Membership of the EU has damaged our economy and undermined the reputation of many economists

European Union membership has done considerable damage to the UK economy and to the reputations of the many economists who have slavishly recommended its economic ways. It has directly caused a major recession in the early 1990s in the UK, thanks to its European Exchange Rate Mechanism scheme. It aided and abetted the banking crash and Great Recession of the last decade by adding the imperfections of the Euro to the poor banking regulation which the ECB shared in common with the US and UK authorities. Many economists have gone on taking a rosy view of the Exchange Rate Mechanism, the Euro, Euro banking regulation and the single market without asking why so many people are unemployed and the growth rate of the Euro area is so low?

For my entire adult life I have found myself in disagreement with much of the UK establishment and the economics profession about three great issues – the Exchange Rate Mechanism, the Euro and banking regulation. In the 1980s as Chairman of a large quoted industrial company I was so worried about what the ERM would do to our employees and customers that I took the company out of membership of the CBI in protest at their support for this job destroying proposal when they were urging it on government. Later as a government Minister I fought a lonely battle with the brave Nicholas Ridley to try to prevent the then government plunging us into the high inflation and recession the ERM was likely to bring about. The economics profession kept their forecasts rosy and claimed that the ERM would curb prices and lead to better growth! Predictable disaster followed.

Then came the long battle to keep the pound. I was more successful with this, with more good allies who agreed that UK membership of the Euro would be bad news for our economy and might even destroy the whole Euro scheme, given the size of our banking sector and economy relative to the rest. I used to argue that the Euro was an ERM that it would be difficult to get out of. Why would we want to inflict on ourselves the austerity of the Euro scheme when we had suffered so much before we escaped from its progenitor, the ERM? How could we avoid the likely boom bust cycle that an inflexible exchange rate would generate?

The Euro proved to be just as bad for many of its member economies as I feared. Vast swathes of the Euro area’s economy are laid waste by the austerity policies, and by the lack of proper mechanisms to transfer large sums of money from the surplus countries led by Germany to the deficit countries of the south and west. There has been a long running rolling crisis for the Euro area’s banks and for financing the deficit countries. None of this has been good for the reputation of the any economists who told us what good news the single currency would be, and how it would transform the subject economies in a favourable way. They did not predict 25% unemployment with 50% youth unemployment in several countries when they set it up, and now seem surprisingly relaxed about those results.

Now we have to debate much of this all over again as we leave the EU. Some say the single market is a precious gem, essential to our prosperity as a nation. They have not studied the evidence. The UK’s growth rate was slower from 1972 when we joined the EEC up to 1992 when the single market was “completed” than it had been in the post war decades before. The growth rate slowed again after 1992 when the EU claimed it had completed its single market. Of course the advent of the full single market in goods came at the same time as the full impact of the ERM recession was felt. The UK has run an almost continuous large deficit on trade in goods with the rest of the EU both before the completion of the single market and afterwards. One of the costs of joining the EEC was the competitive shock administered to UK manufacturing which lost us factories and jobs in the 1970s.

What is so odd is how many so called experts just assert that the single market must be good without examining the data or asking some basic questions. Logic suggests that having common standards and specifications helps manufacturers by allowing them longer production runs and permitting more standardisation of product. However, this is a benefit of the EU single market that all exporting countries to it benefit from, whether they are in the single market or non members. Evidence also shows that the single market in energy, for example, is damaging to European competitiveness because it gives us much higher energy prices than our US and other competitors.

In the referendum the establishment was most upset that Mr Gove and Vote Leave questioned the accuracy of many economic forecasts by the great and good. Today those errant forecasters have another set of questions to answer. Why did they think the UK would experience a drastic slowdown or recession this winter? Why did they revise all their 2016 forecasts down so much? Why are they now having to raise their 2016 forecasts to pre vote levels or higher? Why did they suspend all the usual considerations from looking at money and credit growth, consumer expenditure, retail sales and new homes demand? No wonder so many members of the public now distrust the official forecasts. They have made three catastrophic errors in the ERM ,the Euro and the banking crash. They have now just reminded us how wrong they can be by their silly 2016 forecasts for the UK after the vote.

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98 Comments

  1. Lifelogic
    Posted December 3, 2016 at 6:37 am | Permalink

    An excellent summary.

    I too for my entire adult life have found UK establishment and most of the economics profession to be largely bonkers. But in government (or on the BBC) being right is not really an advantage. Being PC, lefty and in with the current state sector group think while telling government exactly what they want to hear is the way to progress.

    Government find the “experts” and academics they want. They are never interested in real experts. Certainly not ones who rightly tell them to reduce the size of government, cut taxes and fire all those in government who do nothing useful or worse.

    People who would tell them that:-

    Smaller government, far less red tape, cheap energy, lower simpler taxes, no HS2, no Hinkley, easy hire and fire, free trade, democracy, freedom etc. is the way to prosperity.

    Or energy experts who would tell them that the unreliables are absurdly expensive, intermittent, damaging and nearly always pointless even in CO2 terms. They kill and export jobs, kill birds and bats, prevent the UK being competitive and damage UK living standards hugely.

    Or climate change experts who would tell them that there is no real sound scientific reasons to assume a positive feed back and run away climate catastrophe is on the way. That climate sensitivity to C02 is hugely over stated and anyway CO2 has many positive effect in greening the planet and promoting crop growth.

    Or people who point out that the gender pay gap does not actually exist. It is entirely explained by the different subject the genders study, the different jobs they do, the career breaks they take and the work life balances choices taken.

    Or ones who tell them huge subsidies for trains and massive over taxation of cars, planes and trucks make no sense. Nor does blocking are the roads with government inspired road vandalism.

    Or ones that point out that “equality” not not something to be pursued. A basic safely net is far more effective.

    Or ones that tell them how appalling the NHS is and how it can never work efficiently as structured.

    • Lifelogic
      Posted December 3, 2016 at 6:53 am | Permalink

      Alas Theresa May and Philip Hammond seem to have swallowed the agenda of these lefty government “experts”, this with workers/customer on company boards, central government pay controls, intervention with agents fee structures and endless other lefty drivel, endless waste and white elephant vanity projects.

      They even seem to want to lock up thousands of landlords now:-

      The Immigration Act 2016 has now come into force which adds greater weight to Right to Rent regulations introduced earlier this year.

      The key message for landlords, and agents who act on their behalf, is they will be committing a criminal offence with the potential for imprisonment if they have “reasonable cause to believe” that their property is being occupied by a person disqualified under Right to Rent regulations.

      The latest measures also introduce criminal liability if “reasonable steps” have not been taken to evict someone who either the landlord or letting agent had cause to believe is contravening the rules. Steps taken to terminate an illegal tenancy would offer a defence against liability but at present there is only draft guidance as to what constitutes “reasonable steps.”

      Who would be a landlord not only are you taxed on profits you are not ever making due to the new interest deduction laws, but you might have to go to jail too.

      • Lifelogic
        Posted December 3, 2016 at 7:08 am | Permalink

        Still lots of new parasitic jobs for lawyers, bureaucrats, administrators the courts and the likes. All helping to further kill UK productivity.

  2. Lifelogic
    Posted December 3, 2016 at 7:00 am | Permalink

    What is also clear, from lefty remainer May’s attempted attacks on the schooling of children of illegal immigrants (and her go home immigrants mobile van adverts) is that T May is really not very nice at all. She certainly seem to know all about how to be the nasty party.

    It is governments job to decided you can be in the UK and who cannot. It is not the job of landlords to evict and discriminate against such people under threat of imprisonment. Now thanks to interventionist Hammond agents cannot even legally charge for the extra checks that will be needed.

    • ian wragg
      Posted December 3, 2016 at 10:41 am | Permalink

      I think your very wrong Ll. Most of the public would applaud TM if she managed too get our children to the top of the list for schooling. Also health and social housing.
      Whilst many would agree with John that the EU has been of no real benefit to the UK and harmful in many ways, does anyone understand why the body politic in this country overwhelmingly supports continued membership.
      Yesterday there was an article on Juncker and his merry men trying to pass legislation banning anti EU groups or activities on the pretext of preventing terrorism.
      Now we can see why he is so keen on an EU army.

