Expect more gloom from the Office of Budget Responsibility

The official forecasters got 2016 horribly wrong, slashing estimates for the post vote economy. Instead it did well, with credit available, more jobs being created, good growth in car sales and rapid expansion in services.

This year the growth rate is being  slowed by a deliberate monetary tightening from the Bank and from the after effects of tax rises in both the 2016 and 2017 budgets. I have pointed to this likelihood for sometime based on the tax and monetary policies being followed. Official forecasts were revised up a bit from the very low levels made after the referendum. The OBR forecast of 0.3% growth for the third quarter of this year was just 25% lower than the outturn figure. I now read in the press that the Office of Budget Responsibility is going to cut  its forecasts for productivity growth, which in turn will mean lower growth estimates for  output and tax revenues. This will face the Chancellor with a more difficult set of figures against which to make his budget judgement.

I have no problems with more pessimistic forecasts if that is needed to make them more accurate. My complaints have been about a run of pessimistic forecasts that have been wrong, where I have  put forward a more accurate alternative. The adjustment to the official figures will take place against the backdrop of a year so far where the deficit has come in well below forecast. Without further changes to forecasting assumptions, that would have left the Chancellor some welcome leeway for tax cuts and spending rises in areas that need them.

It may well be the case that the last set of productivity forecasts by the OBR  were too high. It is also the case that the OBR has been underestimating tax revenue growth. Their models seem to assume loss of revenue when you cut a rate, yet in many cases as with Corporation Tax, higher rate income tax,  CGT and Stamp duty lower rates have in practice led to higher revenues. The government  needs to avoid lurching  to too tight a fiscal policy to try to hit targets based on estimates that have in the past proved faulty.  The deficit is a figure based on changes in two much larger figures, income and spending. Small changes in assumptions elsewhere can bring big and unrealistic swings in the deficit forecast.

The budget does need to provide sufficient cash for the NHS, schools and social care. It should be tough on any idea that we will pay large sums to the EU, as we need that money at home and we do not owe them beyond our contributions up to departure.  Saving the EU money is the favourite spending cut of many voters. The government needs to revisit how it can instil discipline in spending on the railways. It should ensure the overseas aid budget pays for all military costs involved in disaster relief and peace keeping. It should examine ways of making more affordable housing for sale available to meet people’s aspirations and reduce the strain on social rented housing which has a substantial public spending cost.

The budget also needs to look at how it can use selective lower tax rates to boost output, productivity and tax revenues.

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120 Comments

  1. Lifelogic
    Posted October 26, 2017 at 5:49 am | Permalink

    The Chancellor has huge scope to cut taxes but he has to cut out waste to do so. There is so much waste in the state sector that could be cut. Much of the state sector just causes actually harm so cut all that out for a start then start on the circa 30% that does nothing positive. Also reduce all the incentives that augment the feckless and lazy. The state sector is with pensions included about 50% over remunerates relative to the productive sector for a start.

    Energy prices are high due to “legacy” issues I hear on radio 4 today. I assume ‘legacy issues’ means the green crap religion.

    Cut taxes IHT, CGT, SDLT and income tax now, go for cheap energy, kill HS2, Hinkley C, the green subsidies and all the rest of the endless waste and watch the economy and tax base grow like magic. Kill gender pay gap reporting go for easy hire and fire. Also have some positive vision and inspire confidence. I suppose Hammond has to go to do that. Replace with a real ‘Low Tax at Heart’ Chancellor rather than 15% Stamp duty and an income tax on profits you have not even made one. Also restore fees for claimants at employment tribunals and do other things to kill the litigation culture that so damages the productive.

    • Lifelogic
      Posted October 26, 2017 at 6:47 am | Permalink

      In short – move to an environment that encourages real & productive work, gives confidence to business and individuals and has far fewer bureaucrats, tax consultants, lawyers, planning consultants, HR consultants, ambulance chasers, state sector jobsworths, greencrap building control and renewable incentive ‘experts’, workplace pensions consultants, gender pay gap reporting experts and the likes. Businesses are not another part of social services they are there to produce and make money.

      Also get some real competition in banking .5% on deposits and base plus 5% – 35% on overdrafts (even for borrowers far more solid than the bank) show a total lack of any real competition.

      It is no good for P Hammond & T May to bemoan the lack of productivity when the government is the main cause of this low productivity through red tape and other lunacies.

      • NickC
        Posted October 26, 2017 at 10:22 pm | Permalink

        Lifelogic, The government’s own productivity is woefully low. I have had a government employee (once removed) sit in front of me and state that the paperwork was more important than the product.

        • Miss Brandreth-Jones
          Posted October 29, 2017 at 5:31 pm | Permalink

          If it’s not in writing it didn’t happen! That’s the Law for you.That’s the NHS for you.

    • matthu
      Posted October 26, 2017 at 8:55 pm | Permalink

      The fact that * none * of what you suggest is even being given remotest consideration is an indication of how far from conservatism the Tory Party has travelled.

      You would probably add “without a compass” … but it has actually been worse than that for many years. Without a compass, you tend to go round in circles, but in this instance the Tories have been deliberately led straight into the wilderness with dwindling water and food supplies and only now do they realise they lack a compass to get out, they lack any vision and they lack a leader.

      So what is likely to happen?

      A new leader will likely emerge, a la Macron. And the followers will be SO relieved they will allow themselves to be led straight back into re-joining the EU.

      Now tell me why this isn’t likely.

    • Richard1
      Posted October 26, 2017 at 9:36 pm | Permalink

      The BBC has ‘apologised’ for interviewing Lord Lawson, who did admittedly make an error in saying global temperatures had fallen, when he should have said they have been flat. Yet this morning Ed Davey, minister for green crap in the Coalition, stated, unchallenged, that offshore wind had “fallen in price by 50% and is now cheaper than fossil fuels”. As set out by Christopher Booker this is plain falsehood, yet we will hear no apology from the BBC for it.

      • Hope
        Posted October 27, 2017 at 8:52 am | Permalink

        Well said. Fusillade fuels need to be brought back to help our energy crisis. The govt.s Mass immigration cannot be sustained without infrastructure to support it.

  2. Duncan
    Posted October 26, 2017 at 5:54 am | Permalink

    John

    Your focus on departments of government is meaningless. What is far more important than the department itself is who exactly is in charge of these important areas of government

    The OBR is headed by Robert Chote and Chote is a fervent Europhile, Liberal Democrat, ex-FT Editor and ex-IMF employee. He’s pro-EU down to his very soul.

    So we have Hammond, Chote and May. All pro-EU clones pumping out pro-EU vibes and stoking Brexit fear while manipulating the public’s expectations, concerns and fears

    Let’s look beyond the departmental veneer, its name, fancy titles and all the other paraphernalia associated with high office and focus on the people who run these departments for it is these people who will determine who Brexit will be played out

    Tory politicians are too nice for their own good. They should be naming names, pointing the finger and exposing manipulation of data to manage and warp the public’s attitude on important matters of policy

    Chote and Hammond are stoking Brexit fears with their fabrications and it’s YOUR responsibility Mr Redwood and indeed your colleagues to expose these people and if possible demand their resignation for their disgraceful behaviour

    • NickC
      Posted October 26, 2017 at 10:28 pm | Permalink

      Duncan, You are absolutely right. The establishment is Remain down to its rotten core. The civil service loves the EU model – cosy cartels of technocrats and bureaucrats unencumbered with tiresome democracy and populism. They have forgotten that democracy is regime change without a civil war.

