UK economy slowed too much by domestic policy

As forecast here the latest figures for GDP growth show that the combined fiscal and monetary squeeze administered by Mr Hammond and the Bank of England have had their predicted effect. The economy has not been growing for the last quarter and the overall annual growth rate has tumbled towards German and Italian levels.

The USA is still growing considerably faster thanks to big tax cuts, a fiscal stimulus and active encouragement of growth and sensible lending by the Fed, their central bank. Never has UK policy been so much at variance with global policy as today, with the rest of the world’s central banks fighting recession and the UK one fostering slowdown.

The delay in the budget until March means the cavalry of some fiscal stimulus does not arrive until April. Meanwhile some Monetary Policy Committee members openly muse about a quarter point cut in interest rates, though with no great sense of urgency. What the Bank should be doing is renewing its old scheme for Funding for lending, reversing its most recent decision about capital buffers for commercial banks, and changing its advice on lending for home and car purchase and for small business lending where there is adequate income and capital cover for the loans.

The Treasury needs to lift the IR35 tax changes which are damaging small contractors. All branches of government need to engage with the need for faster growth and join the international consensus that we need to fight slowdown now.

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100 Comments

  1. Ian Wilson
    Posted January 14, 2020 at 5:45 am | Permalink

    The USA has also benefited from its fracking boom, by some estimates to the tune of one trillion dollars, while here Luddite pressure groups and ministers (Conservative ones, I’m sorry to say) have killed it, ensuring chemical and other industries have migrated west.

    • Caterpillar
      Posted January 14, 2020 at 7:20 am | Permalink

      Ian Wilson,

      Also the Govt should be backing fracking to supply cheaper methane for production of hydrogen. Steam methane reform is the most like short to medium route to the hydrogen economy.

      • Dennis Zoff
        Posted January 14, 2020 at 5:33 pm | Permalink

        The tacit truth….

        Hydrogen is one of the most abundant elements in the universe. But more than just being abundant, it has properties that mean it can power a number of different types of transportation.

        Vehicles fitted with hydrogen fuel-cells convert compressed hydrogen from their fuel tanks into electricity that powers the electric motor of a vehicle, providing a similar range to vehicles powered by internal combustion engines. And the best part? Whilst driving, hydrogen-powered vehicles only emit heat and water vapour.

        It is an increasingly viable fuel for even more types of vehicles – so why is this technology not being adopted wholesale…vested interest again perhaps?…I think we all know the answer?

        • hefner
          Posted January 15, 2020 at 10:22 am | Permalink

          I seem to remember that Governor Schwarzeneger of California is/was a fan of hydrogen-powered vehicles. For California only, a cost of $500 bn had been quoted for creating the required infrastructure. The typical cost of such a hydrogen fuel cell-powered vehicle some years ago was O($100k). Then hydrogen would need to be made available in some kind of a network of filling stations, with the hydrogen provided, usually by electrolysis, and for that the electricity has to come from somewhere.

          There might be some vested interests but there might also be a number of as yet unresolved technical and financial questions. So you might know the answer but I am afraid it might not cover all aspects of the problems.

        • dixie
          Posted January 15, 2020 at 12:33 pm | Permalink

          Fuel cell materials, fuel cell cost, safety of H2 storage and transport when distributed and in the vehicle plus other factors contribute to slowness

          A while ago I saw there was an R&D activity looking to usie Formic Acid which is a safe liquid to distribute and store from which the H2 can be readily regenerated in an augmented fuel cell. That looks a much more promising route than pure H2.

          But, you still need to generate the H2 in the first place.

    • jerry
      Posted January 14, 2020 at 7:44 am | Permalink

      @Ian Wilson; Not sure fracking has been ‘killed off’, the term being used is “moratorium” = A suspension of an ongoing activity.

      • agricola
        Posted January 14, 2020 at 10:24 am | Permalink

        The street term is kicked into the long grass.

        • jerry
          Posted January 14, 2020 at 5:52 pm | Permalink

          @agricola; Unless Boris is planning major changes in a reshuffle & reorganisation, thinking about it, you might well be right, considering his reappoints to and announcements emanating from DEFRA since the GE. 🙁

    • Lifelogic
      Posted January 14, 2020 at 8:32 am | Permalink

      Indeed the whole of renewable subsidies, anti fracking and anti-GM agenda are totally insane. But nearly every MP voted for the moronic Climate Change act in a huge virtue signalling bean fest. They are now pushing the even more moronic Carbon Neutral by X agenda. Almost none understand science, energy, economics or very much else.

    • Andy
      Posted January 14, 2020 at 8:33 am | Permalink

      Fracking literally caused earthquakes.

      That might be fine in Texas where it’s 250 miles to the nearest town.

      But here? No thanks.

      Though thank you for revealing what we have long known.

      Brexit is about you enlightened folk taking on us luddites who actually care about people and the panel.

      • Leslie Singleton
        Posted January 14, 2020 at 9:49 am | Permalink

        Dear Andy–Surely you cannot be saying that you reckon Luddites were a good thing

      • jerry
        Posted January 14, 2020 at 9:52 am | Permalink

        @Andy; The UK has “earthquakes” even without fracking, and we are probably far more at risk from serious on going subsidence caused by old coal mine workings. How many problems does tunnelling cause, as a comparison, should Cross Rail have been scrapped because there is a theoretical risk, what about HS2, that darling of the left and eco-worriers…

        • Tad Davison
          Posted January 14, 2020 at 1:39 pm | Permalink

          Those are very important points you make Jerry, and ones more people ought to take on board.

