We know very little more now than we did before Alistair Darling delivered his pre-Budget report. Perhaps we should be grateful.
So the economy is still in recession, government debt is mounting and spending cannot be cut because that would cause the recovery to stall. We knew all that before. Indeed, because all the options are unattractive it was always likely that the Chancellor would have nothing much to say and that the Conservatives would have few alternatives to put forward.
The tax on bank bonuses was a new development, although even this was heavily publicised before the event so that it seemed like old news by the time it was confirmed. I do not take the cries of anguish and the threats of relocation too seriously.
London remains one of the three main financial centres in the world and it would be too expensive and counter-productive to move elsewhere. That is not a cause for complacency. If the financial institutions are ever driven out they will never come back and we do need them.
I have no doubt that bankers will find ways round the penalties and it has already emerged that bonuses already guaranteed will be excluded. In fact, the banks may be quite pleased to defer bonuses until after the election, when a new regime may be put in place. That way staff can be retained at no immediate cost.
The increase in income tax is small but discouraging as it will hit the middle ranking earners, the ones who always seem to cop for it, most. Despite repeated promises that the basic rate of income tax would not rise, the increase in National Insurance is in fact a 0.5% addition to the basic rate. Also, the freezing of the threshold for higher income tax will be an imposition of those who do manage to jack their wages up.
In any event, the few measures that Darling did announce are rather hollow. The Chancellor, like his predecessor, makes proposals for the future but, unlike Brown, Darling is unlikely to be still around to see them implemented. They could all be unpicked before they begin.
Buddy, can you spare a bid?
Despite the stock market recovery, takeover bids remains pretty thin on the ground, so count yourself lucky if you own shares in a company on the receiving end of one.
Cadbury shareholders should hold their nerve despite the fact that there is still only one bid, and a patently inadequate one at that, on the table. The Cadbury board is commendably holding its nerve and is in no rush to respond to the £9.9 billion offer from Kraft that was formally launched last Friday.
The clock is ticking, with Kraft giving Cadbury shareholders until January 5 to accept its cash and shares offer worth about 721p for each Cadbury share. Do not under any circumstances rush to accept, for several reasons.
Firstly, Kraft is highly unlikely to walk away on that date however few acceptances it gets. The more Cadbury shareholders who show their contempt for this unattractive offer, the more Kraft will feel obliged to offer more to get everyone onside.
Secondly, even if Kraft declines, against all reason, to increase its offer it will almost certainly extend the acceptance period by a couple of weeks. It is extremely rare for a bidder to give up at the first hurdle.
Thirdly, there are reasonable possibilities of another bidder coming forward with a better offer. The odds therefore heavily favour keeping your options open. US confectionery rival Hershey is definitely considering its position while Nestle and Ferrero are probably having a think about it.
Do not be concerned that no definite rival bid to Kraft’s has emerged yet. There is no reason to rush in with an offer. It would be different if Kraft stood any chance of getting the Cadbury board onside and there was any danger of leaving it too late. Nothing is going to be settled for some time.
Meanwhile Cadbury shareholders do have the option of taking profits by selling in the market. That would not be wrong but the possibility of a bidding war argues for staying in.
At the opposite end of the food chain, waste disposal group Shanks has received an approach and, like Cadbury, it is holding out for more. In this case we do not immediately know the suitor, although private equity firm Carlyle is assumed to be the potential bidder.
A price of 135p a share has been mooted but Shanks wants 150p. As with Cadbury, it is probably worth hanging onto your shares although the case is not as clear cut. The approach is ‘highly preliminary’ so there is no guarantee that a formal offer will be made and large shareholders in Shanks might well settle for 140p.
However, as with Cadbury there is a real possibility of a bidding war. Hang on and enjoy the fun.
Buddy, can you spare a fifty?
It seems that there has been a sharp rise in demand for £50 notes over the past couple of years or so. The total value in circulation in the summer of 2007 was £7 billion; now it is £9 billion.
Andrew Bailey, chief cashier at the Bank of England, puts this down to lower levels of public confidence in the banking system and to low interest rates. The idea that people are hoarding money rather than banking it may account for part of the increase but surely there are two more likely explanations.
First, people are paying plumbers, electricians, joiners and the like in cash to avoid incurring VAT, thus reducing sizeable bills by 15% in these straightened times. Second, money laundering is increasingly in cash to avoid the inconvenience of explaining to the bank where you got a large sum of money from.
Large denomination notes are used mainly in the twilight economy. Most of us want to get hold of £5 notes since cash machines dish out £10 and £20 notes and any purchase costing more than £10 tends to go on the credit card anyway.
BT revisited
Reader Alan Maynard responds to last week’s comments on BT by emailing to say that he is still a BT subscriber yet he has received two separate letters, both correctly named and addressed, asking him to come back to a better deal.
Some years ago a friend of mine contacted BT threatening to leave because new subscribers were getting better terms than loyal customers. She was immediately offered even better terms than the current special offer. It’s worth a try.
Bikes revisited
This is positively the last word on import duty but I am obliged to those readers who emailed in to say that if you go onto the HMRC website and type anti dumping duty into the search box you get a list of affected items. You have been warned.