  3. Dame Rita Webb
    Posted October 26, 2017 at 5:57 am | Permalink

    Wow and the OBR is off by a massive 0.1% in its forecasts but your government is still dependent on ZIRP and a continued increase in personal debt to keep the plates spinning. Whether its 0.3% or 0.4% an economy growing at those rates under those conditions is nothing to be proud of.

    If Mr Hammond has any sense he will soon announce the death of HS2. Elon Musk’s hyperloop trains means that the HS2 route will be obsolete virtually as soon as it is built with the tax payer again being on the hook for billions. Instead of saving 20 mins on a trip to Brum, Mr Musk’s trains are planned to go from London to Edinburgh in 50 mins.

    • oldtimer
      Posted October 26, 2017 at 8:39 am | Permalink

      The forecast was off by 0.1% point, not by 0.1%. Growth of 0.4% versus 0.3% is a 33% improvement. That said neither is much to shout about; chances are it will be revised later when more data is available.

    • Lifelogic
      Posted October 26, 2017 at 8:44 am | Permalink

      Hs2 is clearly ecomic lunacy but what matters to people is door to door travel times. Driverless cars perhaps more impotant than hyperloop trains. You can already fly in less than an hour or you could if they madw airport transits rather more efficient. Hyperloop trains would have the same airport security issues.

      • Lifelogic
        Posted October 26, 2017 at 3:34 pm | Permalink

        HS2 trains may well end up having to have airport security and one hour check ins too. So much for the high speed London to Birmingham then!

    • Hope
      Posted October 26, 2017 at 9:07 am | Permalink

      The Treasury, BoE and other allegeded independent quango bodies got political to create an apocalyptic economic view if we left the EU. They never showed objectivity or professionalism. Why was no one sacked, including the boss of each? They are a waste of our taxes. We had a financial crash only ten years ago and these are the best to predict and take preventative action in the future! Is this the govt plan? No wonder the Queen asked last time why no one saw it coming. Reasonable question when all these bodies, costing a fortune in salaries do not have a clue or ever get their predictions right. So over to May, what has she done to correct the situation? Sweet FA as it suits her remaining view and deferment to the EU. Yesterday Hammond was at it again blai Jong Brexit uncertainty. Why is he not sacked or rebuked by May?

      Oh well, perhaps she will give another important directive on transgender talk!

    • Denis Cooper
      Posted October 26, 2017 at 9:09 am | Permalink

      We are not China with a lot of economic ground still to make up and plenty of scope for high annual growth rates even when the economy is said to be slowing … in fact we haven’t been in that kind of position for a very long time now, and going back over six decades we have averaged a natural growth rate of GDP of around 2.5% a year, as I mentioned yesterday with a link to this useful chart:

      https://tradingeconomics.com/united-kingdom/gdp-growth-annual

      So the 1.5% a year reported yesterday is below that average but not outside the normal range; and as noted yesterday the downwards trend in growth actually started in early 2015 when it started to slide down from 3.3% a year.

    • alan jutson
      Posted October 26, 2017 at 9:10 am | Permalink

      Dame Rita

      Mag Lev another alternative was also being developed decades ago

      • Dame Rita Webb
        Posted October 26, 2017 at 7:38 pm | Permalink

        Mr Musk’s ideas incorporates maglev. The proof in the pudding exists in the 20 min train ride from Shanghai airport. Compare that against the journey time in from Heathrow to London and Shanghai’s size in comparison to that of London.

    • Codpiece
      Posted October 26, 2017 at 9:21 am | Permalink

      We had rapid and continued ‘growth’ under Gordon Brown.

      Where did that get us ?

      What we need is sustainability. What we are getting is unsustainable. (A population boom with no resources to deal with it.)

    • getahead
      Posted October 26, 2017 at 6:22 pm | Permalink

      Irrespective of possible advantages of the hyperloop, the HS2 was always too expensive for little improvement. Ask LifeLogic.

  4. Dave Andrews
    Posted October 26, 2017 at 6:02 am | Permalink

    Forget the NHS, save the EU contributions we won’t be making to put against the deficit. Suspend the International Development budget as well. Trident should be put on the back burner too. Plus, no rises in public sector pay and benefits.

    All the time the country is running a deficit, there is no hope for the future.

    • Dame Rita Webb
      Posted October 26, 2017 at 8:43 am | Permalink

      We need to pay hardball with the Germans and their policy of getting defence on the cheap. If they want to hide under our nuclear umbrella we want money for it. If they want our troops there we want money for it. If they want to be clever dickies in the EU we can be clever dickies in NATO too.

    • NickC
      Posted October 26, 2017 at 10:55 am | Permalink

      Dave, “No hope for the future”? Yes, (supposedly), the “young” are distressed about Brexit which opens out freedom and a world of opportunities, but at the same time they are (supposedly) keen on more spending which increases the debt (whilst we have a deficit) that they will have to pay off.

  5. Mark B
    Posted October 26, 2017 at 6:13 am | Permalink

    Good morning

    The government should learn to do less with less. It would then be able to spend the monies it received with more care and on things it needs to do to manage its own business.

    • Liam Hillman
      Posted October 26, 2017 at 8:56 am | Permalink

      Hear! Hear!

    • Hope
      Posted October 26, 2017 at 9:14 am | Permalink

      How about scrapping HS2 and putting the money to infrastructure we need like NHS or reversing some of the Beeching decisions by reopening railway lines to give a local service built into the national network? The motorway from England to Scotland is a clue how over crowded we are from immigration and the need to improve the road network. But no, the dopey govt wants to spend an absolute fortune on one railway line to save one journey 30 minutes! It does not have a choice because it is an EU infrastructure project, it the govt doe she not want to tell us this or produce the reports it keeps secret!

    • Lifelogic
      Posted October 26, 2017 at 3:27 pm | Permalink

      Indeed the cost of computer memory and chip prices have gone down by a factor or at least one ten millionth. Cars cost less than 1/20th of what they used to in real terms and all sorts of objects and services have got far, far more efficient and cheaper too.

      Yet government has gone up from say 15% of GDP to nearly 50% taxes likewise and yet they seems to deliver less and less of any real value to anyone. Even collecting the rubbish or bothering to investigate thefts seems to be beyond them. Are they just are taking the p*** perhaps? Worst still they spend a lot of the money inconveniencing the productive or telling us how to think and vote.

    • NickC
      Posted October 26, 2017 at 7:01 pm | Permalink

      Mark, Indeed. Many of the possible savings have been listed on here frequently. HS2, Hinckley C, DfID, the EU, Quangos – they can all be chopped.

      In particular, if the government wants to help the Midlands and the North, then scrap HS2 and spend the money on undergrounds for the major cities there. That will free up the trunk routes anyway by taking some of the local traffic off them at peak hours.

  6. James Doran
    Posted October 26, 2017 at 6:17 am | Permalink

    If the treasury models really do assume loss of revenue from reducing taxes then it represents another socialist argument that has become the default position for want of an effective challenge from conservatives. I see no prospect of any such argument being made by Prime Minister May or the present Chancellor.

    • acorn
      Posted October 26, 2017 at 9:34 am | Permalink

      Nonsense! as JR would say. Governments, particularly Conservative ones, always pre-announce future tax policy changes, for consultation, six to nine months before a headline budget announcement. This allows the corporates to set up “forestalling” tax plans.

      These will arrange the accounts to shift tax payments forward if the tax rate is going down; or, backwards if the tax rate is going up. Spiv City bank employees get to take advantage of this as well.

      Hence, it can appear, in the short term, that a tax rate reduction has increased government tax receipts.

      • NickC
        Posted October 26, 2017 at 10:40 pm | Permalink

        Acorn, Errr, that doesn’t explain why the tax take has gone up (in the circumstances described). Companies which “shift tax payments forward if the tax rate is going down” would pay less tax (because of the lower rate) under your scenario (they would hardly volunteer to pay more).

