Living in the EU means living beyond our means

I have always thought the UK’s balance of payments deficit is a bigger problem than the state deficit, though the two are in part related. I have spoken about it often here and in Parliament. The reason is the longer we run a large balance of payments deficit the more money we will owe to foreigners, and the more of our industry and property will be brought up by overseas investors. Progressively a country loses economic control as it sells many of its assets and mortgages the rest.

A larger state deficit can in some circumstances be financed at home by lending to ourselves. We do not necessarily lose overall control of our destiny, but switch money and assets around amongst ourselves. The state can always repay the debt, though if it overdoes the borrowing it will end up repaying in devalued pounds, partially reneging on the debts through inflation. The state will pay for itself at the expense of domestic savers or by taxing productive people more to repay the debts. Done to excess it makes us poorer. A large state deficit may also mean having to accept loans from abroad. These are more difficult. These usually require repayment in someone else’s currency , so we do not have the power to simply print that. If we borrow in foreign currencies the debts may get bigger and more onerous to repay if and when our currency falls in value.

The EU model put out by the Remain campaign is a model for economic dependence. Taken to extremes it leads to bankruptcy as we have seen in Greece and Cyprus. They say they want to attract more overseas investment. They welcome more purchase of UK companies and assets by French nationalised industries or by German shareholders. That means running a bigger balance of payments deficit and placing ourselves more and more in hock to overseas investors. They do not come here out of charity or kindness. They come to earn a return, to make a profit and to take money out of our country from their activities. One of the main reasons our balance of payments has been deteriorating so quickly is foreign investors are now taking much more out in terms of profits, dividends and interest charges.

The Remain model welcomes German investors taking majority voting control of our Stock market, and accepts we will import German steel rather than make our own. They welcome large imports of German cars and French food products. They do not tell us the truth, that the UK has to compete to maintain and improve our living standards. We cannot afford to allow too many industries and services go uncontested. There are limits to how many activities we can give up doing altogether or can sell to overseas buyers.It is interesting that Tata wants to exit all steel making in the UK and also wants to invest in German steel making. By doing so it accepts the EU logic that Germany should as the creditor nation keep on strengthening its industrial base to export to the other states. They in turn become more dependent economically on Germany. We see the dangers of going too far down that road when you see what happen to an economy like Greece which is now very dependent on the goodwill of Northern European creditors led by the German state. The creditors forced a 25% cut in Greek incomes as they tried to rebalance their books.

Let us draw an analogy with an individual household. It is true that you can boost your spending power above your income for a bit by borrowing more to buy new things . You can also boost it by taking out a loan on your home or selling some of your furniture and other assets. Done in moderation you can buy assets on borrowings which go up in value and make you better off. Done to excess you can end in grave financial difficulty. You find out that you then have to work harder and earn more just to pay the interest on the extra debts. If you are not careful you will reach the position where the interest charges take up too big a percentage of your income and your living standards fall as a result. You eventually reach the end of your ability to borrow more. You also run out of assets to sell. You can only sell your house once to spend the proceeds.

I want the government to curb the national deficits. I want us to generate our own power, make our own steel,produce more of our own cars. I believe we can do this. It requires taking back control from the EU, cutting energy levies and prices, and redoubling efforts to create good conditions at home to produce and sell our goods and services. Leaving the EU will immediately improve our balance of payments deficit and give us back more of our own money to spend on our priorities as I have pointed out from my analysis of the balance of payments deficit. At the moment we are being made to borrow to send money to rich continental countries to spend on what they want.

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122 Comments

  1. Posted April 3, 2016 at 5:29 am | Permalink

    JR you make excellent points as usual.

    In a post on 14 March I pointed out that one major EU investor in the UK is the French 85% state-owned conglomerate EDF. In the previous week, the company’s CFO had resigned over its international investment policy. Three days later the EU Commission approved the Franco-Chinese partnership of EDF and CGN. This is the partnership that will supposedly build the nuclear plants at Hinkley Point, Sizewell and Bradwell.

    Then on the same day, the French national audit office released a damning report on EDF, saying that it had over-reached internationally and is worryingly debt-laden.

    Aside from the macro-economic issues which you highlight so well in your article, there are the strategic considerations.

    Do we want to rely on so much foreign investment in an industry as vital to the UK as power? And are we sure that such investment will deliver this power anyway, given the fragile nature of EDF’s finances and its reputation for projects which are over-budget and over-time?

    • oldtimer
      Posted April 3, 2016 at 8:05 am | Permalink

      Agreed. It should be added that the Finance Director of EDF resigned and another Director has said he would vote against the project. Yet the politicians. ( here in the UK and in France) plough on regardless. They live in cloud cuckoo land.

    • graham1946
      Posted April 3, 2016 at 9:54 am | Permalink

      Isn’t it amazing that we are told that France is a Socialist basket case, ruined by Hollande and his high tax high spend government, short working hours and too high welfare, but we, a supposed ‘success’ scrimping and cutting against the poor and disabled (the last item being their intention until a couple of weeks ago) turn to France to finance and build our power stations because we cannot do it ourselves. Call Me Dave should be very proud of his achievements that we cannot even provide our own basics of life after 6 years of his stewardship.

      How will letting British Steel making go to the wall help our balance of payments? We may get cheaper stuff for a while but what happens when the market turns, or as should be the case, made to turn in the UK by effective tariffs against China like the USA and proper support for low energy costs for industry to match Germany and France and give our people a fighting chance.

      The government are making out that to support steel would cost too much, but we could do it for a whole year while things are sorted out for the cost of one week’s worth of membership fees to the EU. Tata should also not be allowed to dump their pensions liability on the UK when they scuttle out. Where is the pension money that people must have paid in for years? Anyone even asking?

      Our Government can find billions for any old fashionable cause like foreign aid, HS2, the EU etc. but cannot find a relatively few bob for our own industry. It seems that the Tories still don’t like those with dirty hands who actually work for a living, or even care much for our country in general, preferring Europe and foreigners of almost any kind.

  2. Lifelogic
    Posted April 3, 2016 at 5:43 am | Permalink

    You are exactly right. Yet Osborne has delivered the largest trade deficit ever. His policies (of ever higher tax rates, expensive greencrap energy, complex employments laws, over complex tax laws, high wealth taxes such as his blatant IHT ratting, his bonkers complex sugar tax. his subsidies to wind, bio, wave and PV and above all his job destroying national minimum wage laws) are bound to destroy jobs & productivity and to deliver ever larger trade and balance of payments deficits.

    The UK need to be competitive, the government and the EU are preventing this at every turn.

    The open door to low skilled & low paid (thus net liability) immigration further damages the UK competitivity as does all of his daft expensive & pointless vanity projects like offshore wind subsidies, lagoons, HS2/3, happiness indexes, northern powerhouses and his fiscal attacks that push up rents so much.

    Osborne is a menace and must go, perhaps the worst chancellor in my lifetime and it is a dire list over that period. Even worse that 98% income tax Healey, ERM John Major, “Je ne regret rien” Lamont and the pension mugging/no return to boom and bust Gordon Brown.

    The way to compete in the world is simple: lower simpler taxes, far less government, easy hire and fire, fewer bonkers regulations, get out of the EU straight jacket, functional banks with real competition, cheap non greencrap energy. In short get the parasitic government out of the way bl**** way. Let the people who made the money spend or invest it in their businesses, they will do it far far more efficiently than moronic, inept and often corrupt governments ever will. Especially this dire one.

    Yet now we have a chancellor who even thinks he should fix the wages for very large parts of the economy, in businesses he has never visited and knows not the first thing about. He think wage levels in places where houses cost £50,000 should have the same pay as ones where they cost £500,000 and he should fix them.

    Furthermore despite the huge PSBR we still have dire & deteriorating public services such as the dysfunction NHS and many dreadful schools and pointless (tax payer funded) university courses which further harm UK productivity and its ability to compete.

    Vote Brexit and be rid of them.

    • Lifelogic
      Posted April 3, 2016 at 6:04 am | Permalink

      The next chancellor need to cut the bloated and largely incompetent state sector hugely, cut taxes, cut regulation, cut the number of lawyers, bureaucrats and tax accountants, scrap the work place pensions and minimum wage laws, deregulate everywhere, move to easy hire and fire, lower tax rates, move to cheap energy and release businesses to compete in the World.

      Also undo much of the damage done by Osborne over the past six years. Things such as his absurdly high taxes on house moves, incomes, insurance premiums, dividends, rents and very much else.

      The tax payers alliance suggest that the Treasury expects to collect an extra £84 billion a year from households and business in 2015, compared with the year before the Coalition came to power — a rise of 15 per cent. Money that would have been far better left with the people who made it. But also these taxes do much damage in distorting markets and discouraging economic activity, on top of the damage done actually taking the money of them.

      • hefner
        Posted April 4, 2016 at 7:22 pm | Permalink

        You make me laugh, Lifelogic: most of the UK infrastructure over the last 30-35 years has been done with PFI contracts. Most of these contracts have been badly written, with the private sector generally imposing its conditions on public servants not up to the task of defending the public interest.
        And you want to decrease even further the state, so that only the private sector is in charge. You really have rose-tinted glasses if you think the results of the last 35 years of private involvement have been a resounding success. Most projects have been achieved often highly over budget, and usually not delivered on time.

    • fedupsoutherner
      Posted April 3, 2016 at 8:11 am | Permalink

      Agree. China has stopped using wind power because it was intermittent and disrupted the grid.

      Meanwhile, we have Scotland boasting about its renewables and pledging more of the rubbish. No wind today here and so no turbines turning. Makes sense really, doesn’t it? It was said years ago that for every job created in the wind industry 3 more real jobs would go and we are now seeing that with heavy industry in the UK. Utter madness but even facts and figures don’t move this government to do something useful. There will be no industry soon for any kind of energy to be needed!

