Taxation

It is intersting how two major countries within the EU have different views about improving the economy. Germany is considering to lower its income tax as well as VAT. The UK is planning on reducing VAT to 15% but increase income tax for the wealthier to 45%.

Although the number of high earners may have reduced over the last year, Gordon Brown will have a strong oposition. Will such a move cause more enemies than good for next elections?

Paying 45 pence for every £1 somebody earns will certainly increase the economy of offshore tax havens. Why do the high income citizens have to pay more for regulatory mistakes over the past and citizens that have contributed to this mortgage crisis who are unable to pay their mortgages?

Unemployment

Spiegel online writes that the German unemployment level has reached 3.5 million compared to the UK's 1.8 million. Despite Germany having a larger population size, the proportion of unemployment in Germany is much higher.

UK estimations have been up to 3 million over the next two years, which could make policy setting over the next years difficult. On the one hand, banks should start lending again, while unemployment is rising. Who in this case should banks lend to if they may be without a job over the next year without running into the next repayment problems?

High inflation rates and low interest rates will also impose a problem on spending. The government appears to come up with multiple solutions to multiple problems that are not consistent enough. Possibly the whole situation with all of its effects needs to be analyzed and seen as a whole before coming to a conclusion and finding solutions of what could help to improve the current crisis.