"Rising house prices do not offset the fact that manufacturing and construction shrank in the last three months of 2015
Last summer, a brief recovery in the manufacturing sector was already running out of steam. The construction sector followed the same path. Affected by a slowdown in global trade, the high value of the pound, and possibly the government’s determination to impose another five years of austerity, businesses became more circumspect about expanding output.
Now, official figures for GDP growth in the final three months of 2015 show that these backbone of the economy activities, the stuff of making and building things, actually shrank.
While manufacturing accounts for little more than 10% of the economy, and construction about 7%, they are vital elements. The chancellor, George Osborne, promised a march of the makers. It hasn’t happened.
In fact, the manufacturing sector’s output remains well below its pre-crash peak. Should we worry? Of course we should.
Osborne might welcome growth wherever it comes from. But if the source is the residential property sector, where a return to buying, selling and buoyant lending means the pace of price rises is three times that of wages, then the economy is like a listing ship. It might still be moving ahead, but not all the engines are in the water and even a modest wave could knock it over.
Osborne has largely given up on an increase in corporation tax receipts over the next five years – Google is just one element of that surrender – but he expects receipts from stamp duty on property to soar between now and 2020, as prices continue to outstrip wages. (AtW's comment - only that ain't going to happen because level of stamp duty is like VAT on each sale now, his overall take for last year is projected to drop by £1 bln)"
Source: Osborne is storing up a heap of trouble for the UK economy | Business | The Guardian
It's not the only reason, but I say it's going to be important - massively increased tax on dividends forces businesses with retain profits to repay money back to shareholders instead of investing for the future, it's good for Gidiot because he'll get big increase in taxes collected by end of Jan 2017, however drop in investment will continue as companies won't have money to invest and banks don't lend, also Annual Investment Allowance going down this year, so there is even less incentive to invest for a business.
Gidiot will blame China, world trade slowdown, oil price drop, everything apart from his own actions
Last summer, a brief recovery in the manufacturing sector was already running out of steam. The construction sector followed the same path. Affected by a slowdown in global trade, the high value of the pound, and possibly the government’s determination to impose another five years of austerity, businesses became more circumspect about expanding output.
Now, official figures for GDP growth in the final three months of 2015 show that these backbone of the economy activities, the stuff of making and building things, actually shrank.
While manufacturing accounts for little more than 10% of the economy, and construction about 7%, they are vital elements. The chancellor, George Osborne, promised a march of the makers. It hasn’t happened.
In fact, the manufacturing sector’s output remains well below its pre-crash peak. Should we worry? Of course we should.
Osborne might welcome growth wherever it comes from. But if the source is the residential property sector, where a return to buying, selling and buoyant lending means the pace of price rises is three times that of wages, then the economy is like a listing ship. It might still be moving ahead, but not all the engines are in the water and even a modest wave could knock it over.
Osborne has largely given up on an increase in corporation tax receipts over the next five years – Google is just one element of that surrender – but he expects receipts from stamp duty on property to soar between now and 2020, as prices continue to outstrip wages. (AtW's comment - only that ain't going to happen because level of stamp duty is like VAT on each sale now, his overall take for last year is projected to drop by £1 bln)"
Source: Osborne is storing up a heap of trouble for the UK economy | Business | The Guardian
It's not the only reason, but I say it's going to be important - massively increased tax on dividends forces businesses with retain profits to repay money back to shareholders instead of investing for the future, it's good for Gidiot because he'll get big increase in taxes collected by end of Jan 2017, however drop in investment will continue as companies won't have money to invest and banks don't lend, also Annual Investment Allowance going down this year, so there is even less incentive to invest for a business.
Gidiot will blame China, world trade slowdown, oil price drop, everything apart from his own actions
