What caught my eye this week.
The Tories are out after the worst run in British politics since King John.
Labour has won a landslide in terms of seats, but the magnitude has more in common with hacking credit card points than an overwhelming mandate from the people.
Taxes are at their highest level for 70 years. Brexit has taken 4-5% off annual GDP in perpetuity1. That’s left roughly a £40bn shortfall in annual state revenues that could be fixing the NHS or raising income tax thresholds, depending on how you roll. Instead the new government has little room to move.
The Tories have left us poorer economically and culturally, with our birthright to live and work in Europe traded away after a botched attempt to appease a fringe – ultimately gifting seats in Parliament to a populist you wouldn’t trust to run a Banana Republic. Strategic geniuses, these Eton lads.
This time things really can only get better. Except unlike in the 1990s, it’s now more akin to when you come around from a heart attack and a machine is faintly beeping in the background.
Grow for it
I’m not expecting miracles. I’m barely expecting anything. Just not shooting ourselves in the foot for a few years would be nice.
The best hope for Labour – and more importantly the country – is that stability and sanity at the top, plus some judicious low-cost tweaks to planning and policy – might unlock capital spending and investment.
Many indicators are already turning favourable – notably interest rates and inflation – and Sunak and Hunt’s relatively sensible fag-end innings deserves some credit for that. But there’s a mountain to climb.
With most tax rises ruled out, it’s possible the new chancellor will squeeze a bit more from the wealthy.
And honestly, when you compare the huge asset boom of the low-rate decades with real wages that have gone nowhere since 2008, is that really so unreasonable?
Business as usual
Of course that doesn’t mean anyone wants to pay more taxes personally. There’s always someone richer or less deserving to foot the bill.
So while I wish Sir Keir Starmer and Rachel Reeves the very best, Monevator will continue to highlight how taxes reduce your returns, the best ways to use your pension, and we’ll urge you to fill your ISAs.
Some may see something contradictory or hypocritical here. But it’s not our job to help the government plug the financial holes left gaping by the Brexit-y right-wing Tories. You don’t come to us to learn how to leave a tip for HMRC, any more than you’d read the Shooting Times for hints on veganism.
Of course we all hope the tax take rises because the economy gets going and lifts all boats. And after ten years in fairyland railing against EU bureaucrats, cold young men on boats, and people who live in Islington, maybe MPs can focus again on Britain’s real problems, starting with growth and productivity.
It won’t be easy to concentrate though, given the circus that will be unfolding on the right.
My hope is that the Conservatives will move back towards the centre. Genuinely! Despite what some readers think, I’m no left-wing tribalist and I voted for David Cameron back in 2010.
My despair at the Tories was all about what they became at their worst, not what they can represent at their best.
Where was the gracious Rishi Sunak – who gave two excellent speeches after losing – during the actual campaign? Hiding from Barry Blimp and his own party members I imagine. Fixing the right looks like an even harder task than Starmer faced in purging the Corbynistas from the left.
As for Labour and the new government, I want a mostly technocratic first-term that leaves us arguing the toss about tweaks to the ISA regime or child benefit.
More boring, please!
Have a great weekend.
From Monevator
FIRE-side chat: Actively achieved – Monevator
From the archive-ator: ETFs versus index funds – Monevator
News
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Tax windfall continues for the Irish economy – BBC
Build more homes to cut rents says Rightmove, as latter hits new record… – T.I.M.
…so can Labour deliver on its 1.5m new homes promise? – This Is Money
How Britain’s falling birth rate is creating alarm in the economy – Guardian
Bitcoin below $57,000 as Mt Gox begins moving billions in BTC – The Block
Greece pushes ‘growth-orientated’ six-day working week – Guardian
Portugal brings back tax breaks for digital nomads – Fortune
Zoopla: home prices are still 8% overvalued but will be fair value by end of year – T.I.M.
