Quote:
Originally Posted by Hugh
Can I just point out the 4% interest on £20k per year, after tax, is £640 (20% tax rate) and £480 (40% tax rate) - or £12.31 / £9.23 per week.
Wrinkly boomers wouldn't be exactly living high on the hog on that extra income, will they?
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Quite - which begs the question of why George Osborne is offering up potentially ~£300 million per year of taxpayers' cash in extra interest costs over the gilt market subsidising it.
Money that should be circulating around the economy will, instead, be subsiding low-risk, subsidised investment in government bonds which makes a bit of a mockery of low interest rates in the name of encouraging riskier investment and increasing the flow of money through the economy.
The Chancellor has never been an economist but always an astute politician and this is another of his policies that is economically illiterate but most definitely a smart political move.
Whether the economy of a nation should be run based on politics rather than economics is another debate, though that's perhaps misusing the word 'debate'.