Sorting out the balance of payments

The UK has been running a substantial deficit on its balance of payments with overseas countries for some time. The Office of Budget Responsibility has good news for us on this deficit. It forecasts that it will fall from over 5% of our National Income in 2014, to around 4% this year, 3% next year and then to around 2.5% thereafter. It points out the deterioration up to 2014 was caused by a weaker income balance, and suggests that going forward returns on UK investment abroad will pick up again.

If the deficit falls as estimated, then the UK will need to sell fewer assets overseas and raise fewer borrowings, which would be good news.

What we need to remember is the big role in all this of the rest of the EU. The net contribution we pay into the EU and do not get back in any form is over £10 billion a year. That is all a loss on our balance of payments account. If we vote to come out there will immediately be a £10 billion plus improvement in our balance of payments as a result. That is almost one fifth of next year’s forecast balance of payments deficit. The balance of trade is an account split into two parts, EU and non EU. The EU part remains in persistent heavy deficit, whilst we have a surplus with the rest of the world. EU trade has always been arranged in ways which favour Germany and some other continental countries and do not favour the UK. The UK accepted early and substantial liberalisation of trade in manufactured goods where Germany was strong, but has struggled to get a freer market in defence, business and financial services where the UK is stronger.

The UK has also chosen to be generous with its overseas aid. This too is a substantial and growing item entailing the movement of cash abroad, weakening the UK balance of payments. Germany with her huge surplus on her balance of payments does not make such a large contribution to other countries as the UK. The OBR has lowered its 2012 forecast for exports by 23%, reflecting slower world growth especially in the Eurozone and consequent slower trade growth.

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101 Comments

  1. petermartin2001
    Posted November 27, 2015 at 6:35 am | Permalink

    The Office of Budget Responsibility has good news for us on this deficit. It forecasts that it will fall from over 5% of our National Income in 2014, to around 4% this year, 3% next year and then to around 2.5% thereafter.

    Firstly I’d just make the point that the OBR does not have a good track record in the “forecasting dept”. I’d say there would be a howl of protest in the Met Office were this bad but they can make a forecast of a “return to surplus” over the lifetime of a Parliament safe in the knowledge that everyone will have forgotten about it 4 or 5 years later. If anyone has some evidence that the OBR is good value for money in this respect, I’d be interested to see it.

    Howvever, lets be charitable and assume that the CAD does fall, as predicted, to around 2.5% (of GDP) in 2017 and afterwards. It’s still going to be in deficit by 2020. So there will be 2.5% of GDP leaving the economy to pay for imports. GDP is £1.8 trillion.
    2.5% of that works out at £45 billion pa according to my arithmetic.

    That is largely funded by our overseas suppliers buying treasury gilts. In normal times Govt completes the monetary circuit by deficit spending the proceeds of gilt sales back into the economy. But hasn’t George Osborne just told us he won’t be doing that? He’ll be running a £10 billion surplus by then.

    So that’s £55 billion that everyone in the economy will have to cough up. Every year. Just to keep George Osborne’s promise.

    Is that really likely to happen?

    • Denis Cooper
      Posted November 27, 2015 at 3:49 pm | Permalink

      “That is largely funded by our overseas suppliers buying treasury gilts. In normal times Govt completes the monetary circuit by deficit spending the proceeds of gilt sales back into the economy.”

      But clearly that can’t be the only, or even the main, way that the monetary circuit is completed because the volume of gilts sold to overseas investors to help fund the government’s budget deficit is usually nowhere near enough to match the country’s balance of payments deficit.

      In fact it seems that typically the size of the budget deficit would have to be nearly four times that of the balance of payments deficit, for that to be enough to work as the sole mechanism to complete the monetary circuit.

      http://www.economicshelp.org/blog/2215/readers-questions/uk-debt-held-by-oversees-investors/

      “Often people assume that UK government debt is owned by foreign investors. However, foreign investors only hold about 25-30% of UK government debt. The rest is held by the UK private sector (pension funds, insurance companies etc).”

      So for example the balance of payments deficit was 5.5% of GDP in 2014, and if overseas investors had bought even as much as 30% of the gilts that were sold to fund the government’s budget deficit that year then it would have to have been over 18% of GDP for that inflow of money alone to have been enough, when in fact the budget deficit was 5.7%.

      Of course even if the government was running a budget surplus that wouldn’t mean that it was no longer selling new gilts to investors, including overseas investors if they wanted them, because it has an accumulated pile of debt and it would need to roll over far more of the debt than it would be able to pay down each year for many years to come.

      But it may well be that the other routes for recycling money back into the UK economy from abroad would take up the slack created by a reduction in the sales of gilts to overseas investors, and even if those sales ceased altogether.

      • petermartin2001
        Posted November 27, 2015 at 5:20 pm | Permalink

        Denis,

        You’re right. As you say in your second paragraph, the budget deficit can’t totally be explained by the CAD. That’s just a part of it. If Germany or China, or whoever, want to sell us some cars or computers, or whatever, but don’t want to spend all the money they earn they are , by definition, savers. They either hold pounds themselves, as cash or as securities, or they have to find someone else who is willing to hold them on their behalf.

        There are other domestic savers too. Pension funds etc. So if pension funds want to save, then the government has to borrow and deficit spend.

        At present though, which may not be entirely typical, the government’s deficit is entirely, and a bit more besides, is due to the CAD. (see graphs on 3 spoken website) . This means that just to keep things all square in the economy the government needs to either increase its deficit or do something to reduce the CAD.

        But ‘keeping things all square’ isn’t enough for a healthy economy. Germany has a net influx of some 7% of GDP from exports. A 0% govt deficit means this is used by Germans to keep their savings accounts growing. 7% is rather excessive IMO. The UK would do well to set a savings target of something like 2-3% and at the same time understand that the 2-3% either had to come from net exports or an increased govt deficit.

        • Denis Cooper
          Posted November 28, 2015 at 10:11 am | Permalink

          There’s no need to search for complicated explanations for the budget deficit, it is simply that the government is spending more money than it is getting in. Anybody can understand that.

          (Well, apart from the highly intelligent and well educated Victoria Coren, apparently, as during the 2010 general election campaign she admitted on television that she didn’t know what it meant.)

          The question is whether it is essential for the health of the economy that the government is always spending more than it is getting in, and I don’t agree that this is the case.

          I am not opposed in principle to the government borrowing against its future revenues, and there can be circumstances where that is absolutely necessary.

          I am not going to say that rather than emerging victorious but with the government massively in debt it would have been better to have lost the Napoleonic wars, or the two world wars.

          My objections are about the practice, not the principle, when you get irresponsible and border line corrupt politicians in government who are happy to borrow and spend liberally for at best misguided, and very often illegitimate, purposes, reckoning that quietly borrowing extra money is less conspicuous and easier than extorting it from the population through increased taxation, and that the higher taxes to repay the debts may be put off until after they have left office.

          Look at that (word left out ed) Corbyn.

          Would you trust him to only borrow money on our behalf prudently, and for valid purposes? And would you trust him with control of a printing press so that he could just churn out as much new money as he might want to spend?

          You’d have to be silly to do that, especially when we’ve only recently seen Brown talk about prudence but practise profligacy.

