economonkey

People in the UK are saving the lowest amount of money in almost fifty years, according to research from the Office of National Statistics. In the first three months of 2008 Britons saved just 1.1% of their income, compared to 3% in the winter of 2007 and 6% in the summer of 2006.  The last […]

The big news today is, of course, that mortgage lending has dropped so far through the floor that it’ll soon be burrowing its way to the centre of the earth. No surprises there, houses are still far too expensive for most people and even if you were brave enough to clamber onto the property ladder […]

In my previous article I described the remit and practical activities of the Bank of England, as they relate to the operation of the UK economy. Now it’s the turn of the Treasury (or HM Treasury, to be accurate), which is the part of the government that looks after the UK’s money - most of it raised through taxes - and, to a large extent, decides how and where it should be spent.

The first fallacy to blow out of the water here is the idea that taxes collected in a particular sector are also spent in that sector. For example, it would be nice if road tax revenue was spent on improving the transport system, wouldn’t it? Or if levies on the oil industry were used to promote renewable energy sources.

Well, they aren’t. Such so-called ‘hypothecation’ of taxes would be complex to administer, though arguably it would help people feel that their hard-earned cash was being used for something practical rather than, say, lining the pockets of MPs who fancy a second house in London. For example.

Instead, all revenue collected by the government goes into a large pot which is then doled out in accordance with plans drawn up by the Chancellor of the Exchequer (currently old badger-brows, Alistair Darling, and previously Gordon ‘Prudence’ Brown).

It should come as absolutely no surprise to anybody that the Alternative Investment Management Association, which represents those financial sector cowboys otherwise known as Hedge Funds, doesn’t like the FSA’s new rules which will force them to disclose significant short-selling positions. Hedge Funds tend to make a lot of money from betting that a company’s […]

It’s funny that after a decade of cheap credit, low interest rates and out of control house prices, it’s only now that people are starting to worry about inflation. Nobody seems to mind that it’s prohibitively expensive to buy a home, or even rent one, but as soon as the cost of a litre of […]

According to the FT, chancellor Alistair Darling wants to put a panel of leading lights from the City of London’s financial sector into the Bank of England in order to oversee the Bank’s decisions on financial stability. So let me get this straight - here we have a bunch of suits from the city, where […]