      • Lifelogic
        Posted April 3, 2016 at 10:17 am | Permalink

        No sensible engineer thinks renewable/unreliables make any sense at all. Doubtless why DECC ministers have been endless PPE chaps or Historians.

        R&D in them might make sense in the long term, but roll out with huge taxpayer subsidies & with current technology & costs makes no sense at all in the cloudy UK.

        Other than in some very specific situations.

      • Know-dice
        Posted April 3, 2016 at 10:42 am | Permalink

        I’m surprised…isn’t there enough “hot air” coming from Holyrood to power the whole of the UK 🙂

    • Lifelogic
      Posted April 3, 2016 at 8:38 am | Permalink

      Typical BBC bias on show on Andrew Marr this morning. With BBC lefties and ex BBC lefties =Stephanie Flanders, Marr himself and Paul Mason.

      Paul at least seems to be an “outer” but is concerned about Boris taking over after Brexit and dealing with the negotiations? Why the concern? Borris can hardly be worse than Cameron, Osborne or Corbyn?

      Most tosh in the Telegraph from Lord Darzi – I know that leaving the EU would have a catastrophic impact on the status of the UK’s status as a world leader in medical science and innovation –

      What complete propaganda & drivel. Post Brexit the UK will have more money to spend on research, more freedom as how to spend it and as to whom we chose to cooperate with. No one is suggesting we should stop co-operation in scientific research. The EU has almost nothing to do with it, politics should (as far as possible) be kept out of scientific research anyway otherwise it gets misdirected hugely. As with so much of the warming exaggerations/renewables and grant seeking, gravy train.

      • stred
        Posted April 4, 2016 at 9:18 am | Permalink

        Researchers here work with whoever is the best in their field that they can find. They work with Americans, Israelis, Chinese, Russians, Norwegians, Swiss and anyone going, communicating on the net and flying to conferences all over the World. EU colleagues also work with these countries and they all use English as the language of science.

        University chancellors are very highly paid but often have their eyes on the funding and EU money coming back. They often haven’t a clue about what their staff are actually doing.

        • stred
          Posted April 4, 2016 at 9:37 am | Permalink

          Lord (word deleted ed) seems to think we would not be able to employ all the medical researchers that will come to work in the Crick Institute.
          A) We will allow all immigrants that we need in an Australian style method.
          B) We don’t have enough of our own top scientists and will need them.
          C) Researchers in the EU find obtaining work very difficult and would be only too pleased to be recruited by any British institute.

          He says that we need the products of the research for our health.Does he not realise that drug production and use is international and not EU.

          Has he not read the recent statements from some of his fellow surgeons who are working in overcrowded hospitals and find that newly arrived EU citizens are creating waiting lists and that NHS is bribing GPs to not refer suspected cancer patients for scans. The EU is not doing any good to those of us who, having paid our NI and taxes all our lives, now have to take our place in the queue and die if the wait is too long.

          Active can borrow this if he wishes. OK JR?

    • Bazman
      Posted April 3, 2016 at 11:02 am | Permalink

      Parasitic landlords and corporate welfare via not enough taxation and to much subsidy for them at the expense of the working persons taxes and to much indirect taxation via VAT cannot exist in you right wing dream world can it. House prices in an areas being the only indicator of the cost of living assumes that no workers are not live within a commutable distance.
      Infrastructure will be built by tax dodging parasitic companies is just moronic, so do tell us where all this cash is coming from to invest.
      The rest is just the same old repetitive nonsenses. Where are your answers to point made to your previous posts> You seem to be under the delusion that you own the facts.

    • Colin Watson
      Posted April 3, 2016 at 4:21 pm | Permalink

      Think I had better just cut my wrists right away

  3. Jack
    Posted April 3, 2016 at 5:51 am | Permalink

    I support leaving the EU because of the nonsensical SGP, its insistence on austerity and keeping government deficits, which by accounting (sectoral balances) equals the private sector’s savings, below 3% of GDP.

    However, the negative balance on the current account is nothing to worry about. It just signals that the foreign sector is interested in saving assets denominated in Pound Sterling. In fact, having a trade deficit is a net benefit to our prosperity and directly improves our standard of living, as imports are real benefits and exports are real costs. Also, as our currency is in quite high demand (it’s a part of the IMF’s SDR), eliminating the current account deficit is a much harder task than for your typical country.

    Jobs are lost because taxes are too high for a given level of government spending, not because of imports (from Seven Deadly Innocent Frauds of Economic Policy by Warren Mosler). A current account deficit acts as a demand leakage and therefore the government needs to run a larger-than-usual budget deficit to fully accommodate the external sector whilst also promoting full employment and prosperity at home.

    On the state deficit aspect, the government is a creator not a borrower (issuing treasury bonds and paying interest is a political choice, not a necessity for a currency-issuing government). You correctly note that the only constraint on government deficit spending is inflation, although you over-state the risk. China has been running unofficial government deficits of over 20% of GDP (including state bank lending) for years now, hence their double-digit growth, and they have not experienced hyper-inflation of any sort. Our “means” are not whether we run a budget surplus, the economy is limited by real resources and capacity, not by pounds.

    This sounds like leftist Keynesian thinking, but it is simply how our current monetary system operates, and can be used to support centre-right values of lower taxes rather than as an excuse to ratchet up state spending further.

    Reply So why didn’t this magic money system work in Argentina/Brazil/Venezuela?

    • Lifelogic
      Posted April 3, 2016 at 7:32 am | Permalink

      By what sensible/rational mechanism could magic money tree economics ever work?

      Printing money is in its effect just another tax on the productive, the hard working, savers and a devaluation of their money and assets. It discourages prudence. This money is then “invested” nearly always very badly indeed, by the state sector.

      Often spent further misdirecting the productive into essentially parasitic industries like guiding us through the maze of legal complexities and regulations or building pointless wind farms all over the place.

      Yet another transfer of money from the productive and hard working to the bureaucrats. Generally it is largely wasted by them, perhaps on Millennium Domes, congestion causing bike/bus lines, counterproductive wars, political propaganda, bio fuels from the USA, poorly directed overseas aid, bonkers lagoons, payments to augment the feckless, the dysfunctional NHS, duff schools, many largely pointless & second rate university courses on non subjects, or attempting to buy votes, blocking the roads or other such nonsense.

      The state cares not what it spends not what value it gets why should they it is not their money or they who get the value in general? (other perhaps than when they are trying to buy votes with it)?

      Osborne clearly thinks the 60,ooo – 600,000 jobs his “national living wage” will destroy is a price worth paying – for some perceived political advantage he (totally wrongly) thinks he will get.

      Brexit it must surely be , I see some polls are putting it ahead now. This movement will surely continue the more we see of Hammond, Cameron, Osborne, Soubrey, Javid, Kay and Morgan the more overwhelming Brexit support will become.

      • Bazman
        Posted April 4, 2016 at 5:57 pm | Permalink

        One of the biggest costs is housing benefit to private landlords. Yet again you fail to mention this the figure of 300,000 controversial. You take Professor Ray Barrel of Brunel University figures as gospel, but Lord Darzi’s view on leaving Europe as nonsense. You only ever read the Telegraph, so how can you say what is true?
        I’ll remind you again. housing benefit is one of the countries biggest at £16.94bn and you have nothing to say on this? I wonder why you do not rant and repeat about this scandal of government making?
        The only the Department for Welfare and Pensions is the biggest spending department in the UK – spending £166.98bn in 2011-12, which is Of that huge sum, £159bn was spent on benefits – an increase of 1.1% on the previous year. That is 23% of all public spending.
        Benefits due to low wages in the main to working people. Not feckless layabouts so your creation of more low paid jobs will not help.
        Should we just cut these benefits and remove the minimum wage would this improve the situation? etc

    • Jack
      Posted April 3, 2016 at 7:35 am | Permalink

      Obviously deficit spending more than your economy’s productive capacity will result in unnecessary inflation which will, if left unchecked, eventually reach levels that begin to distort the economy and cause negative real GDP growth. Though many countries like Turkey have coped fairly well with high inflation in the past.

      To add to this, in those specific countries there is widespread government corruption. If you have officials like in Zimbabwe using all of their domestic currency to buy foreign exchange, then the currency will depreciate and you get inflation via the fx window.

      Also the real-world evidence strongly suggests that higher interest rates are actually inflationary and cause inflation to worsen due to the fact that the propensities of savers to spend their interest income is greater than borrowers borrowing to spend. And so for many of those countries raising interest rates added to their inflation woes rather than successfully arresting the problem.

      At the very least, monetary policy is a blunt instrument. My recommendation to them would be: decide upon a level of government spending, and then adjust taxes to meet a specific budget deficit target that keeps the economy humming along at full employment and price stability.

    • zorro
      Posted April 3, 2016 at 9:53 am | Permalink

      Reply to reply – because they can’t print $US, € or £….. in short

      zorro

      • Lifelogic
        Posted April 3, 2016 at 10:37 am | Permalink

        But they can print their own currencies and did so with the entirely predictable consequences that followed.

    • graham1946
      Posted April 3, 2016 at 10:05 am | Permalink

      Reply to reply

      On the other hand, if austerity is the answer, why isn’t Greece like Germany, or even showing signs of improvement after many years of being beaten down? Or Italy, both of whom had elected governments replaced by EU placemen? Why are our NHS, local government, social services, schools etc falling apart after 6 years of the Tories?

      • NHSGP
        Posted April 3, 2016 at 7:10 pm | Permalink

        It’s because austerity is a symptom of borrow and spend, a consequence.

