A new fiscal rule

A sensible boost to our economy is affordable whilst having a balanced budget rule for all current spending. Labour’s massive spending plans would plunge us into debt on a huge scale, damaging confidence and squeezing the private sector. It would lead to higher taxes for the many.


  1. Dame Rita Webb QC
    November 7, 2019

    Eh? What about The Tories massive spending plans? 0.7% of GDP on foreign aid, more coppers, more nurses, 40 new hospitals, HS2, £39billion plus to the EU the list is endless.

    1. Dennis
      November 7, 2019

      JR – “Oh yes, I didn’t think of that”.

    2. Bob
      November 7, 2019

      The Tories are trying to outbid Labour on tax and spending.
      They’ve lost the plot.

  2. Richard1
    November 7, 2019

    It’s time the BBC’s ‘fact checkers’ got serious about Labours plans. So far what we’ve had is a concerted effort to find some ‘gaffe’ by a Conservative MP and then make it the main item on the news. Eg I haven’t heard any mention of the postal strike threatened by union militants in order to try to reduce the Tory vote, which they think most postal votes are. Not newsworthy maybe?

    Take the issue of NHS expenditure on drugs. It’s £18bn pa, of which 10% – £1.8bn – Comes from the US. Corbyn has said an FTA with the US will add £26bn to this bill. It isn’t a ‘crude estimate’ as I heard one voice say it is patently ludicrous rubbish. No explanation is offered as to why there will be any increase at all – and not indeed a decrease if tariffs go.

    Labour’s lies must be challenged aggressively.

  3. Nig l
    November 7, 2019

    I also do not understand how they will get round the EU deficit rules. They are very quiet on the subject and of course are not challenged on it in the Media,

    1. a-tracy
      November 7, 2019

      The media need to do its job and ask the questions we all want answers to whatever our political persuasion. You just don’t know what you’re getting with any of the parties.

      I want to ask Labour, if we are still in the EU and you can’t get any different a deal to that on offer and we then have to vote yet again – because people we elect don’t actually want the sovereignty and decision making powers – and we remain HOW will you be able to break the EU debt and deficit rules and then keep your spending promises? HOW are you planning to generate money other than taking money out of the accounts, savings and private pensions that people that already have?

      It is EASY to spend money, ALL of you politicians, it is DIFFICULT to make it. I hear spending plans (well that is the easy bit), how are you going to make NEW money because you can only spend reserves once. Borrowing terrifies the majority especially when we know plenty of spendthrifts who just write out thousands of pounds worth of debts and walk away with IVA’s clear nowadays (I personally know three people that have wiped out over £7000 debts and one has even been given another mortgage five years later).

      1. Denis Cooper
        November 7, 2019

        I’m sure that Labour could get a different deal; the EU would be only too happy to offer a deal that was better for them and worse for us. But then at least that different deal might not have the same potential to break up the UK as the deal agreed by Boris Johnson.

        1. Stred
          November 8, 2019

          Labour will be counting on getting their own Brino accepted tying the UK even more closely than Boris’s deal and that the Commission will be happy to let us become another Venezuela, as a warning to others. Corbyn of course will be happy to be like his favourite country.

    2. Ian@Barkham
      November 7, 2019

      Different rules for different Political Parties. Support the EU and anything goes.

    3. Fedupsoutherner
      November 7, 2019

      Nig1. I was saying this only this morning. How the hell is Corbyn going to borrow what he needs while staying in the EU? According to our host’s post a while ago, austerity measures had to be taken because of EU legislation regarding debt and GDP. What Corbyn wants to do he will not be allowed to do and yet he wants to stay in the EU. Doesn’t make sense to me but then I was never great at economics and it doesn’t look much like our government is either.

  4. Alan Jutson
    November 7, 2019

    Would help if all Parties were honest with cost, and did not count what was already in the pipeline.

    For 10 years we had the Conservatives talking about austerity and cuts when spending was rising.
    Pre that period we had Gordon Brown with Prudence and PFI.
    Now you are all talking of a spending spree when we are still running a deficit and our debt is growing.

    Too many mixed messages without any sensible reasoning for my liking.

    1. Fred H
      November 7, 2019

      Alan that is what every party does pre-election. Promises promises for a better future – jam tomorrow.

      1. Bob
        November 7, 2019

        There is one party manifesto that I can agree with, but it doesn’t belong to any of the LibLabCon cartel.

