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Posts Tagged ‘Economics’

File:HungaryProtesters.jpg

HMRC is responsible for tax collection in the UK (c) Faiz Balabil /Alamy

I expect Ed Lester, head of the Student Loans Company, expected the job to involve press scrutiny and occasional political pressure, I doubted he realised his first notable entry into public life would be over his tax. Lester was paid via his own Personal Service Corporation (PSC), a commonly used method of avoiding tax, in effect he paid Corporation Tax instead of the higher rate of Income Tax by becoming a company employed by the Student Loans Company rather than an individual. Despite this being a recognised, legal method of reducing his tax bill he has been widely criticised, as has the Department of Business, Innovation and Skills and Danny Alexander for approving the deal.

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Euro Coins The European single currency, the Euro. (c) Barry Batchelor/PA

Germany’s economy shrank during the last 3 months of 2011, France’s cherished AAA credit rating disappeared, while Greece’s industrial output continues to plummet. Economic pain is hitting every corner of the Eurozone but no politicians are seriously contemplating break up. The huge cost of leaving is obscuring alternative worst case scenarios and popular discontent but how much longer can a monetary union with no winners survive?

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Borgen vs Bartlett

Caution: This post contains spoilers about TV shows The West Wing and Borgen.  If you haven’t seen Borgen it’s a TV show about Danish politics, specifically the Moderate Party (a Danish version of the Liberal Democrats) and their leader Borgen, it’s quite good, you should go watch it (it’s on BBC4).  If you haven’t seen the West Wing then I can only presume you’ve been in a cave isolated from culture for the past 15 years.

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Protesters in Central Budapest. (c) Laszlo Balogh/Reuters

Another day, another protest against the government, such is life in Hungary under the premiership of Viktor Orbán. Despite its location at the heart of Europe Hungary is often forgotten, but this year Hungary may well be the word on everybody’s lips. A failed bond auction at the end of December is the latest symptom of the myriad of problems facing a country that has had more than its fair share of hardship in its last century. An authoritarian leader, decades of bad blood, an electoral disaster and controversial reforms have led Hungary to a familiar economic brink.

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You may have seen this rather witty image being bandied about the internet today:

It’s another sad attempt to equate the economics of the governance of modern, highly developed economies such as America with an individual citizen struggling to balance their incomings and outgoings as justification for the sado-monetarist. This is very stupid nonsense. The existence of Government is the recognition that people are interdependent and need an outside agency to coordinate, regulate and protect this civil society. Therefore to pretend that the Government an island unto itself, whose only legitimate preoccupation is balancing the national check book  is wrong. Government cuts to spending does not exist in a vacuum, the Government is after all the biggest single employer, customer and benefactor in all western economies. So you cut Government spending you cost workers their job, businesses their contracts and citizens their entitlements. That loss of economic output then echoes through the economy as a magic bullet, reducing private sector activity and tax receipts.

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