How Basel III threatens small businesses
- Basel III requires an increase in the size of banks' equity relative to their loans and a more formal assessment of risk. It is built on the same foundations as Basel I and II. The reasons why those initiatives failed may well apply also to Basel III, not least because the adjusment of assets for risk cannot be conducted with any certainty.
- Soverign debts once considered safe are not necessarily safe any longer.
- The rules agreed in September 2010 are to be phased in between 2014 and 2019 to give banks time to adjust. Most of the capital adjustment will come from banks lending less but better and with increased margins - that is, higher interest rates to customers.
- Big companies will be able to shop around within the competitive international markets. However, in a situation where five big banks dominate the UK market, Britain's smal and medium-sized enterprises (SMEs) will be hit both by the reduced aviailability of loans and by higher interest rates.
- Since SMEs drive the UK economy, the consequence of Basel III is negative for the UK.
Read the full briefing paper here.
Does Inequality Matter?
The Revenue and Growth Effects of Britain’s High Personal Taxes
Just the Facts: Previewing the Comprehensive Spending Review
How severe will the cuts due to be outlined in the Comprehensive Spending Review (CSR) actually be? This short, opinion-free briefing that aims to answer this question, by examining the spending totals outlined in June's Emergency Budget.
Privatisation Revisited
This report calls on the government to undertake a radical new programme of privatization. There are still many attractive commercial operations in the public sector that should be privatized – for instance, Channel 4, BBC Worldwide, Scottish Water, Network Rail and many other firms. The report also calls for the government’s shares in RBS and Lloyd’s TSB to be sold off gradually over the term of the current government. Together, these privatizations would raise up to £90billion over a period of several years.
The report argues that many benefits would accrue if its proposals were implemented in full – particularly in terms of operational efficiencies. The major privatization wave under the Thatcher government opened up much of Britain’s industry to competition and helped the British economic miracle of the 1980s. In times like this, a return to this approach is required to rejuvenate parts of the British economy.
Britain’s national debt is approaching one trillion pounds and interest repayments are nearly £120 million every day. With this report, the government now has an instruction manual in how to begin paying down this debt and simultaneously jumpstarting the flagging British economy.
Taxpayer Value: Rolling back the state
'Taxpayer Value: Rolling back the state' urges the government to reduce the number of people employed by Whitehall departments and their QUANGOs by almost 27 percent. This would equate to almost 270,000 public sector job losses and deliver estimated savings of £55bn a year. However, the emphasis of this report is not on cutting for cutting's sake. Rather, the goal is to make the concept of 'taxpayer value' central to government activity and, in so doing, deliver better services at a lower cost. Among other recommendations, the report suggests that job centres be privatized and the tax and benefit systems integrated, that the military take over procurement from the MoD and purchase equipment 'off the shelf', and the Departments for International Development and Communities and Local Government be abolished.
Response to the Emergency Budget
The ASI’s emergency budget response welcomes the fiscal consolidation proposed by the government and praises the changes to the personal allowance and corporation tax, while also pointing out that the Chancellor could have gone further on spending cuts, and should not have raised VAT and Capital Gains Tax. It goes on to argue that cuts should be achieved by fundamentally re-thinking the role of the state rather than salami slicing, and advocates radical welfare reform as an urgent priority.
Estimated revenue losses from CGT increases
International evidence suggests clearly that increases in capital gains taxes above a very modest level result in decreases in revenue. Similarly, if capital gains tax rates are set above a relatively modest level, then their reduction will involve an increase in revenues. This paper uses new evidence from Ireland, Sweden and Switzerland combined with existing analysis from America, Australia and Britain to try and identify more precisely the revenue consequences of CGT increases in the UK. It looks at both revenue losses from capital gains tax and from other taxes.
The Party is Over
In The Party is Over – A Blueprint for Fiscal Stability, city economist Nigel Hawkins argues that reducing public spending is the most pressing challenge the new government. His report goes on to point out that – assuming the Treasury's growth forecasts are correct – the government will need to cut spending by 3 percent a year to balance the books by 2015. That means finding more than £90bn of cuts over the course of the current parliament. Hawkins also argues that no area of public spending - even the NHS - should be ring-fenced.