        It’s not a policy.

    • Jack
      Posted April 3, 2016 at 10:44 am | Permalink

      Obviously deficit spending more than your economy’s productive capacity will result in unnecessary inflation which will, if left unchecked, eventually reach levels that begin to distort the economy and cause negative real GDP growth. Though many countries like Turkey have coped fairly well with high inflation in the past.

      To add to this, in (some ed) specific countries there is widespread government corruption. If you have officials like in Zimbabwe using all of their domestic currency to buy foreign exchange, then the currency will depreciate and you get inflation via the fx window.

      Also the real-world evidence strongly suggests that higher interest rates are actually inflationary and cause inflation to worsen due to the fact that the propensities of savers to spend their interest income is greater than borrowers borrowing to spend. And so for many of those countries raising interest rates added to their inflation woes rather than successfully arresting the problem.

      At the very least, monetary policy is a blunt instrument. My recommendation to them would be: decide upon a level of government spending, and then adjust taxes to meet a specific budget deficit target that keeps the economy humming along at full employment and price stability.

    • acorn
      Posted April 3, 2016 at 11:29 am | Permalink

      “So why didn’t this magic money system work in Argentina/Brazil/Venezuela?” Please tell me JR, you already knew the answer to that question?

      The countries you mention, all pegged their currencies to other currencies, mostly the US Dollar. Then they started borrowing in those foreign currencies. Eventually, they ran out of foreign currency reserves to keep buying up their own currency to maintain the peg. In 2001 the pegged Argentine Peso would buy US$1. By the end of 2002 it would buy US 30 cents. The Peso currently buys about US 8 cents.

      Greece did exactly the same as Argentina by adopting the Euro, it effectively pegged the Greek Euro to the German Euro on a one-for-one basis and borrowed the German foreign currency. The rest is history

    • forthurst
      Posted April 3, 2016 at 12:07 pm | Permalink

      “I support leaving the EU because of the nonsensical SGP”

      Does anybody take any notice of it? At most, it wastes a few civil servants’ time.

      “having a trade deficit is a net benefit to our prosperity and directly improves our standard of living, as imports are real benefits and exports are real costs.”

      Exports create wealth in this country which can be spent in this country.
      Having a current account deficit means that foreigners can not only purchase gilts but they can also purchase assets which will then generate a rental stream, taking wealth out of this country and out of the pockets of the people.

      “Jobs are lost because taxes are too high for a given level of government spending”

      Jobs are lost because there is insufficient demand for a particular product or service at a price at which it can be supplied either to here or abroad.

    • Tad Davison
      Posted April 3, 2016 at 12:22 pm | Permalink

      Coincidentally, I watched an interesting documentary on Attlee last night, and the problems his government faced after world war two. There are a lot of parallels between that, and the issues John so rightly and diligently outlines in his piece. Well worth a look.

      Tad

    • NHSGP
      Posted April 3, 2016 at 7:11 pm | Permalink

      Same as the UK. That’s issued debt linked to inflation baskets. Most of the debt is inflation linked, its pensions.

      You cannot inflate your way out of inflation linked debt.

    • Stephen Berry
      Posted April 3, 2016 at 7:46 pm | Permalink

      This airy talk of the only restraint on government spending being inflation is amusing. Leaving the government in control of an unbacked paper currency reminds me of the sorcerer’s apprentice being left in charge of the magic shop. Part of the reason for the troubles of Argentina, Brazil and Venezuela is that it’s politically easier to print pieces of paper than make the structural reforms that an economy often needs. But this is not just a South American problem. When the next recession comes, will Mr Osborne wish to reduce his National Living Wage if real wages need to fall? But this is an aside to the balance of payments question.

      If the UK has a deficit on current account, it will inevitably have a surplus on capital account. Whether this is a good or bad thing depends upon how that capital surplus came about. If the capital surplus comes from foreign money being lent to the UK government for consumption expenditure, it’s my opinion that this should stop and the government should live within its means. I concede that Mr Osborne has taken some welcome steps in that regard.

      If however, the capital surplus comes from foreign capital being invested in British industry, we should welcome this fact without reservation. That foreigners come here to earn a return is a plus not a minus. It means that they will want to use resources economically, a charge that cannot generally be levelled against governments – including our own.

      What of the national security question? Back in the 1930s Henry Ford wanted to build a truck factory in Japan. The Japanese government refused as these were trucks which might be used by the Japanese army. Ford said he couldn’t figure it out as once the factory had been built in Japan, the Japanese could easily take control in time of war. He would have been doing the Japanese a favour and helping the Japanese war effort! Ford was right and his argument would be just as right now if the French build a nuclear power station for us here and the Chinese are generous enough to part-finance it.

  4. Posted April 3, 2016 at 6:11 am | Permalink

    As ever JR there were many excellent posts in response to your great articles in the last couple of days.

    Your readership is right up there in terms of its erudition and knowledge, with many commenters posting very interesting information. It’s one of the reasons your diary has made good reading for years.

    Several commenters on here in the last few weeks have talked about the need to address a wide audience, as you regularly strive to do with the media. Your public profile is increasing again all the time and you’re doing everything possible to reach the busy voting public at large, who will never read your diary. It’s great to see and hear you more in the media, where you’re delivering punchy stuff.

    The vast majority of the voting public just want easily-digestible information. That means short sound-bite type information – but they want to know it’s backed by facts from official sources, not wild claims.

    That’s what we’re trying to do at http://facts4eu.org . It’s not perfect, but it gets better each day. For example the News Page includes a piece taken from your article on Friday about the UK’s steel imports from the EU, with a quote from you. We sent this to some national newspapers.

    As it’s a Sunday, I hope you’ll allow this appeal for more help. As one of your readers wrote in an email to us yesterday: “Great work on the site. I, like you, am passionate about Brexit, and I’d like to give you a hand!”

    Some volunteers have apparently had issues with the ‘Captcha’ part of the contact form in recent days, so until we fix this issue today, readers can find our email address in an image at the bottom of this page: http://www.facts4eu.org/editors_wanted.htm , just above the Disqus comments section.

    Finally, we hope your readers will be pleased to know we’ll be putting up more and more positive illustrations of a post-Brexit UK. Unlike the Remain camp we have lots of positive and optimistic things to talk about!

    • Anonymous
      Posted April 3, 2016 at 8:03 am | Permalink

      You must use verifiable and well sourced facts only. They must be neutral in origin.

      Thanks for the good work.

      • Lifelogi
        Posted April 3, 2016 at 4:05 pm | Permalink

        If they use “verifiable and well sourced facts only” they will almost all be clearly pointing in the direction of exit because that is just how it is.

        So it might not appear that neutral on the issue.

        • Bazman
          Posted April 3, 2016 at 6:39 pm | Permalink

          LOL! As I said you think you own the facts and here is the proof. Dingbat. That is just how it is.

    • Bazman
      Posted April 3, 2016 at 11:25 am | Permalink

      Where is this story of the EU slowing down internet speed? I ask you again, so much for facts on this blatant black propaganda site.

      • Posted April 4, 2016 at 4:44 am | Permalink

        It was an April Fool, Bazman – only up there for that day.

        I’m not surprised you wanted to believe it, though. Frankly it was hard to think of something crazier than all those crazy things which the Project Hysteria brigade have already claimed as being true if we leave.

        Don’t worry, your Internet will still work at normal speed when we leave the EU.

        We would take you more seriously if you made actual points in favour of remaining, rather than using pejorative terms like ‘black propaganda site’. Please feel free to post comments on http://facts4eu.org/ . We allow all comments if they’re serious and fact-based.

        • Bazman
          Posted April 4, 2016 at 4:14 pm | Permalink

          It was not there at all and you know it and I only asked where it was how it was possible.
          The EU has in fact adopted new regulations on net neutrality which are controversial. Net neutrality advocates have slammed the European Parliament t after it voted in favour of Internet ‘fast lanes and slow lanes’, which they say plays into the hands of wealthy and powerful companies. MEPS said that internet ‘fast and slow lanes’ would encourage innovation in the EU, but those in favour of net neutrality say the opposite is the case: only a level playing field allows innovation to flourish.
          http://europa.eu/rapid/press-release_MEMO-13-779_en.htm
          My sides are splitting now you tell me it was an April fool joke, now tell us which fool is funding your waste of bandwidth, because that would be funny!

      • acorn
        Posted April 4, 2016 at 6:50 am | Permalink

        Likewise, ” China has stopped using wind power because it was intermittent and disrupted the grid.”

        China is building inter-connectors to improve the mix of dispatchable and non-dispatchable (wind, solar). China is using the European model of interconnection of super-grids for price and system stability.
        http://www.bloomberg.com/news/articles/2015-11-02/by-the-numbers-china-s-clean-energy-investments-show-big-strides

        According to comments on this site, the UK doesn’t need anymore interconnections to Europe.

        • stred
          Posted April 4, 2016 at 4:52 pm | Permalink

          The European model for interconnectors is meant for variable renewables as the theory is that the wind will always be blowing somewhere and it can be redistributed, while nuclear stations are turned up and down to suit. Unfortunately, it has been analysed and found not to work, as wind lulls can cover the whole of W.Europe. Re Energy Matters.

          The UK uses the French interconnector nearly all the time to buy their nuclear generation and sometimes they run short in mid winter and we supply them. Fine, but do we really need much more expensive connectors to Norway and Iceland, in order theoretically to swap excess Scottish wind, as they now have over 50% wind capacity.

          Suggest you read the Energy Matters blog on a blackout in Scotland if the line to English supplies goes off now the main Scottish coal station has gone and English coal is closing. The conclusion is that we need more reliable gas and nuclear, not more smart grids, which turn out to be dumb.

