2022 mini-budget discussion

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sigma said:
The fiscal connection was made by Truss and her mates whilst setting the budget.

An emergency budget, why are bankers bonuses an emergency item?
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I am breaking my record here, i usually average one post per year in this area of the forum but maybe one of you will learn what's going on and it might help you make a good decision.

It's not just bonuses and the 45% rate but the main problem was also corporation tax and the IR35 stuff, it was all conjoined together into one big problem.

In 1981 the country was flat broke, my family, my father had to borrow money of our neighbour to put 50p into the electricity meter at one point, we did not have carpets on the floor and life was pretty grim.

By the time 2001 came around we were cheering the three towers that had been built in Canary Wharf (HSBC, Citigroup, Barclays) and the massive turn-around in fortunes for everyone. I moved to London and started earning decent money.

One of the foundations for this is that the people inside of these buildings were mostly stationary, they all came into work. The bankers (as they were back then) were business people, with 15-20% of them technology people who, also travelled into work with them. All the technology that they used was (surprisingly) also located in Central London, sometimes in the basement of the building the bankers were in.

In 2004, in response to the Bishopsgate bombing, the (now) FCA issued a decree that all technology for regulated companies needed to be relocated 15 miles out of the City Of London. It took around ten years for this change to finish but at that point, around 2015, it proved that, speed aside, you can run your technology from anywhere. This change was the first big significant change.

As a response to the financial crash in 2008, the banks accelerated their outsourcing programmes to India and by 2011 some banks had almost 80% of their back-office staff in India. This was the 2nd big change.

In 2011 these same banks launched programmes to computerise, to automate and to move people out of London. The maximum amount of people these banks could move to India had already been reached and therefore these people were moved to places like Manchester, Dublin and Eastern Europe. This was the 3rd big change.

These programmes then worked out that if you automated the front-office, you could replace 12 front-office banking people with 1 front-office person supported by technology people. Not only would it cost about half as much but, the computers made less mistakes. This was the 4th big change. Technology staff started to take the jobs from the front-office people at an accelerated rate, with the salaries to match by 2017, technology staff started to become the traders, to get a job at Citadel in the front-office as a trader the percentage of trading roles that also needed you to be a programmer started to go up.

2020 when the pandemic hit, these same London-City based companies proved to themselves that remote working is not only possible but, you can lower costs further because you can get people not to work out of these big, expensive offices and your productivity would go up. This was the 5th big change. Programmer traders started to move from New York to Miami and from London to erm Cornwall. See next bit.

Portugal, Greece and Spain spotted this opportunity. Portugal introduced a law which allowed Brits (with no financial capital) to move to the country and pay 28% tax as PAYE. If you earn over 30k per year all you need to do is walk into the Portugal embassy, register, get approved, book a one way ticket, get a place to live and then finalise your tax residency at the Portuguese embassy within the country. For Greece, you pay 0% for 5 years. This was the 6th big change.

The 7th big change was the Johnson administration rolling back the tax friendly environment within the U.K and that started to spook the Banks because, faced with a mass exodus of technology staff due to IR35, they had to increase their I.T spending and Salary expenditure to record levels. Technology staff started to emigrate out of the U.K and taking their money with them.

In 2022 Citigroup, 20 years after they re-located to London, announced they were moving to Dublin. I believe this is a bluff to get the government to act but we shall see.

Now, you might ask what has this got to do with Bankers bonuses and although, I have rambled to get here, the answer is that the 'bankers' are not some Essex accented coked-up geezers screaming down 5 telephones simultaneously from his desk in Canary Wharf from 7am to 6pm every day. No, the bankers are now, increasingly, technology people and Generation Z don't want to be chained to their desks like their parents might have been, they want to work for a tech start-up where all the honey's work and get equity shares in the next Facebook, whilst doing it from a commune every other week in Malaga.

Some of these people are extremely talented and could not be attracted to work at a bank under the current conditions (pre-budget statement) simply because, banks can't afford to attract or, retain them. Their risk departments won't sign off on the kind of fixed salaries required, it must be bonus performance related weighted to large amounts, which was against the law.

They also need to attract skilled entrepreneurs for short term deals, these people don't work for the big four consultancies as they don't fit with the culture (people like me!) but it became almost impossible to hire people like me due to IR35.

I strongly suspect that this situation has alarmed various politicians who have identified what could turn into an enormous issue for the City Of London and then the U.K.

The answer(s) are to de-regulate and to remove the handcuffs placed onto the City Of London, in order to reverse the decline.

As for me, as I stated earlier in the thread, the tax cuts are great but if Portugal are offering me a 28% tax rate and Spain is about to do the same, why stick around in the U.K? The banks are wondering the same albeit, for corporation tax and the ability to attract and retain staff.

As someone who experienced the 1980s, its all very worrying and change is needed, a big gamble is needed and thats what we saw yesterday.
 