        • agricola
          Posted January 14, 2020 at 1:51 pm | Permalink

          Absolutely Jerry. I lived in the north West in the late 1950s before fracking was invented. I experienced earthquakes that were detectable without fancy instrumentation which were a natural phenomena.
          If fracking is anything like oil or gas drilling the final pipe diameter is around nine inches. Compared with mining or tunnelling it is nothing.
          We absolutely need cheap energy until fusion energy generation becomes a reality.

      • Leaver
        Posted January 14, 2020 at 10:00 am | Permalink

        The earthquakes were very small. Apparently similar to those of a tube train passing underground.

        My issues with fracking are more to do with fossil fuels being a poor area for investment. Coal, gas and oil are looking like less attractive investments by the day. I certainly wouldn’t bet the farm on them.

        • Martin in Cardiff
          Posted January 14, 2020 at 2:07 pm | Permalink

          In seismic terms they are small, but by the same standards they are also very near to the surface, and so more proportionally damaging than most natural quakes.

          There have been reports of structural damage and of other adverse effects.

          It is a pity, because gas is a very useful stepping stone from coal to lower carbon energy sources still.

          • Fred H
            Posted January 14, 2020 at 6:04 pm | Permalink

            Marty & Andy – – Do you ever make your way to London for instance? There are lots of instances when walking above higher placed tube lines when the ground above trembles. Man made earthquakes if you like – nobody is horror struck at the sensation, Some flatlivers have survived with it for decades- none the worse for it.

          • jerry
            Posted January 14, 2020 at 6:21 pm | Permalink

            @MiC; “gas is a very useful stepping stone from coal to lower carbon energy sources still.”

            But totally unnecessary, the problem with coal is not so much the harmless CO2 released but other substances such as sulphur -did you never hear about the problem of acid Rain back in the 1980s? Not that sulphur is necessarily a problem, it can be recovered and even used as a by-product elsewhere in industry, as it was during coal gas production.

      • Hunt for mysteron
        Posted January 14, 2020 at 11:28 am | Permalink

        Fracking is not economical at the moment, at least not an expansion of it in some quarters. In regard to oil and gas, not original ‘ the greater production carries the seed of cut backs, the decrease in production carries the seed of increasing the production’
        So, perhaps you can find something else to remoan about

      • Lifelogic
        Posted January 14, 2020 at 1:00 pm | Permalink

        Pile driving, mining, jumping up and down and countless other activities cause earth vibrations it is a question of degree! Earthquake is hardly the right description for minor earth vibrations.

  2. Ian Wragg
    Posted January 14, 2020 at 6:35 am | Permalink

    The Treasury doesn’t want us to prosper
    Brexit must be seen to damage the UK.

    • DavidJ
      Posted January 14, 2020 at 1:34 pm | Permalink

      It does seem that way. Politicians scorned behaving like the proverbial woman. Exceptions of course!

    • Tad Davison
      Posted January 14, 2020 at 1:43 pm | Permalink

      Ian,

      I think that was true in the past tense. Had Sir John been Chancellor instead of Hammond, it is very clear things would have been so very different, and in a good way.

    • UK Qanon
      Posted January 14, 2020 at 11:20 pm | Permalink

      The UK Establishment will continue to push their agenda and narrative and no doubt Boris has had his ear tweeked by them.
      We need an Independent Leader with the FULL support from within to drain our long established swamp which is more wide spread but not as deep as the USA’s.

  3. Cortona
    Posted January 14, 2020 at 6:38 am | Permalink

    My understanding is they needed to reserve the right to hike rates in case of a run on GBP under a no deal scenario putting them at odds with the rest of the world. Obviously that threat is no longer relevant but is an important point I’ve not seen addressed here. Otherwise I have infinite sympathy that Carney’s handling of Brexit has been ‘unhelpful’ to use mild British understatement…

    • John O'Leary
      Posted January 14, 2020 at 1:52 pm | Permalink

      Did I miss something? When did ‘No Deal’ get taken off the table again?

  4. DOMINIC
    Posted January 14, 2020 at 6:47 am | Permalink

    Reform the sclerotic, morally and financially bankrupt British State. Slash income tax and corporation tax. Slash and burn business regulation from pathetic gender reporting to climate change tosh. You’re all woke. All political. All anti-commerce

    In conclusion this article is an insight into how far the Tory party has fallen from the heady heights of Thatcherism and now lies languishing in a Keynesian swamp of more State intervention, more State backed lending and more rotation of liquidity from the private to the public and back again using sovereign debt.

    Whatever makes political life easy is the only rule for the modern Tory party. Any policy idea however sensible, useful and badly needed that may be perceived as being upsetting to the left and Labour is swiftly dispensed into the bin of bad ideas.

    The London based, leftist cabal and their ideas now control both Labour, the Tory party and the British State. This isn’t an assertion, this is a statement of fact and explains why income tax rates remains the same, why the BBC still remains, CH4 remains, the unions still reign supreme in the public sector, the blob in control of education, minority rights activism dictating government policy etc etc etc

    You have a majority, use it to take decisions that remodel business culture, break the left and reform the State. That will inject flexibility and allow the UK to embrace economic opportunities as they arise

    • Bob
      Posted January 14, 2020 at 9:54 am | Permalink

      “You have a majority, use it to take decisions that remodel business culture, break the left and reform the State.”

