What caught my eye this week.
We’re at the point now where about the only potential tax hike that hasn’t been run past the committee of public opinion is a revival of the 200-year old window tax [1].
Don’t laugh! It could be a real revenue spinner in our era of skyscrapers in the City and bifold doors in the suburbs.
In the meantime, a rise in income taxes in the upcoming Budget seems to finally be – maybe – on the agenda.
Yes, those same higher income taxes that were ruled out ahead of the last election.
I have my doubts, but who knows. Perhaps Rachel Reeves and Keir Starmer believe the situation really is dire enough to warrant breaking the pledge? It’s already motived them to lift their silence [2] on the £100bn hit to the economy – and the resulting black-hole-sized £40bn shortfall in state revenues – that Brexit has cost us.
Or maybe Labour thinks they might as well be hung for a sheep as a lamb, considering the kicking they got anyway for dancing around taxes on ‘working people’ with the last budget?
Or maybe it’s just another ill-advised attempt to scare us with a worst-case scenario so that the real medicine doesn’t taste so bad.
We’ll find out on 26 November. But hell will hath no fury like the voting public if income tax rates rise by a bald 2p in the pound without a ‘sterilising’ 2p cut in National Insurance – which would undo much of the revenue-raising potential anyway.
And cutting national insurance won’t help the legions of vote-happy pensioners…
A stitch in time
I happen to believe that from a bunch of very unpalatable options, just hiking the basic rate of income tax and getting on with it wouldn’t be the worst.
But that would be partially on the grounds that it’s such a game-changer that it could have quashed the rumours and uncertainty caused by chipping away at absolutely everything else – from pensions, ISAs, dividends, and capital gains to property and the rest – to the sidelines.
However we’ve already had another three or four months of uncertainty. It’s made people save more, spend less, dither about moving house [3], and thrown yet more sand into the wheels of our lacklustre economy.
Worse, we’ve already had last year’s employer’s NI hike. Which had exactly the effect everyone predicted it would on youth employment, and on the health of the hospitality sector too.
If a bandaid was going to be ripped off then 2024 was surely the better time to go for it.
Rumour treadmill
Here’s a flavour of this week’s speculation:
- Chancellor refuses to rule out manifesto-breaking tax hikes – Sky [4]
- NIESR: hike income tax by 2-10p in the pound – This Is Money [5]
- How much would a 2p income tax rise cost you? – Which [6]
- Reeves also reportedly considering a 20% exit tax [7] on UK leavers – Guardian [8]
- Stand down! Reeves said to cool on big cash ISA reforms – City AM [9]
- A 5% VAT cut on electricity bills in Budget will backfire, experts say – Guardian [10]
- How wealthy is ‘wealthy’, exactly? [Paywall] – FT [11]
But that’s just a taste. I’ve run batches of budget speculation in these links for weeks, so thick and fast and indiscriminate have they come.
Of course what’s notably missing from most of the rumour-mongering is anything about spending cuts. I’ve probably read more about the two-child benefit cap being lifted – which will obviously cost yet more money – than on any mooted plans to curb spending.
It’s true the last round of so-called austerity under George Osborne didn’t do much for the UK. And perhaps it’s senseless to look to downsize government – or at least to stop it growing further – while the economy is only limping along.
But is this a different era? Rates are taking their time to fall, and we’ve borrowed much more money. There’s a growing feeling that we’re sleepwalking into a self-fulfilling prophecy.
I used to look forward to budgets. But I honestly just want this one to be over.
Have a great weekend!