    • Hope
      Posted December 3, 2016 at 10:46 am | Permalink

      JR is correct. But the majority of his party thinks he is wrong. Led by traitorous Major types. Let us be clear, if May had her way we would be remaining in the EU club under EU rule with ever closer union! She wanted ECJ and all the ECHR guff that it entails! Hardly a person to lead our country out of the EU. She chooses do so by having a majority of remaining ministers who were vile during the EU campaign i.e. Rudd sticks out from her TV debate. She has the worst record in history for immigration, she has imposed the worse kind of intrusive supervision on all UK citizens of this country while making MPs exempt! Her chancellor still continuing project fear as is Carney in BoE. Both of which have her support!

      Barnardo, Italian journalist, forecasts that the EU will sacrifice Italy if they vote no to EU rule, to warn the U.K. and France and others what will happen if they dare venture to leave the EU or disEUbedience. Even though the UK is not in the Eurozone financial mess described by JR.

      May is a total disaster. Relying on polls for her performance should now be seen as a mugs game. She introduced a state police style over the population by her snoopers charter so everyone’s browser history can be viewed, MPs exempt! Of all the rotten organizations and substandard behaviour there is one organization that needs independent policing, as it is rotten to its core, it is Westminster.

      JR, you are a very small minority in your party who express this sort of view. Your party is a lost cause as it has been overwhelmed by nasty EU supporters of the worst kind led by May.

    • Anonymous
      Posted December 3, 2016 at 2:42 pm | Permalink

      It was that children of illegal immigrants should not be able to displace indigenes, alas we now know that they can.

      It now seems that Mrs May was Tory Remainers’ plan B in the event of a Brexit win

      “Keep out of the debate Theresa. Your job is to stay unsullied, pretend to take over with your soothing Jenny Agutter voice and delay until Remain regroups and mounts an effective legal and media counter attack.”

    • Hope
      Posted December 3, 2016 at 4:10 pm | Permalink

      JR, you also forgot to say it shows what liars politicians are and how they cannot be trusted by the public.

    • Der Leiter
      Posted December 3, 2016 at 4:28 pm | Permalink

      Lifelogic:
      I can’t think why you would call Mrs May a “leftie” . An ineffectual “rightie” could be apropos.
      She has said less bad things about Putin than Trump. In fact her Shadow Cabinet and The Khan of London think Trump is President-Elect of Russia judging by their hysterical possibly hallucinogen-based outbursts.
      I mean, what is May going to say when she meets Trump? ” Sorry for inferring you are a mysogynist ( keep your filthy redneck hands off me by the way ), racist, power-mad, warmonger with bad-breath and with the personal habits of the lowest mammal. Now that I’ve drawn a line under that, how about getting your extremely rich captains of industry to invest in a fish stall in Covent Garden, if we guarantee for 500 years free rent and rates? ”
      She’ll do Britain proud!

    • StevenL
      Posted December 3, 2016 at 7:42 pm | Permalink

      Now thanks to interventionist Hammond agents cannot even legally charge for the extra checks that will be needed.

      They are the landlords’ agents, not the tenants and the law will not prevent the agent from charging their principal/customer.

      • Lifelogic
        Posted December 4, 2016 at 7:27 am | Permalink

        No but it tied the agents up in red tape and prevents them from operating more efficiently. Thus pushing up rent for tenants in the end. Why should the landlord have to pay for credit and other references perhaps for people who know they have bad ratings or problems anyway? The good tenants will pick up the bills for others and the supply of rental properties will be reduced (the exact opposite of what is needed).

        • StevenL
          Posted December 4, 2016 at 10:34 pm | Permalink

          You’re asking why should the landlord pay for services they require? Whenever landlords bleat policies will push up rents and cause housing shortages we all know fine well they really mean they think the policy will cost them money.

  3. am
    Posted December 3, 2016 at 7:03 am | Permalink

    OBR forecast 2.1 UK growth for 2016 on the Wednesday of the autumn statement. Two days later, on Friday, the ONS figure came out at 2.3 for end Q3 2016. Yet there was no Friday analysis on what went wrong so quickly with their forecast. Neither was there analysis on the effect of this error on subsequent years of their projections, say 2017. If growth is higher at end 2016 than they forecast then the economy has a stronger carry through into 2017(it starts from a higher value) so their 2017 forecast is immediately wrong also. Yet it is all received without analysis. It impacts government borrowing, tax collection, employment, etc, yet not a word.
    Growth for 2016 at 2.3 on end Q3 2016 will surely be more at end q4 2016. Surveys are already indicating that manufacturing and construction will make positive contributions to growth in Q4 whereas in Q3 their contributions were negative. Retails is already strong. A few billion off the trade deficit(a large negation to gdp) will help also. So if services do their usual it is quite possible that Q4 growth on Q3 will be much higher than Q3 growth on Q2. Say, it takes 2016 annual growth up to 2.5 then the forecast of 2.1 will be out by 0.4. A large error.

    Reply Not necessarily. Q4 2015 was strong so we need a very strong Q4 2016 to sustain the 2.3% annual.

  4. Lifelogic
    Posted December 3, 2016 at 7:18 am | Permalink

    The BBC and the Univerity of Sussex currently seem to like their “expert economist” Prof Mariana Mazzucato.

    To me she seems a very confused a typically “BBC think” magic money tree lefty. Doubtless why she seems to be almost in permanent residence at the BBC. I have yet to hear her say anything remotely sensible or coherent. No wonder so many UK graduates are almost unemployable.

  5. Peter Wood
    Posted December 3, 2016 at 7:32 am | Permalink

    Good Morning,

    Perhaps the incompetence of the EU can best be demonstrated by the fact that they have appointed no less than 3(!) Chief, Head or whatever Brexit negotiators! One each for the Council, Parliament, and Commission. Is there any point to wasting our time with them, when in practice we really only need to talk to the Empress? (provided she keeps her office)

  6. Peter VAN LEEUWEN
    Posted December 3, 2016 at 8:26 am | Permalink

    An advantage of different perspectives is that one can see what one wishes to see. So besides this valid opinion, supported by economic argument, I have sometimes read the opposite, namely that the UK has always and still is greatly benefiting from its EU membership, also supported by economic arguments. Easily summed up by “just Google for it”.
    That is why I think that the root of the Brexit wish of many is to be found in different aspects of it.
    (Sent from one the countries which a much lower youth unemployment than the UK)

  7. Lifelogic
    Posted December 3, 2016 at 8:42 am | Permalink

    http://www.telegraph.co.uk/comment/personal-view/3623669/How-364-economists-got-it-totally-wrong.html

    What is odd is why they seem to get it wrong so very often. They simply cannot see the wood for the trees, or perhaps their religious and political leaning overcome their ability to thing logically. The Euro and ERM were obviously going to be a disaster from day one. They start from deciding what they feel they want to be true and develop theories to justify these feelings.

    The BBC, the luvvies, most art graduates, most of the state sector, most of academia, most politicians, the young (especially before they have experienced a job, family and taxes), pop musicians, all seem to get it totally wrong. They just seem to think with their guts and their feelings. I find the brain, maths and logic tends to work rather better. Especially in the fields of business, investing, employing people and placing winning bets.

  8. Alan
    Posted December 3, 2016 at 8:48 am | Permalink

    No one knows what would have happened if we had rejoined the ERM, or joined the euro. These things did not happen and we cannot know what would have occurred if they did happen. We can only speculate.

    We do know that the situation we are in is partly a result of the decisions to leave the ERM and not join the euro. Few seem to think we are doing well. We do know that having one currency makes trading with and travelling in the Eurozone easier than it used to be, with less of the inefficiencies of changing currencies. Obviously both trading and travelling would have been easier still if we had joined the euro. The common standards have made trading much simpler than it was before. We could have gone on to develop common standards for services, but now we have to abandon that.