          • petermartin2001
            Posted November 28, 2015 at 1:32 pm | Permalink

            …. essential for the health of the economy that the government is always spending more than it is getting in

            Not always. It depends on the level of savings and the flows in and out of the economy from international transactions.

            But if these “complicated explanations” are beyond your ability to grasp…….

          • Denis Cooper
            Posted November 28, 2015 at 5:15 pm | Permalink

            Seems to me they are also beyond your ability to grasp …

          • petermartin2001
            Posted November 29, 2015 at 6:09 am | Permalink

            I’m sure it NOT beyond you!

            Can you tell me the circumstances when the correct course of action is for Govt to spend LESS that it receives in tax revenue?

          • Denis Cooper
            Posted November 29, 2015 at 12:17 pm | Permalink

            I suggest you read Genesis Chapter 41, Peter, that will lead you to the correct answer to your question.

          • petermartin2001
            Posted November 29, 2015 at 8:11 pm | Permalink

            Its interesting that you should quote the story the Pharaoh asking Joseph to interpret some dreams. Joseph was smart enough to come up with the reasonable suggestion that they meant seven years of plenty followed by seven years of famine. Even if there was no certainty there were lean times coming it would be quite sensible to store any surplus -just in case.

            In any case, the decision was made to store extra grain during the first good seven years. If the harvest was 20% above normal for seven years, then 20 % below normal for the next seven they would of course need to store that 20% to smooth out the supply.

            We think we are smarter than the ancient Egyptians. If we have a few good years we, think we should save our money in a future fund. Administered by highly paid executives , no doubt.

            If the ancient Egyptians had done the same, saved money when their harvest was good, and spent money when their harvest was down, they wouldn’t have created any more grain when they needed it. They would have depressed the price even more when their harvest was good, forcing some farmers out of business and leaving the rest to cut back on their production. Later, when the harvest was poor the Egyptian economy would have been in worse shape to cope with the problem of genuine scarcity. Having extra money wouldn’t help at all.

            In other words they’d have worsened the situation! So it is a good example of where we need a little bit of counter intuitive thought to correctly understand economics! We need to appreciate the difference between money and things!

          • Lifelogic
            Posted November 30, 2015 at 5:18 pm | Permalink

            If politicians can borrow and waste they will do. They should only do so when they can do so more effectively than individuals can, such things as on defence and law and order.

            They almost never spend it better, they usually just waste it (perhaps on warming religions or HS2), or they use it to try to buy votes or they set up cushy over paid and pensioned jobs for friends and relatives.

      • Mark
        Posted November 27, 2015 at 8:10 pm | Permalink

        Quite right. The data on overseas holdings are available in this DMO spreadsheet:

        http://www.dmo.gov.uk/docs/publications/quarterly/gilt-holdings-data-historical.xls

        They show that the most recent reported level is essentially unchanged since 2012. Since the start of the coalition government in 2010, of some £654bn in total, £212bn of new net gilt borrowing has been financed by the Bank of England, £187bn by pension and insurance funds, £41bn by UK banks, £88bn by other UK financial companies, and £117bn by overseas holders.

  2. Lifelogic
    Posted November 27, 2015 at 6:52 am | Permalink

    Well if we want to export we need to be competitive in the world. This is rather difficult given the daft employment laws, endless over regulation, over taxation, over complex taxation, constant interference from the government and the EU, poor roads and infrastructure, high green crap energy costs, high property costs, restrictive planning and the bloated state sector that delivers so little of real value.

    In short it is difficult mainly due to the many abject failures of government, at EU, UK, regional and local levels.

    As you say the overseas aid too is another overhead rendering the UK less competitive. I see that Angus Deaton, recently awarded the Nobel Prize for Economics, is a strong critic of foreign aid, arguing that it does more harm than good, damaging the opportunities for poor people to grow richer. Trade not aid is surely a far better approach.

    • Lifelogic
      Posted November 27, 2015 at 9:10 am | Permalink

      I see that Matthew Hancock has turned from sensibly being against the Iraq war into yet another depressing, professional politician.

      On question time he said the real choice is whether we take on ISIL now or whether we take them on in the streets of Britain later. By “take on he” seems to mean rather indiscriminate bombing of Syria.

      Complete and utter nonsense. Islamic Terrorism will not be eliminated by bombing or even by eliminating ISIL, quite the reverse. It is not just ISIL driving Isamic terrorism. There are plenty of others pushing terrorism in the name of this religion, many of them already in the EU, UK, France and Belgium.

      When ever a politician says “the real choice is” you can be sure they are going to set up an absurd nonsense (Aunt Sally type of) choice between a wonderful good and appallingly bad. Then rather unsurprisingly they say they personally would choose the good.

      • Denis Cooper
        Posted November 27, 2015 at 1:53 pm | Permalink

        As suggested by their name they are setting up a new state, with its own territory and government and laws and eventually all other attributes of a state, a permanent base and safe haven which they hope to expand so that eventually their brand of Islam will dominate the entire world, and it would be folly not to destroy it now if we can. That can only get more difficult with time if it is not nipped in the bud.

      • Ken Moore
        Posted November 27, 2015 at 4:12 pm | Permalink

        Mathew ‘lets stick together’ Hancock does whatever is most likely to gain him favour with the party leadership. Professional political wonk to his core.

      • Timaction
        Posted November 27, 2015 at 5:51 pm | Permalink

        Just what are the Government doing about the returning jihadi extremists? Sending them on a rehabilitation course? Removing their passports to prevent their return? The biggest threat to the people of Britain are those already here or returning from Syria. We hear very little from Cameron except wanting to add a few more bombs to the pile being dropped there. All military experts say they can’t be defeated without boots on the ground. Who’s boots? We never see politicians family doing that role! The plan is incomplete and a fob to satisfy the Americans.

        As to the main article, what parties signed us up to the EU and its excessive payments through successive Treaties? Nothing in the pathetic renegotiation to reduce our costs. In fact the opposite. The better we do the more we pay. I just wish I could not pay any contribution to the EU budget as I have no representation and therefore should have no taxation.
        I’m trying to think which Government signed us up in law to a 0.7% GDP contribution? That’s now more than the entire Police budget in England and Wales. In these times what’s more important, foreign aid or policing? We know Westminster’s priorities. UKIP is the only patriotic party of the sensible.

        • Denis Cooper
          Posted November 28, 2015 at 11:16 am | Permalink

          Individuals apparently returning from Islamic State have to be dealt with on a case by case basis.

          For those who went there to support it but out of naivety, and who are now prepared to co-operate fully with the security services, yes, some form of rehabilitation may be the most appropriate course.

          However I should think that there will be fewer and fewer falling in that category, firstly because there has now been enough in the mass media to counter Islamic State propaganda about how glorious it is, and secondly because they have been killing anyone who has become disillusioned and wants to leave.

      • Bazman
        Posted November 28, 2015 at 8:05 pm | Permalink

        Put the British army out to tender. Make them more like the utilities and rail companies meeting targets and standards.