        It goes something like this:

        “Personal allowance to be locked in parity with the minimum wage
        and abolish the following:
        • Inheritance Tax
        • HS2
        • Stamp Duty
        • Overseas Aid (replace with disaster relief)
        • TV Licence
        • EU membership
        • Tuition Fees for STEM subjects
        • The House of Lords”

        1. Qubus
          November 7, 2019

          Amen to that

        2. Lifelogic
          November 8, 2019

          We should not have a minimum wage law, if people want to work for less than the minimum (perhaps as they enjoy the job and it is convenient and is close to home then why outlaw it and kill the job? Perhaps they they then have to take a minimum wage job ten miles away they hate and after travel costs earn even less anyway but that is legal.

          I would also cull all soft student loans for the many duff worthless degrees, in duff worthless subjects at largely duff universities (at least half of them are worth virtually nothing and certainly not the £50K and three years loss of earning they cost). On the job training and night schools can work very well.

  5. Narrow Shoulders
    November 7, 2019

    Which of additional spending on education, benefits, public sector salaries and pensions, police, the NHS and aid represents a short term boost to the economy Sir John?

    That sound like additional routine and ongoing expenditure to me.

    Our population is rising quicker than or tax take. Therefore we are spending too much money and your party is promising even more. It is our money and it is being evacuated up the wall.

    Reply The tax cuts I am proposing give a direct boost to spending by individuals. Recruiting more doctors or police means there are more people in employment with decent incomes to spend. As employment rises benefit spending should fall and tax take rise.

    1. Thelonius Smith
      November 7, 2019

      “Recruiting more doctors or police means there are more people in employment with decent incomes to spend”

      Then simply create 2.5 million well paid jobs and all will be dandy…

    2. a-tracy
      November 7, 2019

      “Money is hard to get but easy to spend”, my Dad’s mantra. I come from a family with little money but good habits and they are the people that get punished not poor enough for pension credits but not eligible for ANY help.

      Instant gratification always feels good. We may be taking on more police and doctors but are we using them productively. It doesn’t sound like it when a lady I know got a visit from two police men at 10pm at night recently because her neighbour (an ex high level police officer) had reported her kitchen fitters for parking on the pavement and he wasn’t happy they’d been doing it for a week and the family also had to park on the road because their drive was blocked with a skip.

    3. margaret howard
      November 7, 2019

      Reply to reply

      Doctors and police, while necessary, do NOT contribute to the wealth of the nation or create prosperity. The money they earn is produced by the working man wealth creators.

      1. Fred H
        November 7, 2019

        MH – -reasonable numbers of both DO INDEED create prosperity. Doctors enable more productive working days ( maybe you never worked?) and Police do their best to stop crime and civil disorder (although the Courts now are happy with any distructive protests doing damage and loss of productivity).

      2. Qubus
        November 7, 2019

        Perhaps indirectly ? Think about it.

    4. Dennis
      November 7, 2019

      As employment rises so does resource extraction, emissions, CO2 (not that this s a problem) GHGs, congestion. energy needs which needs more energy suppliers so increasing resource extraction, emissions, GHGs, congestion etc. …… around and around. Only a reduction in population will help.

    5. Ed M
      November 7, 2019

      Dear Sir John,

      Tax cuts and spending are only short-term problems to boosting our economy long-term. The government has to focus on building up the High Tech / Digital Economy, boosting high-skilled jobs, highly-paid jobs, more tax revenue, higher productivity, higher exports (across UK and abroad), and boosting sense of patriotism in British economy where we make stuff (high tech, sophisticated stuff) and branded British.

      Important as the financial / investment and consumer economy is, we need to focus a lot more on the High Tech / Digital Economy.

    6. Narrow Shoulders
      November 7, 2019

      Thank you for the reply Sir john, but that is not really the whole picture is it?

      Tax and spend – the politician of any colour’s mantra, we never really did get the austerity except for the middle classes did we?

      Reply I explained the numbers at the time. The main thing that happened was a big increase in the tax revenues.

      1. Narrow Shoulders
        November 7, 2019

        Reply to reply . You did indeed Sir John. You were very clear and those tax revenues came from the middle class PAYE serfs who could not avoid your increases even though there was no real income increases.

        The high earners paid more tax because they were coining it in. Even then the extra tax they paid was not proportionate to their increased earnings.

  6. Kevin
    November 7, 2019

    This reads as though a vote for Labour is a vote for a fiscal “cliff edge”. If the Conservatives lose to a Corbyn majority, will there be a “soft” transfer of power or a “hard” transfer of power? Will Labour spend three and a half years negotiating a deal with Boris to get him to leave Downing Street? Does it depend on what you mean by “leave”? Can voters be said to have known what they voted for? How does democracy work in 2019?