      Hear hear to that!

  5. Caterpillar
    Posted January 14, 2020 at 7:15 am | Permalink

    Fundamental debt and economic imbalance problems still exist across the world. It is unlikely that loosening monetary policy will have any sustainable beneficial effect. Waiting until March for fiscal response does appear odd, but first half year growth is typically poor in UK.

    Role of Air Passenger Duty on Flybe is ‘interesting’, we”ll see if Govt helps Flybe and consistent with looking outside London or whether environmentalists effectively win.

  6. Posted January 14, 2020 at 7:36 am | Permalink

    Lending is capital- not reserve-constrained

    Lehman is a case-in-point. On September 10, 2008, Lehman reported 11% “tier one” capital and very conservative “net leverage“. Less than ONE WEEK, later, on September 15, 2008, Lehman declared bankruptcy.

    The capital positions reported by large complex financial institutions are virtually impossible to calculate with any degree of accuracy, which goes back to another important point.

    Optimal regulation is achieved via regulation of the ASSET side of the bank’s balance sheet, not the liability side. The objective should not be to create reactive buffers (or “insurance policies”) when the banks’ complex derivatives products begin to go bad.

    Rather, the activities which fail to promote public purpose should be banned outright. The whole point of regulatory capital is to ensure buffers in case of a really bad downturn. When the really bad downturn happens the buffers will be (naturally) be used.

    Why not ban (or heavily tax) the activities that caused the really bad downturn in the first place?

  7. Lifelogic
    Posted January 14, 2020 at 8:26 am | Permalink

    I agree with all that.

    Also we need to do something to sort out the lack of real competition in banking and the excessive red tape. I notice that HSBC’s new 40% overdraft rate and Lloyds one (nearly double that rate) are only happening in the UK. Their customers overseas are not being over charged in this rip off way. The banks are blaming the FCA for forcing their hand, so what on earth are the dopes at FCA playing at? Why are they rigging the market in this damaging way.

    We also need the double taxation of landlord interest and taxation of profits that have not even made to stopped. Airport duty is far too high with Flybe struggling, as is stamp duty, IHT, CGT, insurance tax, income tax, NI, VAT, business rates, the rigged energy costs the enveloped dwelling tax and much else. Cut, cut, cut, simplify and reduce the endless government waste – which is almost everywhere.

    • Leaver
      Posted January 14, 2020 at 9:57 am | Permalink

      Lifelogic,

      I owe you an apology. I thought you did not believe that human activity led to a change in the climate. You clearly do believe this. My mistake.

      I too agree with you that there is alarmism and the effects are very hard to predict – and also worry that billions may be misspent. However, I also think action clearly needs to be taken, which leaves me in a dilemma. We appear to be in a more similar place than I thought.

      • Wil Pretty
        Posted January 14, 2020 at 4:11 pm | Permalink

        Leaver
        I do not know what action mankind can make that would change the climate.
        In the past adverse weather events were reported as Acts of God or Natural disasters, nowadays these are refered to as Climate Change.

        Climate does change, its been getting warmer since 1850. This change does not appear to correlate with the exponentially increased burning of fossil fuels, it has been a steady increase over that time.
        In the UK agriculture has benefited from the additional CO2 and longer growing season and we have a reduced heating requirement in Winter, these are positives for us.

        • Leaver
          Posted January 15, 2020 at 12:27 pm | Permalink

          Switching from fossil fuels to renewables, as most countries are doing seems to be the best solution. 1850 is around the time of the industrial revolution – and yes, there is correlation.

          • Lifelogic
            Posted January 15, 2020 at 6:50 pm | Permalink

            Nonsense switching from fossil fuels to renewables make no real difference at all but it export jobs from the UK quite likely to actually increase CO2 output.

          • Leaver
            Posted January 16, 2020 at 9:03 am | Permalink

            Lifelogic, you keep making statements about the environment without providing any evidence. I thought you were a scientist.

    • Bob
      Posted January 14, 2020 at 10:04 am | Permalink

      Hear hear!

      Have you ever read through the auto enrollment procedures? Mind boggling!
      The govt could have simply set up a scheme where anyone with a NI number is automatically allocated a NEST account and then their employer just pays into it. If the employee wants a more exotic pension arrangements then they are free to arrange that themselves. Why complicate it?

    • Lifelogic
      Posted January 14, 2020 at 12:29 pm | Permalink

      Indeed clearly mankind has some effect along with millions of other factors. But if you want to prevent fires in Australia, flooding or death from Hurricanes then taking actions locally to adapt and adjust is going to be far, far cheaper and far, far more effective than trying to reduce CO2 by using more renewables and the likes.

      Renewable make so very little difference looked at in the round anyway. You have to build and maintain them and they need spinning back up.

      • Bob
        Posted January 15, 2020 at 10:38 am | Permalink

        It appears that many of these fires were started bu arsonists, perhaps AGW zealots trying to make their point.

        The environmentalists prevented the customary controlled burning which minimises the problem when bush fires occur. They should be held accountable for the consequences.

        • Lifelogic
          Posted January 15, 2020 at 6:52 pm | Permalink

          Well if wood is left lying about in a hot dry climate it is going to burn sooner or later that is for sure.