    • Bazman
      Posted November 27, 2015 at 7:38 pm | Permalink

      You are still putting forward the idea of daft employment laws without any evidence.
      How many time will you repeat this and then tell us of the need for truth and evidence.
      How will low taxation provide massive subsidy for landlords and provide infrastructure to be competitive in the world not to mention paying the poor enough to live on in a no rights, no minimum wage job?
      A free for all will mean an end to massive subsidies such as housing benefits and tax breaks to fund this idea or do you intend to fund it by tolls. Stop repeating the same crap without basis and replying to your own crap.

  3. Margaret
    Posted November 27, 2015 at 7:18 am | Permalink

    It is good to hear that the non EU has a trade surplus and in my innocence I wonder how well the EU part of the balance has been manoeuvred to be so. In my experience some things are kept deliberately weak to appear just that, however if it is another reason to leave, so be it.

    It is always good to help the needy and one hopes that this will be reciprocated when the need arises, although this is not always so as world attitudes change.

    We really need to borrow less than we spend . The hope of regaining more control and power over our balance of payments and putting barriers around our island which will discerningly allow the movement which we wish can only add to our prosperity.

    • turbo terrier
      Posted November 27, 2015 at 8:39 pm | Permalink

      Margaret

      We really need to borrow less than we spend

      Steady on there. I thought that this process was written in tablets of stone when it came to running this country!!!!!!!!!!!!!!!!!

      You cannot make it up.

      When will all these words impact on the national debt I ask myself.

      I suppose it must be my generation: two left feet and out of step with the world.

  4. Antisthenes
    Posted November 27, 2015 at 7:51 am | Permalink

    Our balance of payments could be helped considerably if the UK was more competitive. This means that we have to be able to produce goods and services that are of a price and quality that are as good as or even better than other exporting countries.

    There is much that stands in the way of achieving that not least membership of the EU. Apart from our contribution to the EU budget we are restricted by EU rules, laws and regulations that preclude us from participating in many trade agreements and from being represented on trade bodies like the WTO. The EU does it for us and and it can be sure that the interests of Germany and France take precedence over the UK’s. Those two nations ideas of what constitutes free trade is quite different to the UK’s idea of it. The UK believes in free trade of equals Germany and France believes only in free trade if that trade agreements makes them first among equals. Fundamentally they are protectionists.

    The same EU rules, laws and regulations combined with some domestic ones contribute considerably and damagingly by increasing unit costs far above those of competitor nations so making it harder for producers to be based here and still be viable. So they close down or move abroad. Bureaucrats, soppy winging social justice campaigners, eco-loons and other vested interests all clamour for more laws, rules and regulations. They care not that by doing so that they are bit by bit making us less able to compete with other countries that have more relaxed laws and therefore lower unit costs. They putting social justice above economic security will in the end ensure that the UK will not have the wealth to implement much social justice at all or achieve environmental goals.

    When will the EU and lefties learn that putting wealth creation first social justice and looking after the environment will be much easier to achieve because the wealth will be available to do so.

    • Lifelogic
      Posted November 27, 2015 at 4:25 pm | Permalink

      You ask: “When will the EU and lefties learn that putting wealth creation first social justice and looking after the environment will be much easier to achieve because the wealth will be available to do so?”

      Never, as lefties are only really interest in spending & wasting other people’s money (preferably on themselves), or using it to buy votes by augmenting feeling of discrimination, entitlement, jealousy and envy. Vote for me and we will give you his money! Oh and saving the world from the catastrophic climate change threat, that does not really exist.

      I assume you included Cameron & Osborne types in your lefties category with all his token women etc., A listers & lingerie merchants?

      • petermartin2001
        Posted November 27, 2015 at 5:40 pm | Permalink

        “When will the EU and lefties learn that putting wealth creation first social justice and looking after the environment will be much easier to achieve because the wealth will be available to do so?”

        In the early 70′ I remember challenging Sir Keith Joseph, at a student meeting, about the poor state of student grants. His reply was along similar lines to your comment ie that the left were too concerned with redistributing existing wealth and not enough about creating new wealth. The message was that we’d have better grants when the country was wealthier and ‘could afford them’.

        Fast forward more than 40 years and the country’s GDP has increased by 250%. But we now have no student grants at all and free tertiary education has gone too.

        Go figure!

        • A different Simon
          Posted November 28, 2015 at 10:40 am | Permalink

          petermartin2001 ,

          The main thing that shows is how utterly useless GDP is as a measuring stick .

          By most criteria people have been getting worse off every year for decades .

          These pay rises that John keeps talking about are not happening to anyone I know and even when they do they do not translate into extra disposable income because they are absorbed by rent .

          Yet politicians insist on continuing to use the only metric which makes their efforts look borderline respectable – GDP .

          Reply The aggregate figures show an increase in average pay and are constructed by the independent ONS. It is the best guide we have.

          • A different Simon
            Posted November 28, 2015 at 7:24 pm | Permalink

            JR ,

            Thanks for the reply .

            Perhaps I am moving in the wrong circles .

        • Denis Cooper
          Posted November 28, 2015 at 11:22 am | Permalink

          In line with government policy we have many more students than 40 years ago, and what was affordable then for relatively small numbers would now be much less affordable. Those of us who got our university education free with maintenance grants should count ourselves lucky to have been of in that age group then rather than now.

          • A different Simon
            Posted November 28, 2015 at 7:32 pm | Permalink

            A friend works in marketing of University education and I told him that I thought it was a real exports success story with all the overseas students coming here .

            He replied that the quality of education provided by some of the new “universities” to some of those who would not previously have gone to University is of dubious quality .

            There were not enough quality lecturers to go round when I went to Portsmouth Poly 30 years ago so more than doubling the number of students is unlikely to improve matters .

          • Denis Cooper
            Posted November 29, 2015 at 8:28 am | Permalink

            Well, the universities claim to be a successful export business but at the same time they have become a large scale import business, arranging for the importation of large numbers of people. It is not entirely their fault; if the government sets the bar too low when it comes to deciding whether a student can stay on afterwards, which it has, then that is the fault of the government not the universities.

    • turbo terrier
      Posted November 27, 2015 at 8:56 pm | Permalink

      Antisthenes.

      Our balance of payments could be helped considerably if the UK was more competitive.

      Can you please tell me then when you have a company like Jaguar/Land Rover selling top of the range impressive bits of kit get beaten up with all this Green Crap which stops them from being even greater especially in world markets?

      When will politicians start standing behind ” Grown and produced at Home” Our host might do it along with with a few like minded souls but what about the other 500 odd. it begs belief.

      So they are not always leading the emissions charts. Do I really give a stuff? It means jobs and exports and as Bett Midler used to say ” When you have got it flaunt it flaunt it” that is one lady who knows what she is talking about.

      History will show that all this green crap and the like has all but destroyed our major industries

  5. Iain Moore
    Posted November 27, 2015 at 8:19 am | Permalink

    Then there are the remittances sent from the UK, in 2011 the World Bank estimates £3.9 billion was sent to India , 3.8 to Nigeria, 1.4 to Pakistan, 0.7 to Bangladesh . £3 billion is remitted to Poland, and so on.

    It seems we are trashing our country to keep the rest of the world afloat.