    What joining the euro might also have done was to have forced us to pay more attention to productivity. We seem to regard devaluation, which lowers the pay of our workers, as a preferable way to keep our exporting industries competitive. This policy is working well and I can see no real reason not to continue it whilst it works, but I cannot help thinking that eventually we will find it untenable, probably because our currency will start to decline in value more quickly, and possibly because being a low wage economy will not be acceptable to the people.

    The Eurozone countries do not have this option and as a consequence some of them have to improve their productivity. That is particularly difficult to do in the aftermath of the financial crisis and because they borrowed much money and did not spend it sensibly. The euro is not a currency for countries that run their economies prodigally. We will see whether the Eurozone finds a solution that increases productivity, or whether it just allows some areas to decline. We have little influence on this, not having joined the euro, and must just wait and see, and hope.

    We have to get used to not having much influence.

  9. Dave Andrews
    Posted December 3, 2016 at 8:48 am | Permalink

    I guess someone must have plotted the historical forecasts of financial institutions against actual performance. It would be very interesting to view how inaccurate they have been.

  10. Caterpillar
    Posted December 3, 2016 at 8:48 am | Permalink

    I suggest that the debates to which Dr Redwood refers are only occurring due to the inaction of the Government in actually exiting the EU, following the vote to do so.

    There are several more fundamental macroeconomic debates that could, and should, be had.

  11. agricola
    Posted December 3, 2016 at 8:59 am | Permalink

    Quite possibly, but at least being out of the Euro has avoided the control that the EU has over it’s members. A control that has benefitted Germany. Question is, now that Germany begins to realise that there are responsibilities as well as benefits from being the main player in the Euro, is she financially robust enough and does she have the will of her people to accept those responsibilities, as do the people of the USA and UK within their common currencies.
    Rather than continually pointing out the deficiencies of the Euro and the Single Market, and other political constructs of the EU we should be heading for the door with much greater rapidity than is apparent. Fully understand that this is the last throw of the dice for the UK political establishment. Get it wrong and I dare not predict what might happen. In our departure from the EU there is little to discuss with them. As to the hard or the soft, the ball is in their court. By that I mean they can choose between continued tariff free trade or WTO rules. Peripheral areas of cooperation are all that need to be discussed.
    Correct me or not, I have the impression that May is (debating it too much ed) Get it done while the EU is in total disarray. There are much bigger questions to be resolved in the UK such as how we care for our aging population. The none payment of the net £10 Billion PA payment to the EU and a re-think of the £12 Billion PA that goes on so called overseas aid, just for starters. May and her government need to get a grip.

  12. stred
    Posted December 3, 2016 at 9:10 am | Permalink

    renal- retail? last paragraph.

  13. Deborah
    Posted December 3, 2016 at 9:17 am | Permalink

    When I was younger, the balance of payments was regularly reported alongside sterling exchange rates in the news. Politicians would talk about it and ordinary people understood its importance.
    That stopped somewhere along the way. It just slipped off the radar in the 80s or 90s.We never hear about the balance of payments now. Is that because our massive payments to the EU send us so far into the red ?

  14. Iain Moore
    Posted December 3, 2016 at 9:27 am | Permalink

    The lack of questions about the single market has been a irritation of mine. We keep hearing the advocates of the EU and some of the EUsceptics repeat the mantra of the unalloyed good of the single market , and need to stay in it at all cost . I repeatedly tried to get the BBC to address this issue during the referendum, without any success.

    The only study I have seen on the benefits of the single market was done by Bertelsmann Stiftung an independent research company who put the benefits of the single market to Germany at e450 per head p.a. while to the UK it was worth e10 per head p.a. about as much as it was worth to the Greek economy. In other words not a pile of riches, not even enough to pay for half our EU budget contributions.

    https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/Policy-Brief-Binnenmarkt-en_NW_02_2014.pdf

  15. Antisthenes
    Posted December 3, 2016 at 9:42 am | Permalink

    A common market is a goal with considerable merit. However the main ingredient of it if it is to achieve the prosperity it promises is unregulated free trade. Otherwise as the evidence of the EU tells us it only benefits a few of those who participate in it. A shared currency has it’s benefits and works well under well certain circumstances. Those circumstances are very difficult to achieve when they have no political and economic historical link. They have to evolve and as far as I know have never worked when imposed. The EU has imposed the euro before the link putting the cart before the horse. A recipe for failure which observation tells us is exactly the state of the euro-zone. The ERM experiment was a lesson indicating that that would be the result but was not heeded.

    To those with intellect to see the EU is an abject failure and can only be viewed as a success by those who are not anchored in realism. Obviously there are many of the latter type. Hence we are given many opinions that are not anchored in fact either. These experts and prophets who espouse these facts devoid of truth are accepted as being in the highly intelligent class. This can only lead me to believe that how we measure intelligence is flawed and should include a way to distinguish levels of pragmatism and the idealistic. The optimal being neither too much of one or the other.

  16. Posted December 3, 2016 at 9:59 am | Permalink

    Reputation

  17. forthurst
    Posted December 3, 2016 at 10:09 am | Permalink

    “One of the costs of joining the EEC was the competitive shock administered to UK manufacturing which lost us factories and jobs in the 1970s.”

    This is why people like Patrick Minford are wrong to claim that abolishing our tariffs without reciprocity or consideration of wage levels or social safety nets pertaining to trading partners is wrong; there may be a consumer boom in the short term, but high added value jobs are far easier to destroy than to create and we are poorer now than if our manufacturers had had time to adjust to lowered tariffs. This is why negotiating free trade deals with all and sundry, including China is also wrong.

    The problem that economists have is that although they may have complex algorithms modelling an economy and its response to change, they have never found how to apply the human factor, so when they predict that the Euro will squeeze out inflation, adjust wage levels, increase productivity, remove unnecessary government overheads and make the economies of the EU perform like well-oiled machines, they are flabbergasted that this does not happen: they have advanced degrees; their dissertations have been acclaimed; why don’t governments and people obey their models? Why do they prefer to languish in permanent recession?

  18. oldtimer
    Posted December 3, 2016 at 10:16 am | Permalink

    Another aspect of the hubris of the economists is to be found in the account of the referendum campaign “All Out War” by Tim Shipman which I am about half way through reading. The In campaigners were convinced that they had won the economic argument, bolstered by the phony forecasts, but lost because they had no effective counter to the immigration argument.

    Yet this, it seems to me, was an extraordinarily complacent conclusion as those actually speaking to people on their doorsteps discovered (including those on the In side of the campaign such as Damian Green). The fact is that there were and are many who have benefitted from the EU and its largesse – many of these voted Remain. But a larger number have not benefitted at all – they help swell the majority who voted Leave. This fact seems to have escaped the attention of the LibDems celebrating their win over Zac Goldsmith in the recent Richmond Park by-election – one of the most pro Remain (c70%) constituencies in the country.

  19. James Neill
    Posted December 3, 2016 at 10:24 am | Permalink

    When all is said and done, in one hundred years time or say two hundred years time the south coast of England will still be only twenty miles or so distance from the coasts of France Belgium and the Netherlands. It would all be so different if we could just tow the UK out into the centre of the Atlantic Ocean near Bermuda, but we can’t, so we’re just going to have to come up with some other lasting formula that we can all live together in prosperity and harmony with each other. I still believe Brexit is the wrong way to go , instead we we should remain n there hammering at the EU table to make the necessary changes for the future of our young people and not forever outside- with no say!

    • Edward2
      Posted December 5, 2016 at 8:25 am | Permalink

      We’ve tried being “at the heart of Europe ” and “banging the table”
      It has had little effect over the last 40 years.
      The EU has a plan. It will never be diverted
      It will never reform.
      It drives on towards the United States of Europe.

