are people going to flee for 1% for 5 years?”

    Yes. If it really hits their full wealth. For me that would be £400k/annum+ say. On top of a seven figure income tax bill I already pay. It’s not as though I can’t do my job from anywhere else. It just means I might go a’a few years earlier.

    The reality though is that they won’t even get a fraction of that. The UK is the world leader in tax avoidance. We are the best. Anything they come up with will be negated by countermeasures. We’ve wargamed it. Had decades to think about it. I’m 50/50 on most things but I’m pretty confident that I can avoid 90% of any wealth tax.

    And you’re talking to someone who hasn’t typically tried to avoid tax. I’ve paid over £10mm income tax. Most in my position were far less keen to pay! Just go back to the Monevator op-ed on tax. Note all those people willing to work less just to avoid losing their personal allowance of £12k. Avoiding tax is everyone’s favourite pastime.

  • 48 ZXSpectrum48k July 25, 2023, 9:39 am

    @Boltt. I originally thought taking many out of tax was reasonable. It’s turned out to be a bad idea. It’s created a whole bunch of issues. A whole segment with no skin in the game. People avoiding working to optimise tax but end up earning less. The personal allowance needs to go.

    This is the problem with our tax system is that it’s not a level playing field and so complicated that you can’t change one tax without causing a bunch of perturbations downstream.

    Take wealth taxes. @TLI wants to tax me since I have over £10mm, despite already paying 47% on that money. Another guy gifted £10mm, never having paid a penny in tax, pays nothing. So I get grumpy and take my ball home. Yet if TLI had simply said the wealth tax is 1% of anything over zero, I’d have less to be grumpy about. Taxes have to apply to everyone. No exclusions.

  • 49 Jam July 25, 2023, 10:32 am

    @Boltt #44 > “If I was younger I’d be off abroad”

    I remembered that you had previously made some comments about Portugal’s Habitual Non Resident scheme, which is tax favoured for people drawing pensions. Also did I see a comment from you over at @ermine’s site about trialling a stay in Spain? I remember because I was thinking about Portugal as an option for me.

    Anyway, I would be interested in your thoughts and experiences if you would be prepared to share?

    For me, I think while I would be able to benefit from Portugal’s HNR scheme, my ISA’s would become taxable under Portuguese law, if I have understood correctly. So swings and roundabouts. Any future tax changes could massively alter this of course.

    A very nice country with nice people, lovely in winter, but the heat in the summer is very off-putting. Not sure I would ever get used to it.

    So what swung it for you to decide to stay in blighty?

  • 50 Time like infinity July 25, 2023, 10:48 am

    @ZX #47-48: It’s more a prediction and less a prescription. If OBR is right, and UK, upon current trends, is heading to a 311% (optimistic) to 435% net public sector debt / GDP by 2075, then some form of wealth taxes look to be unavoidable. Assuming democracy survives until then, which is not a given, and the UK still exists in some form too (at least England & Wales); then there’s no way the aging electorate will sacrifice the NHS or their pensions. Just not going to happen. They will vote in whoever will protect those for them, whether the politicians call themselves progressives or conservatives, technocrats or a populists. Outcome will be the same.

    I do think, however, that wealth is a non linear utility function. You don’t get 10x the life satisfaction going from £100k to £1m, and I imagine same is true from £1m to £10m etc. After certain points wellbeing doesn’t even double with each order of magnitude increase. Indeed, increases in happiness flatten even under exponential scaling. And some individuals show actual negative effects, i.e. wealth causes them more problems than it solves, reducing their wellbeing.

    Obviously, if you’ve got nowt, then every little helps. If you’re on the NMW, taking home less than £10 p.h. after tax and NI, working 40 hrs p.w. in a soul destroying job for say £18k take home p.a., with no assets, no job security, no security of tenure, and you’ve got £5k of credit card debt, with a child to look after; then £100k could well totally transform your (and your child’s) life.

    But, on the other hand, and at the other extreme, if you’ve got £10 bn, then what difference or good is another £10 bn going to do you or your family? Literally, what can you usefully do in terms of lifestyle with £20 bn that you just can’t do with £10 bn? And as for the ‘keeping up’ & ‘keeping score’ arguments for super wealth, why would anyone measure their own sense of worth as a person by going & comparing themselves to someone else? If you do that, then you’re making yourself a slave to other people.