    • Denis Cooper
      Posted November 27, 2015 at 1:27 pm | Permalink

      According to this 2013 article in the Guardian:

      http://www.theguardian.com/global-development/datablog/2013/aug/09/remittances-britain-data

      “In 2011, recorded remittances from the UK were worth just over $3.2bn.”

      but they made their own estimates, and:

      “… remittances from the UK, including unrecorded transfers through formal and informal channels, could be worth up to $23bn”.

      I hope the OBR has taken into account the likely future increase in those outflows as the government continues to allow and encourage unabated mass immigration in the (probably futile) hope of obtaining some marginal short term improvement in its finances.

    • petermartin2001
      Posted November 27, 2015 at 6:01 pm | Permalink

      It seems we are trashing our country to keep the rest of the world afloat.

      Not at all. If you buy something like a replacement phone battery on eBay, for example, directly from China for £20, say, you ‘ll pay in pounds from your bank or Paypal account.

      That £20 may well end up at the PBoC and be converted into £ securities which is just an entry on a computer somewhere in the UK.

      So the Chinese have an entry on a computer, and you’ve got a computer that can work without being plugged in. Who’s got the better deal?

      PS Just suppose that the officials from the PBoC at some point go on-line to check their account and they see a message apologising for the “inconvenience” but due to a terrorist attack, the computer with their records has been destroyed. So they’ve lost all their money!

      What are they going to do? Who is really taking the risk here?

      • Denis Cooper
        Posted November 28, 2015 at 11:25 am | Permalink

        In the old days they would have produced their paper certificates, assuming they hadn’t been stolen or destroyed by fire or flood or whatever.

      • Edward2
        Posted November 29, 2015 at 9:06 am | Permalink

        Even corners shops do back ups of their computer files Peter.

  6. Ian wragg
    Posted November 27, 2015 at 8:19 am | Permalink

    John. One of the biggest problems with our balance of payments is overseas remittance by immigrants. On some level it is suggested that this could be around £30 billion annually.
    This is a massive drain on the economy and together with the foreigners importing their own products it shows again the nonsense of mass immigration

    When we have riots and vigilantes on the streets the liberal tossers will be rubbing their chins and saying that it’s not their fault.
    The chickens are coming to roost very soon.
    630000 a record intake this year. How many houses do we need.

    • behindthefrogs
      Posted November 27, 2015 at 3:37 pm | Permalink

      Where are we with stopping welfare payments going abroad? We need to stop payments being made for dependents who do not live in this country whether these are of immigrants or native born Brits.

      • Richard
        Posted November 30, 2015 at 11:53 am | Permalink

        This could be so easy. Pay any benefits into special type of ‘benefits account’. The funds in these accounts can only be accessed by paying with a debit card in a physical shop in the UK.

  7. Iain gill
    Posted November 27, 2015 at 8:20 am | Permalink

    Just keep printing and borrowing money, import large immigrant workforces, shut manufacturing with expensive energy and fake green nonsense, giving our money away…. What can possibly go wrong?

  8. Lifelogic
    Posted November 27, 2015 at 8:53 am | Permalink

    If we want to improve exports then getting rid of Amber Rudd’s moronic expensive energy policy would be a very good first step.

    http://www.telegraph.co.uk/comment/12009962/The-UKs-energy-policy-is-an-act-of-national-suicide.html

    • Lifelogic
      Posted November 27, 2015 at 1:42 pm | Permalink

      The more I hear of the new 3% tax on second properties the more bonkers and half baked it looks. Why this mugging of tenants as opposed to the probably rather richer owner occupiers? How do supposedly clever people come up with such dimwitted & counter productive ideas. The 3% might well work out at more than one years rent. So (for perhaps a 10 year holding period) it might will end up as more than 10% increase in costs for landlords and then probably a 10%+ rise in rents for the tenants. Probably rather more with the lack of choice that will ensue and other changes he has made to the tax regime.

      Even more bonkers it seems that owners with more than 15 units will be exempt (one assumes they will then have to buy all the new ones in the same company vehicle to qualify).

      Tax should aim to be fiscally neutral, simply and fair between renting and buying. Turnover taxes in general are a very bad idea, you should tax profits. If it is not it does damage not just by the tax it takes but also by the inconvenience, costs, wasted time and market distortions it produces.

      Osborne seems to love causing extra inconvenience, dead costs, wasted time and market distortions. Still lots more parasitic workers in the tax and legal industries for the rest of us to carry. Clearly leading lower UK productivity and a less competitive UK well done Osborne.

      • Richard1
        Posted November 27, 2015 at 5:41 pm | Permalink

        this measure seems exceedingly silly and very ripe for imaginative avoidance structures. The exemption for people rich enough to buy 15 homes reminds me of measures the Swedish social democrats were obliged to put in place having taxed Sweden into the ground in the 1980s – they created special tax breaks of you were really rich and owned a sufficient %age of a business, in the hope of convincing billionaires to return ( it failed). Other than that, pre-revolutionary Russia had an exemption from taxation for the nobility & I believe France before 1789 had the same thing.

        I suppose if you want to help your children you just give them the money, otherwise buy a 2nd home abroad. Brownite measures will get Brownite results. Conservative MPs should seek to get this measure reversed. (At least CGT didn’t go up, that would have been really dumb).

        • Lifelogic
          Posted November 28, 2015 at 2:16 pm | Permalink

          Just bonkers, a huge tax on tenants with his other interest and depreciation muggings giving perhaps a 10%+ rent increase and a consequential decrease in properties available to rent.

          What has Osborne got against workers who rent rather than buy? They are usually poorer already anyway.

  9. Brian Tomkinson
    Posted November 27, 2015 at 9:04 am | Permalink

    Some of us have vivid memories of consistent balance of payments crises dominating the political economic agenda year after year. It barely gets a mention now but as you have shown it is still highly significant.
    Many wish to leave the EU and do not support the government’s commitment to spend 0.7% of GDP on overseas aid. The additional benefits to the balance of payments by acting on these issues should be given more public attention and I am pleased that you have raised it. Please try and spread the word to a wider audience.

  10. Mark
    Posted November 27, 2015 at 9:04 am | Permalink

    There is another element to the balance on remittances that is no longer reported in the UK’s official estimates, but is available from other sources such as the World Bank or IFAD – the net balance on remittances by workers to their home countries. In times gone by well paid British expatriates repatriated sufficient funds to make this balance strongly positive. Since the surge in immigration, the net flow has reversed and is now comparable with the flows on aid and payments to international organisations such as the EU and UN. Because the UK no longer produces its own statistics on remittances they are usually left out of economic analyses of the impacts of immigration (as is the tendency for immigrants to have a much higher propensity to buy imported goods and services familiar to them in their homelands).

    On the positive side, some studies suggest that remittances are far more effective than aid, since the funds flow directly to families, rather than large amounts being siphoned off by aid providers, governments, supra national organisations and rulers. This suggests that worker remittances, enabled by permitting migrants to work in the UK, should at least in part be included in aid spending.

  11. Bert Young
    Posted November 27, 2015 at 9:29 am | Permalink

    Being financially better off as the result of leaving the EU I have not doubted for some time and no matter how one applies this benefit (against the deficit /balance of trade) I care not . Independence is what matters with the right to legislate and decide for ourselves . The Germans who make a far lower contribution in overseas aid compared to us also do better with their exports than we do , this being the case , why do we continue to be so generous ?

