Wednesday, February 29, 2012

Baked-in laziness

There seems to be a big marketing push going on in Britain at the moment for a "new" product, ready-baked jacket potatoes.

The makers must have high hopes for this revolutionary concept because their seem to be a myriad of TV ads, billboards and full pages in newspapers devoted to it.

Apparently it's McCain's biggest product launch for over 30 years.  They have even gone so far as to introduce special billboards at busstops which glow and emit the smell of baked potatoes.  I kid you not - Adverts that Smell Like Jacket Potatoes

Now I like baked potatoes but rather than pay £1,50 for two I pay 70p for four (thanks Asda) and throw them in the oven when the need arises.  It doesn't take Heston Blumental to cook a baked potato.

It's hard to reconcile the "squeezed middle" or "breadline Britain" headlines about struggling consumers when you read about products like this which seem predicated on the belief that the average British household can't be bothered to cook even the most basic of meals and must pay a 400% mark-up to get someone to do it for them.

What next, ready-buttered bread?  Disposable mugs of tea that can be popped in the microwave?  For pity's sake.

From our website  Spanish pension benefits 2012

Thursday, February 23, 2012

How Cameron can save the economy and win the election

I am sure neither David Cameron nor his political advisers feel in need of some advice from a nobody but I am going to give it any way.  Just to get it off my chest.

Most on the centre and the right think Cameron is a reasonable Prime Minister and his chances of reelection are surprisingly good given the state of the economy and most people's personal finances.

However it frustrates me that his government is not more radical particularly when it comes to the economy.  Apologists often claim the government is being held back by their Lib Dem coalition partners but I sense an opinion poll led fear of straying too far from the centre ground.  Thatcher he 'aint.

But there is an alternative to centrist policies. Here's how he could be radical and position the Conservatives to win the next election at the same time.

His objectives should be to (a) cut a deal with the LibDems which achieves for them some of their cherished goals  but also gets through some more right wing policies that their rank and file won't like (b) wrongfoot Labour by accepting to some extent their argument about cutting the deficit "too far, too fast" (c) bring his own right wing back on side to unite the party (d) appear radical, decisive and like he is doing everything he can to boost the economy in a fair way.

This is the deal he needs to do with the Lib Dems to achieve these 4 goals:

  1. Drop the 50 p higher rate of tax back down to 40p
  2. Cut corporation tax as part of a package of measures to encourage multinational companies to invest/base in the UK (copying what Ireland has done).  Other measures to include making it easier to hire and fire, and make it easier to get permits for non-EU staff
  3. Cut employers' National Insurance to boost job creation
  4. Increase the personal income tax allowance to £10,000 (a key Lib Dem objective which Conservatives should have no trouble supporting)
  5. Partially offset these tax cuts with a mansion tax (another key Lib Dem objective which will help undermine the argument that the package favours the rich)
  6. In a similar vein to 5. close some tax loopholes used by rich people to avoid taxes; again a Lib Dem policy which will help achieve the fairness objective.  It is also good economics to cut high tax rates and close loopholes - Obama has just proposed something similar in the States.
  7. Offset some of the tax cuts with benefit cuts.  Despite the outcry among the left-leaning establishment the benefit cap, cuts to housing benefits and crackdown on fake incapacity claimants are extremely popular and necessary policies, they just don't go far and enough.  What about asking the million young unemployed to do some work for their benefits?  Many will stop claiming.
  8. Leave some of the tax cuts (1-4 above) unbalanced by spending cuts / tax rises (5-7 above).  Although cutting the deficit is vital, the markets will not be spooked by a loosening of the reduction target if it is in the cause of radically boosting Britain's growth potential which these measures will do.  This will steal Labour's main criticism of George Osborne: they will have to either applaud the move or look stupid criticising what they have been asking for for months.  The coalition should also argue that some of the tax cuts will be self-financing, particularly no 1.
Obviously there is no chance of the government doing anything half so bold but I would love to see them try!

Thursday, February 16, 2012

And 2012’s most annoying Americanism is . . .

Although I consider myself something of an Americophile, I still get annoyed by teenagers, z list celebs and reality TV contestants peppering their speech with inane Americanisms.  

English is a perfectly good language which was good enough for Shakespeare and the King James’ Bible but not, it would seem, cool and hip enough for a certain breed of modern Britons. 