    1. Denis Cooper
      November 7, 2019

      Well, it will be recollected that under Nick Clegg the so-called “Liberal Democrats” pushed for the AV electoral system, which could have taken a seat away from the candidate with the most votes and given it to one with fewer votes – preferably one of their candidates, of course – and now under Jo Swinson they want to apply the same principle to referendums, and moreover to that retrospectively, so that the Remain side actually won the 2016 referendum even though it got fewer votes. That would provide them with a sound theoretical justification for revoking the Article 50 notice without even bothering to hold a repeat referendum as they once planned.

  7. Dominic
    November 7, 2019

    What I find very distasteful is that there are Tory MPs supporting fiscal and social policies that I suspect in the privacy of their own home they vehemently oppose. I find that stance utterly abhorrent and indefensible. This rank hypocrisy will continue until the voter wakes up from their slumber and halts perpetuating this vicious cycle by voting for non-establishment parties whose aim is to dismantle all that’s been constructed since 1997.

    All three parties are complicit. All three parties have lost any sense of shame. All three parties will sacrifice this nation, our freedoms and our assets on the altar of political victory

    1. Dennis
      November 7, 2019


    2. steve
      November 7, 2019

      Yep, entirely correct Dominic.

  8. Lifelogic
    November 7, 2019

    Perhaps even more to the point a Labour victory would destroy confidence and kill wealth creation, the economy and hammer tax receipts. Just the threat of it is already doing this to quite a large extent.

    1. Mark B
      November 7, 2019

      Labour in opposition is just as toxic. The Tories have done nothing about the Labour stooges the Blairites left behind. They have also be very shy, almost subservient, to Labour. Mrs.T would be swinging her handbag tearing great chunks out of them. She was a fighter. This lot are frit !

  9. Dame Rita Webb QC
    November 7, 2019

    IDS on LBC talking down an election pact with the Brexit party. He is obviously unaware of the size of his own majority in Chingford and Woodford Green. Its like the Conservative party have a death wish

    1. Chris
      November 7, 2019

      Yes, Dame Rita. It seems they cannot bury their pride and I believe that they are dominated by Dominic Cummings who seems to have a visceral loathing of Nigel Farage. This, I believe, severely clouds D C’s thinking and will lead to a fatal mistake for the Tory Party.

      Boris seems lack lustre and weak to me and just seems to be behaving like putty in his handlers’ hands, trotting out the same dull slogans, and flat “witticisms”. It just makes him even more distant from the electorate. No point in him making promises as he breaks them. We just do not believe him or trust him any more.

      1. steve
        November 7, 2019


        Yes I have to agree with what you say.

        One of the reasons why I’ve decided not to vote is because of Boris’s weakness.

        He missed a golden opportunity when he complied with Blair’s phoney Supreme Court ruling. In my opinion he should have disregarded it.

        Boris also spent too much time pandering to remainers, why ? They had their say during the 2016 referendum, and lost.

        He refers to the EU as our friends. They are not my friends, in fact what I think of the ungrateful EU cannot be said here as it wouldn’t pass moderation. Calling the EU ‘friends’ of my country is highly offensive to me.

        I gave Boris a chance, but he’s shown himself as tough as a cardboard bath seat.

        So I won’t be voting. The country’s gone to rats anyway.

    2. agricola
      November 7, 2019

      Yes, this party first country last could lead to an own goal that exceeds the one May scored in 2017. I suspect that there are a large number of the electorate hovering on the decision Brexit Party/Tory Party for their vote. It will be disasterous if this is not managed intelligently. Remember, political parties lose election rather than win them.

    3. Mark B
      November 7, 2019

      I disagree. I looked at the GE results for both 2015 and 2017. Clearly in 2017 the UKIP vote went to Labour and IDS vote held reasonably well. If the BXP were to stand it is difficult to call how many Tory and Labour voters would go to them but, based on previous I would say more Labour.

  10. formula57
    November 7, 2019

    “….would plunge us into debt on a huge scale…” – well yes, provided that by “us” you exclude us baby boomers and mean Andy’s children who will be working their whole lives to pay it off, bless them.

    I have delayed some expenditure pending the election in the hope my intended purchases will be thereafter provided “free” if Mr. Corbin wins.