        • acorn
          Posted October 27, 2017 at 7:17 am | Permalink

          They shift the revenue that creates the tax charge,not the tax. Sorry I thought that bit was obvious, apparently not. Not uncommon on this and other Brexiteer sites.

          • NickC
            Posted October 27, 2017 at 10:04 am | Permalink

            Acorn, I don’t think you’ve run a business. You state that a business hearing of a tax rate reduction will “shift the revenue that creates the tax charge”? But they are not going to shift it in order to increase the tax the company pays!

            So a proposed reduction in the tax rate means a reduction in tax paid (in the future), all things being otherwise equal for the example of the business you gave. Don’t forget that companies will already be tax efficient.

            Therefore your original claim is false. Not uncommon for a Remain.

  7. am
    Posted October 26, 2017 at 6:25 am | Permalink

    http://www.bbc.co.uk/news/av/uk-politics-41595565/conservative-mark-garnier-on-brexit-doom-mongers-like-me

    An honest man. Very few of the professional economists who signed up to the times project fear letter show such honesty. No letter of retraction has appeared. They just continue with project fear mark #2 which is yes but eh eh something wait eh.

  8. Original Richard
    Posted October 26, 2017 at 6:52 am | Permalink

    “It should examine ways of making more affordable housing for sale available to meet people’s aspirations and reduce the strain on social rented housing which has a substantial public spending cost.”

    The government needs to fulfil its promises of cutting immigration to relieve the otherwise insolvable pressure on housing, schools, health care, welfare, infrastructure and the environment thus forcing employers to train our own people and improve productivity so that wages can rise without inflation through increased GDP/hours worked

    • Hope
      Posted October 26, 2017 at 9:16 am | Permalink

      Absolutely well said. He go t does not even acknowledge its own failures for causing these problems.

    • hans christian ivers
      Posted October 26, 2017 at 2:36 pm | Permalink

      Original Richard,

      This assumes that we teach the 25% of each annual school year who have not learned to read , add and write properly.

      Can we do that or do we still need to import workers?

      • NickC
        Posted October 26, 2017 at 10:19 pm | Permalink

        Hans, Yes, and all that happens whilst we are in the EU. Leaving will make recruiting outside the UK, for most positions, no longer the easy option for lazy businesses. More importantly the UK teaching “profession” (the Blob) will be forced to improve.

        • hans chr iversen
          Posted October 27, 2017 at 7:32 am | Permalink

          teaching quality ahs nothing to do with the Eu and why should it now change when it has not changed for generations, I am sorry I do not follow your logic?

          • NickC
            Posted October 27, 2017 at 10:13 am | Permalink

            Hans, It is not difficult to understand. Firstly, you introduced the EU in the shape of “we still need to import workers”.

            If those imported EU workers are no longer so freely available businesses will demand that our education system equips British workers with the necessary skills. At the basic level that means the 3Rs.

            One of the many advantages of leaving the EU is that UK vested interests can no longer hide behind the EU, and must take responsibility, and have the power to do a better job.

      • Original Richard
        Posted October 27, 2017 at 7:37 am | Permalink

        “This assumes that we teach the 25% of each annual school year who have not learned to read , add and write properly.

        Can we do that or do we still need to import workers?”

        Yes, of course we can.
        Firstly all schools would benefit from reduced student/teacher ratios and secondly many schools would benefit from not having to teach English before they can start teaching anything else.

        Freedom of Movement was sold to the UK (Common Market or EEC days?) to enable a few professionals to easily move between countries with similar economies.

        It was not proposed to us that it would be used for never ending mass economic immigration into the UK from much poorer countries and those where the Euro had caused mass youth unemployment.

        Importing low skilled workers depresses UK wages and disincentivises the government and business to train people and invest in equipment to increase productivity. These people are paid so little (even receiving working credit) that there is no way they can be paying for the necessary increases needed in housing, schooling, health care or infrastructure.

        This is before considering the social consequences and the effects of population increases on the environment.

        Importing high skilled workers from poor countries is immoral as deprives these countries of the very people they have trained and need themselves.

  9. Ian Wragg
    Posted October 26, 2017 at 6:55 am | Permalink

    With the continuation of Labours tax waste and spend policies Hammond with Mays help is bankrupting us.
    No money for the military but promises of large bungs for Brussels and aid.
    Financing HS2 and Hinckley Point is the economics of the mad house.
    Productivity will remain low as long as you keep importing half a million immigrants annually.
    I see JRM has the measure of Carney.

  10. sm
    Posted October 26, 2017 at 7:23 am | Permalink

    I had had high hopes of the OBR when it was first created, and then when Robert Chote was appointed as Chairman, and I feel very disappointed by its recent poor forecasting.

    I have, however, been recently reminded of the saying: “astrology was invented to make economists look good”.

    • oldtimer
      Posted October 26, 2017 at 8:43 am | Permalink

      When the OBR was set up it was staffed by people transferred from the Treasury familiar with the way the Treasury modelled the economy. I do not recall the OBR saying it has changed the approach in any fundamental way.

  11. Kenneth
    Posted October 26, 2017 at 7:34 am | Permalink

    The large public sector is dragging down our productivity.

    The public sector is such a big employer that the private sector is struggling to fill posts.

    We must urgently slim down the public sector.

    • hefner
      Posted October 26, 2017 at 6:43 pm | Permalink

      A bit of maths:
      1/ the size of the public sector has been decreasing every year since 2012
      2/ the UK overall productivity has been either steady or very slightly decreasing since the same year
      Therefore, it is far from obvious that the public sector per se is responsible for the decreased productivity, more likely than the productivity of the rest of the economy is going down.
      Conclusion 1: the decreasing productivity in the private sector is more likely to be the problem.
      Conclusion2: your starting hypothesis is wrong. And your conclusion very likely wrong too.

      Reply The public sector has been growing and its productivity performance in the last 20 years has been poor

      • hefner
        Posted October 26, 2017 at 10:30 pm | Permalink

        Indeed, the size of the public sector increased from 1999 to 2009. Since 2012, as I said, it has decreased. So over 20 years, you are right, over the last five, I am.

        Reply Real public spending has risen since 2010

        • hefner
          Posted October 27, 2017 at 7:42 am | Permalink

          Do you do it on purpose? It is not public SPENDING but the number of PEOPLE employed in the public sector.

          • Stred
            Posted October 28, 2017 at 4:46 am | Permalink

            If the numbers have decreased and we are paying more for less work, how can this be called productive..

          • David Price
            Posted October 28, 2017 at 11:17 am | Permalink

            The size of the public sector has been increasing over the last year.

            First bullet point on ONS summary of “Public Sector employment,UK: June 2017”;

            – Total UK Public sector employment in June 2017 was 5.44 million, up 15,000 on previous quarter and 14,000 on the previous year.
            – Central government employment was up 28,000 on the previous quarter at 3.021 million, the highest since comparable records began on 1999.

            From the ONS report it appears that the public sector grew in numbers from 1999 to 2010 then began falling but has then started rising again since June 2016 so it is now higher than the 1999 and 2016 levels.

  12. Bob
    Posted October 26, 2017 at 7:44 am | Permalink

    “lower rates have in practice led to higher revenues.”

    successive Chancellors appear to be more interested in rewarding and punishing certain behaviours than raising revenue for the Treasury.

    They seem to believe that success is something that needs to be punished and failure needs to be rewarded.

    Is it any wonder we have a budget deficit?

