Wednesday, 13 August 2008

Commercial property owners are knocking the empty ones down

Back in April the government cancelled some rather important tax breaks. If a commercial building was unoccupied the owner used to get a 50 percent discount on the rates for retail and office space, and a 100 percent discount on industrial premises. Since April 1st these discounts have been limited to the first three months (six months for industrial property) of vacancy.

So of course empty buildings become major liabilities and owners take the obvious way out and demolish them. This week, the industrial landlord O&H started demolishing a fifth of its Alexandra Business Park, Sunderland, and last week gave approval to demolish a further 37,000ft of the 750,000ft park. (Link)

This is dire news. We are in an economic downturn and many buildings will be unused until the cycle turns and growth resumes. But if they have been demolished in the meantime growth will engender reconstruction costs and be so much slower; all to avoid a tax now. Better surely to give the tax break so empty offices, retail units and factories will exist to be grown into when the good times return. Such short-sightedness is classic New Labour.

Tuesday, 12 August 2008

Inflation up again in July

July's inflation numbers are out.

CPI: 4.4%, up from 3.8% last month
RPI: 5.0%, up from 4.6% last month


The current base rate you will recall is 5.0%. The Bank of England left it untouched at its rate-setting meeting earlier this month.

What does this mean?

Well, if you're a taxpayer, you can no longer take your savings to a bank and deposit them for more than their value will go down due to inflation.

I've blogged before that UK inflation is out of control; really I'm just documenting the decline now.

One might ask the question: why is the Bank of England not doing anything to stop the problem? Why haven't they increased interest rates? The answer is pretty simple and think I may have mentioned it before. They kept interest rates far too low over the 1997-2007 decade so that New Labour could tax and spend with gay abandon and now when they badly need to raise interest rates they can't because it would force too many people into bankruptcy.

Lastly, watch the US dollar, it's starting to rise against sterling...

Monday, 11 August 2008

Expropriation of Property in South Africa

There's a bill currently before the Parliament of South Africa called the Expropriation Bill.

It gives government ministers the power to expropriate private property for public use, or to expropriate it if it is deemed to be in the public interest; which includes expropriating it on behalf of a private individual who will then become the new owner. Compensation must be paid to the previous owner but the amount is a balance between the value of the property and the public interest.

The property to be expropriated is likely to be farmland in the first instance, although the Bill is worded loosely enough that other land, factories, businesses, shares or even intellectual property such as copyrights could be expropriated.

Unsettling similarities with Zimbabwe can be seen. The current hyperinflation and economic collapse in Zimbabwe started when white farmers had their land confiscated. And now we are seeing the very early seeds of mass-starvation in South Africa.

Tuesday, 5 August 2008

The Debt We're In

Let's look at how much debt we're in here in the UK. As of the end of June 2008....

Total personal debt: £1,444 bn

This is made up of

Mortgages: £1,212 bn
Unsecured loans: £232 bn

Average unsecured loan per-household

All: £9,309
Only those in debt: £21,650

Average household debt in the UK is £58,000 (including mortgages).

Average owed by every UK adult is £30,424 (including mortgages).

Average outstanding mortgage for the 11.8m households who currently have mortgages now stands at £102,554.

In June alone borrowing grew by £4.0 bn; comprised of £3.1 bn in mortgages and £0.9bn unsecured loans.

And we're just talking personal debt here. The government has borrowed the same again.