    1. Ian@Barkham
      November 7, 2019

      You must be a cynic – everyone knows the Corbin acolytes have a magic money tree

  11. Mark B
    November 7, 2019

    Good morning – again.

    Sorry Sir John but this can also be said if the Conservative government. The only difference, is the scale.

  12. Newmania
    November 7, 2019

    I watched J (not very ) Cleverly who for some “mysterious reason” is always trotted out to defend Brexit on Andrew Neil. He claimed that Conservative Governments would be able borrow more than Labour due to their fiscal credibility and that current low debt financing charges were due to Boris ( ….oh hold my sides please….) Johnson.
    Andrew Neil immediately called this lie out ,well done, and we watched Claverly squirm with satisfaction.He was nonetheless right in a broad sense that the Conservative Party does have a record of sound money.
    This was delivered by :
    John Major
    Ken Clarke
    George Osborne ( above all)
    Phillip Hammond

    Every single one of these decent Conservatives has been shown the door by the modern jingoistic anti businesses debt addicted irresponsible gang of glib populist pipsqueaks.
    I had no idea how Conservative I was until it was betrayed .
    Don`t it always seem to be that you don`t know what you`ve got til its gone.

    1. Fred H
      November 7, 2019

      New maniac…..sound money? – from that motley crew of fiscal fools. Don’t know what you are taking, but I suggest you stop immediately.

    2. Narrow Shoulders
      November 7, 2019

      George Osborne was a master political presenter. He managed to convince the markets he was being frugal when he spent like a socialist. He had credibility but certainly did not deliver sound money. His “break even” was and is continuously extended

    3. steve
      November 7, 2019


      “He claimed that Conservative Governments would be able borrow more than Labour due to their fiscal credibility”

      ……is likely the case.

  13. Gareth Warren
    November 7, 2019

    I am suspicious of fiscal rules since very clever people so often do dumb things to get around them.

    Here crash Gordon oversaw billions in private loans to the NHS and ended up miring the UK in debt despite being “prudent” and going on about his fiscal rules.

    The only solution I would trust would be to audit government spending as it were a company, I suspect that would lead to vast reductions in costs.

  14. Simon Cohen
    November 7, 2019

    John, Sorry but you are spreading myths here. You are using the bogus illogic of what was known as Ricardian Equivalence which might have (I only say might) have had some bearing in the days of Gold Standards and pegged currencies but is CERTAINLY relevant now.

    Private sector debt is at historic highs and around the same level as before the Financial Crash which means that there can be massive Government investment with no inflation risk whatsoever because there are massive private, household debts to pay off.

    As you well know when bank debts are payed off the banks asset (the loan) is cancelled by its liability (the borrowers asset) that means financial assets are cancelled. I quote form the economist L Randall Wray:

    ‘ Once a firm finishes production and sells the output, it receives deposits and uses these the retire the short term loan…the firm ‘redeems’ itself by bringing back to the bank the banks own IOUs; repayment of the loan ‘redeems’ or retires the bank deposits (the loans and deposits on the bank’s balance sheet are simultaneously debited when the firm writes a check on its bank account to pay down its loan balance).’ (Wray: ‘Why MInsky Matters p. 103).

    The idea that taxes have to be raised is also completely wrong and I suspect that you really know this. The main function for taxes are:

    1. Create fiscal space so that Government can spend for social purposes seen as valuable to society (unless you think society doesn’t exist).
    2. To modify aspects of consumption behaviour by taxing ‘bads’ not ‘goods.’

    Taxes as ‘revenue’ for Government spending does NOT apply to a sovereign currency that is not on a gold standard and not pegged and that does not have debts denominated in a foreign currency. The Eurozone is DIFFERENT because those countries are pegged to the Euro which is why it is good we are not in it.

    Anyone in doubt, please read the famous document by Beardsley Ruml from 1946 called ‘Taxes for Revenue are Obsolete’. he was head of the new York Federal Reserve and knew a thing or two:- https://www.nakedcapitalism.com/2019/07/taxes-for-revenue-are-obsolete.html

    A last note:

    From about 1945-1969 we had marginal tax rates of up to 90% yet this period was known as the ‘golden age of capitalism’ with near full employment and wages that were parallel to productivity levels. Even in 1975-6 when inflation (cost push) was at about 25-26% because wages were in parallel it was not felt as harsh as today where housing is unaffordable (due to a bank led speculative frenzy over 40 years) and wages low meaning, in some cases, that housing costs can be 50-60% of earnings (the sane level is considered to be no more than 25%).