    • chris f
      Posted October 26, 2017 at 2:37 pm | Permalink

      Bob,

      I think it’s fair to say (and widely recognised) that the Treasury uses ‘behavioural taxation’ as a means of raising yet more money, as they have run out of rational arguments/excuses as to how/why people should pay more into an absolutely ridiculously bloated state that wastes our tax money on a biblical scale.

      I read that an independent review noted that energy prices are too high due to excessive taxation…from Government initiated ‘green’ levies, of course. At the same time the Gov’t stamps its’ feet and cries ‘foul’ to the energy sector (anyone for a non-free energy meter….or subsidised scrappage on boilers, or subsidised solar panels, etc, etc…all of which we pay for in one way or another)

      Same with taxing everyone for the privilege of a flight (where their income has been previously taxed) and so it goes on. Why do they not understand that they should just stop and get out of the way?? If I want a new boiler, I’d (funnily enough) go and buy one! The savings from the variously imposed taxes may well pay for it any way….

      I’m sure I read an ‘all-in figure’ for how much actual ‘tax’ everyone was paying if all of the various taxes were added up. I’m sure if that figure was made widely accessible, it would be like a nuclear bomb going off within the electorate-at-wide.

    • Lifelogic
      Posted October 26, 2017 at 3:31 pm | Permalink

      All shall have enforced “equality” regardless of merit religion. The incentives to produce and not to be feckless all have to be eliminated so we can all be “equal” – all ‘equally poor’ that is.

    • Rien Huizer
      Posted October 26, 2017 at 3:45 pm | Permalink

      Would you be in favour of raising taxes?

  13. alan jutson
    Posted October 26, 2017 at 7:50 am | Permalink

    Whilst all of our past and present Prime Ministers seem to spread money like confetti whenever they travel abroad, and also stick to the stupid rules on foreign aid, is it any wonder we are short of cash to spend at home !

    Many other wasteful examples can be listed.

    Aware that trying to forecast tax revenue from “expected” GDP growth is always fraught with difficulty, I have never understood the fiasco of working to such guesswork.

    Why not base tax intake on the known revenue from the last completed financial year, and set levels of expenditure to that, with a contingency sum for possible emergencies.
    I have made this point many times over the years, but all everyone wants to do is commit expenditure to a phantom guess on how much better we should do in the future, when there are so many variables to push it off course.

  14. alan jutson
    Posted October 26, 2017 at 7:51 am | Permalink

    Well done on getting it right again John.

    What a shame your experience and knowledge is not used to the full for all of our benefit.

  15. a-tracy
    Posted October 26, 2017 at 7:59 am | Permalink

    The Conservative Party need to shine a big torch on productivity statistics. Each hospital is allocated a turnover £ each police force etc. how much per head (ft equiv) does each maintain. Let SME’s know how much productivity i.e. on the simple measure that seems to be used [turnover:employee total (inc Directors)] is expected by the government to be considered productive so they know what sort of turnover they should have per ft equiv employee. How can people be productive if the information is masked in smoke?

  16. Newmania
    Posted October 26, 2017 at 8:04 am | Permalink

    The thing is that you don`t care if its right or wrong so long as we are all forced borrow more money to throw at Brexit so the bad affects are disguised. You are also aware that the vast majority did not vote for car crash Brexit and you lied about the possiblity of cake-and-ea- it Brexit . You are now pretending car crash Brexit is fine.
    Why would anyone take any notice of such partisan and transparently one eyed view , .Growth is slow the country is 90% of GDP in debt and we are throwing billions in the sea just to get rid of the smell of Polish food , that where we are .
    I only wish we could partition the country and let the Brexit side see how they get on alone

    • John
      Posted October 26, 2017 at 8:19 pm | Permalink

      If Brexit is car crash then you believe most of the World is in a car crash.

      Yet the rest of the world has a higher average income than that in the EU, a higher average growth and much higher projected growth.

      When you are wrong you are wrong.

    • Anonymous
      Posted October 26, 2017 at 8:28 pm | Permalink

      Except the discontent isn’t just in Britain.

    • John
      Posted October 26, 2017 at 8:32 pm | Permalink

      Also the Leave campaign was not founded on ridding the UK of the “smell of Polish food”

      Is this something that Remainers have a problem with, the smell of Polish food? Britain is a centre and melting pot for culinary expertise and appreciation and has been for centuries, Mrs Beaton didn’t get to write about using far flung spices without them already being established here in her day.

      That globally admired history and melting pot of the UK was partly built on the sovereign management and protection of immigration and emigration. We just want that back, managed immigration. As far as your issue with the ‘smell’ of Polish food, that’s offensive and I’m not Polish.

    • Richard1
      Posted October 26, 2017 at 9:47 pm | Permalink

      Those who voted Remain but are not EU fanatics can take heart at two things: first, how surprisingly resilient the economy has been, especially compared with the dire forecasts of project fear; and second the utter inability of Continuity Remain, which does seem to be made up of the EU ideologues, to come up with anything even vaguely resembling a coherent argument. This and other posts by you being an example.

    • NickC
      Posted October 26, 2017 at 11:32 pm | Permalink

      Newmania, You have not constructed a logical argument. You are clearly emotionally committed to the unelected politicians and bureaucrats of the EU ruling us in perpetuity. I get that, though I don’t understand why.

      We are still in the EU, and if Mrs May gets her way will be for another 4 years. Whatever state the country is in, it is so either because of the EU, or it would be the same in or out. We are in the EU, so you cannot state that we have acquired low growth, poor education, and 90% GDP debt because of Brexit. Well, you can, but you won’t be taken seriously.

      There are 196 countries in the world; 28 (soon 27) are in the EU, with 3 more signed to the EEA. That means the bulk, 165, are not in, or directly connected with, the EU. How can they possibly survive, if what you say about the hopelessness of our case after Brexit were true? But if they can do it, so can we.

      Both Leave and Remain were quite clear that leaving meant leaving all the institutions of the the EU. I am convinced that the best outcome for the UK is to walk away from the EU – no trade deal, no defence deal, etc, and use only existing international organisations such as the WTO, NATO, Interpol, etc. We must not get tied into the EU by the back door. We must learn to fly.

    • Codpiece
      Posted October 27, 2017 at 1:28 am | Permalink

      A) we think we are full
      B) we would like our own culture to exist for longer.

      No racism about it, yet you have a problem with this ?

    • stred
      Posted October 28, 2017 at 7:33 pm | Permalink

      Newmaniac. Have you ever tried Polish food. Go to the food market behind the Royal Festival Hall. There are delicious foods there from all over the world, even British. The only ones which don’t smell, being less spiced are Polish and British. The Polish beer is excellent too. I always choose it and polish it off. Keep taking the tablets.

  17. rick hamilton
    Posted October 26, 2017 at 8:13 am | Permalink

    I fear that the Tories, being indistinguishable from socialists now, have no interest in cutting the overall tax burden. If you look at the way they leech money from motorists for minor violations – and BBC licence fee dissidents – while the police refuse to investigate burglary in many cases, they are criminalising generally honest people and allowing real criminals to get away with it.

    Rather like the crackdown on any disobliging comment alleged to be ‘hate speech’ when actual hate preachers got away with it. This just causes growing resentment which will eventually burst out in a huge upset for government, just like 40 odd years of resentment at the EU led to Brexit.

  18. a-tracy
    Posted October 26, 2017 at 8:18 am | Permalink

    White British men are getting so displaced by our social services and housing services that many of them are ending up on the streets homeless (83%) and many with mental health problems. The vast majority of homeless people are male 76% aged 21-50, white (81%) and die at the average age of 47. They have no priority from a system that has to house and feed so many displaced people, economic migrants, refugees, EU immigrants that lose their jobs shortly after arriving and we then pay their housing benefit on homes they’ve privately rented.