    Sure, people are going to leave the UK if there were a wealth tax but, rationally, is it actually worth the bother to do so for 1% p.a. which, for the most part, if the threshold were £10m plus, the individuals concerned wouldn’t need and wouldn’t really notice had been paid? If people actually want to live and work elsewhere that’s one thing, and great for them if so; but if they don’t actually want to leave the UK then why uproot one’s life in order to do so for a 1% p.a. amount that wouldn’t even be missed? Doesn’t seem to make much sense to me.

  • 51 ZXSpectrum48k July 25, 2023, 4:24 pm

    @TLI. I understand your view. It makes sense in absolute terms. Problem is that most of us operate in relative terms. What matters is our relative position in the tribe. It’s all about keeping up with the Jones. Or doing better than them. We can’t help it, we are just apes.

    I perceive a big difference in my peers’ attitudes in the last 5 years or so. In 2010, people moaned about a 50% tax rate but very few left for Zug. Now, I’m seeing people leave for Jersey or Portugal in droves. Frankly, we don’t trust the “average person” anymore. We see Brexit, Trump, Orban etc and we can smell which way the wind is blowing. So we want to hold on to wealth far tighter than before. We’re less tolerant and more scared.

    Of the team of four I run, we paid around £18mm in income tax and NI in 22. No management fees, just a percentage of profit. So straw poll, of the 5 of us, 4 would leave for Jersey/Europe on 1% wealth tax over £10mm if it really couldn’t be avoided (we think it can but for sake of argument). Including me.

  • 52 Boltt July 27, 2023, 11:48 am


    I’m quite torn between staying and going. We’ve spent approximately 100 days a year out of the uk for the last 7 years – a mix of Motorhoming in Spain / Portugal, a few trips farther afield, and a few normal holidays.

    The Portuguese D7 passive income visa is highly tempting with 10 years of tax free with 10% pension tax rates. Not to mention free medical after year one and simple route to citizenship. Unfortunately the ISA being tax free here means it is taxable there – this is troublesome as we have £500k+ in ours and it’s hard to let go, especially since coming back to the uk is likely later on.

    We prefer Spain to Portugal but their non lucrative visa isn’t any where near as attractive.

    It’s tough to exceed the 90 days in 180 limit so perhaps a holiday home is a better idea, and this also helps kids/family get sensibly priced holidays every year.

    Key points for me:

    1 Uk is low tax for non-workers. £50k of pension/BTL/interest only pays £7.5k tax, ie 15% and that ignores the Tax free lump sum. If you withdraw £50k pa (with 25% of each being tax free) the tax rate is just 12%

    2 I’ve loved the time spent abroad but it’s a bit escapist – our real life is in the Uk, even if it does feel like it’s going down hill (not necessarily brexit)

    3 Health wise – 15k steps per day was typical whilst away, but so was 2 drinks in the afternoon and 3 in the evening… not sure how this would progress over time!

    4 There’s something romantic, brave, exciting about retiring abroad but for me there’s not quite enough upside v the holiday home/1-3 month rental option.

    We’ve just decided to try more time in the uk – not sure how long it will last!

    Family, friends, language, good chance of medical treatment – basically deep roots and knowing how things work and get done.

    Good luck

  • 53 Jam August 1, 2023, 9:19 pm

    Thanks very much @Boltt.
    It seems that there is a massive overlap in our thoughts.
    I am not sure whether there will be enough changes coming up following the coming General Election, or otherwise, to change my thoughts on this, but tempting as Portugal looks, I have very similar reservations. It may take a couple of years before I feel fully settled in my decision.
    Good luck to you too.

  • 54 Time like infinity August 2, 2023, 12:33 am

    @ZX #51: Apologies for not replying sooner.

    For £18mm paid in taxes within a single tax year, your team should get some Knighthoods for services to the public Exchequer. It’s perhaps not quite enough for a hospital these days, but it’s certainly enough for several wards or a Wing.

    Presumably, as a team, you’re mostly getting compensated via carried interest taxed @28% on profit sharing, rather than taxed @47% (with the 2% uncapped NI) on remuneration in the form of base salary and bonuses (although, I imagine that there will be some of those too in most years); such that your overall ETRs will be closer to the BR and ordinary CGT rate of 20% than to the HR or AR rates of 40% and 45%.