  8. Martin in Cardiff
    Posted January 14, 2020 at 8:32 am | Permalink

    This veneration of “growth” is a curious thing.

    If you look at growth per capita, allow for reduced production costs owing to technological advance, asset inflation, population increase, real inflation, and many other factors, then it becomes apparent that it is near meaningless.

    It certainly has little relation to the quality of life experienced my many ordinary people.

    • dennisambler
      Posted January 14, 2020 at 11:15 am | Permalink

      But the pursuit of growth has changed its path. Growth as you imply, cannot go on for ever, but push a new growth with a false narrative and you start from scratch again:

      https://www.politico.eu/newsletter/brussels-playbook/politico-brussels-playbook-meps-to-watch-just-transitioning-commission-top-job-race/?

      “Commission President Ursula von der Leyen on Monday in Luxembourg committed to raising, by 2030, €1 trillion for the fight against climate change. How exactly she plans to do that, and who will profit most from the money, she left for today’s College meeting to answer:

      The Commission will adopt and unveil its Just Transition plans (part of the broader, €1-trillion Sustainable Europe Investment Plan) in Strasbourg today.

      “Climate change is an enormous challenge, so we have to think and act big,” Commission Executive Vice President Valdis Dombrovskis told Playbook, admitting that today will present the first credibility test for the new Commission. “We put the Green Deal on the table last month and, to put it bluntly, we now need to put our money where our mouth is,” he said.

      Dombrovskis said that what will be unveiled today is a “comprehensive funding plan to transition to a greener Europe.” He added: “We need at least an additional €260 billion a year to meet the 2030 climate goals. The Sustainable Europe Investment Plan will give us real financing clout — €1 trillion over a decade — to fund sustainable projects across the EU. Some might yet need more convincing, and what’s more convincing than a pile of cash?”

      Indeed, especially when it isn’t yours. It seems even out of the EU we are destined to follow this madness. Hammond said just for the UK it would cost one trillion GBP, https://www.bbc.co.uk/news/uk-politics-48540004

      Now if that isn’t growth, I don’t know what is.

  9. Posted January 14, 2020 at 8:35 am | Permalink

    Are you certain it is not a demand side problem? HSBC with its massive deposit base has plenty of liquidity as indeed Lloyds seems to have recently announcing 18 billion available to lend this year and nowhere do I read that there is a problem in this area.

    • Ian Wragg
      Posted January 14, 2020 at 9:47 am | Permalink

      And they are all now charging usury rates of interest on overdrafts. No better than payday lenders.

    • acorn
      Posted January 14, 2020 at 4:39 pm | Permalink

      Brexit has turned out to be the “forward guidance” more powerful than anything that Mark Carney’s techies could dream up for him.

      My Bank’s investment management service is telling me, they have significant unused capacity to create loans. Its problem is finding borrowers that have a very high probability of paying back the loan. If you are a regular overdraft user, don’t even bother asking for a term loan of any kind. And, collateral is not what it used to be; expect a very large haircut on anything that is not guaranteed by the Treasury.

  10. Mark B
    Posted January 14, 2020 at 8:42 am | Permalink

    Good morning.

    It is good that our kind host points out the damaging actions of the last conservative government led by, Theresa May MP. It is also good that he highlights many of the positive things this government can do. What is less pleasing is that realise that our growth is a product of MASS IMMIGRATION and consumer led spending. The latter just simply cannot continue as house building and infrastructure spending cannot keep pace, and the other where people’s confidence is so undermined by both government policy and fear of the future that spending will be reduced.

    A 0.25% cut in the base rate will not be enough. We need action by the government to realise that has legislated damaging legislation that has impacted on the economy. It has to repeal such legislation and accept a tax reduction plus, reduce spending. More borrowing is not the answer and neither is more QE. Thatcherism may have fallen out of favour with the fluffy new One Nation Tories but reality hasn’t !

    • Bob
      Posted January 14, 2020 at 10:40 am | Permalink

      Business rates is the straw that broke the camels back for many small businesses.

      • Martin in Cardiff
        Posted January 14, 2020 at 3:28 pm | Permalink

        Here’s me thinking that it’s more often the rent charged by private landlords, e.g. fifty thousand a year for a greengrocer’s premises in an out-of-town parade.

        • Bob
          Posted January 14, 2020 at 6:25 pm | Permalink

          No Mic, it’s the £25k the govt adds to the the cost of the premises. That’s the straw that breaks the camels back.
          You have clearly never run a business.

  11. Newmania
    Posted January 14, 2020 at 8:44 am | Permalink

    UK interest rates were as follows pre 2008:
    2002 4%
    2003 3.75%
    2004 5.75%
    2006 5%
    2007 5.5%
    Growth 2003 3.3% 2004 2.4% 2005 3.1% 2006 2.5% 2007 2.4%
    In 2008 interest rates were slashed and borrowing ballooned .
    We were by now supposed to be bringing debt down from 80% and normalising interest rates
    Interest rates are still at 0.75 % and look set to stay at these historic low levels , debt is accelerating to up to 90% and yet the country is failing to grow…..despite Brexit.

    Reply So far no Brexit so that is irrelevant

    • Ian Wragg
      Posted January 14, 2020 at 9:52 am | Permalink

      No but the population continues to grow half a million annually so that should encourage growth. All those doctors, engineers and professional people we are told are an asset to the country. Who don’t use the NHS and bring their own houses with them.

