One of the first votes I cast as a young man was a vote in the 1975 referendum on staying in the Common market. I read the literature of the two campaigns, and the Treaty of Rome. It was obvious the government Remain side was misrepresenting a Treaty for a future Union as a so called common market so I voted to leave.
I felt cheated by the result, based as it was on assurances we would never lose our veto and it was just about trade. As a good democrat I nonetheless accepted the verdict. For the next 20 years I did my best to limit our commitment to a free trade one, which became increasingly impossible as a series of Union treaties were put through and the Union went on a ruthless power grab .Every time it got a majority of member states to agree another legal text it “occupied” that field of law so its laws overrode national laws.
As single market Minister I could see most of the laws did not make trading easier. They embedded the ways of doing things adopted by leading companies- usually German and French – banning competitor methods and discouraging innovation. Where I could I blocked, delayed or diluted these would be laws. Many senior officials wanted us to give in or to strike a deal, however bad or worthless the legal proposal.
The big battle came over Maastricht. No one could claim a single currency was part of a free market. It was clearly a big step on the road to Union.
February 1, 2025
I was too young to vote in 1975 I did not read much of the literature but found the arguments of the leave proponents far more convincing. The emotion and lies arguments of Sir Christopher Soames, Harold Wilson, Roy Jenkins, Shirley Williams and Edward Heath arguments sounded duff to me. Not remotely a match for E Powell, T Benn, Michael Foot, Peter Shore, and Barbara Castle, Eric Varley and Douglas Jay,
Much of the ‘Yes’ campaign focused on the credentials of its opponents. According to Alistair McAlpine, “The whole thrust of our campaign was to depict the anti-Marketeers as unreliable people – dangerous people who would lead you down the wrong path. It wasn’t so much that it was sensible to stay in, but that anybody who proposed that we came out was off their rocker or virtually Marxist.” They failed to even address the issues but won easily. Conned by Heath and Wilson with claims of “no loss of Sovereignty”.
I only the appalling Ted Heath has never taken us in. What appalling PMs the Tory Party has given us Heath, Major, Cameron, May, Boris, Sunak… even Thatcher failed in very many ways he worst decision being appointing the dire John Major as Chancellor and then the ERM fiasco.
February 1, 2025
In 75 I voted against and have been a very vocal in decrying the EU. It was fairly obvious when Heath gave our fishing grounds away at the last minute which way things were going.
Watching successive assaults on our way of life from losing orchards to having milk quotas, I couldn’t believe the rank stupidity of government.
John Major trying to take us into the ERM and destroying businesses, sending interest rates up to 15% and houses being repossessed. Even today he pontificates in the House of Frauds without any apology for the damage he caused.
We have treacherous May also in the Frauds after signing up to the UN open borders treaty and the ludicrous net zero scam
Fortunately the ships head is slowly turning in the civilised world and the politicians who created this mess are being ditched.
Trump is a breath of fresh air.
Reply John Major is a Garter knight, not a peer
February 1, 2025
It was never about trade. It was always about building a United States of Europe …. and they knew the only way they could achieve it was by deception.
February 1, 2025
Indeed and Heath took is in without the voters consent giving away parts of their democracy that we never his to give away. Only Wilson later gave the referendum after it was already a FAIT ACCOMPLI!
February 1, 2025
“…was off their rocker or virtually Marxist.” Echoes of today’s decrying of those who dissent from official narratives regarding covid, except the insult has changed to “far right, conspiracy theorists.” It’s amazing how often the dissenters have been proven correct in the long term.
February 1, 2025
The first question on Any Questions was “what to we have to sacrifice for growth” the obvious answers are Net Zero, all the Woke lunacy, deregulate hugely, cut taxes and fire half the state sector. Though none of these is really any sacrifice they are all good in themselves. Needless to say, this being the BBC, not one panelist said this.
February 1, 2025
The whole point of growth is that there is gain, not ‘sacrifice’.
Any impediment to growth is not a ‘sacrifice’ either – you can’t ‘sacrifice’ and impediment to good,
February 1, 2025
Indeed.
February 1, 2025
I’ve just watched the Miliband answering questions to the committment (27th Jan) and this government is going full-on net-zero, and nothing is going to stop them
February 1, 2025
Good interview with Tucker Carlson and Pier Morgan where the latter finally says sorry for his appalling pushing Covid vaccines “to protect you granny agenda”. It is very clear they did net harm and did nothing to protect granny! Has Sunak and the companies and regulators concerned said sorry yet and admitted this? Has RF Kennedy Jn, been vetoed yet? I do hope he will not be.