          • acorn
            Posted April 5, 2016 at 8:37 am | Permalink

            “… while nuclear stations are turned up and down to suit.”

            We don’t turn up and down nuclear plant, they have “must run” status; coal and gas do the system balancing. See “Generation By Fuel Type (graph)” at:-
            http://www.bmreports.com/bsp/bsp_home.htm (best in Firefox browser).

          • stred
            Posted April 5, 2016 at 2:09 pm | Permalink

            Re turning up and down nuclear. They do in France, where they don’t have gas and coal. Re Energy matters. If there was to be a grid collapse or blackout, then the nuclear stations are ordered to shut down and could not be re-started easily. The article on a Scottish blackout is a warning. Why don’t you read it?

    • acorn
      Posted April 3, 2016 at 1:00 pm | Permalink

      Talking of UK trade deficits, Neil Wilson has managed to find his way around the new ONS site better than I, and produce his sectoral flow balance charts. http://www.3spoken.co.uk/2016/04/uk-sectoral-balances-q4-2015.html

      In the first three sector chart, the red bit is the Pounds Sterling flowing into those foreigners sterling bank accounts, including all those imports we get the benefit of.

      In the five sector chart, you can see the blue bit is shrinking; government spending less and less (Osborne austerity). The purple bit is the Household sector bashing them credit cards etc, replacing the government spending.

      Meanwhile, the green bit is the non-financial corporations stashing the cash into financial assets, rather than pay wages or invest in new capital kit.

      There is another housing bubble developing. You can understand why the BoE is getting twitchy about rising mortgage debt; again.

    • stred
      Posted April 4, 2016 at 9:50 am | Permalink

      I hope the example of articles is circulated. re EU to ban washing of underpants. Hilarious.

  5. Richard1
    Posted April 3, 2016 at 6:26 am | Permalink

    There is a protectionist hue to this which is a bit surprising given you are normally a rigorous supporter of free markets. E.g. In what sense is the stock exchange ‘ours’? It’s a public company whose shareholders can come from anywhere – it’s current CEO is French. It’s business has changed beyond all recognition in just the last 30 years, and Investors – including many UK pension funds etc – are probably doing the right thing selling out now given the huge changes in capital markets. ‘We’ will continue to be able to own shares in the combined company. It’s certainly sad for steel workers who are to lose their jobs. But do we really want to force expensive steel on purchasers in the UK just because it’s made here – how many other jobs and businesses will be lost by that approach, out of the 1970s? The car industry by contrast, has prospered and is a big exporter, despite no protectionism and despite our being in the EU.

    Greece is is in trouble because it is in the euro and cannot devalue or set its own economic policy, as you have explained eloquently on many occasions. Greece would welcome foreign investment – but who would want to invest there now?!

    • Anonymous
      Posted April 3, 2016 at 8:18 am | Permalink

      The purpose of government is to be protectionist.

      The UK government has not been economically protective since Thatcher nor nationally protective since Major.

      We have now reached the point that we decide on the 23rd June whether to ditch the now defunct British government.

      This is what I believe the referendum is really about. We are already in the EU. The intent is to neutralise the British government once and for all whilst making the people think it was their idea.

      • Tad Davison
        Posted April 3, 2016 at 12:28 pm | Permalink

        And there’s a word for all of those who have hitherto plotted and schemed behind the scenes to ditch the British government and take away our right to self-determination, it’s called ‘traitor’.

        Tad

        • lifelogic
          Posted April 4, 2016 at 4:29 am | Permalink

          I agree. These were never powers that politicians had any rights to permanently give away, without any authority from the voters.

      • Richard1
        Posted April 3, 2016 at 1:15 pm | Permalink

        Really – who is proposing to neutralise the British govt?

        • Anonymous
          Posted April 3, 2016 at 8:40 pm | Permalink

          Richard 1 – The EU superstate and all those who support it in the British establishment. The British government will be reduced to a local council in a province of the EU.

          You do know about the plan for an EU superstate, don’t you ?

    • Ian Wragg
      Posted April 3, 2016 at 8:22 am | Permalink

      Talking of protectionist I worked for years for 2 large French and German companies in the Power Industry.
      When we did major maintenance or upgrades staff were always shipped in from France or Germany.
      None of the equipment was sourced locally and all the available company cars were French or German.
      There is no way any other country would let a major strategic industry collapse.
      This is just Tory dogma and crass stupidity.
      That silly education secretary says our children will suffer if we leave the EU. We aren’t doing so we inside. We can’t all do each others washing or serve coffee.
      We need to be in control of our destiny.

      • Richard1
        Posted April 3, 2016 at 1:13 pm | Permalink

        What’s your solution then? Extra taxes to prop it up, nationalisation?

        • Anonymous
          Posted April 4, 2016 at 7:28 am | Permalink

          Why not subsidise it ?

          Plenty of our foreign aid is propping up bent arrangements and an unemployed Port Talbot will be subsidised anyway.

    • Alan
      Posted April 3, 2016 at 8:46 am | Permalink

      Greece is not in trouble because it is in the euro and cannot devalue its own currency. It is in trouble because it borrowed more than it could afford and the economic crisis made this worse. Being inside the euro makes it more attractive to foreign investment since the investors don’t have to worry about currency devaluation.

      • Denis Cooper
        Posted April 3, 2016 at 10:49 am | Permalink

        If Greece hadn’t joined the euro then the Greek central bank could have kept the Greek government afloat by creating new drachma and buying up the Greek government’s bonds denominated in drachma, part of what JR has described above as “lending to ourselves”, we “switch money and assets around amongst ourselves”. Which is what the UK authorities have done, to to the tune of £375 billion gilts bought up by the Bank of England. Instead the Greek government has had to rely on the ECB to do that, when it chose, which has come with a heavy economic and social price to the Greek people despite the Greek government having twice defaulting on its bonds, even though neither occasion has been officially recognised as a default by the credit agencies. The next occasion, which is possibly due this summer but after we have voted in our referendum, may be different:

        http://www.bbc.co.uk/news/world-europe-35953028

        “Greece challenges IMF over ‘debt transcript leak'”

        “Former Greek finance minister Yanis Varoufakis said: “As WikiLeaks revealed today, the IMF is planning to stall until July to bring Greece to its knees [again!] in order to force Angela Merkel’s hand.”

      • Richard1
        Posted April 3, 2016 at 1:10 pm | Permalink

        Yes you’re right – Greece is in trouble because it borrowed too much, but being in the euro it cannot print it’s way out of that. The euro enabled Greece to borrow too much as Greek interest rates were much lower than they would have been had Greece had its own currency. In this sense it is true that it’s not the euro as such which has caused the PIGS all their troubles, but the foolish govt policies – which the euro allowed them to pursue. It is true that investors in Greece don’t face currency risk, but they do face a stagnating economy with no end in sight.

      • NHSGP
        Posted April 3, 2016 at 4:09 pm | Permalink

        Spot on. Borrow and spend did for Greece.

        Now look at Corbyn.

        His idea is borrow to grow. His idea of growth is GDP goes up. Like Greece. However ask him how the money is repaid and its taxation.

        Oh dear. Labour policy is borrow and tax.

        • Richard1
          Posted April 3, 2016 at 10:28 pm | Permalink

          Spot on. All the euro did was bring the problem sharply into focus more quickly and clearly than would happen in a country with the ability to print and devalue.

        • lifelogic
          Posted April 4, 2016 at 4:32 am | Permalink

          Osborne is a tax borrow and waste merchant too.

        • Ian Wragg
          Posted April 4, 2016 at 7:43 am | Permalink

          No. We could start by levelling the playing field and exempting industry from the idiotic additional taxes which the rest of Europe dont pay. Business rates should be levied according to the viability of the business. My wife’s shop pays a flat fee on 1st April regardless of the ability to pay.
          Our high Street is getting like a wilderness.

    • forthurst
      Posted April 3, 2016 at 12:24 pm | Permalink

      “It’s certainly sad for steel workers who are to lose their jobs. But do we really want to force expensive steel on purchasers in the UK just because it’s made here”

      What are you suggesting, that people should be at liberty to purchase dumped Chinese steel? It’s noteworthy that China has placed an extremely high tariff on British produced steel products.

      In order to save Britsh steel as a viable industry, it is necessary to get out of the EU so that we can ensure that industry is not hampered by unnecessary and costly regulation, repeal the disgraceful Climate Change Act which was conceived for the sole purpose of closing down industries such as steel, and put tariffs on dumped steel products from anywhere.

      Nobody is suggesting that bunesses should buy overpriced British produce.

  6. Ex-expat Colin
    Posted April 3, 2016 at 6:28 am | Permalink

    So what your saying is half the Tory party and all of UKIP know that very well. Many householders/families know it only to well and are paying the penalties. Simply sitting ducks!

    And its all Mrs Thatchers fault for everything since she gained power and to date. Limits appear to be limitless?

    • Anonymous
      Posted April 3, 2016 at 8:28 am | Permalink

      Peter Hitchens says it well today.

  7. Yosarion
    Posted April 3, 2016 at 6:32 am | Permalink

    So the answer over steel from n0 11 is buy British, is this man heavily into recycling his predecessors ideology.
    Speak to any small business in steel fabrication and ask can you afford to buy the more expensive steel and compete along with the living wage, or would you just watch your competitors who have no obligation to sing by the same hymn sheet drive you out of business.
    Far to little to late, from the Chancellor who would sooner take his orders from a member of the Bullingdon club rather than his local Conservative Club.

    • Lifelogic
      Posted April 3, 2016 at 7:41 am | Permalink

      Indeed nonsense.

