The UK’s 30-year gilt interest rate has risen to 5.25%. Unemployment is moving towards 5% and officially reported inflation is at 3.5%. The chancellor, Rachel Reeves, has to fill a financial black hole of potentially £20bn in her November budget if she isn’t fired before then.
Welfare spending is out of control and earlier ideologically motivated tax changes intended to hurt farmers, businesses and private education have encouraged the wealthy to seek a future elsewhere. As the top 1% of taxpayers supplies 30% of personal tax receipts, a crisis is in the making in the UK, the only uncertainty being whether France may not implode first.
In SA, 30-year bonds are at 10.7%, official unemployment is at 42.9% using the expanded rate, and official inflation is about the same as the UK. Our tax base is similarly skewed, with 7-million personal taxpayers and 25-million receiving grants.
All this from a government which, like the UK’s governing Labour Party and the Conservative one before that, promised more jobs and an expanding economy.
Rising long-term bond rates eviscerate indebted nations, and climbing gold prices are a confidence red light for fiat currencies.
If a UK financial crisis is expected before November, SA must already be drowning. Indeed, the Goodyear closure and Glencore’s smelter shutdown, not to mention ArcelorMittal SA, suggest this is the case. It’s only that our government chooses to keep us in the dark.
James Cunningham
Camps Bay
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