How is the credit crunch affecting you?

[Marc]

Why wouldn't supermarkets pass the VAT-reduction on?

If one goes against it - the others will take its share of the market - if all go against it together - it'd be illegal.

Im not saying they will keep their VAT at 17.5%.

If they charge £1, they get 86p profit at 17.5%. They can keep their price at £1 and thus at 15% they make more profit.

Just because there is a reduction in the VAT rate, doesnt mean the consumer will see a difference.

 

[Bugz]

In theory yes, but..

Lets say a supermarket sells cleaning materials (for the sake of Bugz) at £1. They can still sell it at £1 and due to the VAT cut, make more profit. The shopper will get no benefit.

Also can you imagine how hammered that shop would get from in reputation and in loss of sales from other supermarkets?

If Tescos passed on the VAT cut but Asda didn't - Tescos would have adverts out in a day which would quite simply fuck Asda right over.

For simplicity of the future (since the VAT drop is short term only) and competition-reasons, the vast majority of the retail/service sector will pass on the cut.

Of course the cut itself will do very little but raise confidence - and confidence is simply not enough in the current climate.

 

[Marc]

The construction industry pay practically nil vat - its mostly paid in retail and services.

Yes sorry, my bad. Its mostly new build in the construction industry.

 

[Bugz]

Im not saying they will keep their VAT at 17.5%.

If they charge £1, they get 86p profit at 17.5%. They can keep their price at £1 and thus at 15% they make more profit.

Just because there is a reduction in the VAT rate, doesnt mean the consumer will see a difference.

I don't think you realise what I'm saying.

If a product is 1 pound, they get 86p profit at 17.5%. If the rate of VAT drops, because we are in such a competition-driven country, companies WILL pass it on because others will too - profit stays at 86p, price drops from 1 pound to however much.

 

[Marc]

Also can you imagine how hammered that shop would get from in reputation and in loss of sales from other supermarkets?

If Tescos passed on the VAT cut but Asda didn't - Tescos would have adverts out in a day which would quite simply fuck Asda right over.

For simplicity of the future (since the VAT drop is short term only) and competition-reasons, the vast majority of the retail/service sector will pass on the cut.

Of course the cut itself will do very little but raise confidence - and confidence is simply not enough in the current climate.

Yes, I am being far too cynical here

 

[Marc]

No ones mentioned the increase in petrol duty yet!!

 

[Bugz]

Why oh why labor are increasing taxation in certain areas that affect everyone, such as petrol duty, I don't know.

VAT affects nothing much but more specialist goods; the poor sods who live on the bare minimums will see little benefit. Hello fucked up income distribution.

Increases in petrol duty however, fuck everyone over. :/

 

[pcg79]

No ones mentioned the increase in petrol duty yet!!

booze!!!!11

 

[Furr]

They increased Duty on Petrol, Alcohol and Tobacco to keep them at current prices.

Labour has just committed the UK by the turn of the decade to acquiring over 1 Trillion pounds worth of National Debt, more than double it is now at £45 Billion (going by UK, not US counting).

Taxes will have to go up across the board to pay for this, expect to see a huge raft of of Tax Increases 2010+ including new Taxes such as Green and Carbon Tax if Labour win the election.

Over the next few months I would expect to see the Pound further drop in value, sharply. The UK credit rating will also be slashed.

The goverment wants to stimulate spending, but the VAT rate will only marginally make some goods cheaper, and even then fractionally, and it will only affect those who spend.

Personally think we're f*cked, I have no confidence in the governments predications, and if we don't get back into growth when they hope we do then they will have to make further huge borrowings. The UK will be having to using ever increasing and large parts of its GDP just to service its debt.

 

[pcg79]

Labour has just committed the UK by the turn of the decade to acquiring over 1 Trillion pounds worth of National Debt, more than double it is now at £45 Billion (going by UK, not US counting).

£1tn = £1,000bn

we're only in for 100bn!! its pretty shitty yeah, but hey, the ftse closed up ~10%!!!