    We hear about health tourists using our NHS well just how many are there? which hospitals are affected, what % are these tourists of the total number of people treated and what is this cost – can’t it come out of the overseas aid budget allowance. We seem to be very generous to everyone but our own people what are being told don’t be obese, don’t smoke, or you won’t be treated.

  19. agricola
    Posted October 26, 2017 at 8:20 am | Permalink

    We hear that the latest set of GDP financial figures are better than forecast, good news. However we are continually told that UK productivity is poor and lower than that of many in the EU and elsewhere. I find this a very loose statement.

    When UK productivity is measured, who are they measuring. I cannot imagine that Nissan, Toyota, Honda, and Jaguar Range Rover are not among the most productive companies in the World. The companies that supply them must be equally good or they would not be suppliers. However when national productivity is measured are Local Government, National Government, RBS, Southern Rail, Network Rail and the semi monopoly companies covering utilities all included in the equation. If they are I begin to understand why our productivity is so low. I ask the question, do for instance our NHS operating theatres run a three shift 24hour system to fully utilise the very expensive capital equipment that backs them up.

    Further I would ask, is the criteria by which we are measured exactly the same for all the countries we are compared with. There is a very good argument in the case of the UK for breaking productivity figures down by industry and organisation. Only then will you see where the problem lies, and only then can we do something about it.

    • matthu
      Posted October 26, 2017 at 9:08 pm | Permalink

      When productivity is declining, they mean that population growth is higher than GDP growth.

      At the same time we hear that 77% of population growth is a direct or indirect result of immigration. And that immigrants are SO much more productive than the indigenous population.

      Something doesn’t quite ring true here. Maybe it is the immigration that is not being counted at the border that is affecting the figures …

      • Stred
        Posted October 27, 2017 at 7:59 am | Permalink

        Why don’t they use NI records. Then population would be higher. Mustn’t is be cynical.

  20. fedupsoutherner
    Posted October 26, 2017 at 8:21 am | Permalink

    Reading this I can only say it looks as though the government is intent on destroying the country. They don’t need any outside help. Together with the EU they can drive us into the ground.

  21. oldtimer
    Posted October 26, 2017 at 8:33 am | Permalink

    These forecasts are based on a series of guesses. Calling these guesses assumptions gives them a slightly greater air of respectability. As I understand it, these guesses are then used in elaborate economic models which invariably turn out to be wrong. On those occasions when they turn out to be close to actuality (itself a construct based on guesses and estimates) then the chances are the result was based on a mix of events that was different from the original guesses.

    The nearest the OBR and the Treasury can get to predictability is in setting tax policy. It is evident that changes in taxes will change behaviour. We have seen it in recent years in responses to changes in CGT, stamp duty on property and taxes on cars to name three obvious examples where changes have either reduced or increased the tax take. Yet the Treasury in particular seems oblivious to the obvious, preferring instead to rely on its own questionable models (as its failed predictions on the outcome of the Brexit vote demonstrated). One would think that the Treasury would wish to set tax rates at levels that optimise tax revenues. But that is not so. Instead we get “punishment” budgets targeted at those segments of society that attract the opprobrium of the Treasury and other campaigners that succeed in getting its ear.

  22. A.Sedgwick
    Posted October 26, 2017 at 8:37 am | Permalink

    “Saving the EU money is the favourite cut of many voters” – most voters I would say. This is a no brainer politically, draw your own conclusion about many politicians. At the wire will Corbyn & Co vote for paying the EU illegal and vast amounts that could go to to the key elements of our lives e.g. health, welfare, education, food production. No, but it looks as if the Cabinet Remainers will. I am staggered that apparently 90% of our economy is service related; to paraphrase an economist’s maxim – we can’t all earn a living by cleaning each others’ windows.

  23. BOF
    Posted October 26, 2017 at 8:53 am | Permalink

    I have given up on the idea that the Chancellor budgets for the good of the country and have concluded that he budgets instead for a purely political agenda.

    Drastically cut the public sector, cut and simplify taxes and how about that bonfire of the quangos promised a long time ago?

  24. Mockbeggar
    Posted October 26, 2017 at 9:15 am | Permalink

    It seems to me that the ONS very often underestimates GDP in its initial announcement and releases figures revised upwards about a month later when few people notice. I wouldn’t be a bit surprised to see 0.4% revised up to .5% next month.

    Mind you, I’ve always felt that GDP is an overrated measure of national output. It includes all sorts of transactions that are unrelated to wealth creation.

  25. graham1946
    Posted October 26, 2017 at 9:22 am | Permalink

    In addition to the overseas aid budget covering military costs in disaster relief it should also recompense the NHS for the health tourists who don’t pay. Why has the NHS become the World Health Service?

  26. Chris S
    Posted October 26, 2017 at 9:26 am | Permalink

    A 50% cut in the overseas budget would do for a start. I see that you don’t suggest this. Is it because you are happy with the huge amount of borrowed money being allocated that way or is it that there are just to many MPs in favour that there is no point in arguing for a cut.

    A small amount of the money saved could at least save our two amphibious landing ships which could contribute to landing aid supplies as and when necessary.

    Perhaps the Government could badge certain military assets as Foreign Aid Assets and run them off the aid budget. After all, many ships and aircraft are regularly used for that purpose Servicemen could be rotated in and out to maintain their military effectiveness and all could be taken up for military service when necessary.

  27. gregL
    Posted October 26, 2017 at 9:39 am | Permalink

    Some of these large projects HS2 and Trident should be halted. Money could be diverted into developing a few more container ports around the country and upgrading fishing harbours we are going to need more urgently.

  28. Epikouros
    Posted October 26, 2017 at 9:45 am | Permalink

    Models are based on theories that then reality prove are correct or not. If they are proved wrong then new theories need to be applied to the models. It is noticeable that economic and climate change models are frequently proved wrong and that which is predicted does not accord with them. Unfortunately that does appear not to make those who design the models question whether those models need to be scrapped and new ones applied. Instead they stubbornly keep to the old ones in the hope that repeating them they will be correct the next time. Like a stopped clock of course they occasionally will be. The problem appears to be that bias, pride and not noticing that dynamics and new factors change keeps model makers from pursing new more likely to be accurate models.

  29. John Finn
    Posted October 26, 2017 at 9:46 am | Permalink

    John

    On a related topic, I notice that, in recent times there have been some pretty hefty revisions to public finance data. I never quite understood how the data was determined initially since it wouldn’t be possible to know the value of all the taxes generated in a given month within a few weeks of the month’s end. They could use the taxes that are collected in that month but, in most cases, they would relate to activity in previous months.

    So how do the ONS calculate the deficit/surplus for a specific month. Are they using OBR forecasts? (I suppose I could find this out for myself)

  30. Christine
    Posted October 26, 2017 at 10:05 am | Permalink

    The Government changes the rules quicker than we can make adjustments. They have raised my retirement pension age by 7 years and told me I have to save more towards supporting myself during my old age. Every time I try to achieve a modest income,the rules are changed. I moved into Buy To Let but the risks are now so high they outweigh the benefits, I moved into share dividends but the chancellor has imposed a massive tax on these, I set up a SIPP and now there is talk of reducing the tax rebates. I now think – what’s the point? As the chancellor plays with the lives of the middle classes is it any wonder that the ranks of the feckless grow every day. The less that a person contributes to this country the more they are given. I despair for the future of this country. Just stop all the tinkering and reduce the bloated public and political sectors (especially the House of Lords), reduce foreign aid and reduce immigration. Listen to what the public is telling you.