  20. Bert Young
    Posted December 3, 2016 at 10:51 am | Permalink

    John , you were not “speaking for England ” today , you were definitely speaking for me !. I did not vote to join the Common Market – I have always felt that we were better off paddling our own canoe .

    The introduction of the Euro has driven wedges into the EU alliance and done nothing to enhance the living standards of individuals ; only Germany has benefited by the Euro , ,it has maintained the level of its exports and its surplus .

    The dream of a united Europe in all respects was never really achievable ; the differences in ethnicity , customs and background history of each of the member countries make it impossible . I do sympathise with the feeling that a united Europe would make war less likely – certainly those countries who were occupied had more reason to support this motive than us . On the other hand the dominance of Germany has still emerged and made its presence felt in many other ways .

    Our independence is our very life blood and has sustained our way of life ( and its success ) over many many centuries ; it has also been a balancing influence on European affairs . Without this influence Europe would have succumbed to a dominance of frightful proportion in the past . Our blood spent in the defence of fair play has been scattered on many occasions .

    Congratulations on today’s blog.

  21. John Archer
    Posted December 3, 2016 at 11:00 am | Permalink

    Remember this too from those great economic thinkers in the run-up to the Euro: “Fiscal transfers — no problem! The convergence criteria™ will take care of those. Now run along and leave this to the big boys.“? And how these convergence criteria were so badly flouted by France, Italy, and Germany anyway —not that it would have made any difference in the end if they hadn’t?

    If I had my way these third-rate Mystic Megs would all be in for a huge ‘asymmetric shock’ of their own.

    Some of these prestigious jokers even have the gall to claim their supposed discipline is a science. Worse, many more actually believe them.

    So many economists have never merited any credibility at all, but how’s Joe Soap to tell the difference when he’s too busy paying the mortgage and watching television?

  22. Prigger
    Posted December 3, 2016 at 11:10 am | Permalink

    Nepotism and cronyism.It is the herd of elephants in the room.

    Throughout the whole if industry, academia, police force, NHS…the same lamentable story is there. So common, so bog-standard normal, it is now in many cases that there is not even any attempt to cover it up. More, it is openly smiley-faced boasted about.

    Local Authorities…it is a way of life. How could it be otherwise when you see the stupidities. It takes connivance to get that much incompetence and don’t-give-a damn coagulating in one place. Couldn’t have happened by accident!

    For those precious few trying their best in Local Authorities and their Arms-Length whatever it is, with supervisors and bosses direct from the funny farm, they imagine private industry and endeavour is better.

    Wouldn’t it be nice if the profit-motive ensured efficiency and purpose! Sounds like a Tory Party mantra, and it is. But profit-motive is just a tee-shirt slogan. The actual “profit” as an in-your-hand incentive to management of huge companies is so remote, even as an overall concept, that it may as well not exist at all.

    “Why did they ( experts ) think the UK would experience a drastic slowdown or recession this winter?

    Answer: because they never were expert.

  23. Richard1
    Posted December 3, 2016 at 11:21 am | Permalink

    During the first few decades of EU membership the world was a much more high tariff and protectionist place than it now is. EU membership has almost certainly therefore led to more trade than there otherwise would have been. In many sectors, expansion and consolidation within Europe has been very positive for growth and prosperity. I note that even Nigel Farage has said he would have voted In in 1975 due to the potential for trade.

    Your comments on the ERM and the euro are of course correct, but I think the eurosceptic side would have more credibility if it didn’t argue that every aspect of EU membership has always been terrible.

  24. Itiswritten
    Posted December 3, 2016 at 11:36 am | Permalink

    “Membership of the EU has damaged our economy and undermined the reputation of many economists”

    Just how can the EU, anything or anyone undermine the reputation of many economists?
    Since when have economists been on a pedestal? Every asylum seeker and his son from the great drifts walking through southern European countries claim to have been trained and worked as “an economist” or “dentist” or “oil industry engineer”. Nasty dictators in the Middle East seem to have a global edge in educating their people far beyond Western capabilities.
    So, most of our expert economists, it follows, and it goes without saying, get it wrong because they are mis-translating and interpreting from Arabic and that’s why their pontifications come out as numpty double-dutch.

  25. ann ceely
    Posted December 3, 2016 at 11:56 am | Permalink

    Whereas some citizens (including myself) think that a Government’s moral duty is to provide for and protect it’s honest citizens (& temporary legal visitors), first and foremost. Secondly, to attempt rehabilitation of it’s dishonest citizens. However, at the bottom of the queue should be illegal immigrants.

    I don’t think people have thought through the situation around schooling of illegal child immigrants. If a school has only one place available, yet several citizens and illegals wanting it, would anyone really give that single place to an illegal immigrant?

    • fedupsoutherner
      Posted December 3, 2016 at 10:11 pm | Permalink

      Hit the nail of the head Ann!! That is exactly what is wrong with the whole system of immigration.. They get first pick of everything!! No housing stock for the locals but plenty for those queuing up from all over the world.

    • Jerry
      Posted December 4, 2016 at 8:17 am | Permalink

      @ann ceely; So you want to punish the children (deign them an education) for the crimes of the parents (if indeed you really did mean illegal migrants)?…

      Many might suggest that if so much money wasn’t being wasted within the education sector/DfE on pet schemes, projects, fulfilling the National Curriculum tests or dubious private sector funding models and methods (and here I include student loans) etc, then there could be a school place for every child that needs a place in the state sector. The real problem is not the children of (illegal) migrants. Just as our housing problems are not being caused by migrants either, to pick up on a point made in reply by @fedupsoutherner.

      I think some people need to re-read the writings Martin Niemöller; First they came …

      • Edward2
        Posted December 5, 2016 at 12:41 pm | Permalink

        How do you plan years ahead for numbers when you have no idea on how many choldren will be here?
        Perhaps you could tell us Jerry how much extra budget you would allocate for extra school places for immigration and illegal immigration over the next ten years.

        • Jerry
          Posted December 5, 2016 at 7:31 pm | Permalink

          @Edward2; With the ‘defeatist’ attitudes of people like you have Eddie it makes one wonder how this country ever won any wars. Reacting to events is a far more important skill than planning ever is…

          • Edward2
            Posted December 6, 2016 at 2:27 pm | Permalink

            Defeatist? “People like you”
            Why are you personal and agressive.

            Not actually answering the question I note.

            You can try “reacting” but it takes years to plan and build new schools and train and recruit teachers.

  26. Newmania
    Posted December 3, 2016 at 12:10 pm | Permalink

    They have not studied the evidence. The UK’s growth rate was slower from 1972 when we joined the EEC up to 1992 when the single market was “completed” than it had been in the post war decades before.

    Oh for god`s sake is this really what we are reduced to ? How big to think the economy was “Post war ” John the clue is in the word “war” . This reminds me of the sort of witless guff pro-duced by the TUC when they wish to pretend our debts are ordinary by historical standards. The West in its entirety experienced a surge of growth after he war but the UK was noticeably left behind by its European neighbours . We were the sick man of Europe
    What are you suggesting, that we should go back to Nationalising motor steel coal shipping Rail , endless strakes stagflation and decline. That as the economic story of post war Britain and it was reversed by membership of single market ( prior to joining the EEC) liberalising our econo-my and the achievements of the Thatcher government. I start to wonder whose side you would have been on against Scargill

    • Richard1
      Posted December 4, 2016 at 8:09 pm | Permalink

      The 50s and 60s did of course see post war recovery in the U.K. As elsewhere. As you rightly point out the UK performed much worse than eg Germany or the US in this period. By the 1970s the U.K. Was nearly bankrupt. The reason was socialism, and recovery dates from the reforms of Mrs Thatcher. I agree membership of the EEC /EU was on balance helpful in this period. It probably meant more free trade than there otherwise would have been, and it provided a good cover for many needed reforms which otherwise would have had to have been debated from first principle – e.g. The block on subsidising industries and protectionism, which the left argued for stridently (and which were the cause of so many of the UK’s problems).