      If you are in business you have to buy the most suitable product for the best available price. If you do not you tend to make losses, lose customers, go bust or get taken over! Perhaps Cameron and Osborne have not worked this out yet having no understanding of the private sector?

      You say “Far to little to late, from the Chancellor who would sooner take his orders from a member of the Bullingdon club rather than his local Conservative Club”.

      Or indeed just listen to some rational & sound economists for a change.

      • Lifelogic
        Posted April 3, 2016 at 7:42 am | Permalink

        Nonsense from the government not Yosarion I meant!

      • Lifelogic
        Posted April 3, 2016 at 7:47 am | Permalink

        Also he could usefully listen to some sound electrical engineers instead of all the green loon priests who seem to drive DECC.

      • Bazman
        Posted April 3, 2016 at 3:48 pm | Permalink

        Or indeed just listen to some rational & sound economists for a change? Do not tell us about this whilst believing in a bloated massively subsidised by corporate welfare private sector such as the private rental market, and numerous other government contracts awarded at stupidly high rates to private companies nit to mention a tax system that allow them to get away with paying tax on these ‘profits’ extracted from taxpayers.
        You are denying this can and does exist! etc ed.

    • Bazman
      Posted April 3, 2016 at 4:05 pm | Permalink

      The cost of steel is a good point as it is often possible to buy small Chinese fabrications for less than it costs to buy the steel here, Who in the steel fabrication business is paying fabricator/welders less than the living wage.? You seriously expect these tradesman to work for £7.20 an hour or less?!
      Most larger fabrications are produced in this country and mostly locally the cost of transportation of heavy bulky things such a staircase systems and the like prohibitively expensive. Yes it is. I made and drove the lorry delivering these things for a number of years. No foreign competition just local.
      The idea of doing this for seven quid an hour just laughable and that includes all East Europeans in the same game too. I have been asked to do this for seven quid a few years ago. The agent said it was an ‘opportunity’ LOL!
      Pushed a trolley around in lovely warm, clean pick and pack warehouse (words left out ed) for seven quid five years ago less than a mile from my house.
      Welding is double that and the rest in this country. maybe you could try and get everyone working for seven quid?

  8. eeyore
    Posted April 3, 2016 at 7:26 am | Permalink

    This is supposed to be the world’s fifth largest economy. As everyone knows, there’s no telling the difference between a man who owns a million and one who owes a million – until, as the Sage of Omaha observed, the tide goes out. What rank will Britain’s economy hold when the tide ebbs? Or are we betting it will flood for ever?

    “It’s always cheaper to pay cash,” said Mrs Thatcher. And Lord Beaverbrook used to wag his finger at his hacks and warn, “Young man, never buy a large steam yacht. They’re nothing but trouble.” I rather fear that not only are we buying large steam yachts, but we’re doing it on tick too.

    • Lifelogic
      Posted April 3, 2016 at 10:40 am | Permalink

      Only when the tide goes out do you discover who’s been swimming naked.

      Warren Buffett

  9. alan jutson
    Posted April 3, 2016 at 7:39 am | Permalink

    Once again a well written and perfectly understandable post, and one which chimes with much of what many of us have said many times before.

    Individual Companies selling out to foreign owners is one thing, bad enough as it is, but selling services which are the basics of existence are another.

    Power generation, water supply to foreign owners is simply crazy, but compound that with foreign legislation and control over the environment, water management, farming production, fishing rights, taxation, employment law, welfare, and the deliberate running the down of the ability to generate our own power (closing perfectly workable power stations), is simply suicide.

    Never know next we will give up the ability to defend ourselves.

    Oh just a minute, is that in the pipeline as well.

    When are the majority of our Politicians going to wake up. !

    • DaveM
      Posted April 3, 2016 at 1:15 pm | Permalink

      Couldn’t have put it better Alan.

      John, we can’t go on much longer with the current front bench. We’ll be a bunch of unemployed, unemployable fatsos who own nothing, do nothing, make nothing, sell nothing. I’m sick of it.

      We need some real politicians who believe in our country and our people, and teachers who have confidence (and instil confidence) in our kids.

      All we have is self-interested career politicians who are terrified of losing their invites to EU and CBI lunches.

  10. Antisthenes
    Posted April 3, 2016 at 7:50 am | Permalink

    “Let us draw an analogy with an individual household.”

    Every day we buy things with money and get goods and services in return we are not poorer for it as we are producing goods and services somewhere else to pay for them. Trade produces benefits in excess of costs. So it is with exporting and importing they do not need to balance because if we import more than we export then the money we have spent in excess of of what we have earned returns as capital. The current account does not affect our wealth. Deficit and debt is where the danger lies.

    Not often I disagree with you but I am happier to accept the Austrian school of economics ideas on trade on this occasion rather than yours. In my experience they do appear to have the knack of calling things correctly. Your views on improving our balance of payments by improving the environment in which our exporting company can do better that I find compelling. However there are considerable barriers to doing that some you have listed.

    The EU and domestic policies and practices are affecting our competitiveness very damagingly as you point out. So leaving the EU is important so as to unshackle our selves from their suffocating embrace. At least we then will have the freedom to address the problem without the restrictions which are great of the EU which are currently holding us back. However there is still a long way to go and considerable lefty, socialist and progressive barriers to overcome. We need another Margaret Thatcher who will take them on like she did.

    There is one anomaly though and that is Germany because despite the EU and the euro trade wise it is doing very well. I put this down to the EU given them special treatment or at least turning a blind eye to any infractions of their rules. The euro being a benefit to them even as they are not to everyone else as the euro exchange rate favours them. Also they have employment and business practices that motives optimum productivity. I know not what they are but perhaps emulating them may be beneficial. Although I suspect we could not because we have a different mind set to them and lack their discipline.

  11. Ex-expat Colin
    Posted April 3, 2016 at 7:58 am | Permalink

    Another Talk In on the horizon….yawn? Foreign Aid:

    http://www.dailymail.co.uk/news/foreignaid/article-3520878/A-nation-roars-official-foreign-aid-e-petition-biggest-newspaper-fastest-100-000-secured-Commons-debate-YOU.html

    This Tory Govt does some good things (fingers one hand..count) but its heavily negated by everything else going on – EU/Russia/US/Energy/Industry and so on.

    • miami.mode
      Posted April 3, 2016 at 10:40 am | Permalink

      EeC

      Could be a strange one this, because whilst the international recommendation of Foreign Aid is 0.7% of GDP, with which our government agrees, it is also mooted that full adherence is in part to ‘de-toxify’ the Conservative Party. Could this be construed as improper use of State Aid?

  12. Alan
    Posted April 3, 2016 at 8:04 am | Permalink

    I think the article presents a parody of the Remain campaign arguments. But two can play at that game:

    The EU model put out by the Leave campaign is a model for economic isolation. Taken to extreme it leads to emulating North Korea. They say they wish to discourage foreign investment. They dislike the purchase of UK assets by foreigners. They believe that selling things will make us poorer. They don’t believe we should make a profit by selling to foreigners, but should only buy from and to ourselves.

    Not accurate, I know, but about as accurate as the article.

    • Denis Cooper
      Posted April 3, 2016 at 10:31 am | Permalink

      Selling what to foreigners? Products, or productive assets? If you’re selling the products of your productive assets then it’s hard to imagine the day when you no longer have any products to sell, but if you’re selling your productive assets then it’s easy to imagine that eventually you may have none left to sell. What then?

    • forthurst
      Posted April 3, 2016 at 12:33 pm | Permalink

      The EU model put out by the Leave campaign is a model for economic isolation.

      Twaddle. It is the EU that is low growth and isolated from growing world markets; the EU overregulates, destroys economies with the politically inspired Euro, is inward looking, and now is in the process of being economically and culturally destroyed by ?… Merkel and some of ( words left out ed)the Commission.

    • getahead
      Posted April 3, 2016 at 3:36 pm | Permalink

      You may wish to be governed by the committee in Brussels.
      I want my country back.

  13. Nick
    Posted April 3, 2016 at 8:14 am | Permalink

    Between 2005 and 2010, Brown almost quadrupled the size of the state pension debt.

    That was increasing at 636 bn a year on top of the deficit.

    No wonder you want to hide that off the books so the plebs don’t notice and carry on paying into the scam.

    So what’s the balance a payments as an issue?

    What’s the deficit as an issue?

    Irrelevances.

    But the pensions aren’t. They aren’t debts you can inflate away because they are debts that are linked to inflation, so printing doesn’t work. You have to default.

    The state can always repay the debt, though if it overdoes the borrowing it will end up repaying in devalued pounds, partially reneging on the debts through inflation.

    So the state can’t repay its debts. That’s the big lie. The story told to keep the little people happy.

    Reply I have published the estimates of future costs of the pay as you go state pension, which will be paid for out of future tax revenues which you also need to capitalise

  14. Mark B
    Posted April 3, 2016 at 8:23 am | Permalink

    Good morning.

    It seems to me that we are to consumed into the EU by stealth. Both our institurions and industries will be so entwined that we can never leave.

    Eventually, we will consumed and no more.

    • zorro
      Posted April 3, 2016 at 10:03 am | Permalink

      It is all part of the planned de-industrialisation of the U.K. (well England mainly) to such an extent that we can no longer effectively function as an independent sovereign nation.

      zorro

      • Lifelogic
        Posted April 3, 2016 at 6:32 pm | Permalink

        You are surely right in that.

    • Denis Cooper
      Posted April 3, 2016 at 1:44 pm | Permalink

      Well, many of those so entwined won’t want to leave as they think that would be too disruptive of their present arrangements. That is, unless we can convince them that it won’t be as disruptive as Cameron and his allies have led them to fear.