    • matthu
      Posted October 26, 2017 at 9:14 pm | Permalink

      They want you to invest in green technology …

    • cloxback
      Posted October 27, 2017 at 9:29 am | Permalink

      Christine
      Yes.
      Also I think I read a while back that they’re going to withdraw/alter rent a room allowance ( because of air B&B ).

    • Miss Brandreth-Jones
      Posted October 29, 2017 at 5:38 pm | Permalink

      I could jump on the back of this and give more and more examples of taking from us hard working, relatively intelligent people ,but I cannot bring myself to elucidate. I may cry and keep myself awake all night.

  31. Denis Cooper
    Posted October 26, 2017 at 10:06 am | Permalink

    Off-topic, in view of the hysteria over a perfectly reasonable comment made by David Davis yesterday perhaps I could repeat something I posted here in March:

    http://johnredwoodsdiary.com/2017/03/12/the-foreign-affairs-committee-gets-it-wrong-parliament-should-just-enable-the-letter-to-be-sent/#comment-860021

    “Parliament will have every opportunity to debate the progress of the Brexit negotiations over our future relationship with the EU.”

    That’s if Parliament wishes to do so … but I don’t recall extensive debates of the progress of the negotiations for any of the five major amending treaties since we joined the EEC.

    Maybe I failed to pay proper attention and missed those parliamentary debates during the negotiation of new EU treaties, but my recollection is that those treaties were negotiated and signed by the government and then simply dumped down on Parliament for its approval without any possibility of it changing as much as a comma.

    Who in Parliament is going to follow the negotiations in detail and initiate debates on their progress, identifying the developing aspects which are satisfactory and also those which are unacceptable and which the government should be told are unacceptable?

    First of all, who in Parliament could be trusted with confidential information on how the negotiations are proceeding and on the government’s strategy and tactics? The plain fact is that a majority of parliamentarians are and will remain on the EU’s side, not ours.”

    If the EU insists on taking the negotiations to the wire then MPs should blame the EU if they only get to vote on the agreement after the UK has already left the EU, but of course there are many unpatriotic MPs, and also peers, who will always automatically blame the UK government rather than blaming their beloved EU.

  32. Bert Young
    Posted October 26, 2017 at 10:17 am | Permalink

    Well well well -still being “moderated” again for yesterday ! . It’s John’s blog and I accept his right of decision to publish whatever he thinks is right . On the other hand when a response is on topic , truthful and adds to the dimension of discussion , I fail to comprehend why a response should be delayed to the point when it is no longer topical .

    Today I simply wish to support the criticism Jacob Rees Mogg reportedly made of Carney . It is obvious that Carney has never supported Brexit and had produced forecasts to undermine our economy . We are in much better shape than Carney has ever predicted and he should have learned by now to be more constructive .

  33. Peter
    Posted October 26, 2017 at 10:20 am | Permalink

    Interesting to hear Jacob Rees Mogg describe Mark Carney as an ‘enemy of Brexit’ and the BBC as the ‘Brexit Bashing Corporation’.

    He is not usually so forthright. He is normally far too polite for that sort of thing.

  34. Prigger
    Posted October 26, 2017 at 10:26 am | Permalink

    Few people have heard of the ONS. Governments always have some Clever-clogs Authority to say how poor we are, how poor we will be and how we will need to work harder, smarter, longer because we are grossly unproductive.The ONS therefore, as British workers, are poor, they look as if they will be even poorer, they will need to work harder, smarter, longer because they are grossly unproductive.

  35. stred
    Posted October 26, 2017 at 10:26 am | Permalink

    The head of the OBR may be missing his wife to help him out when he is playing with his computer. She has gone to OFCOM, where she must be keeping the TV media impartial so effectively, or not. I wonder whether they still use the economic models that were so helpful to Project Fear I. To predict to 0.1% must be very difficult. A fly landing on the keyboard might send the forecast the wrong way.

  36. Iain Gill
    Posted October 26, 2017 at 10:37 am | Permalink

    Getting really frustrated with the bogus and simplistic jobs figures.

    Given that I know lots of British IT workers out of work WHY ON EARTH IS THIS COUNTRY STILL PRINTING UNCAPPED INTRA COMPANY TRANSFER WORK VISAS for thousands and thousands of foreign workers to come in and be subcontracted into other companies for less than it costs to hire a Brit? And why are they taxed less than locals?

    Really if I was in parliament I would be asking this question every single day…

  37. MickN
    Posted October 26, 2017 at 11:03 am | Permalink

    Apologies for this totally off topic post but I have just seen a contribution on Guido s site . It is two photos. The first shows a miner at the end of his shift with the caption “Labour 1967 ” The second shows Eddie Izzard in all his finery with the caption “Labour 2017 ”
    This should be plastered all over those areas of the country where they always vote Labour “cos thats what me father did and ‘is father before him “

  38. ferdinand
    Posted October 26, 2017 at 11:49 am | Permalink

    On a reverse principle is the Laffer curve employed in any of the OBR’s algorithms ?

    • Dunedin
      Posted October 26, 2017 at 7:28 pm | Permalink

      It would be useful if incumbents of Number 11 familiarised themselves with Professor Laffer’s theory – preferably before getting the job. The Chancellor would be advised to look at the examples of France and the USA.

      Ex-President Francois Hollande of France learned about the Laffer curve effect after raising taxes to 75% with resulting outflow of the wealthy. London is now one of the largest French cities by population.
      US corporates have huge amounts of cash sitting offshore, so we may see the Laffer effect in action if President Trump can lower corporation tax and encourage them to bring profits back to the United States at lower tax rates.

  39. Denis Cooper
    Posted October 26, 2017 at 2:00 pm | Permalink

    Without wishing to have a go at her, I saw Dr Sarah Wollaston on TV worrying about the lack of suitable provision outside hospitals for some patients who could otherwise be discharged and musing that there needs to be not just more funding but also better planning of health services taking into account the demographic projections among other factors. But before the referendum she came out in favour of staying in the EU, which through its Working Time Directive has strongly contributed to the closure of small units such as cottage hospitals which could have been used for convalescence, and which through its unlimited and uncontrolled and unpredictable immigration has made it impossible to have reliable demographic projections …

  40. Prigger
    Posted October 26, 2017 at 2:19 pm | Permalink

    “Emails reveal Foreign Office alarm at Trump travel ban”
    Mrs May and her advisory team are extremely intelligent but it is becoming increasingly clear to many of us who thought mistakenly our own education rubbish that their grasp of English is on the same level as the best that can be accomplished by the brightest of foreigners who have studied English for two years. They clearly do not understand American English, nor American culture nor indeed the depth of language of our own classic writers. They are shallow of mind. Mr Trump, though they would no doubt scoff like meercat insurance puppets on hearing, is their intellectual superior.
    http://www.bbc.co.uk/news/uk-politics-41739491#

  41. Oggy
    Posted October 26, 2017 at 2:19 pm | Permalink

    OT – Dr Redwood you will have noticed in the last 24 hours Keir Starmer et al and other remoaners trying to manipulate the Government’s ‘meaningful vote’ on the final EU/UK deal into one whereby they think that if it’s rejected we will stay in the EU.
    The legal process of leaving is already underway via A50 and we leave in March 2019 which they voted for ! A50 according to the supreme court is not revocable which is what the whole Gina Miller case was based upon, although they have been trying to change the goalposts since.
    What is it Keir Starmer/Hilary Benn and others just don’t get ?