From Monevator
Defensive asset allocation beyond the 60/40 portfolio – Monevator [12]
Yes, you can eat risk-adjusted returns – Monevator [13] [Mogul members [14]]
From the archive-ator: How to choose a bond fund – Monevator [15]
News
Bank of England holds its key rate at 4% – BBC [16]
UK economic growth forecast downgraded for 2025 – Yahoo Finance [17]
Construction sector suffers worst downturn since 2020 – This Is Money [18]
Fixing Britain’s ‘worklessness’ crisis would cost business £6bn a year – Guardian [19]
Motor finance backlash mounts, with calls to pull £4bn from lenders – City AM [20]
UK children to get mortgage and budgeting lessons in school – This Is Money [21]
Savills’ five-year forecast for house prices – This Is Money [22]
AI-washing and the massive job cuts hitting the US economy – CNBC [23]
Firm founded by winner of The Apprentice Harpreet Kaur collapses – City AM [24]
[25]
The rise of a new American oligarchy – Oxfam [26]
Products and services
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Nationwide cuts mortgage rates to 3.64%, cheapest since 2022 – This Is Money [27]
HSBC increase mortgage limit to 6.5x income for richest customers – This Is Money [28]
A review of Chip’s £500,000 prize savings account – Be Clever With Your Cash [29]
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link [30]. Terms apply – Charles Stanley [30]
Nationwide offers interest-only mortgages to first-time buyers – What Mortgage [31]
Why are workers abandoning their Nest pensions? – MoneyWeek [32]
Where to price match when you purchase to save cash – Be Clever With Your Cash [33]
Get up to £200 cashback when you open or switch to an Interactive Investor [34] SIPP. Terms and fees apply, affiliate link. – Interactive Investor [34]
How Experian has rejigged its credit scoring system – Which [35]
Enjoy Apple CarPlay while you still can – The Atlantic [36]
Homes for sale near a cycle route, in pictures – Guardian [37]
Comment and opinion
A wistful farewell to Warren Buffett’s annual letters… – FA Mag [38]
…and literacy as your investing edge – A Teachable Moment [39]
How to fix wealth taxes [Podcast] – IFS [40]
Should you buy at all-time highs? – Of Dollars and Data [41]
A history of private equity [Podcast] – A Long Time In Finance via Spotify [42]
Zen and the art of moat maintenance – 3652 Days [43]
“Can I make more money working for myself?” [Paywall] – FT [44]
The benefits of bubbles – Stratechery [45]
Is now the time to go all-in on tech stocks? – A Wealth of Common Sense [46]
Funds-of-funds really layer up those fees – Basis Pointing [47]
Just buy stocks until you die? – Wall Street Journal [48] [h/t Abnormal Returns [49]]
Howard Mark’s famous memos anthologised [PDF] – Oaktree Capital [50]
Deutsche Bank long-term asset study / data dump – DB Research [51]
Naughty corner: Active antics
Cockroaches in the coal mine – Howard Marks [52]
Cash hoarded by Buffett’s Berkshire Hathaway hits $381bn – CNBC [53]
Growth stocks aren’t the only route to riches – Morningstar [54]
Currency valuations – Verdad [55]
Which Trump trades paid off? – Morningstar [56]
Kindle book bargains
Poor Charlie’s Almanack by Charlie Munger – £0.99 on Kindle [57]
The Man Who Solved the Market by Gregory Zuckerman – £0.99 on Kindle [58]
Chip War by Chris Miller – £0.99 on Kindle [59]
Meltdown: The Collapse of Credit Suisse by Duncan Mavin – £0.99 on Kindle [60]
Or pick up one of the all-time great investing classics – Monevator shop [61]
Environmental factors
[62]
Climate models show the 1.5°C goal is dead… [Paywall] – The Economist [63]
…with three hottest years in a row putting the nail in the coffin – Guardian [64]
Does installing a heat pump deliver savings after one year? – MoneyWeek [65]
Climate action is the best way to ensure long-term growth – Observer [66]
Government touts new forests from £1bn tree-planting programme – GOV.UK [67]
How bird flu has decimated the elephant seal population – BBC [68]
Pearls of the ocean that might return to British shores – Guardian [69]
A pumping station and WW2 pillbox converted for bats – BBC [70]
Robot overlord roundup
OpenAI’s planned $1 trillion infrastructure spend – Tom Tunguz [71]
The double bind of the AI bubble means we’re screwed either way – Vanity Fair [72]
Google plans to put data centres in space to meet AI demand – BBC [73]
French philosopher Baudrillard predicted AI 30 years ago – The Conversation [74]
AI’s exciting until companies want to use it: Rightmove edition [Paywall] – FT [75]
Why do people love or hate AI? The answer is in our brains – The Conversation [76]
Too much social media gives AI chatbots ‘brain rot’ [Research] – Nature [77]
Not at the dinner table
Will Rachel Reeves repeat Denis Healey’s nightmare 1975 budget? – Sky [78]
What a UK government led by Reform would really look like – BBC [79]
Britain’s fiscal reality check – New Statesman [80]
Stupidology – N+1 [81]
BBC has questions to answer over edited Trump speech, MPs say – BBC [82]
Trump says he has “no idea” who he just pardoned – Citation Needed [83]
Tensions rise in UK’s asylum and refuge hotspot – Guardian [84]
Off our beat
Why is Argentina poor? – Uncharted Territories [85]
The world’s most militarised economies by three metrics – Visual Capitalist [86]
Everyone is a strategist. No one is a writer – Gen Zero [87]
Scientists excited by gel to repair tooth enamel – BBC [88]
Adaptability – We Are Gonna Get Those Bastards [89]
This physicist says we don’t take Covid seriously enough – The Tyee [90]
Celebrity chefs urge Britons to bang in some beans [91] – Guardian [92]
The lucrative economics of being an expert witness – The Hustle [93]
Tails, things, and stuff – Permanent Equity [94]
And finally…
“When you sell in desperation, you always sell cheap.”
– Peter Lynch, One Up On Wall Street [95]
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