Why Brown may become a decaphobe

Your weekly stockmarket update from Brewin Dolphin, Hamilton House, 6 Nantillo St, Poundbury. 0845 213 1280 brewindolphin.co.uk

The Monetary Policy Committee comments tomorrow on whether UK interest rates are set appropriately to meet the Government's two per cent inflation target over the medium term.

Unfortunately, with CPI inflation presently above target, the committee has little room for manoeuvre. The CPI has also yet to fully absorb the increases in food, fuel, and energy costs that we are presently experiencing day-to-day.

There is little company news due this week. Retailer Next Plc should give a trading update tomorrow detailing just how tough conditions are on the High Street. Retailers are presently catching inflation on both sides of the equation.

On the supply side comes higher transport, labour, and raw material costs.

On the demand side, customers are understandably more prudent. If the update is ugly but proves less ugly than the City expects, it could actually be good for Next's share price. "It takes two views to make a market" as the adage goes.

Spotting numerical trends is helpful in finance, especially where tax is concerned. Here's one akin to Jim Carey's film 23.

Ten years and 10 months ago Gordon Brown gave his first budget as Chancellor. An early simplification' reduced tax taken at source from dividends to 10 per cent.

Unfortunately, the small print embargoed charities, pensions, PEP/ISA investors, and those on low incomes from reclaiming that tax whereas previously they had been able to - in effect taxing them for the first time. This created an immensely unpopular multi-billion pound revenue stream and undermined the nation's savings ratio in the process. At the same time the Chancellor halved the bottom rate of income tax to create today's fated ten per cent starting rate. But he also reduced the qualifying tier by much more than half, bringing many lower income earners into basic rate tax through that technicality. Cries of stealth' resulted.

Ten years after electing Labour into Government, the country gained Mr Brown as a replacement Prime Minister, moving into... No 10. Ten years after its introduction, another simplification' - to abolish said starting rate but once again, misjudging the effect on lower income earners. Uproar and mutiny this time.

Unluckily for him, his 10 months of premiership have encompassed flood, pestilence, war, terror, bank failure, strikes, and last week the disastrous local elections. Perhaps on this occasion Mr Brown feels it is the electorate who has misjudged him.

Considering that the number 10 is supposed to be biblically and mathematically harmonious, one could understand Gordon Brown feeling rather let down, if not borderline decaphobic. I certainly would be. Stephen Taylor