    David Jones pointed this out to them today.
    ‘ “And as a matter of law under Article 50, we will be leaving the European Union in March of 2019.”
    Mr Jones said “we can’t possibly Remain” and it would be “highly debatable” to say the Brexit can be stopped.
    He said: “The country has voted to leave the European Union and I think that any Government or Parliament that decided to overrule the vote of the British people in that referendum, would be playing with fire.”

    http://www.express.co.uk/news/uk/871422/Brexit-Deadline-Hard-Brexit-Latest-Theresa-May-Brexit-EU-News-UK-European-Union

    The EU it seems in the event of agreeing a transitional deal say it will be for just 20 months until the end of the present 7 year budget period 31st December 2020.

    AND nor do they want us back !! (Hoorah !)

    http://www.express.co.uk/news/politics/871320/Brexit-news-EU-officials-begin-scoping-talks-transition-Britain-UK

    ‘Officials say a 20-month transition period would see Britain formally leave all the EU’s structures, including the Single Market and Customs Union, on December 31st 2020. EU chief negotiator Michel Barnier has said this “makes sense” because that date also marks the end of the bloc’s current seven-year spending cycle, which Mrs May has pledged to honour.’

  42. Denis Cooper
    Posted October 26, 2017 at 2:23 pm | Permalink

    Here’s a typically irrational and totally hypocritical whinge from somebody who was previously content to see a range of powers which should have been exercised by the Welsh Assembly and government instead being exercised by the EU, and who was keen to tell us that we should all vote for that situation to continue, but now according to SCAB, the Sky Campaign Against Brexit:

    http://news.sky.com/story/welsh-first-minister-scrap-the-eu-withdrawal-bill-or-risk-devolution-crisis-11098626

    “””What the Bill says is that powers that would come from Brussels to Wales will be hijacked and taken straight to Whitehall for an indefinite period. Now we clearly can’t support that,” Mr Jones told Sky News.”

  43. hans christian ivers
    Posted October 26, 2017 at 2:34 pm | Permalink

    John

    The net £ 9 billion going to the EU and the international aid budget paying for military expenses in the case of support for relief abroad you have introduced in the past and used as a pre-requisite for more spending and less tax. Amounts which overall are very small and make no real significant differene

    Do you actually realize in how bad a state the government finances really are both in terms of overall deficit and on-going deficit and you are still advocating more spending.

    Is this for political reasons or is it simply because you know something the rest of us have not yet seen or do not know about?

    • Denis Cooper
      Posted October 27, 2017 at 9:55 am | Permalink

      Did you realise how bad the government finances were in early 2009?

      https://en.wikipedia.org/wiki/2009_United_Kingdom_budget

      Total revenue £496 billion (29% of 2008 GDP)
      Total expenditures £671 billion (40% of 2008 GDP)
      Deficit £175 billion (10.5% of 2008 GDP)

      Or, £175 billion divided by £671 billion = 0.26, that is to say the government was having to borrow a quarter of all the money it was spending.

      The root cause of the so-called Tory “austerity” was Labour’s “profligacy”.

    • NickC
      Posted October 27, 2017 at 10:22 am | Permalink

      Hans, It’s actually £10.5bn to £13bn net according to the EU itself. Then you have to add in the benefit to the EU of British fishing waters. Multiplied at current rates over 44 years and you’re looking at around £600bn. That is not a small amount, and it is outrageous that you have the cheek to say so.

  44. Bob
    Posted October 26, 2017 at 2:56 pm | Permalink

    Why is the media talking about fiddling the grade requirements to get state school victims into Russell Group universities?

    Just bring back the grammar schools.

  45. Prigger
    Posted October 26, 2017 at 3:18 pm | Permalink

    The BBC kept we loyal viewers waiting half the afternoon on tenterhooks for a LIVE broadcast from the Catalonian President. Would it be civil war, policemen shooting policemen, blood washing down the streets? So on came the President of Catalonia:
    “Oh..erm he’s speaking Catalonian! My Spanish is bad, but I haven’t a clue about Catalonian, we”ll try to get a interpreter…”
    Red hot the BBC aren’t they, like the flippy-floppy bits of the nether region of a Black-tailed jackrabbit on heat.

  46. HardyB
    Posted October 26, 2017 at 3:21 pm | Permalink

    There is so much uncertainty about that there is no need for official money tightening by the banks, people and businesses are reining in borrowing until they see what’s going to be the outcome of these talks.

  47. kenD
    Posted October 26, 2017 at 3:25 pm | Permalink

    The more taxes government rakes in the more they have to waste

  48. Rien Huizer
    Posted October 26, 2017 at 3:42 pm | Permalink

    Present circumstances: persistent twin deficits, a high debt/GDP ratio, full employment but with 7% of the labour force originating from the EU do not necessarily point in the direction a risk-seeking stance for economic policymaking. The UK simply does not have the “capital” to play risky games. Your recent criticism of the BoE (and Carney in particular) is understandable, but his reputation as a “market monetarist” was well known before his appointment and if he would be in charge of monetary policy under steady-state circumstances, it would be relatively easy to guess the direction of that policy -given current circumstances and the existing policy path. However, we all know that the near future may well present the UK with unusual supply as well as demand shocks that would require a high level of cooperation or at least coordination between Treasury and BoE. Who would want to be the foreigner in charge of monetary policy in this country. Carney should resign for his own good.

    • ian wragg
      Posted October 26, 2017 at 5:29 pm | Permalink

      Carney should never have been appointed. We should never have foreigners running government departments.
      Osborne was someone who thought himself more intelligent than he actually was and he made the classic mistake of increasing taxes instead of reducing unnecessary spending in the early days. The mans a joke the same Carney.

    • hans chr iversen
      Posted October 26, 2017 at 5:37 pm | Permalink

      Rien,

      Mr. Carney has done a good job under very difficult circumstances, that he dos not agree with John about policy and Brexit is neither her nor there.

      We so-called EU citizens who pay 45 % tax see no distinction on whether Mr. Carney is a foreigner or not.

      We have made the British economy vulnerable without any help from the outside, so foreign or not is really not relavant

      • Richard1
        Posted October 26, 2017 at 9:43 pm | Permalink

        He’s Canadian. That’s not really a foreigner 😁

      • Rien Huizer
        Posted October 26, 2017 at 10:34 pm | Permalink

        Carney (or rather the MPC) have done an excellent job, but his approach is not conventional. Neo Keynesians would like to disagree with QE and supporters of less independent central banks would disagree too. The BoE mandate has never been as straightforward as, for instance the Bundesbank or the ECB (the latter shows distinct “mission creep”) For those who believe that cyclical policy is pointless and that central banks should concentrate on maintaining a stable level of nominal GDP BoE policy, despite the diffuse authority structure of the UK, has been as good an an outside observer can see.

        However, my concern with Carney’s position is that he is the ideal scapegoat if the supply and demand shocks that I think can (not must) happen overwhelm the Bank’s ability to ensure orderly markets in products relevant to the UK state: the currency, the market for government issues and last but not least those markets that should be avaibable once the BoE’s balance sheet needs to be reduced. Volatility and high risk premia would make that task uneccesarily difficult. Hence, if I were in Carney’s shoes, I would excuse myself and leave this job to the natives..

  49. Lindsay McDougall
    Posted October 26, 2017 at 3:57 pm | Permalink

    There are all sorts of “clever” ideas for boosting housing supply. Most of them are either of the short term help-to-buy type or building lots of social housing, adding to government debt. One idea worthy of consideration is to sell urban land cheaply to small builders on condition that they build on it within a year. I understand that small builders are less likely to hold land speculatively than the big developers.

    Let us be clear, though, about cause and effect. Land prices are high because house prices are high and not the other way round.

    What is needed to help the young – and ‘the young’ now includes many 40 year olds – is a big drop in house prices relative to incomes. This can be engineered by higher interest rates and zero population growth, driven by zero net immigration. The whole process will take a long time because negative equity and repossessions will need to be limited in order to avoid wholesale misery. Only by this means will houses become more affordable.

