Martin Flanagan: Taxing times as Osborne faces calls to change tack on economy

as IS sometimes said, if you can keep your head while all about you are losing theirs, maybe you haven’t sussed the gravity of the situation. Chancellor George Osborne says he is not for turning on Britain’s austerity programme, despite macro-economic gloom suggesting a “Back to the Future” recession, so shortly after the 2008-9 edition, looks uncomfortably possible.

Osborne’s answer to those suggesting a lowering of the austerity sails to acknowledge the stream of worrying global economic data is that painful deficit reduction in Britain still remains the right policy.

The Chancellor says you only have to look at the sovereign debt black hole in the eurozone, calling into question the project of European monetary union, to see that Britain’s unequivocal fiscal hairshirt has made us something of a safe haven (though not compared with gold and Swiss francs, obviously).

However, it will be interesting to see if Osborne proves as obdurate in keeping the 50p top rate of income tax as he is on the public sector spending clampdown and large state job cuts.

Clamour is growing in some quarters for the repeal of the top tax rate, with 20 leading economists writing to the Financial Times yesterday saying its abolition is necessary to boost growth amid the economic storm clouds. “Only by returning to an internationally competitive tax regime will Britain enjoy long‑term sustainable economic growth,” they wrote. The argument has greater heft because the signatories include two former members of the Bank of England’s monetary policy committee, Sushil Wadhwani and DeAnne Julius.

The Confederation of British Industry has previously said it wants the tax, introduced by the previous Labour government as a temporary measure, removed at the earliest opportunity. Boris Johnson, mayor of London, calls the 50p tax rate “job destroying”, claiming it makes Britain less competitive internationally and discourages inward foreign investment.

And yet… it would need even more iron in Osborne’s nature to do away with the top rate of tax as it would be politically controversial. Much of the public would be upset. His Liberal Democrat coalition partners would be apoplectic.

The public associates our current woes with highly-paid financial workers rendering the country wretched through a mixture of arrogance, greed and stupidity. Many believe that the well‑off should pay for this, literally and metaphorically.

For the Chancellor to say we must all suffer the austerity but there is time for some leniency at the top end for the longer‑term economic good is a very hot political potato. I suspect he will have the salad instead, and keep the 50p rate for political, not economic, reasons.

Hard-pressed consumers still like to wake up and smell coffee

IN THE recession, followed by what former US president Richard Nixon once called a “growth recession” where people don’t feel any better in a bloodless recovery, I felt coffee shops would be hit.

I thought Caffe Nero, Costa Coffee, Starbucks etc would suffer because forgoing a daily caffeine buzz would be an easy economy for consumers. A saving of maybe seven or eight quid a week for daily imbibers, say £30 a month, and make your own coffee at work far more cheaply? It hasn’t been like that. Coffee shop sales have held up well throughout the downturn. Costa Coffee is just the latest chain to post impressive like‑for‑like sales figures, up nearly 10 per cent on a year ago.

Reasonable inference? People may waive big discretionary expenditure in tough times. But it seems the little daily treats and routines keep many people going. Or, in adversity, keep cappuccino and carry on.

SuperGroup comes out on top in battle of the fashion brands

CELEBRITY endorsement and twenty‑something aspirational cool are clearly a potent combination. Certainly too strong for anything as frivolous as the worst downturn since the 1930s. Fashion brand Superdry’s strong latest trading update yesterday shows that, with the odd profit margin blip, owner SuperGroup has gone from strength to strength since its flotation in choppy stock market waters in spring 2010.

The shares, at over £10, are double the flotation price and at once stage in the past 12 months reached nearly £19.

SuperGroup’s expansion programme, in the UK and, increasingly, overseas, continues at a fair clip. The retailer has a clearly targeted market, and in its product range does not try to be all things to all men/women.

Like Superdry‑wearer David Beckham was once noted for, the company looks to have successfully bent the ball round the recession wall into the cash net.