    We have many priorities at home fairly desperate for help (shortage of teachers , nurses , carers) where extra funding would make a difference , if this is the case , why do we persist in getting things out of balance ?. The Autumn Statement that decided to deal with the training of nurses by loan rather than by grant , will be detrimental to their supply – absolute madness in my judgement ; this could easily have been dealt with by reducing the amount in overseas aid .

    It’s time the country was managed and guided by people who are worldly wise and sufficiently experienced ; young individuals who make their way into politics by misguided notions of ambition are making a mockery of this country ; the system that allows this ought to be changed immediately . I would want to see a 10 – 15 year successful background in industry , commerce or the services before anyone could be considered for election . The outcome would be a much more reliable and respected government .

  12. The Prangwizard
    Posted November 27, 2015 at 9:30 am | Permalink

    Where do private remittances abroad fit into this to EU and non-EU countries? It will realised I’m thinking of the hundreds of thousands, perhaps millions, of so-called temporary workers that Cameron and the CBI for example claim are such an asset to England’s prosperity.

  13. Mark
    Posted November 27, 2015 at 10:11 am | Permalink

    Looking at the UK current account since 1970, it is clear that our trade balance was adversely affected by ERM membership, and later by the destruction of British industry that took place in the Labour years and later, much of it motivated by expensive energy policy as we have seen with recent steel industry and power station closures, and the decline of North Sea production in more recent years.

    With regard to IPD, the OBR say:

    Our forecast for the income account remains conditioned on the assumption that the deterioration in the net rate of return is partly temporary, consistent with weaker growth prospects in the euro area and the possible effects of large cross-border fines and compensation paid by UK firms abroad (although this is not verifiable from published data).
    As a consequence we expect the income account to improve gradually over the forecast period

    This seems to be based on no analysis whatever. The fact is that we have sold off assets at home and abroad, and borrowed abroad via the banking system – all of which leads to increased flows of interest, profits and dividends to the new foreign owners of assets (which includes loans make to the UK) in place of the previous UK owners. The decline into a deficit on this account can only be reversed by purchasing foreign owned assets with cash. That would require a surplus on the other parts of the current account, as the capital account of net investment flows funds the current account deficit.

  14. Tad Davison
    Posted November 27, 2015 at 10:13 am | Permalink

    Just goes to show how lop-sided and unfair the EU really is when it favours one particular member so heavily.

    If only I could get inside the minds of the EU supporters and try to see it from their point of view, but I’m afraid unlike theirs, my own outlook is governed by logic and common sense. They have never yet convinced me that their arguments stack up. It’s like somebody trying to argue that 2 plus 2 makes 5, when every sane person on the planet knows that just isn’t the case.

    So that leaves us with the conclusion that there must be something else at play, and I suggest, as indeed a lot of us have from time to time, that there is more to this than they are letting on. What they are really after, is our full subservience to an overbearing political machine called The United States of Europe.

    People rightly say that IS is a massive threat to our nation. The penny hasn’t yet dropped that the prospect of losing our independence and right to self-determination to the European Union is just as big, if not bigger, but it doesn’t use violence to get its way, just a process of creeping gradual acceptance, and incremental almost imperceptible change.

    Tad Davison

    Cambridge

    • Martyn G
      Posted November 27, 2015 at 3:00 pm | Permalink

      Tad, you say “….conclusion that there must be something else at play….” Yes, and it is probably our very own politicians working with the EU in its aim of eliminating all nation states. Seems to be working, at least so far as the UK is concerned, because there will soon be so many immigrants with voting rights at local elections – and possibly if they get their way at national and referendum level as well – that they will overwhelm the votes of the ethnic peoples of this country. After all, those immigrants living here, with all their benefits to hand and able to send money back to their own countries, are hardly likely to vote for anything that jeopardises their gifted position in the UK, are they?

    • Ken Moore
      Posted November 27, 2015 at 4:23 pm | Permalink

      So that leaves us with the conclusion that there must be something else at play,

      Incompetence alone cannot explain our difficulties. There is a plot to impose a politically correct world order…Cameron picked up the torch where Blair left of with his neo -liberal war mongering and reckless spending.

      At least Brown thought he had created Nirvana – Gideon has had a warning from the 2008 crash and is still splashing the cash.

      I see today JR’s party set a new record for net migration this week – Cameron doesn’t care one jot it’s just more self employed scrap collectors amd window cleaners to fudge the jobs figures with.

      • Denis Cooper
        Posted November 27, 2015 at 5:36 pm | Permalink

        Alan Sked has done something useful for a change from coming out of the woodwork to slag off Nigel Farage and UKIP just before elections, as if that could help to get us out of the EU which is supposedly what he wants:

        http://www.telegraph.co.uk/news/newstopics/eureferendum/12018877/The-truth-how-a-secretive-elite-created-the-EU-to-build-a-world-government.html

        “How a secretive elite created the EU to build a world government”

        “Voters in Britain’s referendum need to understand that the European Union was about building a federal superstate from day one.”

        • stred
          Posted November 28, 2015 at 10:04 am | Permalink

          Very interesting. My green/anarchist/socialist worker neighbours hang banners out indicating that they would prefer ‘no nations- world government’. If I ever find them awake at the same time as myself, I will show them this article and explain how Eural McCameron has similar views to Arold McMillan. They must be the next generation of Tory voters.

          • Denis Cooper
            Posted November 28, 2015 at 11:42 am | Permalink

            I’d rather they campaigned for it openly than worked for it secretly, which is what like-minded people in the three old political parties have been doing for decades.

    • Lifelogic
      Posted November 27, 2015 at 7:17 pm | Permalink

      The EU is indeed a far larger, more real and more pernicious threat, to what is left of UK democracy.

  15. oldtimer
    Posted November 27, 2015 at 10:24 am | Permalink

    In other words the government is selling the family silver to provide for overseas aid. That is not a sustainable policy.

  16. Mitchel
    Posted November 27, 2015 at 10:48 am | Permalink

    Contributing to the outgoings will be the £1bn that Cameron promised yesterday for the reconstruction of Syria,presumably,in part, rebuilding the bits he would like to bomb.

  17. Atlas
    Posted November 27, 2015 at 10:50 am | Permalink

    Indeed.

    You’ve outlined yet further reasons for leaving the EU cartel.

  18. acorn
    Posted November 27, 2015 at 11:37 am | Permalink

    The agregate effect of budget changes, modifies, over time, the Total Net Worth of UK plc. The ONS just published the latest version of “National Balance Sheet, 2015 Estimates”, it is a facinating read. http://www.ons.gov.uk/ons/dcp171778_425486.pdf

    It will not get a lot of press coverage, the macro-media has no understanding of Quadrupple Entry Bookeeping used in the government’s national, fiat currency, accounting system. That is; double entry “financial asset” accounting, balanced with double entry “non-financial asset” (real assets) accounting.

    Fig 1 shows that the nation is currently worth £2 trillion less than the trend line, had the 2008 crash not been allowed to occur. BUT; it is Table 7 “General Government: Total net worth by asset and year at Current Prices”, that really bamboozles politicians that still think that the government has to tax and borrow before it can spend. By normal business terms, UK government is clearly insolvent. It has negative working capital and highly negative net worth. (You get the same picture from the Treasury Whole of Government Accounts.)