    In those circumstances, if your colleagues and you were to be faced with a choice between either, on the one hand, having a 1% p.a. permanent wealth tax with a nil rate band of £10mm per person (and let’s assume here, just for simplicity’s sake, that there would be absolutely watertight anti-avoidance measures); or, on the other hand, having no wealth tax at all, but instead having full equalisation of the tax rate on carried interest with the normal IT rates/bands; then which of those two alternatives would be less objectionable to your colleagues and you?

    In particular, is it something especially objectionable about the idea of having accumulated assets taxed rather than taxing income, profits and gains? If so, then what? Philosophically, there might be a distinction here, but practically speaking it seems less clear to me that if there is a distinction then it is one with a real difference.

    Would your colleagues and you feel any differently about a wealth tax if there was, say, a 10% credit given against the primary liability to a wealth tax where that credit was based upon the full amounts of all direct taxes (IT, CGT) paid in the UK in that same tax year? Let’s assume the credit is non-transferable and can’t be carried forward or backward. It has to be used by the same person in the same tax year.

    In other words, to use a quick, simplified worked through, hypothetical example:
    – Gross assets of £100mm, £10 mm nil rate band for wealth tax, £90 mm chargeable to wealth tax @1% p.a.
    – Direct taxes paid in same tax year: £6mm in total on c. £19.5mm income comprised of c. £5mm tax @28% on £17.5mm carried interest and c. £1mm tax @45% on £2mm remuneration.
    – As total direct taxes of £6mm paid in the same tax year, the 10% credit would reduce the wealth tax liability by £600k.
    – Wealth tax to pay therefore only £300k that year, rather than £900k (i.e. @1% of £90mm, minus the £600k credit).

    This scenario possibly has, I think, the unusual effect of actually incentivising UHNWs to maximize their UK tax liabilities (and tax payments) on their income and gains in each tax year in order for them to then generate the max. amount possible under the 10% credit for them to then use to offset their liability to such a wealth tax in that same year.

    What do you think? Would that placate your colleagues and you, and keep them and you in the UK and within the UK tax base?

  • 55 Time like infinity August 11, 2023, 11:44 am

    Update on wealth tax from Guardian: TUC proposing tiered rates excluding pensions starting at 1.7% p.a. from £3mm, hitting 2.1% p.a. at £5mm and then going to 3.5% p.a. over £10mm:


    Note each of 171 UK billionaires in 2023 held £4 bn.

  • 56 Time like infinity August 13, 2023, 9:47 am

    More today (from the ever thoughtful Will Hutton at the Guardian) on the decline, fall and possible future rebirth (?) of the country formerly known as Great Britain:
    For more detailed takes I’d recommend “What we have lost” (James Hamilton Paterson) and contrastingly “The rise and fall of the British nation” (David Edgerton)

  • 57 Time like infinity December 19, 2023, 8:01 pm

    Excellent YT piece this week on the state & causes of Broken Britain on Economics Explained YT channel. TL:DR – although relative decline traces to WW1, it’s 16 Sep 1992 / Black Wednesday which began a slow burn run on confidence in UK plc; then accelerated with the GFC, extending under the misfire of Osborne’s austerity and becoming acute with the many disasters of Brexit, culminating in the Truss fiasco. Outside of London, the long term economic prospects look bleak.

  • 58 The Accumulator December 22, 2023, 10:41 am

    @ TLI – thanks for this, and the above links which I missed first time around. Will take a look at this when I’m fed up with all the Christmas cheer 😉

  • 59 Time like infinity December 23, 2023, 1:09 pm

    Thanks @TA and a very merry and happy Christmas to @TI, @Finumus and you, and to all of your families.

    The economist Robert Solow passed away on Thursday aged 99 and Noahpinion did a piece on his work today applying its lessons to China (“What the Solow Model can teach us about China”). It’s an interesting read and shows that no two sets of growth related problems are the same. The PRC has built too much infrastructure too quickly and has too high a savings rate and not enough consumption; whilst the UK, in contra distinction, has insufficient infrastructure relative to our economy, isn’t building enough new infrastructure (or properly maintaining our existing stock), has too low a savings rate and too much consumption relative to our output.

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