SO WHERE DO WE GO NOW?

The Greek ‘debt deal’ has now been secured which kicks the problem firmly up the road.

In immediate terms this should have a massive positive effect for the EU and this has avoided a huge disorderly default.

This debt write down of bonds now paves the way for further aid to be advanced to Greece allowing it to meet its obligations under bond redemption later this month.

This still amounts to the biggest sovereign debt default in history. Greece will still be under a huge ongoing debt burden. The best possible outcome is expected to be a debt to GDP ratio of 120 per cent by the end of this decade.

Most economists (and politicians) know that this is unsustainable – the outcome is much more likely to be worse. This is far from the final restructuring of Greece’s massive national debt.

Unfortunately, this default now increases speculation that Portugal could follow the same path.

Yet, Nicholas Sarkozy recently declared that the Greek “Problem is Solved”. Is there a French election looming?...This seems to me to be mighty optimistic! Watch this space….

OSBOURNE TO CUT CORPORATION TAX TO 20%?

George Osborne has recently been reported that his objective is to reduce corporation tax to 20% which is significantly lower than other Western economies and would be great for UK business.

Hopefully, we will hear more of this in the budget later today.

George Osborne inherited a rate of 28% from the last Government and plans to reduce it to 23% in the lifetime of this Parliament.

A further planned reduction would be a good move and would attract business to the UK.

What about the UK’s competitors? The USA has a basic rate of 35% and France over 33%. Germany has a rate of 15% but there are additional social taxes which bumps this up to a rate in excess of 30%. Conversely, Ireland which attracts many multinationals has a much lower rate of 12.5%.