      But maybe the balance of advantage changed c. Mid-90s as the EU embarked on a relentless programme of federal supra-national government, driven by the euro? In retrospect maybe it’s a pity the UK didn’t join in 1957 and restrict the whole enterprise to a simple system of free trade.

  27. Lamia
    Posted December 3, 2016 at 12:16 pm | Permalink

    Very good article. The fact that standardisation of specification also benefits non-member countries who export into the EU ought to be so obvious but seems to simply bypass Single Market enthusiasts. You could also have mentioned that Single Market regulations favour large companies but make life harder for smaller ones, since

    (1) regulatory compliance and administration place a proportionately larger burden on smaller companies (e.g. it’s manageable for a very large manufacturer to have a number of products tested at the cost of tens of thousands of pounds to meet a new set of specifications, but the same cost can simply drive a smaller company out of business. When the SM was first introduced, a quarter of UK pig abattoirs went out of business due to the vast new compliance costs.

    (2) Most of the EU regulations originate not with the inept EU Commission itself but with large companies which lobby to have specifications and regulations drawn up to meet their own wishes – i.e. in effect everyone else has to comply, at great cost, with how a large company is already doing things or has decided to do things.

    ‘A Revolution in Government’, Chapter 15 of ‘The Great Deception’ by Booker and North gives numerous examples of how the SM in practice strangled vast numbers of smaller businesses. For readers who don’t know it, it’s a fascinating read and probably the best-documented account of the EU and the UK’s involvement in it.

    The net result of this has been to buoy up already very large established German, French, Belgian and Dutch companies who can lobby in Brussels and Strasbourg week in, week out*, while hampering smaller companies and innovators. Additionally, established giants such as Philips and Volkswagen very rarely contain innovators and entrepreneurs. Instead they attract C-plussers, mediocre managers and careerists who would never be able to start a new business or come up with a useful new idea. Yet the SM is stacked to favour the C-plussers, rather than innovators such as James Dyson.

    And then people wonder why the EU economy has shown so little dynamism since the SM was introduced. That is because dynamism comes from smaller companies growing and from new areas in manufacturing and technology. The SM puts the dampers on that while making things easier for giant companies, particularly in manufacturing, to put smaller competitors out of business.

    * Again, it’s more costly for companies in geographically peripheral countries to try to do this; physical closeness to the centre of a very centralised institution confers advantages on certain countries. This hardly ever seems to be considered.

    (PS, John, there is a typo ‘reputaiton’ in your headline and there is an ‘any’ that should be ‘many’)

  28. SweepingBrushExpert
    Posted December 3, 2016 at 12:27 pm | Permalink

    People should look to internet coverage of long and detailed video interviews with “experts” on business websites.
    You will find they all have extremely wordy and apparently intelligent views..but opposite or partially different one from another. So economics is not a pure science by any means. Also in terms of information leading up to the Referendum, American and Canadian Fund Managers were factually incorrect in some of their offerings.

    Most commenting on this site whether Leave or Remain would have been dumbfounded by the ignorance of people dealing in billions of money including pension funds.Astonishing! These self-same people rub shoulders with similar experts and are responsible for the emphases in World Stock markets. So, the FTSE has gone down/up. So the Pound versus US dollar has gone down/up/ ? So what! So what, when you realise how decision-making is enacted and the basic knowledge, not intelligence, but basic knowledge of the actors.
    Why are “experts” blissfully ignorant of the commonplace? The answer is beyond the space limitations of a Comment on this blog.

  29. Little Englander
    Posted December 3, 2016 at 12:34 pm | Permalink

    PVL: Don’t “‘do one”‘ yet – read Mr. Redwood’s Membership of the EU…. and then “‘DO ONE!!'”

  30. Jerry
    Posted December 3, 2016 at 12:45 pm | Permalink

    They have not studied the evidence. The UK’s growth rate was slower from 1972 when we joined the EEC up to 1992 when the single market was “completed” than it had been in the post war decades before.”

    Then nor did the politicos of the day, or did they put the poor growth rate down to other factors, such as union militancy, if you are implying that Thatchers government was wrong then many will be g;lade to hear it but I suspect you will still want to blame the EEC/EU, so why did the government you were a part of encourage the formation of the EU and its single market?!

    “The growth rate slowed again after 1992 when the EU claimed it had completed its single market. Of course the advent of the full single market in goods came at the same time as the full impact of the ERM recession was felt.”

    Except that your so called ERM recession also came at the time of the fall of communism, the first Iraq war and many other international problems that spook investors and speculators.

    “The UK has run an almost continuous large deficit on trade in goods with the rest of the EU both before the completion of the single market and afterwards. One of the costs of joining the EEC was the competitive shock administered to UK manufacturing which lost us factories and jobs in the 1970s.

    That must rate as a classic example of post-truth politics, never mind the fact that the most damaging recessions were in the 1980s and most UK manufacturing capacity was lost in the 1980s – due to the policies of the Thatcher our host was a part of. As a comparison, our EEC neighbours during the same period chose to support their troubled industries, both private and publicly owned.

    “They have now just reminded us how wrong they can be by their silly 2016 forecasts for the UK after the vote.”

    Except that their forecasts were for post Brexit, or at least the triggering of Article 50, which was assumed to happen within days or at least weeks of a Leave result to the referendum, not (eight or nine) months after…

    Reply More capacity and jobs were lost 1973-6 under Labour’s IMF recession and during the great Recession of 2007-9

    • Jerry
      Posted December 3, 2016 at 7:35 pm | Permalink

      Also, regarding the recession in the mid to late 1970s, wasn’t that caused far more by the OPEC oil price/supply shock?

      Reply The 1992 one was caused by the ERM

      • Jerry
        Posted December 4, 2016 at 7:55 am | Permalink

        @JR reply; Except you talked about the 1970s recession, implying that it was caused by our joining the EEC, when much of the worlds economy was affected by OPEC’s behaviour in the mid 1970s on, or was the recession in the USA around the same time also caused by them (or indeed the UK, for that matter) joining the EEC too?!

        Also many other world factors existed in the early 1990s, not just the ERM, such as issues around the fall of communism and the first Iraq war), indeed my boss at the time commented in mid 1991 that there was a slowing of the UK economy -in my industry a lot of customer spending is very discretionary and can almost be used as a barometer for the wider economy.

    • Jerry
      Posted December 5, 2016 at 8:20 pm | Permalink

      @JR reply; “More capacity and jobs were lost 1973-6 under Labour’s IMF recession and during the great Recession of 2007-9 [than during the 1980s]”

      More post-truth politics revisionist nonsense! UK unemployment was at around 4.3% in 1972, 3.4% in 1974, in 1979 it was around 5.7%, by 1984 it was at 11.4%, it did not drop below 6% until year 1999/2000.

      Reply There were massive jobs losses in coal, steel,rail etc under Labour. Unemployment averaged 2.7% in 1973, the last year of the Conservative government, and averaged 6.2% in 1977 under Labour, an increase of 130%.

      • Jerry
        Posted December 6, 2016 at 2:30 pm | Permalink

        @JR reply; More spin Vicar?…

  31. ian
    Posted December 3, 2016 at 12:51 pm | Permalink

    Most of what we see is experiments by the elite and there pet governments and groups while the populations do the suffering and dying.

  32. Embarristering
    Posted December 3, 2016 at 1:01 pm | Permalink

    Corbyn is on Sky News saying that if the Supreme Court throws out the government position on triggering Article 50 then the Labour Party will seek an amendment of any bill put through Parliament to secure access to the Single Market. Of course this would mean he would have thwarted the will of our people.Obviously I am not an expert on the British Constitution in that it exists, but how would Mrs May avoid calling an immediate election?
    We really cannot have Opposition Westminster parties openly flouting the very clear-cut basic democracy of the Referendum. How are we to have future referendums or even General Elections when a cross on a ballot paper and a win for the most votes are as nothing? It is most certainly not hyperbole to write that civil wars have started for less.

