The FT reports:
The US fiscal stimulus package agreed late last year and the Federal Reserve’s autumn decision to restart quantitative easing have significantly improved the outlook for growth, according to the International Monetary Fund.
Meanwhile, as the Guardian notes:
The business secretary, Vince Cable, was tonight forced to defend the government's approach to economic growth after the departing head of the CBI used a valedictory speech to accuse ministers of hindering business and job creation through politically motivated initiatives.
On the eve of figures expected to show a sharp slowdown in the pace of growth in the final three months of 2010, Sir Richard Lambert said the government's strategy would make the country's problems worse if it was simply about cutting spending.
What a difference a policy makes, eh? One government — the US government — has taken proactive action to support its economy. It may not have done enough. It may have been too timid on some issues. It may not have tackled some of the difficult problems. But it has acted and will see the result.
And we have a government that even the CBI think is cutting for the sheer political fun of doing so — inflicting needless pain on the people of the UK.
How long will it take people to realise that Labour did not cause this crisis? The real crisis we’re going to face was made by the Conservatives and their Lib Dem friends.
Fianna Fail look like they will be wiped out in Ireland for doing something similar. That fate awaits the ConDems here. And rightly so. If, and I admit it’s still an if, Labour presents a viable alternative. And yes, I do mean the sort of viable alternative I write about.
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Hmmm, the viable alternative bit is the sticking point, the Labour Party have moved so far from the concepts of the Labour Movement that I’m not sure how they find their way back. Ignoring party names and reputations the closest policies match, for me, are the Greens. They also have a stonking leader in Caroline Lucas but lack the strength in depth. The major problem around viable alternatives is education and generally held public perceptions. A brief glance at comments sections, and blogs, for the mainstream media is depressing. But it’s also extremely efficient at pandering to small c conservatism and painting alternates as evil bogeymen.
The ‘elephant in the room’, that’s always ignored, is the pyramidical structure of our economies. I have no problem with meritocracy but the pyramid has become so steep that the choices, people still seem to believe in, are laughably absent. I think that would make a good graphic for guidance purposes. Take a current snapshot and represent as a pyramid. This should demonstrate to people where they fit in and how likely/unlikely an improvement in their lot is. Measure each new policy against this, constantly updated, snapshot. The goal being a widening and shallowing of the pyramid. Simple, straightforward, pictoral representation of the impact of a given policy, or suite of policies.
Richard, you’re too harsh… it was the wrong type of snow that done it… (copyright George Osborne)… 😆
Hello Richard.
I notice you reply to people who ask you questions on your blog.
So, would you be so good as to answer the following question, which is to do with one of your recent posts regarding Alliance Boots.
The Annual Report for Alliance Boots (according to the Group Income Statement)shows that total tax paid out by the company for 2009/2010 was £129 million, up from £88 million from the previous year.
So here is my question: how is Alliance Boots avoiding tax?
@Michael
If you ask the question, I would be surprised if you will believe the answer but here goes:
Recipe for setting up a private equity deal
===========================================
Ingredients:
-A theoretical UK company making a profit of say £10m paying tax at 28% (£2.8m)
-A big four firm
-A fund set up in a tax heaven that doesn’t apply IFRS
-Lots of holding companies
Method:
Set up a company in Gibraltar
Lend it £100m from your offshore fund
Set up a 100% sub in Switzerland
Lend the swiss company the same £100m
Set up a maze of UK holding companies owed by the above
Using the £100m, by the UK company’s equity
Hive off the trade and assets to various subs
Allow the subsidiary companies to pay interest to the swiss parent
Pay up interest on the swiss company’s loan at say 10% p/a (£10m) to the Gibraltar company
Pay interest from Gibraltar to the fund (or hang onto the cash for further loans and expansion)
Result – little or no tax to pay in the UK.
No tax to pay in Switzerland as little or no profit
Little tax in Gibraltar as it is a tax haven
Oh but hang on – wouldn’t the swiss company’s results by consolidated into the Gibraltar company, showing a huge profit and little tax within the top group accounts? Nope – Gibraltar doesn’t require filing of group accounts.
But surely there would be withholding tax? Nope – you can pay interest to Switzerland with no withhold from the UK. And no withholding tax needs to be paid on interest from Switzerland to anywhere!
So. That’s how you could avoid tax. I’m not saying that’s how Alliance Boots GmbH (Switzerland) did it.
The amounts are illustrative.
@Michael
Alex S has explained the principle of what happens – without saying this is what Boots did
I have explained my concern that loading a UK company with debt not incurred in the course of its trade but incurred to allow a non-UK taxpayer to buy it – and who will not subsequently be liable to tax here on selling it – is tax avoidance
I have noted that is legal
But I have offered clear reasoning for thinking it avoidance
Absolute amounts do not change that logic. Why should they?