    • Know-Dice
      Posted January 14, 2020 at 9:55 am | Permalink

      May be that should read “despite Brexit uncertainty” – Up to late on 12th December 2019 the main stream media were still talking about a “hung Parliament”, which I am sure effected GDP, retail sales and growth for the end of last year.

      Now the air has cleared to a certain extent lets see Boris’s true colours…

    • Newmania
      Posted January 14, 2020 at 10:53 am | Permalink

      Coincidence then

    • Peter Wood
      Posted January 14, 2020 at 11:51 am | Permalink

      Reply to reply,

      Sir John, you deliberately ignore the point made; higher interest rates do NOT cause lower GDP growth. We have a much more serious problem and you seem unwilling to look at it. The consumer is full, we already have too much debt. We have a trade deficit, so more purchasing means more imports and greater trade deficit. Our problems are structural. Interest on Government Debt is 8% of taxation, that is MORE than the cost of defending our nation. This, when interest rates are historically low.
      We have rampant inflation in asset (houses) values that are not included in government inflation statistics. We are racing towards the precipice.

      Reply Monetary tightening helps create and results from lower growth. Higher rates are often part of monetary tightening. There is nothing unsafe in helping a new generation of homebuyers get their first mortgage or a lending money to people in jobs to renew their car

      • Newmania
        Posted January 14, 2020 at 12:39 pm | Permalink

        I would not say inflation was a concern, the trade deficit certainly isn’t. Borrowing costs are not at high levels but that does not mean that 90% of GDP debt is place to relax in. Things can change .
        The low interest rates we have are overall sensible but the suggestion that the Bank of England is responsible for low growth is clearly a fiction .
        The only possible course now is to hold what little there is left in the armoury back for the Brexit recession my worry is that the Brexit government , dragged even further left by Corbyn will find it easy to set up spending commitments and will not be able to adjust when the revenues do not appear

        • Richard1
          Posted January 14, 2020 at 5:23 pm | Permalink

          Net debt to gdp is c 65%

      • Caterpillar
        Posted January 14, 2020 at 11:43 pm | Permalink

        Reply to reply to reply,

        (Extreme) low interest rates favours industry leaders, hence increasing concentration, increasing monopoly power and decreasing innovation. Continued use is bad overall.

  12. Stred
    Posted January 14, 2020 at 9:02 am | Permalink

    The propaganda about air quality deteriorating to ‘terrible levels’, repeated frequently by the BBC and other ignorant presenters. is killing the motor industry and trade. People hear that councils are banning cars and vans altogether, diesel and petrol, in city centres. The truth is that air quality is much better than it used to be but UN standards have been made even tougher than EU directives and are way below the pollution levels found in Asia and Africa. We have above average lifespans in parts of London and shorter in others, but with similar pollution. Even if all cars were banned the background level would remain and electric vehicles would still stir up and produce particulates. Diesel cars can now produce zero NO2 but the councillors still ban them. Most drivers will not be able to use battery driven cars and so they keep their old low tax diesels.

    • James Bertram
      Posted January 14, 2020 at 10:24 am | Permalink

      Stred, it is not so much cars that are the problem in rural areas but industrial agriculture. Ammonia levels are estimated to kill 3,000 people in the UK annually. Brexit is now the opportunity to end the failed industrial farming experiment of the last seventy years that has been so damaging to our environment and wildlife, to human health, to farm employment and cohesion of rural communities; and to return to systems that work much more closely with Nature.

      This is from the Air Quality Expert Group report on Agricultural Air Pollution 2018:
      Q1. What pollutants are emitted by agriculture?
      A: Nitrogen-containing compounds (NO 2 , NO, NH 3 , N 2 O) are emitted to the atmosphere from agricultural activities. In the case of ammonia (NH 3 ) and nitrous oxide (N 2 O), agricultural sources are the main contributors, comprising 88% and 68% respectively of annual UK emissions in 2016. In addition, agricultural soils are becoming a significant source of nitric oxide (NO) (projected to be 6% of UK NOx emissions by 2030) as emissions from combustion sources are reduced by control measures. Methane and non-methane volatile organic compounds (VOC) are emitted by agriculture, and livestock are an important source of methane in the UK budget (51% in 2016). The pesticides/fungicides hexachlorobenzene, hexachlorcyclohexane and pentachlorophenol, which are listed in the Stockholm Convention on Persistent Organic Pollutants, are also emitted from agricultural and forestry use.

    • Martin in Cardiff
      Posted January 14, 2020 at 10:26 am | Permalink

      You touch on an interesting point.

      Growth, the increase in the value of goods and service produced, does not take account of negatives, such as the costs of disposal at the end of useful life, nor damage to people’s health, increases in crime, and so on caused by them.

      When you look at the impact of some of these, then I suspect that the overall figure might well be negative too

  13. Everhopeful
    Posted January 14, 2020 at 9:08 am | Permalink

    Maybe the opportunity to reform was missed post 2008.
    Rather than allow the banks to fail, QE and artificially low interest rates employed in attempt to keep govt. budgets under control.
    Why even go near those obviously failed policies? There IS a worldwide downturn after all ( I gather) so 10 years of monetary policy ( which I have seen described as Keynesian-Marxism ??) have not worked.
    What happens when people realise that they have put up with all the attempts to manipulate the economy (mass migration…much house building etc supposed GDP boosts?) yet the economy is still failing?