    The most accurate summary of what is actually happening is provided by RT’s Max Keiser. With QE, inflation goes into asset prices and not so much into everyday expenditure. The Dow has increased much more than GDP in recent years. The US Fed keeps promising to unwind America’s QE, but never does.

  50. paulW
    Posted October 26, 2017 at 5:49 pm | Permalink

    Yes If I were Carney I’d be gone back to Canada years ago.. why he hang’s around in this crazy country I don’t know- must be something to do with honouring his contract?
    I supppose it’s a Canadian thing!

  51. lojolondon
    Posted October 26, 2017 at 6:32 pm | Permalink

    John, maybe I am paranoid, but I smell a rat. The Chancellor seems to be trying to do anything he can to prevent Brexit. Same as the last Chancellor. There is a fairly well-established pattern at this stage. The OBR comes out with pessimistic forecasts, and the Chancellor ‘reacts’. Unfortunately the actions he takes (eg. massively increasing taxes on rental homes, increasing stamp duty) under the guise of ‘increasing tax income’ will really have the effect of damaging the housing market. This is then blamed on Brexit. This pattern, of taking actions that damage Conservative voters in the expectation of appeasing Labour voters, has been proven to fail, time and again. We really do need for the PM to take control now, appoint a proper Conservative Chancellor, and fire the Remainers in the Cabinet so that things can move forward, ‘appeasement’ won’t work and has never worked.

    • KeithL
      Posted October 27, 2017 at 8:43 am | Permalink

      Poor Lojolondon..you still don’t see it..all of the government inner circle know’s full well by now that we are not going to be able to cut ourselves off completely from the EU27 and survive. What they are at now is trying to come up with some half deal that might be acceptable to the majority- but how to sell it? that is Mrs Mays quandary?

  52. Chris
    Posted October 26, 2017 at 6:38 pm | Permalink

    More gloom from another direction if reports are to be believed. This time with regard to the fishing industry. I believe this industry is symbolic of UK freedom from the EU and should be given priority and not become part of a sellout:

    http://www.express.co.uk/news/politics/871552/Brexit-news-Ukip-Britain-UK-CFP-participation-transition
    ‘Worst nightmare’ Fury as Britain set to KEEP ‘hated’ EU fishing rules beyond March 2019
    PLANS to keep “hated” EU fishing rules in place beyond March 2019 were tonight described as the struggling British industry’s “worst nightmare”.

    • DaveF
      Posted October 27, 2017 at 9:00 am | Permalink

      Chris..despite what Mike Hookem UKIP and the Daily Express would have you believe there is no British fishing limits out to 200 miles, there never was. The most we ever had in law and international law was out to 12 miles from the shore baseline and that was prior to the 1970’s when we joined the EEC. At some stage around that time the EEZ was declared – so what Mike Hookem is talking about is taking control of EU fishing waters. Here i would remind you that we tried that once before- it was called the Icelandic cod war from which we did not fare too well–it’s all UKIP fake news!

      • Chris
        Posted October 27, 2017 at 9:16 pm | Permalink

        DaveF, I sent your comment to a key individual in the fishing industry, who is well aware of the extent of the UK fishing waters over the years and the role of the EU, and, I understand, closely linked to talks with government. I fear the moderator of this blog would not let me post his reply, but suffice to say he said you were utterly wrong, and suggested you went away.

  53. Ron Olden
    Posted October 26, 2017 at 9:03 pm | Permalink

    B’RYNCK’MANSHIP

    Stefaan De Rynck (in case no ones heard of him he’s Barnier’s EU Brexit Negotiator) has said today, that the EU is preparing for ‘No Deal’ by the time the UK leaves the EU.

    Mr De Rynck and the EU are 100% right to make these preparations, and it would be a dereliction of duty not to .

    The words Mr De Rynck has used are identical to those used by sensible and responsible people in the UK. When we say them however, Remainiac fifth columnists accuse of, at best, sabotaging the chances of any deal at all or at worst insanity.

    But we haven’t heard a word of criticism of Mr De Rynck from Remainiacs etc ed

    The few who have commented say it’s Britain’s fault that Mr De Rynck is saying this. One of them has commented that he is justified in making ‘threats’ so as to concentrate the UK mind.

    Shouldn’t they be telling him that what he is saying is ‘unthinkable’ and demanding that the EU immediately agree whatever deal the UK wants? Isn’t it their view that ‘a bad deal is better than no deal’?

    You never hear of any politicians on the continent undermining their side’s negotiating position. In the UK however we have an army of them.

    http://www.bbc.co.uk/news/uk-politics-41765983

  54. Peter Martin
    Posted October 27, 2017 at 9:42 am | Permalink

    The Office of so-called Budget Responsibility has an appalling record. They have got it so wrong so many times that we really shouldn’t take them seriously. But, having said that, we shouldn’t discount the possibility, at some time, that they might just get something right for totally the wrong reasons . If I have a flutter on the Grand National, I usually get it wrong. But just now and again I have been spot-on.

    If there is a downturn it will be blamed on Brexit. However it is likely to have happened anyway. The UK runs a current account deficit in its trade. Someone in the UK has to borrow to fund that deficit. The Government has wanted to reduce its share of the burden so has encouraged everyone else to borrow more by pushing down interest rates. That can work for a time but not for more than a few years. The level of debt in the private sector continues to increase and reduces its ability and willingness to borrow more.

    Most of the private borrowing has gone into creating a property price bubble in the SE of England. If that shows signs of deflating which it could well do in the next few years, we could soon be in real trouble.

    That will give enormous amounts of ammunition to the Remainers.

    So don’t just assume the OBR will always get it wrong. They’d be more useful if they did. We’d know to then do the exact opposite of what they were recommending.

  55. nigel seymour
    Posted October 27, 2017 at 9:55 am | Permalink

    Brexitcentral today reported:

    “Yesterday’s Guardian reported that EU officials have pencilled in 31 December 2020 as the end-date for any possible transition period, to coincide with the end of the EU’s current 7-year budget cycle and various other programmes which start and end with the calendar year. This is likely to reassure Leavers, putting a strict 21-month deadline on any transition period, and stands in stark contrast to the FT’s claim yesterday that Theresa May had already “privately accepted the need for a three-year transition”, which would take the entire process dangerously close to the next election.”

    I would prefer no transition at all or max 12 months but understand the thinking and realisation of business needs. I fully agree TM needs to give us a date and head of remainers seeking the longest possible date in an attempt to ultimately reverse Brexit ahead of the next election

  56. Ron Olden
    Posted October 27, 2017 at 11:25 pm | Permalink

    I sent this email to Alexander Stubbs at the European Investment Bank today.

    ”Dear Mr Stubbs

    Your comments as to the fate of the UK’s Investment in the EIB wen we leave, are rubbish.

    As with any divorce settlement in which there’s a family owned company involved, the UK and the remaining 27, can to agree to dish out our Shares in the EIB, pro rata, amongst the other 27.

    We then count the value of the transaction towards the money we pay. The settlement we have already offered is far more than the value of these Shares.

    The EU Member States will jump at the arrangement because it means they get part of the Divorce Settlement rather than than us giving it in cash to the EU Bureaucracy. And it gives each and every one of them a bigger Stake (and say) in the running of the Bank.

    Germany and France will, be particularly keen on their increased say, and the poorer countries will be delighted with their enhanced stake.

    You are the hired help, and have no say in who holds the Shares.

    The same thing applies to our share of the value of the wine cellar, buildings, artworks and other EU owned assets.. It will all count towards the final settlement. They don’t have to sold or physically transferred to us.

    Ronald Olden”

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    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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