 

[Aoami]

booze!!!!11

fags

I take it prices will stay roughly the same though right? Due to the VAT cut.

 

[Gumbo]

I'm only small fry, but I won't be passing on the vat cut to the customers, and I don't think they'll notice or give a flying fuck, frankly.

on £1000, it could save a whopping £25ish. OOOOooooh!!

This government has fucked over the small business in a million ways over the last few years. I think most, like me, will see this as just a way to get some of our margin back a smidge, having had it squeezed for soooo long.

 

[Furr]

£1tn = £1,000bn

we're only in for 100bn!! its pretty shitty yeah, but hey, the ftse closed up ~10%!!!

opps got my figures wrong there, the current UK national debt is £637.4 billion ish as of August, but i think it depends on "what you count" i.e government likes to exclude PFI, northern rock and the bank stock buying.


over 1,000 Billion or a Trillion by 2010.

It's all smoke and mirror.

Fags, Booze, Petrol will be the same, they raised the Duty on all three to offset the VAT cut.

 

[Gumbo]

Precisely, and on 1st November Labour introduced duty on the diesel I use to run my boats. This put my costs up by 25p per litre of diesel. 20 boats running 3-5 litres per hour when we're busy. You think I'll pass on the 2.5% cut that they give me a sniff of? Hell no!

 

[pcg79]

opps got my figures wrong there, the current UK national debt is £637.4 billion ish as of August, but i think it depends on "what you count" i.e government likes to exclude PFI, northern rock and the bank stock buying.


over 1,000 Billion or a Trillion by 2010.

It's all smoke and mirror.

Fags, Booze, Petrol will be the same, they raised the Duty on all three to offset the VAT cut.

aye its bollocks, nay? well theres a 40% voucher off wine and champers at theshers floating around the web - go drown thy sorrows, people!

 

[Furr]

Also just found this.

Quote form another web site
"UPDATE: In worrying about the licensed drinks industry, I completely overlooked the impact on the haulage industry. They reclaim the VAT on fuel (which will be lessened) but will have to pay the extra fuel duty. The same goes, I believe, for Black Cab drivers. Thanks to Mike L for pointing this out."

 

[Raven]

The vat cut is meaningless in real terms. £10-£20 less for a TV, assuming the companies even pass on the saving will mean fuck all.

They need to cut fuel duty and tax immediately, that in itself will help reduce food costs, electricals, transport, pretty much everything (again assuming the retailer passes on the lower cost of production and distribution) at the same time people will have a few more quid in their pocket to spend.

 

[Edmond]

i have to charge vat, which i have to pay back, and i claim back what i pay out for, the nett is still the same for me at the end of the day.

 

[rynnor]

Why oh why labor are increasing taxation in certain areas that affect everyone, such as petrol duty, I don't know.

VAT affects nothing much but more specialist goods; the poor sods who live on the bare minimums will see little benefit. Hello fucked up income distribution.

Increases in petrol duty however, fuck everyone over. :/

Yep - it was a shaft everyone budget with the Nat Insurance increases (Income tax with a more politically acceptable name ).

As you say many things that the poor buy are vat exempt like food/kids clothes etc. so they gain proportionally less.

The VAT decrease shows how badly wrong the chancellor is - the biggest threat we are facing is a deflationary cycle - you can buy almost anything at 20% discount so this will be lost in the noise.

They still havent realised that unless they beat the banks with a stick the banks will not lend at rates people/businesses can use.

Because of this many companies that would otherwise survive will be dragged down.

I see us stuck in a deflationary cycle like the one Japan got stuck in in the 90's that lasted a decade!

The single biggest fault with todays budget was how optimistic the forecasts are - out of recession by July next year - does anyone seriously believe this??

 

[old.user4556]

anyone thought that this recession might weed out bad businesses?

 

[Raven]

The single biggest fault with todays budget was how optimistic the forecasts are - out of recession by July next year - does anyone seriously believe this??