London houseboat owners being priced out by rising mooring fees – Guardian
We’re in the midst of the longest-ever US bond bear market (by far) – Bilello
Election section mini-special
What the Labour government means for your money… – Which
…and another take on the same topic – This Is Money
Biggest-ever gap between votes and seats hits Reform and Greens – BBC
Brexit backlash: Britons now regret their populist revolt… – WSJ
… and why Starmer should play prosecutor on Brexit [Search result] – FT
Products and services
The big High Street banks are cutting mortgage rates again – This Is Money
No-deposit mortgages enable tenants to buy the home they rent – Guardian
Is it worth opening a Junior ISA? – Which
Sign-up to Trading 212 via our affiliate link to claim your free share and cashback. T&Cs apply – Trading 212
Does broker insurance really make an investing platform safer? – Banker on Wheels
The best packaged bank accounts – Be Clever With Your Cash
Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
Why is Nationwide closing branches on Tuesday and Thursday? – This Is Money
Homes for sale under £350,000 for first-time buyers, in pictures – Guardian
Comment and opinion
The drawbacks to aged-based asset allocation – Oblivious Investor
Should you put your state pension into a SIPP? [Search result] – FT
We live in a society – Money With Katie
The tediousness of running a General Investment Account – Simple Living in Somerset
How does inflation impact retirement? – Of Dollars and Data
Can we normalise ‘phased retirement’? – Morningstar
Being Jack Bogle’s apprentice – Humble Dollar
Not all predictions are created equal – Behavioural Investment
The optimal portfolio for the next decade [Search result] – FT
A painful confession: we all get old – Humble Dollar
“I’m retired and regret my frugal retirement” – Yahoo Finance
Novel US ETFs mini-special
(All US, but interesting – and likely to come to the UK eventually)
Monetising loss aversion for fun and profit – Paul Kedrosky
Boomer candy: sweet treats or investment headaches? – Morningstar
Stone Ridge aims at retirement market with ‘longevity income’ ETFs – FT
Naughty corner: Active antics
GMO’s latest asset class real return forecasts – GMO
The risk of a replay of the lost decade in US stocks [Search result] – FT
US small cap returns: relatively bad, absolutely fine – Acadian
The superior returns of cyclical stocks – Klement on Investing
Steve Ballmer richer than Bill Gates via the time-honoured strategy of not diversifying – Sherwood
The shareholder supremacy – Where’s Your Ed At?
Kindle book bargains
The Hidden Half by Michael Blastland – £0.99 on Kindle
How to Own the World by Andrew Craig – £0.99 on Kindle
Never Split the Difference by Chris Voss – £0.99 on Kindle
Bejiing Rules: China’s Quest for Global Influence by Bethany Allen – £0.99 on Kindle
Environmental factors
It’s 2024 and drought is optional – Asterix
We can’t comprehend the solar revolution [Podcast] – Full Disclosure via Apple
Water firms could be sued over sewage after ruling – BBC
Let China pay the cost of solar and EVs – Econbrowser [h/t Abnormal Returns]
The complex rise of somewhat eco-friendly viscose – Guardian
An estuary smothered by a thousand logs – Hakai
Robot overlord roundup
Related: using AI to animate old photos [Video] – Science girl via X
AI drives 48% increase in Google emissions – BBC
Off our beat
Why more Britons are making the great move north [Search result] – FT
The fastest data in the world – BBC
A WFH ‘culture war’ has broken out across Europe – Fortune
Are you allowed to shoot down an intrusive drone? – This Is Money
The enthralling and emotional inside story of a house clearance – Guardian
Should lawmakers worry more about Temu and Shein than TikTok? – Sherwood
One man’s lifelong search for fragments of Britain’s Jurassic past – Guardian
Exercise for aging people: minimise risk while maximising potential [Podcast] – Peter Attia
And finally…
“Being democratic is not enough, a majority cannot turn what is wrong into right. In order to be considered truly free, countries must also have a deep love of liberty and an abiding respect for the rule of law.”
– Margaret Thatcher
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Per the OBR and Goldman Sachs.
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