  14. Lifelogic
    Posted January 14, 2020 at 9:22 am | Permalink

    Yes more nanny state lunacy – with the ban on using credit cards to gamble. What next, perhaps not allowed to use them to buy gin, bear, sugar, fat or a slap up meal. Does the government really think this will have any effect on a determined gambler?

    Meanwhile the government encourages gambling hugely with their national lottery scheme to take money off the gullible.

    • Lifelogic
      Posted January 14, 2020 at 9:46 am | Permalink

      They we have the mad Birmingham war on private motorists. Not it seems a ban on taxis however which are, of course, far less efficient than private cars. This as they need a driver (with all their costs and carbon output) and spent much of their time travelling with no passengers in them. Often doing a double journey to achieve a single useful one.

      If it really costs £500K to make Big Ben Bong on Jan 31st then let’s spend the £500K on some good causes and just put a large loudspeaker up there with a recording of it rented for perhaps £1000. Perhaps as a symbol of a new smaller, more efficient and frugal government.

      • Martin R
        Posted January 14, 2020 at 3:00 pm | Permalink

        Sadly I don’t think that smaller, more efficient and frugal government is quite what Boris Johnson has in mind.

        • Lifelogic
          Posted January 14, 2020 at 5:11 pm | Permalink

          I suspect you are right.

    • Martin in Cardiff
      Posted January 14, 2020 at 10:29 am | Permalink

      You have your exit from the European Union, and also the government for which you apparently longed.

      And yet all you do is complain endlessly.

      • Lifelogic
        Posted January 14, 2020 at 12:34 pm | Permalink

        Well almost anything was better than a Corbyn dog wagged by an SDP tail!

        Will it be a real exit from the EU (or as I suspect a leave in name only)?
        Will the Boris government cut taxes and the size of the state (I suspect not given the indications so far)?

        It looks like more tax borrow and waste socialism to me. Just not as dire as Corbyn’s version.

        • Martin in Cardiff
          Posted January 14, 2020 at 4:39 pm | Permalink

          It will be exactly for what you voted in the referendum.

          The UK will leave the Treaties. That’s that done.

          Everything else will be for whatever the Government wants, that it can also get past our sovereign elected Parliament.

          Since you voted for both, you have absolutely no grounds for complaint under any foreseeable circumstances, I don’t think.

      • Fred H
        Posted January 14, 2020 at 5:30 pm | Permalink

        Sir John provides this facility to allow public to raise and debate issues of concern. He doesn’t have to agree, but appears generally to include them.
        It may also serve to update his feeling on how the electorate sees certain issues – hopefully of some value. The day the public at large agrees with everything in the public interest and those we suspect are not, this site will loose value. I imagine you and certain others enjoy venting your considerable speen don’t deny us ours!

        • Fred H
          Posted January 14, 2020 at 10:20 pm | Permalink

          ooops – spleen

    • formula57
      Posted January 14, 2020 at 11:50 am | Permalink

      Like nationalized industries, gamblers need to learn to live within their own means.

    • Lifelogic
      Posted January 14, 2020 at 5:12 pm | Permalink

      Beer!

  15. ukretired123
    Posted January 14, 2020 at 9:24 am | Permalink

    There needs to be seeding of investment nationwide at many levels ASAP- I agree with SJR.

  16. jerry
    Posted January 14, 2020 at 9:27 am | Permalink

    “The USA is still growing considerably faster thanks to big tax cuts, a fiscal stimulus and active encouragement of growth and sensible lending by the Fed,”

    I do wonder why this might be, obviously tax cuts and sensible lending plays a part but perhaps the biggest stimulus and active encouragement for growth has been Trump’s MAGA doctrine, with people in the USA not only wanting to buy products ‘Made in the USA’ but often willing to pay more for those products, resulting in a rebirth of manufacturing via “on-shoring”.

    The UK, perhaps, needs a post Brexit system that allows the customer to know exactly were their intended purchase was made. No one can me made to ‘Buy British’ but at least people would be able to make an informed choice. I note some retail websites in the USA are indicating when the product has been imported.

  17. bill brown
    Posted January 14, 2020 at 10:07 am | Permalink

    Sir JR,

    There is of course a need for a more growth oriented fiscal and monetary policy as we have had one of the lowest growth in Europe of any country in the past 3 years, even lower than Germany.
    The question is does the uncertainty with low investments both by the private and public sector will it continue as very low part of GDP compared with other nations.(EIU Economist, Brexit)
    On the comments on the growth of the US, the tax cuts and therefore the federal deficit of US$ 1 trillion is unsustainable, so there must be a middle way to catch.

    Our productivity level and educational/training levels still remains what of our biggest challenges for continued and sustainable growth?

  18. agricola
    Posted January 14, 2020 at 10:22 am | Permalink

    Why do we have to wait for the budget. Does the Chancellor understand the problem, if so why does he not act today. Are government still in the mindset where they await guidance from the EU. I do not doubt what you say, but fail to understand the lethargy.

    • Lifelogic
      Posted January 14, 2020 at 12:22 pm | Permalink

      Me too even if he just announced the direction of travel and showed some tax cutting, pro growth, smaller government, easy hire and fire, cheap energy and abolition of red tape vision it would help. The sooner he does so the sooner the positive effect tax place.