    Alas, fear not. The true simple beauty of being insolvent in your own sovereign issued fiat currency is, that you can never be insolvent in your own currency.

    PS. Spot the line item in Table 7 “Other buildings and Structures”, £766 billion of land and property. How much of that will have been sold, probably to foreigners, by the next election?

    • Denis Cooper
      Posted November 27, 2015 at 2:03 pm | Permalink

      Maybe you can never be insolvent in your currency, but others may not be willing to accept it in payment. A government can usually force the people in its own country to accept its currency, but not the rest of the world outside its jurisdiction.

      • acorn
        Posted November 27, 2015 at 6:13 pm | Permalink

        Denis, if BMW comes over to the UK and opens a showroom and sells cars, it gets paid in Pounds Sterling. The guys who made the BMW back in Germany, get paid in Euro. BMW UK ends up with a lot of Pounds Sterling. It could sell them and buy Euro and take them home; or, it could buy UK Treasuries / Gilts or, Chelsea mansions or, a UK factory that makes stuff we can sell to Germans. Buying Euro would push up its price normally, thankfully for the Germans, Club-Med countries keep the Euro anchored down.

        If you are a banzai exporting nation like Germany, other nations people get to play with all the great stuff you make, and they give you some of their “fiat money” in exchange. German people don’t get to play with the great stuff they actually make themselves, and start to wonder why a portion of their wages, is sitting in a foreign central bank in a foreign currency.

        Normally, permanently importing countries currencies, start to devalue as loads of the currency is held by foreigners looking to do something with it. If it drops too low, foreigners central banks may start buying it to keep its value up and keep their exports rolling out and their employment up.

        Massive uncontrolled speculative capital flows between currency areas badly distort this process. The USA has so much of its currency held by foreigners, it becomes the de-facto world’s “reserve currency”; its currency area becomes global and used as a benchmark for commodities like oil.

        • Mark
          Posted November 28, 2015 at 9:39 am | Permalink

          A significant proportion of the cost of BMW vehicles is represented by goods and services imported by BMW or its immediate suppliers. The vehicle you buy may have been manufactured/assembled in the UK, as with the Mini or Rolls-Royce, USA as with the X series SUVs, South Africa as with some 3 series vehicles, and so forth.

          In practice, Germany has around $240bn in cash foreign currency/gold/SDRs (and about the same in current account surplus annually), against overseas investments of over $2 trillion, mainly in manufacturing. That allows them to bypass the sclerotic and high cost EU. However, not all German investments have been a success – they lost big time on Chrysler and T-Mobile for example.

        • Denis Cooper
          Posted November 28, 2015 at 12:06 pm | Permalink

          If a foreign based company wants to set up a branch in the UK then that part of its operations will be within the jurisdiction of the UK government and Parliament, which may or may insist that it must accept payment in pounds in line with UK legal tender laws.

          On the other hand if the company decides that it will not have any part of its operations under UK jurisdiction then there is little or nothing that the UK authorities can do if it says that it is willing to sell its products to UK customers, but it will refuse payment in pounds and instead insist on payment in X, where X could be another fiat currency or it could be gold or whatever.

          We are a long way from the situation where foreign companies refuse to accept our national currency and insist on being paid in some foreign currency, and nor do we want to go there.

          http://mgafrica.com/article/2015-11-09-when-an-egg-cost-1-billion-zimbabwe-dollars-it-was-replaced-by-us-currency-now-the-american-buck-is-being-blamed

          “When an egg cost 1 billion Zimbabwe dollars, it was replaced by US currency: Now American money blamed for new crisis

          “The dollar strength really works against them,” Ellyne, who worked at the International Monetary Fund for 25 years, said by phone. “They’ve made a wrong choice about the currency and they’ve not opened up enough. They should have tried to do a deal with South Africa to use the rand.””

          https://newrepublic.com/article/115925/zimbabwe-prices-why-are-they-high-new-york-citys

          “How Did Zimbabwe Become So Poor—And Yet So Expensive?”

          “All the while, the Reserve Bank was printing money to fill the gap. By 2007, inflation was 7,982 percent. Zimbabwe had let go of the balloon, and there was no way to get it to come back down. Factories didn’t have the currency to import raw materials, so they cut production, laid off workers. Power outages went from weekly to daily as the country ran out of money to pay its neighbors for coal.”

          “It was illegal to trade in foreign currencies, so all the shops had to charge Zimbabwean dollars. The U.S. dollar and South African rand quietly became the only currencies that had any meaning. Colin was running a bed and breakfast at the time, and he paid his employees their official wages in Zimbabwe dollars—“some ungodly number with nine zeroes after it”—then give them their real wages in an envelope full of U.S. notes.”

          • acorn
            Posted November 29, 2015 at 9:31 am | Permalink

            “… decides that it will not have any part of its operations under UK jurisdiction then there is little or nothing that the UK authorities can do …”

            The foreign company resident in the UK, will be subject to UK taxation including local business rates. It has to pay these in Pounds Sterling. Where will this foreign company get Pounds from if it insists on being paid in a foreign currency?

            There is a mechanism for paying UK taxes in Euro under the Treaties, but it involves the aproval of the relevant Central Banks / Treasury.

            Currencies like the Pound; Dollar; Euro etc, are “tax driven” in a designated currency area. This is what gives them value; you have to get some to pay your taxes. This is a fundamental requirement of sovereign fiat currency economics.

          • Denis Cooper
            Posted November 29, 2015 at 12:22 pm | Permalink

            Pounds and euros are both convertible, at the moment, so if you have euros there is no problem getting pounds in exchange.

      • petermartin2001
        Posted November 28, 2015 at 12:15 am | Permalink

        …. but others may not be willing to accept it (the £) in payment.

        It’s just a matter of doing the currency conversion. If Germany wants to be a net exporter they have to accept £ from the British, $ from the Americans, pesos from the Argentinians etc. There’s no point asking for euros. No one outside of the EZ uses euros so they aren’t an option.

        Of course Germany could decide to balance its trade with the rest of the world so they ‘d just effectively swap BMWs for Rolls Royce jet engines or Californian grapes or whatever. They wouldn’t care quite so much what the $ or £ was worth because they wouldn’t be want to be holding quite so many as Govt securities.

        • Denis Cooper
          Posted November 28, 2015 at 12:53 pm | Permalink

          Of course German exporters could ask to be paid in euros, indeed if they were sufficiently concerned about the future prospects of some other currency they could simply refuse to take it and absolutely insist on being paid in euros, or failing that forego the business.

          Pharmaceutical companies stopped supplying their products to Greek hospitals because the Greek government was unable to pay for their past deliveries, in euros or any other currency, while on the other hand pharmaceutical companies stopped supplying their products to hospitals in Zimbabwe because they were no longer prepared to accept payment in the Zimbabwean dollar.

          • Edward2
            Posted November 29, 2015 at 9:11 am | Permalink

            Correct Denis.
            When we purchased from some overseas suppliers years ago, the contract demanded we paid them in US dollars.
            This created quite a lot of extra admin work for us.
            These days the bank does the payment for you in seconds electronically.

