I awoke yesterday to weather that was dark and apparently gloomy whilst the economic forecasts facing the country appear to mirror the weather. Rachel Reeves, the Chancellor, is expected to have to find up to £30bn at the budget to balance the books, after a U-turn on winter fuel and welfare reforms and a big productivity downgrade by the OBR, which means Britain is expected to earn less in future than previously predicted. Yesterday, the IMF upgraded UK growth projections by 0.1 percentage points to 1.3% of GDP this year – but also trimmed its forecast by 0.1% next year, also putting it at 1.3%. The UK growth prospects are 0.4 percentage points worse off than the IMF’s projects last autumn. The 1.3% GDP growth would be the second-fastest in the G7, behind the US. It looks as though we are in for a regime of both tax rises and also spending cuts as how else is the $30bn to be bridged? All chancellors are desperate for economic growth not only in the UK but across the European continent where projected growth rates seem anaemic. I heard a commentator pose the question that if the USA could achieve much higher growth rates, why should this prove to be so difficult on this side of the pond? But here we are comparing chalk and cheese as the American economy is one large internal market, has a much more dominant ‘hire and fire’ culture in the absence of a strongly unionised workforce and all the big generators of future growth, mostly AI grounded, are based in the United States. The media and the internet is filled with people explaining that they would do if they had the Rachel Reeves dilemma of raising money whilst not breaking manifesto promises. One account that took my eye is what might well emerge and it ran as follows. It is possible that taxes on unearned income will rise, loopholes allowing tax avoidance will be closed and duties on Tobacco, alcohol and fossil fuels (petrol and Diesel in particular) will rise. There are likely to be windfall taxes on the excessive profits of petrol companies. There may be a new duty on Vapes – as they are becoming a health problem. It is rumoured that the proportion of a pensions pot that can be taken as a tax-free lump sum will be reduced from the current 25%. It is also rumoured that National Insurance Contributions by employers (not employees) may rise. Probably the income tax threshold will not rise – particularly the upper threshold. Now all of this sounds very plausible but we shall have to wait until late November to find out. But many eyes are fixed on the inflation rate in September to be published in a week’s time as this will determine the amount by which pensions and benefits may have to rise next April when the new fiscal year commences. The inflation rate may approach 3.9% and is predicted to be the highest in the advanced economies. But I suspect that the Chancellor will announce the end of the ‘triple lock’ by which pensions rise by the highest of the average rise in wages, the inflation rate or 2.5% and from which pensioners have undoubtedly benefitted even during the years of austerity.
After I had exercised, showered and breakfasted, I set out for the Methodist Centre where there is always some company as well as very reasonably priced tea or coffee and cake. I located myself on a table where was a married couple and a widow (as it turned out) and we quite an entertaining discussion. In fact, the experience this morning was as pleasant as my experience in the same venue a week ago was disappointing. One of the ladies had been brought up in a Catholic school and associated church so we swapped tales of the repressive nature of 1950’s Catholicism. One story that I recounted and my fellow coffee drinker swore happened in the school she attended was the following. The teenage girls were expressly forbidden to wear black patent leather shoes as it was it felt that young adolescent males would be driven wild with lust at the reflection of the girl’s knickers in their shoes and this had to be avoided at all costs. Actually, this story is widely told, and believed, but I think that the true story comes from a book written in 1950’s America which was subsequently made into a Broadway production. Another imprecation was never to enter the church of another denomination as it was felt that that you might be consumed by the fires of hell should this occur. Of course, we all giggle about this nowadays but for some, the influence of their teachers, particularly if they happened to be nuns, stayed with them for decades. After I left the centre, I decided to visit a local hardware store with the principal intention of buying some plastic ‘wheelie bin’ numbers for which the whole town is going mad as all of our old bins, complete with their house numbers, are being exchanged for new ones of a different design. Now at this point, Sod’s law comes into effect which is that if things can go wrong, they will. I was looking for four items in the hardware store and each of the items was either out of stock or not sold anymore. But then I had a chance meeting with my Irish friend who told me that Poundland had a stock of numbers and she had seen them the day before. So I made haste to the local store where, of course, the very number that wished to purchase was out of stock. A fellow customer, searching for the same number as myself and I went to see an assistant managing one of the tills to enquire when the stock would be replenished and the lady dived into a box behind the counter and produced what we wanted for each of us. I finished off buying eleven numbers altogether, 3 x. 2 for my University of Birmingham friend, two for my next-door neighbour and finally three for myself. After I had cooked a lunch of ham, beans and potatoes, I made myself wash the car although I felt a little disinclined to do it. One of the factors impelling me on was the funeral I am due to attend tomorrow and I always have the feeling, irrational though it may be, that it is only a mark of respect to turn up in a clean car.