      What Javid has said has been negative. Essentially more government borrowing and more government waste and market manipulation. Not even the cancellation of the absurd HS2!

      • Lifelogic
        Posted January 14, 2020 at 3:16 pm | Permalink

        take place.

    • jerry
      Posted January 14, 2020 at 6:46 pm | Permalink

      @agricola; Isn’t HMT not restricted in what it can do, even announce, until after Jan 31st due to EU rules. That said, I’m also surprised that the budget has been announced for March, and not (very) early in February, even more so considering that the last full budget was in 2018 under very different people and policies!

    • Fred H
      Posted January 14, 2020 at 7:43 pm | Permalink

      In recent governments and output from various makeup of the H of C, it can be difficult to determine what actually gets done. Do as little as possible seems contagious.

  19. BillM
    Posted January 14, 2020 at 10:25 am | Permalink

    It is clear the BoE, under Carney, is the only one in step while the RoTW are out of step. LOL. I do wonder if it was a deliberate manoeuvre on his part to create the bad image of Brexit he predicted.
    Did that foreign import by Osborne actually do anything to benefit the citizens of this country? I find it incredulous that a British Government would allow a non-citizen to control such a vital element of our infrastructure. Where else in the world, outside of the EU, does this occur?

    • bill brown
      Posted January 14, 2020 at 2:57 pm | Permalink

      BillM

      This has nothing to do with whether Carney is a UK citizen or not, which he actually is as well, but whether as an individual he is competent to fill the role.

      And there are lots of well informed people like yourself, who believe he did a good job in the role.

  20. acorn
    Posted January 14, 2020 at 11:09 am | Permalink

    It is good fun going back to read what politicians were espousing back in 2010. http://johnredwoodsdiary.com/2010/12/27/time-to-try-controlling-public-spending/

    Reply Yes, I drew attention to run away public borrowing and high rates of increase in public spending. Neither of these features apply today. The new rule requires all current spending to be paid for out of taxes!

    • acorn
      Posted January 14, 2020 at 3:15 pm | Permalink

      Since you are calling for tax cuts, and the new rule requires all current spending to be paid for out of taxes; then current spending, ipso facto, has to be reduced in the short term at least to sum to zero! Hence we get a new hospital with fantasy “borrowing” for the capital expenditure, but less tax money to staff and operate it.

      I suspect that like the Funding-for-Lending Indian rope trick, the magic money tree is going to acquire the latest version of the Klingon cloaking device, courtesy of the techies at the NLF; DMO and BoE. That basically means it won’t appear on any published government balance sheet.

  21. kzb
    Posted January 14, 2020 at 12:16 pm | Permalink

    It’s a miracle anything at all gets done, never mind growth.
    The country is paralysed with intentionally congested roads and trains that don’t run.

  22. Sydney Ashurst
    Posted January 14, 2020 at 12:53 pm | Permalink

    The EU Parliament is being presented with a one-trillion-euro plan to finance its goal of making the bloc carbon neutral by 2050.
    That figure represents a 10-year investment to be sourced from public funds and leveraged private sector money. It is part of Europe’s “Green Deal” — an ambitious rethinking of the economy, transport and energy sectors to turn the EU into a leading inspiration in the fight against global warming.
    European Commission President Ursula von der Leyen has proposed a transition fund meant to bankroll the sort of deep changes needed, which would make available up to 100 billion euros (110 billion dollars) a year.
    The Commission wants a quarter of its long-term budget spending to go on the Green Deal transformation, and is banking on EU member states and the European Parliament backing its plan.
    Can you assure me the UK is leaving in time, and will not be suckered into paying into this fund?

    • Andy
      Posted January 14, 2020 at 5:14 pm | Permalink

      The UK will have no choice but to go carbon neutral.

      In any case Boris Johnson has claimed what he called a ‘stonking’ mandate to govern. And his manifesto – which didn’t include much – did include a commitment to go carbon neutral by 2050.

      I suspect you even voted for him 0n this basis.

      • jerry
        Posted January 15, 2020 at 7:12 am | Permalink

        @Andy; What the Conservative manifesto actually said was;

        and achieve our goal of being carbon neutral by 2050.

        I read that to be an aspiration, not a commitment, considering much of the (so called [1]) carbon neutral technology needed, that Boris was referring to, largely doesn’t yet exist in a mass-production ready form, nor does the infrastructure that is need to service the technologies whole life cycle.

        [1] often simply moving emissions of CO2, and other far more dangerous pollutants, to another country

  23. DavidJ
    Posted January 14, 2020 at 1:30 pm | Permalink

    One could be forgiven for thinking that there has been deliberate intent to damage our country. Could it be that the perpetrators are on a mission to see that their Project Fear comes about?

    • margaret howard
      Posted January 14, 2020 at 5:59 pm | Permalink

      DavidJ

      Much more likely:

      “We told you so!!!!!!!!”

  24. Posted January 14, 2020 at 1:35 pm | Permalink

    Do you think this policy of the bank of England could be another Remaining sections ploy to stop or drawn a bad picture of Brexit as the present Governor was and remains a person of anti Brexit ideology

  25. Martin R
    Posted January 14, 2020 at 2:54 pm | Permalink

    I see Mr Raab has said today that Britain is going to be a leader in climate change. As it is not within the power of politicians to change the climate of this planet, or any other planet for that matter, I’m wondering if he means Britain is going to be a world leader in virtue signalling. But it is that already for our pains.

