Irwin Stelzer has a typically sharp piece in today’s Telegraph in which he makes a crucial point about a rather overlooked political consequence of the recent market turbulence. As Stelzer writes,
“The former chancellor surely knows that tax receipts have been sustained largely by payments from high-earners in the City. He knows, too, that it is those very people who are taking a hit from the turmoil in financial markets, and are expecting their incomes to drop this year by at least 25 per cent. Fewer pounds taxed at top rates, lower Treasury receipts, bigger deficits. That forces the Bank to raise interest rates. End of economic growth. Brown must find it tempting to want to beat the downturn.”
The rest of the column, especially his argument about why Brown feels confident about ignoring calls for an EU referendum, is well worth reading too.