Before I reveal the one that is getting under my skin at the moment (even when uttered by Americans) let’s recap and look back at some of the Americanisms we have been subjected to in the recent past:

  1. We have had decades to get used to the word “like” uselessly and endlessly punctuating the speech of the vacuous but it still manages to grate somehow particularly when combined with the habit of turning a statement into a sentence.  That’s really, like, annoying?
  2. There’s a whole series of urban African-American speech habits that are often used by Brits for comic effect but it long ago ceased to be funny to say “girlfriend”, “talk to the hand” etc
  3. Saying that you, or someone else, doesn’t “do” such and such.  For example: “I don’t do ordinary”.  I am not sure this habit originated in the States but I would be surprised if it didn’t and I wish it hadn’t spread over here. 
  4. Adding a “not” at the end of a sentence to turn an affirmative into a negative, again for supposed comic effect.  That’s still really funny . . . not!
  5. “Can I get a coffee to go”.  Enough said.
  6. Anyone who says “math” for “maths” has watched too many imported shows (sorry, programs) on E4
  7. I am fed up with Americanisms … period.  It’s quite a useful verbal device to end with “period” but surely saying the same with “full stop” at the end would be more appropriate in this country.

But to bring things right up to date, the one Americanism that I find increasingly creeping into British speech is “my bad”, as in “I forgot to get you a birthday card.  My bad”.   

Judging by a Google search to find the origins of the phrase “my bad”, it is not new to express contrition with this nonsensical phrase but it hadn’t registered with me until recently.  Now I seem to hear it more and more and I find it cringeworthy.

Just to repeat I love America and most of these expressions sound OK coming from the right lips. I just don’t like non-Americans talking like they have just stepped off the set of Beverley Hills 90210 or American Idol.

From our website: Spanish Wealth Tax Guide

Thursday, February 9, 2012

Spanish electricity bills set to soar?

I have always thought electricity was rather pricey in Spain.  Despite plenty of effort to keep the bills down, mainly involving use of cumbersome gas bottles, the monthly bills seem to roll in higher and higher.  It is therefore surprising to learn that Spanish electricity bills are subsidised and the consumer does not pay the full cost of production.

The subsidy relates to renewable energy.  Spain takes great pride in its renewable energy sector and has encouraged hydro, solar and especially wind power to the extent that these sources supply 30% or more of the electricity Spain needs (it varies with wind strength).

But this success comes at a price: feed in tariffs which are generous to renewable suppliers but which are not passed onto the consumers (like they are in the UK by and large).  Spain manages to get all the green benefits, including much trumpeted jobs, without the inconvenience of higher bills for end users.  The trick is that the government set up a fund called FADE to carry the accumulated additional costs of the renewable energy and it has a deficit of €24 billion.

This in turn is funded by selling bonds to the market but given that this is effectively the government borrowing, the markets are starting to lump it in with general Spanish debt which is reckoned to be a major default risk.  So the government doesn’t want the FADE deficit to swell any further and has pulled the plug: no more green subsidies.

It is supposed to be a temporary suspension but the renewable sector, and some regions like the Canary Islands, are up in the arms about the lost industry and employment.  Even the WWF has weighed in bemoaning the effect on CO2 emissions.  There are lots of quotes in the papers about 300,000 jobs that would have been created by 2020 being under threat. 

I am somewhat dubious about alleged jobs being funded by secret slush funds and am not too sad about the decision.  The big question for householders though is how long before the government puts up electricity bills to pay down this €24 billion deficit.  That would be a painful “stealth” tax rise we could do without.

Thursday, February 2, 2012

Could you live in Spain on €547 a month? Millions do

The answer for most of us is probably "are you having a laugh?".  Even without rent or mortgage payments, utilities, taxes and food would surely use up €547 a month however frugally you lived.

But that is Spain's minimum state pension and about half of Spanish retirees have to make do with it although couples get more: €752.

The average monthly pension for those who have sufficient contributions to qualify for more than the minimum is €936.  It is getting harder and harder to get a "contributory" pension i.e. more than the minimum, based on contributions from work or self-employment.  The minimum number of years' contributions required is increasing from 15 to 25 and the retirement age is going up.  But it is all happening in stages and there are some complications - we have just published a guide on our website Spanish Pension Benefits 2012.

Although the state pension has risen only 1% this year there are more pensioners so the overall cost is up more than 4%. You wonder how the government can go on paying these pensions with so many should-be taxpayers unemployed or working in the black economy.

As for the pensioners trying to live on the minimum pension I don't see how they could particularly if they are living on their own and have housing costs to pay.  Spain has become an expensive country.  When I arrived in the late 90s pretty much everything seemed cheap compared to Britain but now very few categories of expenditure are.  There isn't the same culture of bargains, offers, price-cutting, presumably down to a lack of competition.

I guess the answer is to save more for retirement but that is hardly being made easy at the moment.

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