    Personally I do not see why the leader of the Labour Party, the leader of the LibDems and whoever has courage in the event to say they are leader of the SNP to be arrested and jailed awaiting trial on so many laws broken that one does not need to go way back to 1700AD or thereabouts to find them. In truth!

    • Jerry
      Posted December 5, 2016 at 8:40 pm | Permalink

      @Embarristering; “We really cannot have Opposition Westminster parties openly flouting the very clear-cut basic democracy of the Referendum.”

      You would not know “clear-cut basic democracy” if it reared up and kissed you full on the lips (and no I do not mean that very regional Scottish version!).

      In the referendum you cite all the electorate did was vote to leave, we did not vote on either how or when we should leave, we were not asked, nor would it have been clear-cut even had we had been because there were 28 different Brexit groups legally campaign for a Brexit result. If you want the democracy you cite then best we have that second referendum, this time asking asking the How and When questions.

      As for your last paragraph, that rant sounds more like it belongs in 1930s USSR or Germany. Having an opposing, democratic, political opinion, how dare they – lock them up…

  33. Up the EU
    Posted December 3, 2016 at 1:20 pm | Permalink

    It is your continued rejection of good sound economic advice Mr Redwood which is leading this country to ignominy. The British are a laughing stock throughout Europe. Britain has gained economically and in political influence by taking advantage of poor people throughout Europe who flock here to do menial tasks which British people are too lazy and good-for-nothing to do. They ( the weak-kneed glass-back British ) want their cake and eat it and still cry “More” like a weird and unsightly parody of Oliver Twist.
    I just hope the Supreme Court will uphold common sense and throw out May’s arrogant ” Royal Prerogative” . She is a gallon and half short of having the blue blood one associates with excellence.

  34. Sober person
    Posted December 3, 2016 at 1:45 pm | Permalink

    To question Osborne and Carney’s doomsday speeches is not an argument. Osborne, Cameron and Balls interchanged their terms of Deficit and Debt continually over two years. This proved they had not the slightest understanding of economics. Yes I know they have qualifications in this and that. All this proves is that our educational establishments and indeed our financial institutions are certainly not fit for purpose as the late Auberon Waugh outlined time and again and, these utterances were the very few times he was speaking without at least a little of his tongue in cheek satire. ( unbeknownst to The Great Unread )

    Quoting silly people however they be elevated to senior positions is not an argument. It is quite obvious that when you have long-standing and understood trade deals with 27 nation states then you cannot just say to them all as a block “Well we want something different, hard luck”. How many UK businesses would relish the idea to take 27 of their customers/buyers and say in a couple of years, get ready for it, we are opting out of our previous deals going back near on half a century. What would you expect those customers/buyers to do? Give you a round of applause and an invitation to their daughters’ weddings?

  35. SimplyTheBest
    Posted December 3, 2016 at 2:00 pm | Permalink

    There’s not much plain bread and butter intelligent comment on here. People who write tumultuous never-ending gobbledygook are always flavour of the month on these grey dull internet pages.Always banging on about selling to “The Commonwealth” in the good old days…no doubt when “Johnny Foreigner knew his place” and would sign any unfair and unbalanced trade deal if you promised him places at Eton for his ne’er-do-well boy-children from numerous and simultaneous marriages…oh and “foreign aid”directly to his personal bank account in Switzerland and turning a blind eye to his trips to soho red light districts. The world has changed Leavers-with attitude-problems! The bribes still get paid but the EU has a bigger wallet to pay them than an ineffectual island people of f the coast of Greater Europe.

  36. John B
    Posted December 3, 2016 at 2:03 pm | Permalink

    Is it your opinion, Mr Redwood, that any of the British Government Ministers actually understands what a Customs Union is, or a Single Market, or that the EU Single market is a pretense (or being kind, an aspiration rather than a reality) because it does not fufill the basic conditions of freedom of movement of: capital; finance; goods; services; labour – for practical reasons and political considerations?

    How, for example, can anyone who understands a Customs Union suggest that the UK could be in it but have its own trade deals with external Countries ir even more crazy, be in it for some things but not others, without understanding that would require the re-establishment of customs posts on all internal borders, because once inside a Customs Union, goods are in free circulation.

    So how could other members of the Customs Union satisfy themselves that goods crossing their borders from the UK comply with the Union’s tariff and non-tarrif barriers and which do not and so must be taxed/restricted?

  37. Anna
    Posted December 3, 2016 at 2:21 pm | Permalink

    Lifelogic: a small point: the posters on vans were a warning to ILLEGAL immigrants, not to those who had entered the country legally. The Home Secretary was merely attempting to enforce and uphold the law.

    • Lifelogic
      Posted December 4, 2016 at 6:51 pm | Permalink

      It was a stupid, damaging, pointless & rather childish political gesture by Theresa. This while she presided over a massive increase in immigration and pretended to be tying to reduce it to the tens of thousands.

  38. Will
    Posted December 3, 2016 at 2:36 pm | Permalink

    My Father, who studied economics, always claimed that you could never succeed in an economics examination if you actually answered the question. Modern economists & forecasters seem to have absorbed this tecnique to the detriment of their professional competence.

  39. Jeffery
    Posted December 3, 2016 at 3:06 pm | Permalink

    On the subject of the ERM, let’s hear it for economics prof the late Alan Walters. He conducted a one-man critique of the ERM on British TV, despite the usual media court jesters trying to portray him as deranged.

    As to present forecasts, it is important to separate these from the pre-referendum Treasury ‘dossier’ which was then echoed by others. That was simply deceptive, through spinning up the sophisticated economic model used with a large ‘shock’ immediately after a leave vote in the referendum. In effect, the entire UK trading regime would change abruptly the day afterwards! Presumably, the model(s) are now being run more sensibly. This does not mean they are right, but they are ‘trying their best’. While understandable to gloat at Remainer economic absurdity, especially given their pretensions to intellectual superiority, the forecasts are now definitely possibly correct.

    • Edward2
      Posted December 5, 2016 at 8:27 am | Permalink

      Today’s economics sage is Prof Patrick Minford.
      Like Alan Walters he will be proved right.

  40. Enrico
    Posted December 3, 2016 at 3:27 pm | Permalink

    I feel it’s so important that we have these so called professional economists.I always read their comments and then do the exact opposite and I am doing very nicely thankyou.

    The unfortunate part is most people listen and believe what they are told,just stop being so gullible and follow my lead.

  41. Roy Grainger
    Posted December 3, 2016 at 3:44 pm | Permalink

    I think the triumphalism of the LibDems in claiming a national anti-Brexit mandate from a by-election result in which >70% of the total Richmond electorate didn’t vote for them is dangerous. Their candidate actually said she’d work to “overturn” the referendum result. The outcome will be enhanced support for UKIP and possibly other more extremist parties over time because the fact is that on a parliamentary constituency basis Brexit wins in a landslide.

  42. Dennis
    Posted December 3, 2016 at 3:57 pm | Permalink

    Tour post here is very informative Mr Redwood so why are not these views aired/debated on the BBC? Does the BBC deliberately ignore you – have you upset them or Andrew Neil? Is there no prospect of a BBC interview lasting at least half an hour?

    The BBC and even the Brexiteers still do not distinguish between access to the single market (if there is such a thing) and being members of it – the continuous misinformation is beginning now just to make me laugh.

  43. Tom William
    Posted December 3, 2016 at 4:34 pm | Permalink

    A fine summary of your views. Unfortunately in life those who disagree with you and are proved wrong are prone to say you are “difficult” or “not a team player”. Congratulations on
    your intellectual honesty.

  44. Icicle
    Posted December 3, 2016 at 4:41 pm | Permalink

    Your 6th para – what is so odd…
    Exactly. Odd, defying logic.
    Thank goodness that the young across Europe ( and America ) using the Internet for dissemination of info are getting what’s happening.
    An explosive twitter or two from you a la Trump wouldn’t go amiss.
    Something the media could pick up on.
    Would do it but have no twitter account and no one knows who I am.