They seem to be hoping enough knuckle dragging labour voters do to get them in for another term.

 

[GReaper]

Why wouldn't supermarkets pass the VAT-reduction on?

Are you referring to just supermarkets or shops in general? Maybe I'm just cynical, but I don't exactly trust them.

Can you honestly see every business changing the prices on all their products/services? If they aren't having any problems selling at the existing price, it'll be hard to justify changing it.

 

[Ch3tan]

anyone thought that this recession might weed out bad businesses?

Yes, and then we will all be going to tesco for everything under the sun

 

[DaGaffer]

opps got my figures wrong there, the current UK national debt is £637.4 billion ish as of August, but i think it depends on "what you count" i.e government likes to exclude PFI, northern rock and the bank stock buying.


over 1,000 Billion or a Trillion by 2010.

It's all smoke and mirror.

Fags, Booze, Petrol will be the same, they raised the Duty on all three to offset the VAT cut.

How appropriate that our government now reflects the prudence of the population...

(nb a trillion isn't actually all that these days; its about the same as is spent on illegal gambling in the US, and a quite a lot less than the amount of money that is spent on Visa credit cards).

Personally, I'm going to make a big effort to get all my outstanding debts settled in the next 12 months (just my credit card bills now, mortgage is paid off) and minimise my direct debits (for instance by buying Freesat instead of Sky, having a spare payg 3G card just in case I don't want to/can't pay broadband etc.) so that if things get really bad I can whether the storm without too much discomfort. I genuinely think there are some very nasty times around the corner. I've been in my new job for 3 weeks and its now official that my company is up for sale. Which is nice...

 

[Hawkwind]

Dubai is a bit surreal at the moment. It seems to have the view that the situation is fine as long as you keep saying its fine. It's not the credit crunch that caused the problems here it was GREED! Rents Doubling every two to three years is simply not sustainable and now the poor lanlords can't find anyone to rent to. Prices have just started to tumble.

Dubai is cancelling several major projects it had announced and rumours are that Abu Dhabi has had to step in with some cash to keep Dubai Inc. going. Supposed to 80,000 Apartments empty and now way too many villas on the rental market.

I can't grumble, get paid far too much for doing way too little as it is. The package I'm on means I pay out for very little and even make 80K Dhs profit on rent money from what company pays me. I'll stay another year or two then either go UK or US. Unless Aviation goes tits up as well. Will wait and see.

 

[Damini]

It's all win, win for Labour. If people fall for the supposed fix, the sky high borrowing to bide us over, the sleight of hand tax cuts that balance the costs elsewhere, then they get re-elected, and that's all they really care about. If people don't, its a scorched earth policy, and the Conservatives inherit a shit storm.

Seriously, 2.5% VAT cut? What is the bloody point? I don't buy meat any more unless it's on special offer, in fact I don't buy much unless it's on special offer, and knocking that much off a purchase of any kind wouldn't entice me in the slightest. Marks and Sparks knocked 20% off everything, and the biggest effect there was loads of people returning stuff they'd already bought, getting a refund, and re-buying it, rather than splurging out.

 

[taB]

Wooo.

On booze VAT is still going down but Duty is going up. This means the average price of my products will remain static while I have to change every single one. Not to mention the complete shag of changing every spreadsheet I have.

It's not going to make anyone spend any more.

Fuck you and your slug eyebrows Darling.

 

[Damini]

Fuck you and your slug eyebrows Darling.

Sadly, I have to spread more rep around before giving it to you again.

 

[Damini]

The Mayor of London launched an extraordinary personal attack on Gordon Brown's handling of the financial crisis today.

Boris Johnson accused the Prime Minister of behaving like a drunk taking a "frantic and unprecedented gamble" with the economy.

"He is like some sherry-crazed old dowager who has lost the family silver at roulette, and who now decides to double up by betting the house as well," the Mayor said.

God, I love Boris.

 

[Uara]

Hehe yes Boris is a legend