          • petermartin2001
            Posted November 29, 2015 at 11:11 pm | Permalink

            ……. absolutely insist on being paid in euros, or failing that forego the business.

            Yes of course the seller can ask for all kinds of conditions. For small orders its not really a problem whether the price is agreed in euros, pounds or dollars. Its just matter of knowing how to use a calculator. There can be hedging of currency transactions if there is any problem.

            But, ultimately, if Germany wants to be a net exporter, which does mean not foregoing the business, to the UK it has to accept that the affordability of German products in the UK will be defined by the number of pounds that UK buyers have at their disposal.

            It has to accept UK govt securities denominated in £ in payment for its surplus unless it is happy to balance its trade.

          • Edward2
            Posted November 30, 2015 at 8:28 am | Permalink

            However Peter, the pound can float and if people, like yourself, worry that the UK is importing too much then the pound may alter in value making German cars too expensive for UK buyers who may then swich to home built brands.
            And home built brands will become cheaper in export markets, thus increasing the UKs exports.
            And so it goes on.

    • oldtimer
      Posted November 27, 2015 at 3:57 pm | Permalink

      What also struck me was the sheer amount of national net worth accounted for by “dwellings” (£5.1 trillion out of £8.1 trillion). This is triple the 1997 level – no doubt mostly inflation. By contrast “machinery, equipment and weapons systems” were just £850 billion; and “equity and investment funds/units” fell in one year from £308 billion (2013) to £90 billion (2014). Central government negative net worth was -£1 trillion in 2014.

      Quite why Conservative back benchers were applauding the Chancellor`s Autumn Statement is beyond my comprehension. As you say, the UK government is totally and utterly bust, yet continues to spend as if there is no tomorrow.

  19. bigneil
    Posted November 27, 2015 at 11:38 am | Permalink

    Off topic – – – Another third of a million people come in – all want somewhere to live – -but Cameron wants to build MORE housing for even MORE to come. If we already have a housing shortage – -where the hell are THIS third of a million going to go? And presumably those who are “coming to work” won’t be getting any benefits? and they won’t use the NHS at all? After 45 yr of paying in, to get nothing, it is clear that I would be better off going abroad, changing my nationality – and coming back. Foreigners get treated better than people who have paid into the system.

    • ian wragg
      Posted November 27, 2015 at 12:20 pm | Permalink

      Only a third of a million. 850,000 N.I numbers were issued last year to foreigners.
      Someone is lying to us.

      • stred
        Posted November 27, 2015 at 2:22 pm | Permalink

        The biggest numbers of inward migrants were from India and China- 45k and 39k. I wonder what jobs they prefer? The EU provided most from Romania and Bulgaria. Many of these, I see at the builders merchants and on the tube helping sustain the London building boom, for sale largely to foreign buyers. If we are to build 400k cheap houses, for those lucky enough to fit the criteria, over 5 years, we will need skills quickly. Wages are high in London, so there will be plenty of EU builders to take up these subsidised houses. Great for GDP and taxes.

  20. Gary
    Posted November 27, 2015 at 12:09 pm | Permalink

    according to the BBC, North Sea oil revenue down 94% to £130m from£2.2b in 2014/15, and £11b 4 years ago.

    Incredible collapse. If that’s true, and they’re not just goading the SNP, that is a wipeout. No wonder Cameron wants action in the oil rich middle East. If you cannot produce it, steal it.

    • Denis Cooper
      Posted November 27, 2015 at 1:38 pm | Permalink

      Depends on the oil price, which is depressed because the Saudis are trying to drive the US frackers out of business.

    • behindthefrogs
      Posted November 27, 2015 at 3:47 pm | Permalink

      At least the positive actions taking to help planning approvals for fracking will help to reduce our oil and gas imports.

  21. MickN
    Posted November 27, 2015 at 1:14 pm | Permalink

    Well if the bombs currently being dropped by a combination of USA Russia France etc. are not enough I don’t see how a few more from us will make a difference.

    Personally I would rather that the money that will have to be found to finance this was instead put into a homeland security force and used to seek out and neutralise the Isis sympathisers that are either home grown or imported via our non existent border controls. These are the immediate danger to the citizens of Britain who Mr Cameron said only yesterday it must be the first priority of the Government to protect. Don’t take my use of the word neutralise to mean hit squads roaming the streets, but rather education and yes internment.

  22. The Prangwizard
    Posted November 27, 2015 at 1:15 pm | Permalink

    I’m no revolutionary Marxist, but do agree that selling off national assets to finance any deficit is unacceptable. I have asked often enough, when foreigners own national infrastructure, property and businesses, whose nation is it?

    And what do we do when there’s nothing left to sell? Why do we undervalue ourselves so much? But perhaps Cameron, Osborne, and their admirers and supporters are no border internationalists and don’t really care and it makes them feel grown up and really slick with their spiv friends. Fools.

  23. Mitchel
    Posted November 27, 2015 at 1:58 pm | Permalink

    Professor Sked’s article in the DT today (“The secret reason the EU was created”) should be read by all those who think the Tory party elite has ever been truly Eurosceptic – it lays bare the relationship between Macmillan (and his bag carriers Heath and Hurd) and Jean Monnet and their desire to create the basis for a world government.

  24. behindthefrogs
    Posted November 27, 2015 at 3:43 pm | Permalink

    We need more action by the government to make exports more competitive and home made products more competitive with imports. Reducing employers NICs particularly for manufacturing would be a step in the right direction. The government continually fails to use the tax system help the balance of payments situation.

  25. bob
    Posted November 27, 2015 at 4:56 pm | Permalink

    Whilst everybody talks about the big national issues, has anyone noticed that the Chancellor has allowed local government to increase Council tax by 2% to pay for the care of the elderly that have already paid for it through years of work. Has anyone noticed that the Chancellor is reducing the amount given to local government by 50% in 5 years. The Chancellor has very cleverly placed his problem of finding money on you. That is if you pay the council tax

    Reply Local government is not suffering anything like that level of cuts.

    • Bob
      Posted November 27, 2015 at 5:30 pm | Permalink

      Yes they are. That is exactly what the chancellor said.

  26. Jon
    Posted November 27, 2015 at 5:25 pm | Permalink

    I now support air strikes on the IS Caliphate area (not a constituent).
    There isn’t a perfect answer and if we wait for one then the Caliphate could become a country with oil wealth and money for ‘dirty bombs’ and much more. A centre for all the inadequates of the world to go to. We need to stop that.
    Bombing is not perfect but it’s all we have available. 10 years from now we may still be fighting the same kind of enemy. Hopefully, we will still have solidarity with our allies then, hopefully we will have learned more about our enemy by then through our conflicts now.
    This is not leaving a vacuum in that country or looking to replace a regime, this is tackling IS, the Caliphate not the government there.

    On the article point I welcome the intention to spend more of our overseas aid on the Commonwealth.