    Don’t forget also , as John clearly knows well, that the Central Bank can set the interest rate at any level it chooses. This is what happened with QE. SO higher Government Spending does not mean higher interest rates (unless the Bank and treasury are supine which is an ideological choice and not a natural law). QE showed that the Government could increase it’s ‘debt’ (really Government buying its own debt as John has always pointed out) yet reduce interest rates to near zero. Post gold-standard, there is no relationship between Government debt levels and interest rates-anyone who bothers to check this out will discover this. The economist Richard Werner (who invented the term QE) has some interesting videos on this topic. https://www.youtube.com/watch?v=MechH0ebs_c

    Let’s try to get beyond the myths.

  15. Ian@Barkham
    November 7, 2019

    Guido Fawkes reports
    As Britain heads for a December Election, Christmas has come early for self-styled ‘Great British Hero’ Phillip Lee. According to his register of interests, he has received a whopping £70,000 to support his new candidature.

    Answers why we have now received 4 campaign leaflets in quick succession.

    Just lucky other candidates are not permitted by law to spend such large amounts.

  16. ian
    November 7, 2019

    Your spending and debt plans are not BJ and the gov plans they are totally different.

  17. ferdinand
    November 7, 2019

    labour’s plans are simply the road to serfdom.

  18. MagicMoneyTrees
    November 7, 2019

    Boris needs to find the Magic Money Tree that Swinson has found.

    Still pay north of £13 billion to the EU…but stay in the EU and somehow find £50 billion by shaking the Magic Money Tree…

  19. Prigger
    November 7, 2019

    The Coalminers in America and their unions and their Republican Constituencies are 100% NOW backing Trump.

  20. NickW
    November 7, 2019

    I would like to wish Sir John good luck in the forthcoming election.

    It is worth pointing out that the Lib Dems, Greens, and Plaid Cymru are banding together to end Universal suffrage and take away the Votes of all those who Voted to leave in the referendum.
    They are, all three parties, vote thieves who will steal your vote in the night. Don’t let them get away with it.

  21. ian
    November 7, 2019

    The world central banks have pumped in 15 trillion dollars on to their balance sheet since 2009 and getting ready to double down on that which has already started in September this year with no end date, the UK has not joined in yet but it will.
    Next year interest rates in the western world will be zero to negative in all countries in the west and countries deficits will be rising, in the UK for the first 6 months the deficit is already 40 billion pounds with 6 months to go, in the USA it is already over 1 trillion dollars and rising, the UK debt is at 2.2 trillion pounds according to the debt clock and USA debt is 23 trillion dollars, this is real debt with no liability counted in.

    Would you want to win this election I certainly wouldn’t, knowing what I know and worst still this new debt will only last less than half time of the last debt which is 3 to 4 years, each time they doge a recession to cleanse the system they make it worse and that is what they are trying to do now.

    1. Mark B
      November 7, 2019

      The extra money has gone into assets which have benefited the rich and investment banks.

  22. Ed M
    November 7, 2019

    In order to make our economy strong in long-term (not forgetting how we just narrowly escaped a depression) and to make Britain great in best sense of word, we have to focus against the economics/politics of both envy and greed – but instead focus more on the work ethic of the Quakers who were the best group of people in business this country has ever had. A small group of people who had a HUGE, POSITIVE impact on our economy. Making vast amounts of money, creating great brands, whilst having happy employees (high productivity), and giving tonnes of money back in terms of philanthropy.

    Famous British companies created by the Quakers (a relatively small group of people)

    LLoyds, Nike, Sony, Clarks, Barclays, Cadburys, Wedgewood, Friends Provident, Furness Withy, Fry’s, Carr’s, Rowntree Mackintosh, Stockton and Darlington Railway, Newcastle Electric Supply Company, and loads more.

  23. Everhopeful
    November 7, 2019

    Will some Tory shout from the rooftops the true consequences of voting in a Corbyn-led govt.
    Land value tax, lifetime gift allowance, tenants right to buy ..all manner of wealth stripping measures.
    Biggest redistribution of wealth ever experienced in a western democracy.
    All that in addition to 70s style industrial unrest.
    People MUST be made aware of the consequences of a commie govt.
    If they care, the Tories ( who are entirely to blame for Corbyn) need to act now!!!
    Should NOT EVER have pandered to the Left nor should they have betrayed the Referendum.