February 1, 2025
You’re very forgiving. Morgan admitted that he had failed to ask any appropriate questions regarding the Covid Tyranny and he joined in the jab coercion.
It was the most appalling tyranny in our post Civil War history and he FAILED to carry out even the most basic role of a senior journalist and encouraged the tyrants to carry on with their economy-wrecking and life-damaging policy.
I’m not in a forgiving mood.
February 1, 2025
LL is in the same boat as Morgan.
February 1, 2025
I tend to be very sceptical by nature but even I was not sufficiently so of the lies from Big Pharma, the government’s medical “experts”, the lies from out politicians and the compromised vaccine regulators.
February 1, 2025
What you could see from inside, we could sense from outside. Politicians led us on a very shabby path. It was an admission that our own historic democracy was a failure in their hands, and that they prefered a very undemocratic system led by europes collective civil service. A formula for even greater corruption than democracy allowed.
Your, and our own struggle did not end with the referendum of 2016. From then on the betrayal of the British people became increasingly and nationally clear. Politicians of all colours, the civil service, the CBI, the judiciary, the BBC, and all elements of the establishment fought tooth and nail to thwart democracy, and be in no doubt they are at it today under Starmer whatever soothing words he may use. He has even appointed the traiterous head civil servant from the last debacle to head up his dishonest smooch of the EU. Know them by their actions, not their words.
There is only one solution, and the evidence is growing nationally, for the sweeping aside of treachery by Reform. They have not been close to the change in US politics not to have learnt lessons as to the depth of necessary changes here in the UK, nor to the preprepared speed with which it needs to be imposed. In 2029 the weeping and wailing of the “Establishment” will dwarf that of reforendom night 2016, remember the look on Dimbleby’s face. There will be much metaphoric blood on the establishment carpet. By god they have earnt it. Under calamity Starmer the moment could arrive earlier than expected, be ready.
February 1, 2025
At yesterday’s Reform Rally in Kemi’s Constituency, Rupert Lowe spoke about the need for a Great Repeal Bill. I think they’re getting ready to hit the ground running, like Trump has.
February 1, 2025
Removal of:-
Human rights Act, ECHR withdrawal, non Equality Laws including DEI and ESG. Ban all public sector positive action criteria. Discriminatory Sex Education propaganda Act. Foreign Aid removal, Climate Change Act all removed. Immediate deportation of all illegals or no trade or aid. All judges to reapply for their posts under an independent right of centre scrutiny. All re ruitment and selection to public services, health and emergency services re written and based on merit. Only two sees, man and woman. That’ll do to start.
February 1, 2025
I watched Farage last night AG and it’s beginning to feel very much like an old vaudeville act. Maybe this was just Nigel working the ‘stump’ (which he does well) but he’s going to need a lot more depth to his polices before long.
I have grave doubts that the Tories can purge themselves of the Lib Dems they are currently harouring but I’m not yet convinced that Reform will be ready for Government. Both parties have four years to sort their acts out and maybe by then we will be able to tell the men from the boys. Can Reform grow up? (rather than just grow)
I hope so, we really need some adults back in charge.
February 1, 2025
You seriously think they will go quietly after all they have invested in the status quo?The blood might be real.Ask Wat Tyler!
February 1, 2025
btw all you NATO fans,did you see Jens Stoltenberg has become co-chair of The Bilderberg Group-just keeping the seat warm for Mark Rutte in a few years time no doubt.
What does that tell you?
February 1, 2025
They are quite comprehensively outnumbered. And of course they are talkers not doers.
February 1, 2025
John Major favoured the Maastricht Treaty demonstrating how wrong and useless he is, and was then, to the UK he was supposed to lead and protect.
February 1, 2025
I was too young to vote in 1975. I don’t know how I would have voted had I been eligible but to be honest, being fairly young and naive, I suspect I would have been bamboozled by the Establishment’s lies like so many older than me were. By the time of the Maastrict Treaty I had woken up and opposed it. I supported Sir James Goldsmith’s Referendum Party and post election I joined the UK Independence Party.