  45. Icicle
    Posted December 3, 2016 at 5:06 pm | Permalink

    Watch Humans Ch4 od Series 1 then 2.
    Thought provoking and minor relief from current woes
    Conscious Synthetics. British. Good.

  46. Javelin
    Posted December 3, 2016 at 5:12 pm | Permalink

    Membership of the EU has also damaged the Italian, Geeek, Portuguese, Spanish and French economies.

    The cost of leaving the EU is now far less than the cost of leaving.

    It’s time unwind the globalist business models based on cheap immigrant labour and outsourcing jobs abroad. Time for the Conservatives and support the one nation. If they do not UKIP will come back and take the nationalist votes that Trump won by.

    • Juliet
      Posted December 4, 2016 at 6:28 pm | Permalink

      EU has ruined western europe, everything went down hill when they embedded Eurozone and decided to allow weaker economy countries to join

      • Jerry
        Posted December 5, 2016 at 8:49 pm | Permalink

        @Javelin; @Juliet; The word you both and most are looking for is “Globalisation”, after all many non EU member nations are suffering the same or similar problems as EU28 nations are, so logically it can not be the EU that is the cause/problem…

        • Edward2
          Posted December 6, 2016 at 2:29 pm | Permalink

          The EU is going backwards against other nations.
          A falling share of world trade
          Low growth
          High unemployment
          Other nations are forging ahead improving the standards of living of their people.
          Sadly the EU is not.

  47. Pauline Jorgensen
    Posted December 3, 2016 at 5:36 pm | Permalink

    The manufacturers of high end commuter bicycles made just that point about the single market – outside the EU they still have the benefit of only having one spec for all of the European markets but they get the advantage of the EU being able to negotiate a trade deal with some of their major far eastern export markets which the EU has not delivered.

  48. Rabbit
    Posted December 3, 2016 at 5:49 pm | Permalink

    We are given up on experts. Now it is a crisis that experts are disbelieved. It should not be so. Think, do you disbelieve your gas heater maintenance engineer? Do you disbelieve your household electrician? Do you disbelieve the firefighter who advises you to put extra safety asbestos features to your built-in garage? NO
    Yet these Objects in Parliament have taken the socially dangerous ploy of using “experts” to criticise honest opinion and, substantiate nonsense.
    Corbyn , and whoever is at present leader of the LibDems for that will change of course, look at him! have, like the spoonbenders vis-a-vis the Magic Circle, violated the eternal maxim, the eternal law, DO NOT Leave Your Audience In The Belief That Something Weird Has Occurred. It IS a trick, no more!

    • Edward2
      Posted December 5, 2016 at 8:28 am | Permalink

      I lose confidence in experts when their previous work turns out wrong.

      • Jerry
        Posted December 5, 2016 at 8:53 pm | Permalink

        @Edward2; Indeed and that is why,. unless someone ion the Tory party gets a grip, Mr Corbyn will be walking (or more likely, cycling…) up Downing Street some time between now and May 8th 2020! 🙁

        • Edward2
          Posted December 6, 2016 at 2:31 pm | Permalink

          Ridiculous fantasy.
          Farron has more chance than Corbyn.

  49. acorn
    Posted December 3, 2016 at 5:58 pm | Permalink

    Back in the seventies, the 1% elite were seeing their traditional share of national income (GNI), increasingly being taken by the other 99% who created it.

    This, occasioned by Trade Unions, the Antichrist, as far as the 1% were concerned. The GINI coefficient was dropping; inequality was reducing. The bottom third of the income distribution was getting money to spend. The Elite needed a new scam to lobby politicians with, naturally, it had to predict Armageddon, if the 1% elite did not have their rightful huge, disproportionate share of GNI restored.

    The scam was Chicago School “monetarism”, which morphed into the “New Keynesian” (NK) model of economics and the birth of computer models of macroeconomics (DSGE etc); which were eagerly taken up as Thatcher-Reaganomics.

    Three decades later, the whole shebang imploded. Unfortunately, the GFC of 2008 did not wipe out all the NK economists, who still have tenure in Universities; government bureaucracies; and, the like of the IMF; World Bank and OECD etc etc. Still peddling a brand of economics that the last eight years has proved to be total nonsense. A brand of economics that invented “austerity”. The latter equals unemployment and poverty.

    The future is Post Keynesian, particularly Modern Money Theory (MMT). Say every day when you get out of bed, Mosler’s Law, “There is no financial crisis so deep that a sufficiently large tax cut or [government] spending increase cannot deal with it”. The only entity that can deal with it is a Sovereign, independent nation state, currency issuing Treasury.

    Central Banks are history; time to shut down these failed “monetary policy” snake oil salesmen. The last eight years have proved that central bank “monetary policy” does not work for the 99%, only for the corporate 1% elite. Sovereign currency issuing Treasuries are the only entities that can operate fiscal policy (spending and taxing) for the 99%. 😉

  50. fedupsoutherner
    Posted December 3, 2016 at 5:59 pm | Permalink

    I had an email today asking me to renew my membership of UKIP. I did not intend to as I have always been a lifelong Conservative voter but I am so disappointed in Mrs May and her continuous policies regarding expensive and useless green energy and her dismal performance over Brexit that I have today renewed it. I think many others will too now that UKIP has got its act together again and Paul Nutall is committed to Brexit and cheaper energy etc. I do feel that they will do well in the North in particular and if the mess over Brexit continues the Conservatives had better watch their backs. You must feel very frustrated sometimes John. I wish more ministers were like you.

  51. Longinus
    Posted December 3, 2016 at 6:40 pm | Permalink

    It has seemingly been decided that the national borders will not be enforced in the UK so the approach has been to set up a police state with close monitoring of the entire population as a response. Can’t recall voting for this though.

    • hefner
      Posted December 4, 2016 at 6:54 pm | Permalink

      If the UK as essentially an island (Ireland/NI border) cannot enforce its borders, it is a proof of the desintegration of the state. On this website a large number of contributors keep asking for a smaller state. Maybe could they reconsider their priorities and realise that calling blindly for the application of the ideas of mainly long dead people might also be reconsidered.
      A smaller state, maybe, but not any type of smaller state.

  52. Eh?
    Posted December 3, 2016 at 6:59 pm | Permalink

    “Now we have to debate much of this all over again as we leave the EU.”

    No, no-one has to or is required to debate. We had that debate pre-Referendum. The debate should be over. The fact it is not over is playfully described as listening to the Remoaners.

    Most if not all Leave voters are fed up to the back teeth of being bored out of their skin with debate pre-referendum and then being subjected to it once the match was played and the goals scored. The match is over!
    Corbyn and whatever the Lib Dem leader is called better get used to the British tradition of fair play. You play the game, abide by the accepted rules of the game and accept the winner. Full Stop!

  53. CeebeesIs
    Posted December 3, 2016 at 7:48 pm | Permalink

    CBI is an acronym few people, really, few people understand. Confederation of British Industry could be a trade union. In any event someone not engaging in productive work who has the time to talk, not working, appears on TV from time to time talking about work; yet, no direct detail of the work they themselves are doing, like a plumber who puts down his wrench momentarily and talks about wild flowers and fairies at the bottom of his garden.
    Pretty.

    • Juliet
      Posted December 4, 2016 at 6:33 pm | Permalink

      CBI is very pro-EU focused. I’m amazed they keep “British” in the name

  54. stred
    Posted December 3, 2016 at 9:06 pm | Permalink
    • King Ent
      Posted December 4, 2016 at 12:14 am | Permalink

      A new term I learned is “Green Energy denier” which I suppose lefties and liberals use to equate sensible people as being in the same realm as holocaust-denier, fascist, nazi and a thoroughly bad egg or more properly a bad tree-trunk.

