A whistle stop tour through politics, tax, debt and a nod to the passing of a travel icon.
Brown’s Bottom
With news that Gordon Brown has been appointed as special envoy for global finance, one casts one’s mind back to the Millennium. As Chancellor, he oversaw the sale of about half the UK’s gold reserves. Having signposted the sale, the Treasury depressed the market selling at a historic low equating to a loss of £30bn at today’s prices.
Difficult to see how this appointment is going to shore-up Starmer’s premiership longevity. If Starmer falls, it will mean the UK has not seen a Prime Minister serve a full term after a single-party election win since Tony Blair. It should also be said that voters are not keen on unelected masters.
As we potentially head for Prime Minister No. 8 since Blair, only David Cameron managed to make it to a second term – some are questioning whether the UK can still be governed effectively? It’s worth remembering that we are less than 2 years from Labour winning a three-figure majority. Will we see ‘Manchesterism’ – a model that devolves power away from Whitehall corridors – or vision over vacuum from Ilford. Either way, history does offer one lesson, no official challenge against a sitting Labour leader has ever succeeded.
Daylight Robbery
The Gov.uk Chat app launched this month, designed to give plain English answers to those seeking tax advice, is said to have been too helpful, even suggesting ways to avoid tax. Generally, people in the UK accept taxation as part of the social contract to fund public services, around 44% of people don’t pay any income tax at all.
When it comes to tax, politically the emphasis is skewed towards the supply-side, be that a purported wealth tax or land tax to add to the UK coffers. How long is it before the 1696 Window Tax makes a comeback, as the number of windows could directly correlate to the size and value of your home? Bricking up is an option, but arguably not good for wellbeing.
There seems to be far less clarity on the demand side – how the state spends. The bit in the middle reminds me of the BBC Question Time audience clip from November 2024 ‘I do not understand how we end up with economically illiterate people in the Government – boom and bust’.
Addicted to Debt
In this social poll world we live in, the bond markets are a real-world economic barometer. The cost of 30yr UK borrowing now exceeds Truss’s tenure. Reeves ‘Securenomics’ is still favoured by the markets as offering the most stability, leadership contenders would be wise to stick to Rachel’s fiscal fortitude. She may not have been the most popular Chancellor, but she is seen as the safest pair of hands in the party.
Mark Carney, former Bank of England Governor, put it succinctly, Britain relies on the ‘Kindness of Strangers’ to fund its borrowing habit, especially relevant given UK public sector borrowing hit £24.3bn for April – the highest since COVID. In the words of Robert Palmer’s iconic chart topping 1985 hit, ‘might as well face it your addicted to debt’.
Fiscal creditability is hard won. Between the front runners, the party must decide who is the most market-friendly, not helped when backbenchers suggest that ‘the markets will have to fall in line’. Very wrong, as previous Chancellors have found – you dance to its tune.
Wish You Were Here – Butlins, Benidorm & Beyond
With news that cheap flights could be a thing of the past, we saw the passing of Judith Chalmers, travel icon. She visited over 120 countries for her 7pm ITV prime time slot, revolutionising UK travel habits from Butlins to Benidorm package holidays, a childhood favourite.
Is there a slot for a new prime time show ‘Wish you weren’t here’? The rich list seems to think so. This so called ‘taxodus’ is not just for the uber wealthy, but middle Englanders too, with more motivated by inheritance tax concerns and a spend it mindset.
If you are looking to sell up, Estate Agents suggest that the UK property market will weaken in the months ahead. For those relocating, Spain, Portugal and Greece remain firm European favourites. Thailand is a firm retiree favourite – low cost of living, culture rich, year-round warmth. Alternatively go west, Belize. English is the official language, tax-exemptions for foreign earned income (clearly you will require the assistance of the Dafferns Private Client Team!) and of course, the Belize chocolate festival.
As the 10th Brexit anniversary approaches, there is a potential leadership two speed approach for the case for re-joining the EU. Those stuck at European biometric passport control this summer may wish for an accelerated approach.
Simon Cossey is Dafferns’ Business Development Consultant and part of our Strategic Advisory team.