      Take Lord Darzi writing in the Telegraph today:

      http://www.telegraph.co.uk/news/2016/04/02/lord-darzi-leaving-the-eu-would-be-disastrous-for-uk-science-and/

      “Lord Darzi: Leaving the EU would be ‘disastrous’ for UK science and health”

      Any decent government would tell him: “You needn’t worry about your EU funding being cut off if the UK leaves the EU, because we would make sure that you got the same or level of funding, or more, directly rather than via Brussels”.

      But we don’t have a decent government, instead we have a despicable mendacious government which has taken a position on the referendum, is utterly determined to get the result it wants and has no scruples at all about how it achieves that, and even maintains that it has made no contingency plans in case the people foolishly vote the wrong way – if that is actually true, then it is the height of irresponsibility.

      Then Lord Darzi is concerned that outside the EU the UK would be excluded from the “European Reference Networks”:

      http://ec.europa.eu/health/ern/policy/index_en.htm

      “Imagine if the best specialists from across Europe could join their efforts to tackle complex or rare medical conditions that require highly specialised healthcare and a concentration of knowledge and resources. That’s the purpose of the European Reference Networks and it’s becoming a reality.”

      Except it’s not becoming a reality for the Swiss, who apparently are not Europeans and do not suffer from any complex or rare medical conditions and have nothing to contribute to their diagnosis and treatment – I wonder whether Lord Darzi has noticed that? – but it is becoming a reality for the Norwegians because while Norway is not in the EU it is in the EEA, meaning they are graciously allowed to participate in this “European” initiative which has been “consumed” by the EU, like so many other things have been “consumed” by the EU Borg, and which I find is based on an 2011 EU Directive which treats it not as a matter of international cooperation but as an aspect of the EU Single Market:

      http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:088:0045:0065:EN:PDF

      “Article 114 TFEU is the appropriate legal basis since the majority of the provisions of this Directive aim to improve the functioning of the internal market and the
      free movement of goods, persons and services.”

      Another good reason for seeking to stay in the EEA, or something similar, not as the final destination but to make the transition easier.

  15. acorn
    Posted April 3, 2016 at 8:26 am | Permalink

    We are not living beyond our means, far from it! We are spending below the level required to maximise the use of our own resources; labour and capital. We are doing the latter due to government’s lack of spending. The non-government sector is using up its savings and maxing out its credit cards, trying to maintain its lifestyle.

    To paraphrase Warren Mosler (from 7DIF book). Domestic credit creation – bank loans – has funded the Chinese desire to hold a $U.S. deposit at the bank, which we also call savings. Where’s the “foreign capital?” [borrowings]. There isn’t any!”

    “The entire notion that the U.S. is somehow dependent on foreign capital is inapplicable. Instead, it’s the foreigners who are dependent on our domestic credit creation process to fund their desire to save $U.S. financial assets. It’s all a case of domestic credit funding foreign savings.”

    [Similarly, imports from the Eurozone need members to have a desire to hold Pounds Sterling assets; the imports from the Chinese need them also to want to hold Pounds Sterling assets; spend them on a nuclear power station or a steel works or stuff.]

    We are not dependent on foreign savings for funding anything. Again, it’s our spreadsheet and if they want to save our dollars, they have to play in our sandbox. And what options do foreign savers have for their dollar [Pound] deposits? They can do nothing, or they can buy other financial assets from willing sellers or they can buy real goods and services from willing sellers. And when they do that at market prices, again, both parties are happy. The buyers get what they want – real goods and services, other financial assets, etc. The sellers get what they want – the dollar [Pound] deposits.

    No imbalances are possible. And there is not even the remotest possibility of U.S. dependency on foreign capital, as there is no foreign capital involved anywhere in this process.” (W.Mosler).

    • NHSGP
      Posted April 4, 2016 at 5:35 pm | Permalink

      So obvious question for you.

      The socialist welfare state is spending everyone’s pension contributions.

      it’s run up a 9 trillion plus debt with no assets.

      That’s screwed it.

      • acorn
        Posted April 6, 2016 at 7:02 am | Permalink

        Private pension funds are doing the same. In the case of TATA Steel, they are spending the working members contributions; the investment income from the £14 billion assets; the ten year top-ups plan by TATA Group; and they have started liquidating some of the assets to make up the £650 million yearly payout. A pension payment bill that is going to get a lot bigger.

  16. Shieldsman
    Posted April 3, 2016 at 9:04 am | Permalink

    As a saver and investor I feel let down by Governments for many years now.
    I am not surprised people do not save, what incentive is their with almost zero interest.
    Investing patriotically in UK owned Companies is a thing of the past.
    Government policies allow them to fall into foreign hands.
    Will the Government allow the Port Talbot steel works to fall into the hands of the asset strippers?

  17. Iain Moore
    Posted April 3, 2016 at 9:10 am | Permalink

    I full agree with all that you have said. I remember back in 1987 when it was the fashion was to say that deficits didn’t matter, then along came the 87 crash, where the deficits eventually cracked the markets. Same again in 2007-8, which though is blamed on the bankers was at its heart about deficits, and what is scary is that those deficits which broke the market in 2008 are still there but being hidden by quantitative easing. Next time around, which I fear is not too far in the future, it won’t be just the banks that fail, it will be the central banks.

    As to the costs our virtue signalling ruling classes have dumped on our economy , expensive energy is one, and as you point out so is the £10 billion EU membership, so too is the obscene Aid budget , Ooops there goes another £10 billion, but just as you mention the repatriation of dividends , there is also the repatriation of wages migrants workers are sending back home, which is estimated to amount to some £15 billion , etc ed

    Its no wonder we are having to sweat our assets so hard for we seem to be funding much of the world.

  18. Antisthenes
    Posted April 3, 2016 at 9:16 am | Permalink

    Public sector is being told buy British steel. Apart from the government making the case that they are doing something it is pure nonsense. They are advocating the very thing that helps to make us uncompetitive. That is putting social consideration above economic ones. It is our pursuit of having things like pay and conditions, health and safety, social justice and not forgetting energy policies far in advance of our competitors that makes our production costs that much higher than theirs. So when you advocate that social considerations should take precedence over price for consumers then those costs are made worse. Accelerating the decline of our businesses because they cannot compete on price because their costs are so high.

    We cannot afford the business models that our politicians, employers and employees think they are entitled to until we can attain the productivity level that allows it. That in the short term means making sacrifices. We should have learned this lesson from the loss of our ship building, coal industries and others and from the demise of so many bad businesses in the past like British Leyland. Things will continue to decline if we are too generous in socialising our wealth creators.

  19. zorro
    Posted April 3, 2016 at 9:46 am | Permalink

    John,
    Not directly relevant but certainly cuts to some of the topics being discussed around Brexit and UK’s future as a modern trading nation…… http://www.dailymail.co.uk/debate/article-3520932/PETER-HITCHENS-Privatisation-Free-trade-Shares-great-ruined-Britain.html#ixzz44k1wZBoP

    Doubtless, you may have some views around this, and the Syrian point which is made?

    zorro

  20. Denis Cooper
    Posted April 3, 2016 at 10:17 am | Permalink

    Right back to the days when there were efforts to get us into the euro I’ve regarded all talk of Foreign Direct Investment with scepticism, in fact suspicion.

    Because it’s one thing when a foreign company sets up a new business in the UK and puts its money into bricks and mortar and productive plant and then employs UK workers, while it’s quite another thing when a foreign company buys up an existing, often competing, business in the UK and then shuts down all or parts of its UK operations with job losses, but even so the two are just lumped together at least in the headline statistics.

    I remember one month there was a much-lauded surge in the Foreign Direct Investment statistic for the UK, which actually corresponded to nothing more than a huge foreign takeover of an existing UK company, without any increase in productive assets.

    I find I also still have a note from the autumn of 2002 about the German company Bayer purchasing Aventis CropScience Holding SA in France for $6.6 billion, which was counted as inward investment into France, but without it being clear from the report whether the figure for inward investment into Germany had been adjusted for that $6.6 billion outflow; in any case, that cross-border transfer did not provide France with any new productive assets, it was just a change of ownership through the purchase of existing shares without any new capital being raised.

    And did the money actually come from Germany, and did it even go to France? If Bayer had borrowed money from a US bank, to buy shares held by a Japanese pension fund, where did France come into that? Nowhere really, except that France was where Aventis CropScience Holding SA was registered as a company.

  21. james cottee
    Posted April 3, 2016 at 10:24 am | Permalink

    Dr Redwood,

    It is indeed refreshing to see someone point out the obvious, which is that financing a large current account deficit by capital inflows (mostly foreign investment) is completely unsustainable.

  22. Posted April 3, 2016 at 10:30 am | Permalink

    To me, the main problems with foreign owned business is twofold. The profits are sent abroad and not spent in this country as would probably be the case with dividends payable to UK owners. Secondly, there is the problem that foreign owners don’t necessarily invest in the business and even move parts of it abroad, and as in the case of Tata steel, there is no pressure that our government can apply to keep the business from being run down or closed. Indeed, there are cases when a business has been bought by foreign owners who have basically asset stripped and moved the business abroad.

    Surely a large part of the blame must be placed on the various investment funds and insurance companies who are the main owners of the shares. A foreign company offers more than the current value of the shares and they grab the offer in order to make a quick profit; they have zero interest in the company itself, just what its shares are worth at the time, and with the modern high speed computer trading, they all seem to behave like sheep. Now the London Stock Exchange is to be sold, who knows what will happen next!

  23. Antisthenes
    Posted April 3, 2016 at 10:32 am | Permalink

    I learn from Tim Worstall that it is the bast furnaces to blame for Port Talbot’s problems because they are out of date and need modernising. Liberty may ride in and replace them so all will be well again. We in the UK always seem to follow this path of underinvestment in our businesses. It appears a peculiar British disease that allows overseas companies who do invest more in new technologies to take our business away from us.

