First read about "Henry's" in a great article in The Economist, Standard have done a good article below. I find this area and this group of people fascinating.
First World problem. Privileged group moaning about their lot and expecting sympathy.
If this is the biggest problem in your life you don't have too much to worry about.
The point is it’s no longer a “privileged group”. £100k a year in London isn’t a lot. You can have highly specialised relatively junior roles popping into £100k territory. I want people to earn as much as they can so the tax man can take as much as they can without hurting productivity. The 65% tax trap doesn’t do either.
I think a lot of people would think it was a lot. There are plenty of people doing valuable jobs who get paid peanuts because society doesn't value their roles - they'd love to get a decent wage.
Sure, and the answer to that is to try and get them to a point where they are being paid more for what they do. That’s (provably, as it’s currently the case) not done by suppressing the wages of everyone else.
Unfortunately that would lead to higher inflation, which would lead to higher interest rates, which would mean higher mortgage payments.....and for those that rent (which are a lot of the lower paid) will mean higher rents as landlords who have BTL mortgages increase the rent.
No easy answer I'm afraid. Average income is around £32k pa so anyone affected by the reduction in the PA is earning 3x the average.
And it will get worse. Taxes need to rise. No idea where Rachel Reeves will go to next but I suspect it wont be from the low paid.
Which is what we are told will happen. But we've had ridiculous levels of inflation at the same time as wage suppression so many times in the last 50 years. The wage price spiral is a theory that gets wheeled out every time working people want higher wages but has literally never been bourne out in empirical evidence.
I'll say it again if average wages increased with purchasing power since 1980 it would be £85k. If the higher rate of income tax threshold had risen with inflation it would be £162k. We have a low pay problem in the UK.
I don't think that argument about low paid workers being paid an actual living wage causing inflation is without merit. What it means in reality though is some people will pull in a bit less money but a lot of people all of a sudden might have some more to spend on stuff that stimulates economies, holidays, cars, clothes, computers.
There has been a spike in inflation this year partly driven by the train drivers & doctors getting big pay rises as soon as Labour came in last July.
It's not an arguement its fact.
That was an interesting juncture. Sterling fell immediately after those payouts and the governments borrowing costs rose. I don't think Reeves or the government have ever really recovered from that smack of fiscal reality.
Total number of days lost to strike action under the Tories in both 2022 and 2023 = 2.5M whereas that figure is now down to 50,000 per month under Labour GDP growth 2019-24 under the Tories 3% or 0.6% PA... mid August will see the ONS release for June / Q2 2025 which is likely to show growth under Labour at around 1.2% - that's double the last Gov't.
BoE base rate was 5.25% but now 4.25% and tipped to come down twice more this year. That impacts mortgage holders, Gov't debt costs and the business environment.
Pay rises at 5% have outstripped inflation leading to more household income, a higher tax take and perhaps a reduction in benefits? Certainly the increase in the minimum wage should be felt on the high street.
It's incredibly hard to discern what happens next but one outcome is that this Labour Gov't trades through the various headwinds as rates come down, GDP growth continues AND increased tax receipts associated with both growth and freezing various allowances.
With such a massive majority in Parliament, one would hope for a far bigger impact on NHS waiting lists, failing water companies, electricity generation and planning etc. Time will tell whether the various deals with India, Europe etc and various ideas will make a tangible difference over the next year. We should at least hope that the BoE end quantitative tightening and perhaps even consider QE later in this cycle because our country needs massive investment in infrastructure, health and education, not to mention the housing stock.
Therefore the Gov't should be able to afford the latest NATO commitments, not least because billions spent on housing asylum seekers under the last government is rapidly reducing with far more asylum cases processed as well as rejected appelants being deported.
There would be a danger of turning this into a political thread which everybody wants to avoid. However this can't be let go. If you really believe some of the comments and implications in this, then I am very disapointed and thought you had a higher level of grasp. If you wish to take this debate further you can pm me.
Perhaps we might reframe... consider UK PLC as an investment proposition! I have certainly reduced exposure to US/ S&P 500 earlier this year with a switch to UK and Europe. And many of us live here, bringing up kids as well as dealing with creaking travel and health systems.
In a few weeks time we will see the ONS numbers for Q2 GDP growth which completes a full year under this government. There are known challenges across the board, a budget coming up in the autumn and a definite trend for interest rates to fall. This isn't about politics so much as macro... BoE rates are certainly coming down, wages are outstripping inflation, but household consumption is somewhat flat.
Aggregate demand relies upon growth in business, gov't and household as well as FDI & exports. It remains to be seen as to whether our service economy will grow at 1.2%+ PA over the foreseeable. And given that there's no currency risk, this feels like a decent hold for me right now!