    Britain produces less than 1% of mankind’s output of CO2 a gas which has never been shown by empirical evidence to have the slightest effect on the weather, let alone the climate. Mankind’s CO2 output is a tiny fraction of natural carbon flows in the carbon cycle anyway.

    • Martin in Cardiff
      Posted January 14, 2020 at 4:53 pm | Permalink

      No, it isn’t.

      Atmospheric carbon dioxide has been increased, by human activity, by nearly half since pre-industrial times.

      The best models that science can derive show that it has a highly significant effect too.

      • jerry
        Posted January 15, 2020 at 7:26 am | Permalink

        @MiC; re Atmospheric carbon dioxide;

        Care to estimate how much CO2 has recently been emitted by mother nature due to volcanic eruptions in New Zeeland and the Philippines, any estimates for the amount of absorbed CO2 being given up to atmosphere from our oceans due to sea bed volcanic activity?

        “The best models that science can derive”

        Call be a sceptic if you like but, would these models be the ones designed by research scientists who are being paid to find AGW?… Duh!

    • Lifelogic
      Posted January 14, 2020 at 5:09 pm | Permalink

      Virtue-signalling with vast sums of tax payers’ money. Even if you accept the vastly exaggerated CO2, hell on earth religion, the solutions proposed (wind, PV, public transport, cycling and the likes) clearly make virtually no difference to world CO2 output. Indeed the expensive UK energy agenda (that exports energy intensive industries and jobs) probably actually increases net CO2 – when all is considered.

  26. Rhoddas
    Posted January 14, 2020 at 2:56 pm | Permalink

    Sir John, the perverse nature of IR35 and it’s malign influence on contracting and the self-employed creates a huge drag on entrepreneurial/freelance risk-taking versus the relative safety of status as an employee. As others have commented, why does the Chancellor need to wait 100 days to announce a budget for obvious items which can kickstart and motivate business?

    For UK industries to flourish then we do need the measures you’ve outlined and to reignite the buccaneering spirit, with infrastructure investing, freeports, FTAs, with the rising economic tide lifting all boats – supporting people and society.

    PS: There’s a lot of p155 & wind in the press from EU sources about the dire limitations of a trade deal (time/scope and the need to ensure UK is seen NOT to profit from leaving). I would countenance the use of this one word as how to respond.

    reciprocity
    /ˌrɛsɪˈprɒsɪti/
    noun
    the practice of exchanging things with others for mutual benefit, especially privileges granted by one country or organization to another.

    Frankly they have alot more to lose than ourselves. The fisheries thing has possible options imho by creating/declaring UK marine conservation zones (to protect fish stocks) and if we were to give some limited temporary access to some UK waters, it is thus reciprocal, EU must give us access to their fishing waters equally.

    If the EU insists on tariffs, which we could dispute, then we could reciprocate like for like, but for the ROTW offer alternative low/zero tariff arrangements.

    And it’s NOT a proper Brexit if we continue to pay monies to EU from 2021, I am damn sure Japan or Canada don’t for starters!!

  27. The Prangwizard
    Posted January 14, 2020 at 4:22 pm | Permalink

    Another impediment to growth is tbe ridiculous time it takes to impliment improvements of all kinds in infrastructure, or indeed anything of significance that requires planning and other consents.

    It is claimed time is required in the name of democracy and consultation, but every man and his dog seems to be consulted. Objectors particularly the ‘professional’ lobby groups whose agenda is to stop everything are pandered to and by the time a spade hits the ground years, even decades have gone by. The original plan is then deemed out of date and needs to be revised and the process starts again or when completed the project is inadequate.

  28. mancunius
    Posted January 14, 2020 at 5:30 pm | Permalink

    Mark Carney extending his BoE tenure from 31st Jan to 31st March is bad news. Javid’s apparent over-caution is more bad news. I suppose Boris is still honing the shape of the new and still-to-be-announced cabinet changes.
    Message to Planet Boris – Get a bl**dy move on.

    • Lifelogic
      Posted January 15, 2020 at 4:49 am | Permalink

      Indeed Javid does not inspire any confidence so far. We will finally see if he is a real Conservative in his March Budget. I suspect he is just another, visionless, essentially socialist, Chancellor – just like the disasters Brown, Darling, Osborne and Hammond.

  29. Fred H
    Posted January 14, 2020 at 5:34 pm | Permalink

    OFF TOPIC.
    From BBC website…

    Former Commons Speaker John Bercow spent £1,000 on a taxi fare and £12,000 on leaving parties for staff in the run-up to his retirement.

    Mr Bercow, who stood down before the election, also spent £7,000 on a US visit in his final months in the job. His expenses were obtained via a Daily Mail Freedom of Information request.

    A Commons spokesman said the 260-mile round trip from London to Nottingham, in April, was made by taxi rather than train for security reasons. Mr Bercow, who was accompanied by an aide, travelled to Nottingham to deliver a speech at the Political Studies Association annual conference. The speech was about how Parliament should respond to the “anti-politics age” and what the Parliament of the future might look like.
    The taxi is reported to have stayed in the city during the speech, which was followed by a drinks reception.

    Is this taken into account in an expenses budget – perhaps you might enquire Sir John?

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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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