JamesH85 said:
Grim, back to the thatcher years. You're better off emigrating for you're families future. The UK is dieing. Hard to see how much more can be stripped out of the UK.
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Thatcher took a sick UK from the 70's who has gone cap in hand to the IMF to a lot better place, yes it was painful but the results meant we were no longer the sick.man of Europe, why do you think the UK became so popular for Europeans to move to and work in?
 
Quartz said:
Something that's just occurred to me: this budget disproportionately benefits the lower paid because of the cancelling of the 1.5% National Insurance hike. Poorer people who are not retired get the majority of their income from salary whereas the rich get much of their income from sources other than salary - rents, dividends, share options, etc - which do not benefit from that cancellation.
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Please stop.
 
Besty said:
Now, you might ask what has this got to do with Bankers bonuses and although, I have rambled to get here...
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No kidding. ;)
Besty said:
As someone who experienced the 1980s, its all very worrying and change is needed, a big gamble is needed and thats what we saw yesterday.
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Yea because that's just what everyone needs to do in worrying times, bet it all on black. :rolleyes:
 
Besty said:
I am breaking my record here, i usually average one post per year in this area of the forum but maybe one of you will learn what's going on and it might help you make a good decision.

It's not just bonuses and the 45% rate but the main problem was also corporation tax and the IR35 stuff, it was all conjoined together into one big problem.

In 1981 the country was flat broke, my family, my father had to borrow money of our neighbour to put 50p into the electricity meter at one point, we did not have carpets on the floor and life was pretty grim.

By the time 2001 came around we were cheering the three towers that had been built in Canary Wharf (HSBC, Citigroup, Barclays) and the massive turn-around in fortunes for everyone. I moved to London and started earning decent money.

One of the foundations for this is that the people inside of these buildings were mostly stationary, they all came into work. The bankers (as they were back then) were business people, with 15-20% of them technology people who, also travelled into work with them. All the technology that they used was (surprisingly) also located in Central London, sometimes in the basement of the building the bankers were in.

In 2004, in response to the Bishopsgate bombing, the (now) FCA issued a decree that all technology for regulated companies needed to be relocated 15 miles out of the City Of London. It took around ten years for this change to finish but at that point, around 2015, it proved that, speed aside, you can run your technology from anywhere. This change was the first big significant change.

As a response to the financial crash in 2008, the banks accelerated their outsourcing programmes to India and by 2011 some banks had almost 80% of their back-office staff in India. This was the 2nd big change.

In 2011 these same banks launched programmes to computerise, to automate and to move people out of London. The maximum amount of people these banks could move to India had already been reached and therefore these people were moved to places like Manchester, Dublin and Eastern Europe. This was the 3rd big change.

These programmes then worked out that if you automated the front-office, you could replace 12 front-office banking people with 1 front-office person supported by technology people. Not only would it cost about half as much but, the computers made less mistakes. This was the 4th big change. Technology staff started to take the jobs from the front-office people at an accelerated rate, with the salaries to match by 2017, technology staff started to become the traders, to get a job at Citadel in the front-office as a trader the percentage of trading roles that also needed you to be a programmer started to go up.

2020 when the pandemic hit, these same London-City based companies proved to themselves that remote working is not only possible but, you can lower costs further because you can get people not to work out of these big, expensive offices and your productivity would go up. This was the 5th big change. Programmer traders started to move from New York to Miami and from London to erm Cornwall. See next bit.

Portugal, Greece and Spain spotted this opportunity. Portugal introduced a law which allowed Brits (with no financial capital) to move to the country and pay 28% tax as PAYE. If you earn over 30k per year all you need to do is walk into the Portugal embassy, register, get approved, book a one way ticket, get a place to live and then finalise your tax residency at the Portuguese embassy within the country. For Greece, you pay 0% for 5 years. This was the 6th big change.

The 7th big change was the Johnson administration rolling back the tax friendly environment within the U.K and that started to spook the Banks because, faced with a mass exodus of technology staff due to IR35, they had to increase their I.T spending and Salary expenditure to record levels. Technology staff started to emigrate out of the U.K and taking their money with them.

In 2022 Citigroup, 20 years after they re-located to London, announced they were moving to Dublin. I believe this is a bluff to get the government to act but we shall see.

Now, you might ask what has this got to do with Bankers bonuses and although, I have rambled to get here, the answer is that the 'bankers' are not some Essex accented coked-up geezers screaming down 5 telephones simultaneously from his desk in Canary Wharf from 7am to 6pm every day. No, the bankers are now, increasingly, technology people and Generation Z don't want to be chained to their desks like their parents might have been, they want to work for a tech start-up where all the honey's work and get equity shares in the next Facebook, whilst doing it from a commune every other week in Malaga.