  24. The PrangWizard
    Posted April 3, 2016 at 10:39 am | Permalink

    How do we turn around the dire situation we are in following the disposal so many of the UK’s assets, and the outflow of funds which it is producing? Leaving the EU will play a vital part as will a change in our trading practices, but we must change the way we look at ourselves. There is something fundamentally wrong with that. Solutions to our problems do not lie abroad, they lie with ourselves. We must start to restore our self-respect.

    Take an attitude in China. As that nation began to grow individuals and its government recognised that many things it had produced were now in foreign hands. They regarded this as a matter of shame and embarrassment. Some items had been sold, some stolen, but however that had happened they decided that they would start buying back fine artefacts; it was a matter of pride. They have belief in their nation and their identity and history and what they have achieved, and in recognising their mistakes they wanted to rectify them.

    We have sold too many of our businesses, many which had been created from nothing, by individuals when we had pride in ourselves and they had pride in their achievements, not the just money which came with it. Our population was proud then too, in spite of the many hardships of the time. But a feeling took hold recently that they were merely saleable items, much like tins of beans, they were parts of old industries which we deemed to have no long term future, there were buyers out there. So, why not sell? It’s time we got a message out that we are no longer for sale, and the City must take note.

    These sales and de-industrialisation have proven to be grave mistakes, a consequence of short-termism and blinkered thinking which has plagued us for years. We should stop thinking that we are somehow so rich that we can pay fast and loose with our nation and its assets. Let us hope it is not too late.

    We have built some new businesses recently, but we have missed the boat in most new products developed in the last couple of decades, the result of an attitude of mind – why should we make things when we can simply buy from others, a form of arrogance. And then we had the idea which did the rounds to excuse our lack of manufacturing, of saying only do what we are best at and buy from others what they do best. This had the extension that we should be designers and let others make. Another arrogant attitude, as if the ‘coolies’ in the rest of the world were there to service us.

    All of this self-evidently has failed.

    We must change, but how? Could we take a leaf out of China’s book and go for a buy back of some of the businesses we sold, as starting new ones when foreign interests are so far ahead is difficult; Aston Martin was I think bought back from the US’s Ford a couple of years ago, maybe we could think of buying back ICI’s DULUX paints from Akzo Nobel. There must be many others, big and small. And let’s have an active credible government industrial policy which encourages, with generous incentives for new production methods, the repatriation of product manufacture,. If we get out of the EU this will be easier in many ways, but let us not listen to those who will say it can’t ever be done.

    Where there is a will there has to be a way, in or out of the EU. But like a reformed alcoholic, we must admit and confess that we have been prostituting ourselves for the profit of City spivs and government posturers, and now we have stopped.

  25. Ian Wragg
    Posted April 3, 2016 at 10:57 am | Permalink

    You mention TTIP and I understand we in Britain are not even represented on the panel.
    As you say it’s mainly about harmonising standards. We invented standards during the industrial revolution and we are the second largest contributor to the EU but have no say.
    Is that what the Remain side call influence.

  26. Dennis
    Posted April 3, 2016 at 11:38 am | Permalink

    Off topic – JR, you recently answered a poster that it is the government which is the customer for steel. Are you saying that it buys the steel and then sells it on to car manufacturers and others? You must be totally wrong, surely.

    Also today on the Marr Show Sajid Javid said that the public sector has been advised to consider buying British steel. Again this refutes your reply.

    Reply I didn’t say the govt is the only customer! Yes the U, public sector does need substantial amounts of steel.

  27. Dennis
    Posted April 3, 2016 at 11:40 am | Permalink

    Your reply must also imply that is is the British govt. that is buying the Chinese steel!!

  28. behindthefrogs
    Posted April 3, 2016 at 11:48 am | Permalink

    People who support the BREXIT campaign continuously use the fact that we pay in more than we get out as a major reason. Surely as one of the richer nations in the EU this is a social responsibility. On the same basis Wokingham should be planning to leave the UK so that we don’t have to support the poorer areas of the country.
    How much do you propose that the UK should pay the EU to support its poorer nations once we have left?

    Reply Nothing. Wokingham is happy to contribute to the rest of the Uk because we belong to the same nation and accept. Usual obligations.

    • behindthefrogs
      Posted April 4, 2016 at 4:11 pm | Permalink

      Similarly the UK should be happily a contributing member of the EU. This is not a valid argumrnt forBREXIT

  29. CHRISTOPHER HOUSTON
    Posted April 3, 2016 at 1:21 pm | Permalink

    “They [ *The EU Remain Campaign ] welcome more purchase of UK companies and assets by French nationalised industries or by German shareholders.” (3rd,4th and 5th lines, 3rd paragraph )
    “German shareholders” are not exactly the same of say American shareholders. Here and across the Pond private individuals even with humble savings are apt to buy shares. In Germany, they have operated what some might call a Corporate, or State capitalism. Therefore in a sense, French nationalised industries and German “nationalised” industries are hell-bent on controlling British industry yet flying a neutral commercial flag of convenience. It is a matter of semantics but allows Germany to bypass EU law in relation to monopoly and legal corporate governance. It also allows the only 50% State stake in French energy to do similar. The Remain campaign, their business “experts” ,are wet behind the ears. But then they are business people and their sported expertise, even their personal interest is not geo-politics nor economic Security in a wider sense and beyond the front gates to their enterprises.

  30. hefner
    Posted April 3, 2016 at 1:33 pm | Permalink

    Which JR do you believe? The 2016 one or the Jan’94 one in “The Global Market Place: Capitalism and its future”, or the one dithyrambic in Financial World on the Big Bang on 31/03/2016. When have the various Damascene conversions taken place, or is it the Denial of Peter.

    Reply My views are consistent. You will have to do better than general smears if you want to argue I have done a u turn.
    I have always believed that government sets the legal and economic framework for business, and that once you have some unfortunate interventions e.g. Dear energy and high energy taxes you might then need other interventions to offset the negative effects.

  31. bluedog
    Posted April 3, 2016 at 2:20 pm | Permalink

    Excellent comment, Dr JR. The UK has an exceptional future outside the EU, which is increasingly handicapped by problems of its own making, not the least of which is the Euro. Freed from the ultimate stricture of the European Court of Justice, a post-Brexit UK can start to exploit the weaknesses and inflexibility of the EU. We have many capable entrepreneurs and businesses, just give them the chance in the right tax regime and wealth will follow.

    As Michael Howard says, and he is old enough to know and understand, it’s all about control. Cameron and Osborne have lived their lives in the shadow of the EU and are psychologically dominated by its presence. We need a new leadership that is not afraid of independence and which rejects our increasingly colonial and subservient relationship with the Euro bloc of the EU.

    It seems strange to put it in these terms, but Brexiteers are freedom fighters, looking forward to a post-colonial future.

    We should also reject the increasingly tedious interventions in the referendum debate by ageing US politicians. It is interesting to note that George W Bush is conspicuous by his absence. For all his faults, Dubya has manners, for which we should one day thank him.

  32. ian
    Posted April 3, 2016 at 2:21 pm | Permalink

    PFI is one of the biggest crimes which started under con government in 1992, interest rates were 16% because of EU dogma and thousand business went broke and thousand of people throw out of their homes as the chancellor of the day was sacked, interest rates reversed back down to 10% and then 6% the same as in 1989 when everybody was rushing to get on the property ladder.

    PFI was not cancelled, the plan to build hospitals, schools and other infrastructure off the books went on at (high ed) interest rates with the fine print in the contracts and is still going on today at a time when the government can borrow at 0.5 percent, this money comes out patient care and staff wages in other words the hospitals budget each year.
    The money is funnelled to offshore companies in Jersey and Guernsey and banks (names removed ed), as the banks move in to takeover more hospital because they cannot pay their debt to them patient care and buying equipment and drugs will be hit badly, (One bank ed) has already taken over 3 hospitals from private companies to enforce the letter of the contracts and the same will happen to schools, they will take what assets they can get like land and put pressure on the boards to cut wages to make sure they get their interest and money.
    PFI is already around 400 billion off the books with the hospitals and schools paying the interest on the debt so if you add 400 billion and rising to 1.6 billion that’s 2 trillion pounds and has gone up by over 50 odd billion in the last 3 years not including the interest which paid by the infrastructure that is built like the trains 40 billion in debt and fares some the highest in the world if not the highest.
    Of cos it all gone to far now because by 2022 it will all be done with wet & mad on the warpath finishing the job off with the bankers and his best friends.

    That apart from what john is talking about.

    I ask my self when are people going to wake up.

    • NHSGP
      Posted April 4, 2016 at 5:36 pm | Permalink

      Ask how much the state owes for pensions.

      PFI is around the 150 bn present value.

      The pensions are 9,200 bn present value, rising faster than total taxation

      They are off the books.

      PFI is chump change.

  33. ian
    Posted April 3, 2016 at 2:57 pm | Permalink

    When they are finished with the 8 areas and city mayors and councils by 2022 with bankers and companies sitting on the boardrooms deciding what to build how much it will cost with PFI borrowing to get the money, it will come to a fortune with you footing the bill with your household rates and of cos you will not be able to use it because if it roads or rail or building for rent or anything like that because it will cost to much to go on with the infrastructure paying the interest on the loans, it a bankers dream.

  34. ian
    Posted April 3, 2016 at 3:06 pm | Permalink

    and of cos overseas countries pension funds and bankers with companies will have a field day as they are now but on a much bigger scale with everything imported and overseas labour to come in to max profits.