  55. John Finn
    Posted December 3, 2016 at 10:51 pm | Permalink

    John Redwood

    The impression being given on the BBC News channel is that there is an internal war going on between Remain and Leave ministers. One commentator suggests that most of the cabinet think Brexit is – or will be – a disaster.

    Now I’m sure there are disagreements, but what is the truth here. Is this a continuation of the campaign to keep us in or are there serious splits?

    Reply All the Ministers I know are positive about Brexit and want to get on with it.

    • Richard
      Posted December 4, 2016 at 1:13 pm | Permalink

      And how many Minsters do you know, or will talk openly with you?

    • John Finn
      Posted December 4, 2016 at 9:56 pm | Permalink

      Thanks for the Reply, John.

      Richard: John Redwood has been a conservative MP for many years and has held a number of senior posts. I think it likely he has the trust and confidence of several ministers.

      PS I’ve also always found anything JR has told me to be pretty much on the mark.

  56. Posted December 3, 2016 at 11:52 pm | Permalink

    Yet another graph they don’t want you to see.

    Terms of Trade. Which has been improving all year as we get more imports for our exports which really is what matters.

    https://medium.com/modern-money-matters/uk-terms-of-trade-824adf6122dd#.h03z2nxmu

    Why you can ignore most of what is written about floating rate currencies and why the commentariat always gets it wrong.

    The UK is an island economy that exports demand to the rest of the world. In a world short of demand that means the rest of the world has to retain access to that demand somehow — or they have to take the economic impact on their own export led strategies.

    For a country to have excess exports it has no choice but to save other currency denominations to excess. Otherwise its own currency goes sky high and kills the excess exports. This is why there are ‘sovereign wealth funds’ and huge hoards of currency and financial assets held by offshore entities. They are a consequence of excess export policies across the world and the currency management that enables them to exist.

    If you ban UK exports to your nation, or you refuse to take them, or you put extra taxes on them, or you refuse to buy Sterling assets then that means you have to save more Sterling if you want to continue to export to excess to the UK.

    What economists always get wrong is the idea of funding. A current account deficit isn’t funded. For it to exists at all it must already have been funded. Every short has to have a corresponding long. Similarly for every excess import of goods and services into a currency zone there has to be a corresponding external sector held asset denominated in the currency of the import zone. One cannot exist without the other. It is a simultaneous requirement in a floating system. If any step along the way fails the whole deal falls through, eliminating both sides instantly.

    At the moment the speculators are playing silly games laying on shorts in Sterling. They will do so until there is nobody is prepared to take the other side, no soft holders to panic out of their savings and no more flash crashes allowing dealers to close open long positions. In other words until the liquidity drains away until all that is left is that required for the underlying trade flows.

    Then you will get the mother of all bear squeezes.

    The game, of course, is to tempt the patsy of last resort — the central bank — into the speculation market to throw fresh salmon to the bears. A wise central bank will avoid doing this. Instead it will offer to clear needed trade flows with its reserves on a strict national policy basis — food and power: yes, Learjets: no. It will offer refinancing to firms who have foreign currency loans, as long as they go through administration first so that the foreign currency loan is wiped out and the foreign bank is force to take the loss. A wise central bank would do everything it can to ensure the squeeze stays on track. It would make its intentions known — there will be no liquidity for speculation outside the ‘natural’ supply. And that means, in an over-the-counter market of foreign exchange, liquidity may run out.

    A wise central bank understands that is the responsibility of the other central bank with the high currency value and an excess export policy to decide what they want to do. A wise central bank will keeps it head while all around are losing theirs.

    The problem is that central bank policy makers are still talking about shocks and equilibrium. They talk about pass through for exchange costs and there is apparently an extensive literature on the subject. But there seems to be little analysis of pass back (volume/price impact on the export side) because that would require acknowledging that the demand side matters — contrary to dogma.

    Last year there was a suggestion that entities may respond to the exchange rate in different ways and this may change the response profile. Apparently this a revolutionary concept (!) Eventually they’ll realise that you can get supply from more than one foreign country and they may just compete with one another for your business. But putting more than one foreign country in the model is a bit much apparently. Perhaps that is next year’s revolutionary concept.

    So we still have central bank following policies guided by incorrect thinking and developed using unbelievably primitive models. We are still trying to fly aircraft with techniques developed for riding a horse. Is it any wonder the commentary around Sterling has more in keeping with witchcraft than science?

  57. Posted December 4, 2016 at 12:05 am | Permalink

    All the Brexiters need to say on this issue is that they are going to use the ways and means account and away we go. Which is just an overdraft HM Treasury keeps at its own bank the Bank of England.

    HM Treasury simply doesn’t issue any Gilts any more. Any funding of private pensions in payment should be done by offering annuities at National Savings, which would also have the neat side effect of ‘confiscating’ net savings and making the deficit go down.

    It’s irrelevant what interest BoE charges on the ‘Ways and Means’ account since any profit the BoE makes from it goes back to HM treasury anyway. So it can 50% if that gives the necessary level of satisfaction to the IFS economists or any other right wing think tank.

    What you have is a standard intra-group loan account between a principal entity (HM Treasury) and its wholly-owned subsidiary. Normally those sort of loans are interest free for the fairly obvious reason that interest charging is utterly pointless, and they are perpetual for the same reason. Rolling over is totally pointless.

    Any term money can then be issued to the commercial banks directly by the Bank of England – up to three month Sterling bills.

    Now is the time to consolidate the Bank Of England with HM Treasury to finally get rid of the charade that it is independent. Consolidate it and use the ways and emans account and make politicians accountable again every 4 years for their actions. Instead of passing that responsability away to some technocrat.

    The deficit should be no bigger or smaller than that which supports full employment and most things will take care of themselves after that.

  58. Posted December 4, 2016 at 12:22 am | Permalink

    What really annoys me John and makes me very angry, is a lot of senior politicians know how the monetary system operates in reality. The know the actual accounting that takes place between HM Treasury and the BOE.

    Look left on the balance sheet and that’s where you find the assets.

    Yet, for over 40 years and more they have lied and cheated about this fact. The framing and propaganda used has quite frankly been a disgrace. This charade is now holding us back now we have regained our sovereignty.

    Now is clearly the time to tell voters what the deficit and debt actually represents in an accounting sense on the balance sheet = the non govermental sector savings home and abroad on £’s to the penny.

  59. Adam
    Posted December 4, 2016 at 1:28 am | Permalink

    The UK’s growth rate was slower from 1972 when we joined the EEC up to 1992 when the single market was “completed” than it had been in the post war decades before. The growth rate slowed again after 1992 when the EU claimed it had completed its single market.

    Interesting.

  60. Fimbrethil
    Posted December 4, 2016 at 1:35 am | Permalink

    The positive of Mr Farron and Mr Corbyn continually attacking freedom and democracy is that it gets people’s backs up and interests them in wiping their moribund squirrely daydreams off the blackboard of the UK. etc ed

  61. Virtue
    Posted December 4, 2016 at 1:53 am | Permalink

    Anna Soubry has been getting some hate twitter. I must say that of all the politicians opposed to Brexit she seems to be the only one who emotionally expresses she is genuinely opposed. The rest seem hard-hearted careerists by comparison who would vote for anything if you gave them a non-Vegan fiver. Better an opponent who believes in what they say than a shapeshifter.

  62. Richard
    Posted December 4, 2016 at 1:09 pm | Permalink

    Within the EU the UK went from being the sick man of Europe to the 5th largest economy. Your suggestion that outside of the EU we would have been the 1st, 2nd, 3rd or 4th largest economy in the world is, frankly, rubbish.

  63. Juliet
    Posted December 4, 2016 at 7:39 pm | Permalink

    EU mounting failures
    – slow economic growth (low productivity, low innovation)
    – high youth unemployment in western europe is endemic
    – EU enlargement membership (weak economy countries)
    – migration is a one directional push from central & eastern europe
    – eurozone (unworkable dream that turning into nightmare & leadership failure)

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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