    1. Mark B
      November 7, 2019

      When you have an economy when people cannot get on the housing ladder without mountains of debt, you have a voter that is growing increasingly marginalised by the system. These voters are looking for what they hope is a fairer deal. So if someone offers you the chance of getting a home (tenants right to buy) what is there not to like. This is the Tory governments fault. It interfered in the market with its schemes, allowed MASS IMMIGRATION and driven up prices.

      1. margaret howard
        November 8, 2019

        Mark B

        Nothing to do with mass immigration. Immigrants are rarely able to afford to get on any housing ladder.

        It was the general public who were allowed to treat housing needs as a second stock exchange and went on a shopping spree for ever more expensive properties. Dinner parties in the 80’s/90’s/2000 were infested with boasts about the increasing values of their houses. Then came buy to let when traditional investments gave no return for savers.

        So today the young are paying the price for the greed of their previous generation.

        1. Edward2
          November 8, 2019

          It wasnt greed that made property more expensive.
          To say a rapid 10 million increase in population had no effect on demand for housing is ridiculous.

  24. Derek Henry
    November 7, 2019

    Labour just keeps reinforcing neoliberal gold standard, fixed exchange rate nonsense.
    Talks as if ” borrowing ” is fiscal policy like that of a household or business. They do not know the HUGE difference between a monopoly ” issuer” of a currency and a ” user” of that currency.

    In theory. The negative effect of considering the overhanging burden of the increased debt would, it is claimed, cancel the stimulative effect of the deficit.

    In the real world Japan destroys this theory and has done for decades along with most fiscal conservative theories. Theories that still think we use the gold standard and fixed exchange rates.

    Balancing the budget like that of a currency ” user” is a very bad idea.

    a) inflation happens when the deficit is too big

    b) Unemployment happens when the deficit is too small

    c) The deficit has to meet the “saving desires” of households and business.

    Which is why we have fun one for nearly 300 years. I think we have only run 2 budget surpluses since 1950 for the reasons above.

    The election as always ends up a race who can use neoliberal framing the most. A no deal brexit is supposed to stop all of this neoliberal nonsense.

    1. Derek Henry
      November 7, 2019

      Japan also shows quite clearly the ” crowding out ” of the private sector fear is nonsensical John.

      I have already explained why.

      1. Dame Rita Webb QC
        November 7, 2019

        Eh and who is buying all those JGBs? You have also failed to spot that unlike the UK, Japan records trade surpluses with the yen therefore being seen as as safe haven currency unlike the £

        1. Derek Henry
          November 7, 2019

          Not failed I have studied it for a decade.

          If there any bonds left over the BOJ buys them which is just a simple asset swap.Bank of Japan was clearly demonstrating its capacity to control yields at whatever level they choose. They are in control not bond vigilantes like the Eurozone. Because the Euro is a foreign currency to anyone who uses it.

          I am terribly sorry, but it is complete nonsense that running a trade surplus makes the currency a safe haven. That has nothing to do with it.

          Here is the reality

          1. The Japanese government can never run out of money (yen). It is impossible. Therefore it can never become bankrupt.

          2. The Bank of Japan can maintain yields on JGBs at whatever level it chooses, at whatever maturity range it targets, and for as long as it likes. The bond market investors are incidental to that capacity and are supplicants rather than drivers.

          3. The size of the Bank of Japan’s balance sheet (monetary base) has no relationship with the inflation rate.

          4. If the Bid-to-Cover ratios at bond auctions fell to zero – that is, private bond dealers offered no bids for an auction – then the government could simply instruct the Bank of Japan to buy the issue. A simpler accounting device would be to stop issuing JGBs altogether and just instruct the Bank to credit relevant bank accounts to facilitate the spending desires of the Ministry of Finance.

          5. If private investors choose to buy other assets once the risk in international markets subsides then the Japanese government (the consolidated central bank and treasury) could just buy more of its own debt – to near infinity.

          6. When you run a trade deficit you allow other countries to use up their skills and real resources and allow them to send goods and services to you to consume. All they get are gilts or treasuries in return on a spreadsheet at the BOE or the FED. We get all those goods and services which allows us to free up our skills and real resources to do other things.

          Japan is running a trade deficit not a surplus and has been trying to do so for the reasons above.

  25. Mr Datum
    November 7, 2019

    I do not know if this time in our UK history will be called The Era of ALL OUT Insanity. Not for sure.

    1. Fred H
      November 7, 2019

      A friend has called it ‘The age of imcompetence’ for some years. Never more so than recently.