Some of these people are extremely talented and could not be attracted to work at a bank under the current conditions (pre-budget statement) simply because, banks can't afford to attract or, retain them. Their risk departments won't sign off on the kind of fixed salaries required, it must be bonus performance related weighted to large amounts, which was against the law.

They also need to attract skilled entrepreneurs for short term deals, these people don't work for the big four consultancies as they don't fit with the culture (people like me!) but it became almost impossible to hire people like me due to IR35.

I strongly suspect that this situation has alarmed various politicians who have identified what could turn into an enormous issue for the City Of London and then the U.K.

The answer(s) are to de-regulate and to remove the handcuffs placed onto the City Of London, in order to reverse the decline.

As for me, as I stated earlier in the thread, the tax cuts are great but if Portugal are offering me a 28% tax rate and Spain is about to do the same, why stick around in the U.K? The banks are wondering the same albeit, for corporation tax and the ability to attract and retain staff.

As someone who experienced the 1980s, its all very worrying and change is needed, a big gamble is needed and thats what we saw yesterday.
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Fair point and we've obviously lived parallel lives :) however the idea that all good staff are contractors is just bolleaux. Good for you and all but yeah, I've seen some utter doggo contactors, even those on 4 figures a day. Final edit :-) contractors are not entrepreneurs. I am a bit hung over so not entirely sure that's what you are saying but if you are that's a fallacy sold by those who like to have "managing director" or "consultant" on their linked in profile despite being a react contractor.

We've hired all the good contractors as permies and in my teams we don't even have a single one anymore.

As for deregulation, in a global market what regs do you think we should remove and where can we sell said deregulated products?
 
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To be honest I'm not really sure what to do.

I feel I have to emigrate. But will it ever really happen?

It no longer seems an exaggeration to say the UK is dying. Being killed off by what should be the "fiscal safe handed" party.

Seeing the pound tank that much in one day is frightening.


Not really sure what to do! This is like a freight train heading to a downed bridge with the tories stoking the engine.
 
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Quartz said:
Something that's just occurred to me: this budget disproportionately benefits the lower paid because of the cancelling of the 1.5% National Insurance hike. Poorer people who are not retired get the majority of their income from salary whereas the rich get much of their income from sources other than salary - rents, dividends, share options, etc - which do not benefit from that cancellation.
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In a world where 5,000 is 0.25% of 200,000 you are spot on with the thoughts that just occur to you.
 
Quartz said:
Something that's just occurred to me: this budget disproportionately benefits the lower paid because of the cancelling of the 1.5% National Insurance hike. Poorer people who are not retired get the majority of their income from salary whereas the rich get much of their income from sources other than salary - rents, dividends, share options, etc - which do not benefit from that cancellation.
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You'll need to quantify what you class as the lower paid in salary terms to even try and make this point hold water.

Also, given this:
Quartz said:
Oops! I'm sure you're correct. Basic maths fail!
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Are you sure your first point is correct?...
 
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Besty said:
As for me, as I stated earlier in the thread, the tax cuts are great but if Portugal are offering me a 28% tax rate and Spain is about to do the same, why stick around in the U.K? The banks are wondering the same albeit, for corporation tax and the ability to attract and retain staff.

As someone who experienced the 1980s, its all very worrying and change is needed, a big gamble is needed and thats what we saw yesterday.
Click to expand...
But why do you need more money? You are obviously doing very well for yourself, as are the bankers but it seems all you really care about is chasing the almighty dollar. Is more ever going to be enough?

You do understand that for millions of people that are struggling, they cannot understand why the Government is not only helping people who have more than enough, but what will happen to them when this gamble inevitably fails.
 
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LabR@t said:
Thatcher took a sick UK from the 70's who has gone cap in hand to the IMF to a lot better place, yes it was painful but the results meant we were no longer the sick.man of Europe, why do you think the UK became so popular for Europeans to move to and work in?
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Yup, nothing to do with joining the EU and everything to do with the millions of unemployed, 10's of thousands extra repossessions, deregulation of the financial markets that allowed bankers to gamble with other peoples money, the shift from being a net exporter of goods we used to manufacture to a net importer of goods made in Asia, etc, etc.
 
The Tories have got so used to lying to British people, they forgot that you can't lie to the financial markets.

They put their fantasy budget out there yesterday, and the rest of the world called bull****.

Hope y'all enjoy the incoming emergency interest rate hikes.
 
Freakbro said:
Brought to you by the same guy who's still waiting for the £100 Billion Scottish fishing industry thanks to Brexit ;)
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Fishernomics. Where the distribution of fish in a body of water is even and static and the fish do not have to breed to create new fish.

That's starting to sound like the current Tory plan...
 
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Just read something that Kwarteng was half-responsible in writing and it would appear that he was fooled by the Reinhart and Rogoff which spells ill for his competency. It also praised the independence of central banks so will be interesting if he's abandoned that position.
 
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