Ben Chu Profile picture
4 Mar, 4 tweets, 2 min read
Richard Hughes of OBR seemed concerned about the share of GDP projected to be raised by higher corporation tax yesterday:

"Highest level since the Lawson boom in the late 1980s and one seldom sustained for very long in the post-war period"...…
...but this from IFS shows that raising 3% of GDP from corporation tax is by no means out of line with other OECD countries... with looking at the total projected tax rate as a share of GDP (highest sustained level since the 2WW) looking at international context just as important, perhaps more, than UK history
...Even when/if we get to 35% of GDP taken in tax, we'd still be roughly at the G7/OECD average

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More from @BenChu_

4 Mar
*How* exactly is Rishi Sunak bringing austerity back to public services?


A thread…🧵1/
“There's absolutely no way in which anyone can say that's austerity, we're spending more money on public services than we were," Sunak said last November...2/…
But this week a chorus of public finance experts said austerity is indeed returning to the public realm.

So who’s right? And what’s going on?...3/
Read 16 tweets
4 Mar
If an industrial strategy council can't make it to three years, what chance of an industrial strategy lasting any longer?...
Note that the terms of reference document for the Industrial Strategy Council from 2018 refers to maximum six year terms for council members.

This clearly wasn't envisaged as a short-term project…
....Here's the letter from Business Secretary Kwasi Kwarteng to Industrial Strategy Council chair, Andy Haldane, saying the council will end on 1 April 2021 (which some might note is All Fools day)...
Read 4 tweets
3 Mar
Does #Budget2021 really shows us a “swifter and more sustained economic recovery” for the UK?

A thread…🧵
That was the claim made by @RishiSunak in his Budget speech, citing the @OBR_UK.

Is it justified?

Well, the new OBR projection on unemployment is certainly good news (if it materialises).

A peak of 6.5% would be a very benign outcome, given nightmares of 12% last year....2/ Image
But the GDP projection does not, in fact, look much improved.

The claim of reattaining the 2020 peak “six months earlier”, as this shows, isn’t really much to write home

And the 3 per cent permanent scarring projection from the OBR is unchanged from last time....3/ Image
Read 9 tweets
3 Mar
Sunak says OBR sees "swifter and more sustained recovery than expected in November"

GDP back to peak in mid 2022 – 6 month earlier than previously expected
A 3% of GDP shortfall relative to pre-crisis OBR forecasts in FIVE YEARS' TIME is seriously concerning - does not imply a strong recovery
Read 17 tweets
2 Mar
"Pay for the pandemic" isn't, I'm afraid, a useful way of framing the UK's fiscal sustainability question.

Nor is "raise taxes to pay for the cost of supporting people during the pandemic"...
Furlough and other forms of state support for firms have helped protect the future productive capacity of the UK economy.

Without that support the UK's future structural deficit would have been greater, not smaller...
Way to think about tax implications of the pandemic (and the way people should be encouraged to think about it) is: has the crisis opened up a bigger long term structural deficit by making the economy permanently smaller than it otherwise would have been?...
Read 7 tweets
12 Feb
Is the European Union really being unreasonable over the City of London?

Or are we seeing an inevitable consequence of a Brexit that prioritised sovereignty over financial services?

A thread…🧵💵🏦🇬🇧🇪🇺
Andrew Bailey’s Mansion House speech this week showed clear signs of frustration about the EU’s foot dragging in granting “equivalence” to UK regulators on financial regulation...2/…
The view among UK financial lobbyists and regulators is that the EU has various financial equivalence agreements already with a host of other third countries (even the US) so why not the UK, which is currently, of course, totally aligned?...3/…
Read 12 tweets

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