  27. Bob
    Posted November 27, 2015 at 5:42 pm | Permalink

    I would also point out that the PCC last year asked for more money for the police. As this was not relevant to the 2% increase demanded by the government it is all of a sudden ok . The council said yes and dipped their hands into my pockets. I am sick of the many differing ways the government use to take my money. I shall give you another example. The council used to take my garden rubbish. I paid for it with my council tax. All of a sudden the outsourced garden rubbish to a company I have to pat £60 a year. Correct me if I am wrong but is that not a £60 increase on my council tax

  28. ian
    Posted November 27, 2015 at 5:48 pm | Permalink

    It pointless going on about the government and how well it doing or not till you get into 2018, with all changes coming along like tipp, wars, eu, immigration, buy to let, energy policy, the muslim problem, housing, nhs, councils, debt,and so on and if the problem are not sorted out by 2020 you have your chance to do your voting thing again.
    My view is that the EU is braking up and if the EU does not have TIPP they will vote for out also buy to let, I think they will give the tenant the right to buy at the next election.
    Yes leslie singleton same thing as used on nuclear sub and aircraft carries had them since the 1970s, these ones are more powerful Ap100, six fitted in china last year and one in the usa biggest revolution in the energy market this century, councils want them for all there ele needs, hinkley point is outdated like HS2, it goods you need to get around the country not people, separating lorries from cars is the way to go till you get to city and towns and the lorries go in to town and city at set times all automated, they is no need for people to move around with the tec we have today, it not as if your going to send a bricklayer to some where on HS2.
    You do not need road for lorries you need tracks like the army put down for tanks and underpass so they can go under roads and rail.
    That’s government for you, they will build lots more roads for employment and get no where and end up building it anyway.
    These revolution will be put off for years even as they have the tec now to do them.

  29. Bazman
    Posted November 27, 2015 at 7:28 pm | Permalink

    We need to find out who the real scroungers are, so maybe you will like an evidence based approach to taxation and tax breaks for companies? I would also apply it to massive subsidies such as housing benefit and infrastructure gifts to private companies.
    Massive fees for services that provided no use and in fact end up costing us more. If a company is in the UK with no benefit to the UK then why are they allowed here?
    http://www.theguardian.com/politics/2015/nov/22/labour-probe-tax-breaks-business
    Many are getting tired of business bleating about how poor and hard done they are whilst getting large tax breaks and carrying out tax avoidance. Tax breaks are not always positive and often cost the state negative amounts.
    It is to be evidence based so I predict that like global warming evidence it will not be believed no matter how overwhelming and mainly based on religious dogma and financial Darwinism that does not apply to themselves. The usual thick lying nonsense in fact.

    • Edward2
      Posted November 28, 2015 at 6:05 pm | Permalink

      The link does not mention any specific “tax breaks” for companies and neither does your post.
      But in general billions are paid by companies to the Government each year.
      I feel that money left with companies to invest and grow or declare as dividends to shareholders (to pension fund investors for example) are just as useful to the nation as snatching ever more tax off them for the State to use for overseas aid or subsidies to pet projects or charities which close down.

      • Bazman
        Posted November 28, 2015 at 8:34 pm | Permalink

        Might be true if many of the beneficiaries were British citizens, but much of the cash on the form of profits. dividends fins its way abroad such as helping American pensioners not British ones and some are just taking the piss. As it says ‘evidence based’ ,but that is not what many right wing managers and companies are about. Its called ‘welfare scrounging’. Something you may be aware of in the middle class social security system which of course does not exist.

        • Edward2
          Posted November 29, 2015 at 9:14 am | Permalink

          One world now Baz.
          This little england attitude is no longer PC.

          And don’t forget all the inward flows from the UKs investments and trading abroad.

          • Bazman
            Posted November 29, 2015 at 11:26 am | Permalink

            It these myths that need investigating.

          • Edward2
            Posted November 30, 2015 at 8:30 am | Permalink

            Well investigate them, Baz
            If you find anything exciting please let us know.

  30. Gary
    Posted November 27, 2015 at 9:36 pm | Permalink

    or, more likely, there is a general commodity deflation, including oil, because in bailing out the collapsed financial system from 2008 they created a massive bond bubble that has sucked all money out of commodities and dropped monetary velocity towards zero. They have now arrived in a position. where they are so pinned in the corner that any moves to attempt to correct it risk a bond collapse and hyperinflation. The Baltic dry shipping index recently hit 498 down from 12000 in 2008 and that’s not the Saudis dealing with the frackers. That a massive economic deflation.

    • Denis Cooper
      Posted November 28, 2015 at 1:07 pm | Permalink

      Doesn’t that partly reflect the lag between decisions to increase shipping capacity and that new capacity actually coming into operation?

      I read here:

      https://www.flexport.com/blog/why-are-ocean-freight-rates-so-low/

      “It takes about three years to build and outfit a container megaship. And it was three years ago that the many carrier lines decided to invest in larger ships, when freight prices were near a historic high. At the time, carriers expected freight prices to be high and global trade to be growing quickly. That turned out not to be the case, and now there’s much greater supply.”

      • Gary
        Posted November 29, 2015 at 10:38 am | Permalink

        I don’t think it’s a shipping capacity lag, because the aggregate global commodity index has fallen 60% since its 2008 high(Bloomberg). I think it’s deflation and the bond prices would confirm that. IMO

        • Denis Cooper
          Posted November 29, 2015 at 2:07 pm | Permalink

          The shipping index has fallen by ten times as much as that.

  31. CHRISTOPHER HOUSTON
    Posted November 28, 2015 at 8:23 am | Permalink

    These figures, statistics and forecasts are not gaining traction with Joe and Josephine Bloggs. It is like debating…and there is a kind of a debate… on the statistics relating to the deaths in the First and Second World Wars. Some say it was 60 million which was 3% of the world’s population and others put the figure much higher…80 million…100 million with many millions more due to flu and trench fever and the rather nasty regimes created for a peacetime of Gulags and mass murders.
    No, a billion here and a million there fades into a cognitive fog. Hard for a human mind to get its head round the “on-the-ground”meaning of it all.

    We do know Mr Osborne has suddenly found £27 billion down the back of his sofa. Either he has gigantic furniture fit for his giant proportions or he is financially negligent. At any rate, I wouldn’t send him shopping. He’d come back with a handful of beans.

    • Bazman
      Posted November 28, 2015 at 8:20 pm | Permalink

      Why did he back down on tax credits and not just stopped all housing benefits too? How popular would that have been! Genius, but he bottled it and bent to the will of tax and spend nonsense from the left supporting £250 billion in ‘social protection’ during 2013-14 cut to nothing and the deficit would be soon paid off and we could get back to business.
      http://www.ifs.org.uk/publications/7424

      • Edward2
        Posted November 29, 2015 at 9:18 am | Permalink

        How would poorer tenants afford to pay any rent if they were not helped by the State?
        Would you leave them out on the streets?

        • Bazman
          Posted November 29, 2015 at 11:28 am | Permalink

          Yes put them all out on the streets and stop all benefits and privatise everything and we will see how your non free market nonsense has no clothes.

          • Edward2
            Posted November 30, 2015 at 8:33 am | Permalink

            You retreat to sarcasm and avoid my question.

            Either you pay those who are poor or unwaged to rent private sector homes or you give then free or heavily subsidise social housing.
            Which is it?
            The cost is about the same to the State.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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