  35. ian
    Posted April 3, 2016 at 3:15 pm | Permalink

    You might say no room for overseas labour to come in but they put them in portable housing and change them rent and transport costs out of their wages so they end up on 5 pounds a hour doing 10 hours a day.

  36. Margaret
    Posted April 3, 2016 at 5:06 pm | Permalink

    John as you and others should be aware , this is simple economics. Some contest that it does not work in macroeconomics , but as most things ,moderation stops the extremes. So when Alan tried to put the shoe on the other foot, he forgot to mention that there are Wellington Boots , slippers ,court shoes which can be worn according to occasion and bought either from our own shoe makers , Italy or Tai wan. It is a case of managing , conservative spending and borrowing and looking at the ifs and buts. We have been unsafe in our monetary practices.
    If I only have a small house and cannot afford a larger one I won’t have more children than I can afford. If something happens in my life which threaten a lack of growth and a time where I can rest from my toils , I won’t keep spending any more than I have to and ensure the things I spend on are durables or have relative durability. Unfortunately economics means that all individuals take a sensible view even when speculating.

  37. hefner
    Posted April 3, 2016 at 5:52 pm | Permalink

    As had been pointed out some years ago (2013?) by David Willetts, the UK having a very broad science and research base, mainly through universities, is/was/could be at the forefront of Science, Technology, Engineering, and Maths developments. Its competence and past and present successes in Big Data, Space, Robotics and autonomous systems. Synthetic Biology, Regenerative Medicine, Agri-Science, Advanced Materials, Energy (that’s energy storage) should be the domains to be helped, nurtured and further developed.
    What is presently happening with steel is nothing more than creative destruction at work (Schumpeter). It is a pain to see politicians, who could be thought as intelligent creatures, again fighting last-century battle, and here on this blog cheered by a large number of what I can only consider as “has-been”s.

    • bluedog
      Posted April 3, 2016 at 8:15 pm | Permalink

      We live in a physical world that is based on control of property to supply our needs. Even the finest minds need nourishment and other basic requirements of the human condition. It follows that a virtual economy with a largely intellectual focus still consumes steel as the basic manufacturing and construction metal.

      Currently it seems that one nation, Communist China, has set out to achieve global domination in the manufacture of steel. Markets for steel everywhere are being distorted by the Chinese supply glut. The Chinese state is run by superb strategic thinkers who are ruthlessly focussed on retaining power without a popular mandate. By dominating the world trade in steel, the Chinese export their unemployment and can potentially bankrupt the steel making businesses of nations that believe in finance by private capital. If China’s competitors fail, the Chinese will have the market to themselves, accruing great wealth for China in the process. Only a powerful state can finance the production and sale of steel below cost, as China is doing. Within the EU, even the Germans will finally buckle, unless they introduce protectionist measures for their own industry.

      So yes, it’s all very last century in some regards, but the British steel industry at 14m tonnes of production per annum is just a rounding error in a very dangerous game. We should try to keep it in order to retain a degree of economic flexibility and independence, whatever events may determine.

    • JoeSoap
      Posted April 3, 2016 at 8:55 pm | Permalink

      Except for the strategic issue, true.

  38. ian
    Posted April 3, 2016 at 6:08 pm | Permalink

    Government minster for business on steel, we will take all the liability and leave the private offshore company with all the profits, I ask my self what is the point if your to take on all the liability you might as well take all the profits as well if there is any the government already pays out 90 billion pounds in business subsidies and if other companies follow tata steel will end up taking on all companies liability like pension and other fees so they just take the profits and pay no tax hear and pay the tax back home.

    Another great idea that the taxpayers take on all companies pension liability which will come to billions of pounds a year, we already take on the pension liability of companies that go bankrupt this is the start of a new plan, just like the new plan for schools to be private, only 24 pupil per classroom no disabled children or badly behaved ones, leave thousand of children without schools to go to and council will have to step in to take on the children who cost the most to look after and as they are private schools you will be able to force them to take them and your child can be throw out at anytime with go school to go to because other private school will not want them.

  39. ian
    Posted April 3, 2016 at 7:29 pm | Permalink

    The man took on tax haven reform and who is pushing for it only so he can bury it into the long grass because he up to his neck in it with a lot of other in this country.

  40. ian
    Posted April 3, 2016 at 7:56 pm | Permalink

    HEFNER,
    all that you talk about, science & research being done at universities which taxpayer are paying out billions for in grants and so on will end up like it always dose in the hands of offshore companies like it has done since the fifties, all given away, can you me one invention by this country universities that has not been given away.

    • hefner
      Posted April 4, 2016 at 5:32 pm | Permalink

      Ian,
      1/ you might want to have a look at http://www.universitiesuk.ac.uk “Submission to the 2015 Comprehensive Spending Review” and possibly revise your figures.

      2/ University “inventions” are often developed by start-up companies (Oxford is quite good at it, and over the last fifteen-twenty years, the so-called Oxford VCTs have had investors (more often than not from the public) who helped the development of “the science” into applications. I agree that often these start-up companies after 5-10 years have been taken over by bigger companies.

      A recent invention well publicised was graphene. Others have been those linked to genome reading and applications in pharmaceutical developments (by GSK among others)

      • stred
        Posted April 5, 2016 at 2:19 pm | Permalink

        The Chinese are now developing graphene. re Nature

    • hefner
      Posted April 4, 2016 at 6:52 pm | Permalink

      Ian,
      Look at http://www.oxfordtechnology.com then VCT3, there is a list of ~20 companies, all start-up companies created from research within the university. You can click on each one and get some information on what is being developed.
      I do not know where you get your information from, but it does not fit with reality!

      You could repeat the same exercise with other universities, Cambridge, Imperial, Bristol. Warwick, …

  41. Ken Moore
    Posted April 3, 2016 at 8:25 pm | Permalink

    An excellent analysis – in short Britain’s economy is being run ‘on tick’ and has much in common with a Ponzi scheme. The chancellor has been allowed, unchallenged to set policy based on his need to become prime minister rather than the best interests of the country. Someone need to ask ‘what the **** is going on’ now that the current account deficit has reached 7% of GDP. Only the BOE and Gideon believe this downward spiral to be sustainable…

    The Uk simply cannot get by on ‘value recycling activities’ alone, we need an industrial policy that actually creates real value!!!. Whitehall simply doesn’t get this hence the too little too late response to the steel crisis.

    My view is a temporary re-nationalisation of the steel industry would be a price worth paying to maintain the jobs, facilities and skills needed. We need to lose the ideological problem we have borne of 1970’s experience and do what most other nations do – ring fence core industries.
    Day by day Nick Ridley is being proved correct when he described the Eu as a ‘German run racket’. A German club with rules set to suit the German national interest – why are we not hearing about more German steel plant closures ?.
    Nationalisation was never the root of the industries problems..poor management is.

    Two choices – stay in an unreformed Eu with worse conditions than ever before as our rebates will be taken away if we are foolish enough to stay. Keep grovelling to China and watch Germany get rich as we struggle to goldplate every Eu directive.

    Get out and prosper by making things the world wants to buy and living within our means.

  42. ian
    Posted April 3, 2016 at 8:31 pm | Permalink

    This how PFI work, the government borrow the money off the books and the interest is paid by the infrastructure like hospital out of their budget from the government and the contract last for 30 years and government supposed to pay the debt off in that time but as the government dose not pay the debt off it is rollover forever, so even if the hospital is knock down say in 60 or 70 years you are still paying for it because debt has not been paid and then the hospital trust has to build a new hospital on PFI while it still paying for the one that has been knock down and cos the new hospital will be at a massive cost so in 60 years time nearly all the money the government gives to the trust for patient care will end up as interest payments to offshore companies and banks.

  43. JoeSoap
    Posted April 3, 2016 at 8:54 pm | Permalink

    “I want the government to curb the national deficits. I want us to generate our own power, make our own steel,produce more of our own cars. I believe we can do this. It requires taking back control from the EU, cutting energy levies and prices, and redoubling efforts to create good conditions at home to produce and sell our goods and services.”

    All fine, but the steel issue is a strategic one, as well as an economic one. Might it pay us to stockpile Chinese steel for national emergencies, rather than carry on producing our own? Looking at this as a national issue is more than just selectively reducing power costs or business rates for steel manufacture. Perhaps getting rid of business rates would even more dramatically increase our auto, shipbuilding, brewing or other space-intensive industries. I always explain business rates to foreigners as a tax levied on us for hiring more employees or giving our employees more working space. It is a really insidious nasty tax, and is about to be handed to local authorities to do with as they wish. Another Osborne epic fail.

  44. CHRISTOPHER HOUSTON
    Posted April 3, 2016 at 9:24 pm | Permalink

    Off Topic.

    I see there is a revelation of leading members of UK Establishment/ US /Russia and all and sundry about tax havens, tax dodging from Süddeutsche Zeitung .

    This last 12 months has certainly been a Germany year.

    So much, economic uncertainty Greece-Germany. Germany-Turkey, withdrawal of NATO and former Warsaw-Pact forces from her territory. The whole of southern Europe beset with tramping persons on their territory encouraged by an uncharacteristically Germany sentimentality to the plight of unfortunates. Barbed wire, razor sharp fences being erected. Divisions emerging on religious and racial/nationalistic grounds.
    At the centre Germany.

  45. Posted April 12, 2016 at 1:23 pm | Permalink

    “I have always thought the UK’s balance of payments deficit is a bigger problem than the state deficit, though the two are in part related.”

    Sorry to be a bit late on this one but, yes this is exactly right.

    If the UK as a whole is in deficit then someone in the UK has to finance that deficit by borrowing. At the moment the argument between left and right is over who should do the borrowing. Government or the Private Sector.

    A better approach is to reduce the need for ALL borrowing.

  • About John Redwood


    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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