I've always preferred "labour value of that commodity". It was good enough for Adam Smith and strips out rentier type stuff.
But what's more important is why we've ended up here. We might then have a chance of turning it around.
25 years of cheap money inflated assets and left wages in the dust. Made asset holders richer, reduced the incentive to take business risks to improve productivity and instead leverage up and live off rents. That in turn led to a very poor allocation of capital chasing ever lower returns. Thousands who would have invested in businesses were now landlords
We don't have cheap money any more but it's taken years for firms to work off that debt. Households still have a way to go and governments are getting worse.
Then you have mass importation of cheap labour that has suppressed wages and reduces the incentives to automate.
But the Yanks have much of that and still have doubled their average wage compared to us in real terms. Partly because they still take risks but also, they have a lot less red tape, a lower tax burden, and, except briefly, no interference in market pricing like energy caps and green subsidies inflating the price of energy.
And then everyone wonders why we haven't had productivity increases in that same time period and why we all feel poorer.
Time to bring back another ghost from the 1970s, capital controls, or an exit tax, as they're now calling it. That's the answer!
I absolutely hate with a passion Andrew Tate, but this clip about Gary's Economics actually did tickle me and find I agreed with about half of it! Not just me who thinks he's on the pay role!
I absolutely hate with a passion Andrew Tate, but this clip about Gary's Economics actually did tickle me and find I agreed with about half of it! Not just me who thinks he's on the pay role!
I absolutely hate with a passion Andrew Tate, but this clip about Gary's Economics actually did tickle me and find I agreed with about half of it! Not just me who thinks he's on the pay role!
To relieve the tension on here I'll put in my guess for the FTSE100 at the end of December........
9101
The one we've been waiting for obviously rates wishidstayedinthepub who chose the same!
Didn't even look at the other guesses. I simply went with sequential numbering. 9....10....1(1).
Good enough reason than any other.
Welcome to the relegation zone, Golfie.
If I get close to being way out come mid-Dec I'll just call my mate Donald and ask him to do something wacky that will send the markets into oblivion 😄
To relieve the tension on here I'll put in my guess for the FTSE100 at the end of December........
9101
The one we've been waiting for obviously rates wishidstayedinthepub who chose the same!
Didn't even look at the other guesses. I simply went with sequential numbering. 9....10....1(1).
Good enough reason than any other.
Welcome to the relegation zone, Golfie.
If I get close to being way out come mid-Dec I'll just call my mate Donald and ask him to do something wacky that will send the markets into oblivion 😄
"I've just spoken to my friend Golfie, very nice guy, he's doing a great job over there. We spoke about a lot of things, like the Luton defence. They have being doing a terrible job over there, it's a shame really, and now they've gone to his team, it's sad, very sad. Foreign music! I don't know a lot about foreign music, have you heard it? But anyway it sounds like it was loud, we've got to get that stopped, it can't keep happening anymore. Today, I'm announcing 300% tariffs on the UK effective immediately until they stop that music and move the Luton defenders back to Luton, it's got to stop, it should have stopped a long time ago, it's unfair and it's gone on for too long, it would never have happened if I was President in the UK, I shouldn't even be having to do this"
Comments
In a few weeks time we will see the ONS numbers for Q2 GDP growth which completes a full year under this government. There are known challenges across the board, a budget coming up in the autumn and a definite trend for interest rates to fall. This isn't about politics so much as macro... BoE rates are certainly coming down, wages are outstripping inflation, but household consumption is somewhat flat.
Aggregate demand relies upon growth in business, gov't and household as well as FDI & exports. It remains to be seen as to whether our service economy will grow at 1.2%+ PA over the foreseeable. And given that there's no currency risk, this feels like a decent hold for me right now!
But what's more important is why we've ended up here. We might then have a chance of turning it around.
25 years of cheap money inflated assets and left wages in the dust. Made asset holders richer, reduced the incentive to take business risks to improve productivity and instead leverage up and live off rents. That in turn led to a very poor allocation of capital chasing ever lower returns. Thousands who would have invested in businesses were now landlords
We don't have cheap money any more but it's taken years for firms to work off that debt. Households still have a way to go and governments are getting worse.
Then you have mass importation of cheap labour that has suppressed wages and reduces the incentives to automate.
But the Yanks have much of that and still have doubled their average wage compared to us in real terms. Partly because they still take risks but also, they have a lot less red tape, a lower tax burden, and, except briefly, no interference in market pricing like energy caps and green subsidies inflating the price of energy.
And then everyone wonders why we haven't had productivity increases in that same time period and why we all feel poorer.
Time to bring back another ghost from the 1970s, capital controls, or an exit tax, as they're now calling it. That's the answer!
https://youtube.com/shorts/butoZ1YG3jw?si=1e4snddZhCuuPNLC