      1. Fred H
        November 8, 2019

        even my typing is often incompetent.

  26. Everhopeful
    November 7, 2019

    Isn’t Boris trying to “outspend” Corbyn with promises of money for this that and t’other?
    Dangerous strategy surely?
    Boris can’t win on that one. And would we even want him to?

    Reply No, not outspend. Huge different between sensible Conservative reflation and massive tax and borrowing binge by Labour

  27. margaret brandreth=J
    November 7, 2019

    Always seems to be the same , Conservatives get the country on its feet and labour overspends . This tooing and froing has been going on for decades. Labour always have big ideas and then the party misinterprets and behave like greedy capitalists . Corbyn wants to nationalise.. good.. but rather than say nationalism doesn’t work .. fix it so it does.

    1. steve
      November 7, 2019

      margaret brandreth=J

      It was always thus, Margaret.

      Historically the conservatives build it, Labour knackers it. Twas always thus, Margaret.

  28. BillM
    November 7, 2019

    Interesting that Labour have not mentioned their Trade Union benefactors. These Unions are the Paymaster-General for the Party and without their money Labour would shrivel and die.
    Casting my mind back to the 1970s this situation prevailed at the time Unions were striking for ever more pay bringing the country to its knees and reducing the UK to the status of “The Sick man of Europe”.
    That scenario will be replayed and on a much bigger scale if Corbyn and his gang of Socialist Workers get control of OUR Country,
    Who among the avid Corbynistas, will check the history books? And learn from them?

  29. steve
    November 7, 2019

    Corbyn’s manifesto is, well, a cheap stunt for want of a better description.

    It’s a blatant attempt to bribe the voters. Fortunately it is a doomed strategy, since people are far more astute than they were three years ago so it won’t wash.

    Anyone can see Labour would have to borrow on a gargantuan scale to fulfil their ‘promises’.

    Borrow to pay for the bribes, and then raise taxes to pay for the borrowing……people are not as dumb as Corbyn would like to think. People deserve better than Corbyn’s snake oil.

    To Boris’s credit the conservatives are not promising the Moon.

    1. Fred H
      November 8, 2019

      Steve – – but Boris IS pretending he offers a GREAT leaving the EU. IT ISN’T.

  30. Lindsay McDougall
    November 7, 2019

    So Labour’s massive spending plans are severely unhealthy for the economy but a little of the Labour disease is healthy, rather like an inoculation. Is that the argument?

    To me, borrowing is borrowing, whether the ‘borrowing’ is to finance current expenditure or capital expenditure. Remember, there only 3 ways to finance Government borrowing: one is to borrow at home, a second is to borrow from abroad and the third is to print the money.

    Another complaint I have is that ‘borrowing to invest’ covers both projects expected to yield a financial or economic return and ‘investments’ made to increase services provided free at the point of use. The latter will not yield a financial return. Providing services free or subsidised at the point of use is not usually a good idea.

    Our health services would benefit from small charges in order to manage demand. I see no reason why railways should be subsidised by taxpayers given the huge scope that privately owned vertically integrated regional railways would have for cross subsidies within an overall envelope of profit. And I see no reason why housing subsidies should be permanently tied to particular properties rather than temporarily allocated to individuals and families on the basis of need. When your sprogs have grown up, you lose your subsidy.

    1. Lifelogic
      November 8, 2019

      Well borrowing at 1% interest to invest in something that will return 20% is not bad. But people and businesses do this far better than governments. In over taxing people you damage good investments (by people and businesses) and ensure mainly duff investments by governments and bureaucrats often corrupted by vested interest too.

      Green crap “renewables” and HS2 as good examples of such damaging & wasteful lunacy.

      1. Lindsay McDougall
        November 9, 2019

        Agreed. it beggars belief why people think that a ‘committee’ of 600 or 650 MPs, who disagree strongly among themselves, are likely to be good at making investments that yield a financial or economic return.

  31. ian
    November 7, 2019

    I have to say, Mr Derek Henry, you talk a load carp, Japan debt is 350% of GDP and the Japanese government have bail-in all people pension in Japan to buy up all their Bonds, the people never make any money on their pension because the bonds are all negative-yielding and make a loss, in the meantime the Japanese government are busy buying shares of their own companies and Japenese ETFs, the housing market in Japan has never gone up since it fell in 1989 by 70%, if you think that is a good way to go for the UK like some people in the City of London do to keep their wealth then there is nothing more say.

  32. Andrew S
    November 7, 2019

    Let us not be distracted from the main issue here.
    Boris’s deal is a surrender treaty. Does it return control of UK fishing and waters to us?
    No. Does it remove legal requirement to align with EU rules for trade agreements? No
    Does it remove the ECJ in all judgements? No
    It must be stopped in its tracks and we know which party alone will do that.

  33. Ian Pennell
    November 7, 2019

    Dear Sir John Redwood

    Sir, in normal times I would say that “Yes, the Conservatives should preserve their reputation for Fiscal Prudence”- and that the Conservatives should avoid pledging electoral giveaways on a scale that threaten Britain with either rising Inflation or a Credit-ratings downgrade: Alas, these are not normal times.

    If the Left get a Majority between them in five weeks’ time (possible with the mess made by some senior Conservatives at the start of the Campaign)- Brexit will be cancelled via a rigged 2nd Referendum: Both the EU and Parliament will think they got away with subverting Democracy in the UK! That will then give them boldness to further politicise Britain’s Constitution, Gerrymander the Voting System to favour the Left and push through more state regulation of the Press- further weakening the UK’s Democracy. Results from this Election will have big long-term implications for Britain.

    Hence the Conservatives seriously need to Up Their Game- FAST! Major bold, eye- catching policies will be required to really bribe voters away from Labour, Lib. Dems or the Brexit Party – to the Conservatives to be sure of winning. Big Tax Cuts, massive investment in Infrastructure and housing, a million more Apprenticeships for young people and (to get Britain away from Recession) a nice £500 for every man woman and child in Britain just before Christmas.

    In total you need to pledge a fiscal expansion of at least £100 billion annually over the next five years- £40 billion annually can come from cutting Foreign Aid by £10 billion annually, axing HS2 and no longer having to pay EU contributions after 2022. The remaining £60 billion plus per annum is funded by borrowing, most of this can be borrowed from the Bank of England through a £200 billion QE programme (than the QE programme from 2009 through 2014) and borrowing a further £20 billion annually through selling Government bonds in the UK. With Inflation low printing 2% of GDP worth of money for the next five years won’t cause big Inflation; with interest rates low you can also borrow a bit more from elsewhere.

    Money -lots of it- has to be sprayed at those crucial swing voters that the Conservatives need in order to win the General Election. Appeal – with policies like Tax Cuts- that none of the Left parties offer. Such policies will also kick-start the British economy.

    The Conservatives also need to deal with the public image of the Party. Boris Johnson would do well to get all Conservative Candidates together to impress upon them three important points:

    1) Watch one’s tongue: Engage brain before speaking.
    2) If it is found that they have engaged in criminal behaviour or said/ done offensive things online they are not allowed to stand as a Conservative Candidate.
    3) Do a little digging to find out if any of the Opposition candidates (Labour, Lib. Dems, SNP) have a sleazy past. That can then be used to diminish Labour and the Lib. Dems (you can be sure Labour has a Crack Team dedicated to finding sleazy pasts of Conservatives!).

    Boris Johnson needs to prepare for the TV Debates, prepare what he wants to say and for what he might be challenged on. You Sir, need to warn him to prepare for questions about the journalist Charlotte Edwardes, his arrangements with Jennifer Arcuri or possible Russian interference in the 2016 EU Referendum: He had better make sure he covers himself against such eventualities.

    Get all this right and the Conservatives should win, provided there are no more major gaffes!

    Best wishes

    Ian Pennell

    1. Bob
      November 8, 2019

      “Money -lots of it- has to be sprayed at those crucial swing voters”

      I look forward to the day when govt stops spraying my hard earned money around allows me to decide for myself how it is used. I have a sneaking feeling I would make better financial decisions than people like Gideon Osborne, P.Hammond or Sajid Javid.

  34. Prigger
    November 8, 2019

    I am British, you see. We are special.

    1. Martin in Cardiff
      November 8, 2019

      Yes, as a country before the world it is plain that we now have Special Needs.

    2. Fred H
      November 8, 2019

      I am English – even more special !

    3. margaret howard
      November 8, 2019


      People who REALLY are wouldn’t dream boasting about it.

      1. Fred H
        November 8, 2019

        British is not something to be boastful about anymore. Anybody might be.

  35. agricola
    November 8, 2019

    While we have laws covering misrepresentation and the sale of goods not fit for purpose, there are no laws covering the lies that emanate from politicians. Is this because politicians create the law. When there is good cause they should be held to account. A GE is insuficient for this as it is at this time that the greatest porkies are told.

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