In later life Heath admitted he had lied to the British people in order to get us in the EEC and he had been advised to do that by Civil Service Mandarins who knew that if the truth were known, the people would have rejected it.
Our Constitution needs revising so that Ministers and Senior Civil Servants who deliberately and blatantly lie to the electorate about the known (and intended) consequences of a policy on our Sovereignty and Constitutional settlement can be prosecuted for treason.
February 1, 2025
@Donna – A Constitution? not much chance of that. parliament trashed and repealed the bulk of the Magna Carta before the ink was dry. While much of the ‘free-world’ took it up and adheres to it.
I used to be a fan of the evolving Constitution that we have in the UK, but there are know so many terrorist infiltrators that have the priority of trashing the UK, I now think we need a cast iron Constitution so we can be moved back to being a full fledged democracy. Five year terms in office a recent introduction because MPs don’t like being challenged, questioned and have to seek confirmation for their performance is the first big insult that needs to go. That shouldn’t have been a right that a dictator can hide behind, that should have been a direct ‘peoples’ choice Like other free people elections should be every 2 years.
February 1, 2025
Not so. Magna Carta serves us still. It need to be reinstated in full as does our existing constitution.
We need a Constitutional Court as the Constitutional King refuses to do his job.
February 1, 2025
The King is more concerned about submarine naming and not offending the French. He must think they are rather pathetic to be offended in this way. At least he is not demanding our navy and RAF all run on Wine and Cheese waste like he claims his Aston Martin is.
February 1, 2025
Agree
February 1, 2025
We need to be very attentive to creeping suprantionalism and what constraints we are imposing on ourselves. The EU was the first big experiment and it was a political union masquerading as free trade membership. That political union is certainly going to be a sovereign union when fully realised.
Conservative proponents of the ERM said we needed a single currency to manage domestic inflation. But we already had monterary policy based on centuries of understanding and practice. Why did we suddenly need a supranational body (the Bundersbank, then the ECB) to do it for us?
Aside from the EU, the other big one today is the UN and we must learn quickly from our EU experience and reject their doctrines before they morph into something else and then ultimately unveil their real intent.
To British ministers I recommend reviewing all of our existing agreements with such bodies and never sign anything further without exceptions and waivers in place (in case the British governent needs to use them). If that cant be offerred then dont sign it. We already have centuries of experience.
February 1, 2025
Were ” the road to Union” very much shorter and if it could offer the probable prospect of contentment thereafter, it might have been worth following. That is not so, rather the Evil Empire has many deep-seated problems and no comparable solutions so is likely doomed. Meanwhile, our Establishment keeps our wagon hitched to its falling star and the people are fed propaganda so they doubt the wisdom of Brexit. If only we had had a pro-Brexit goverment at any time in the last ten years.
February 1, 2025
In 1975 my father said that they would take us over and he was going to vote to leave the Common Market, while I knew better and said that we should not insult them by leaving so soon after we had joined, and in any case we could have another vote later on, and so I was going to vote to stay in. Ten years later I began to regret that.
February 1, 2025
You placed your trust in those you thought had our best interests in. You were not alone and, like so many, I am sure you sought to correct this at the first opportunity.
February 1, 2025
Hi sir john
The undemocratic MP’S did what they could to damage the leave negotiations
If they had all accepted the vote then we would have got a better deal to leave
But the EU could see elected MP’S were going against their constitution’s by not accepting the democratic vote
so we ended up with a very bad deal
then we gave in to the violence of the French fishermen and gave them our fish
for nothing.
The government now want to rejoin the EU
But under fancy names as if we weren’t rejoining the EU we can’t trust the government they have already broken all their promises.
Good luck to those standing up for England at the March in London today god bless you all thank you sir.
February 1, 2025
@George Sheard +1 – they are desperate to be part of a Bureaucratic Dictatorship where they get their orders everything is someone else’s fault. The last thing they want is to think for themselves, act on behalf of their Constituents and the Country – just free-loaders
February 1, 2025
The MP’s post ‘The Glorious Referendum’ behaved like children. They either did not understand what we were offering them or, they did and knew that they were not worthy of the responsibility leaving the EU would be ?
It was like having the winning Lottery Ticket in your hand and just tearing it up because you can’t be bothered to claim your prize.
February 1, 2025
You have to credit the machievellian ingenuity of the EU elite. They have managed the takeover of the nations of Europe more thoroughly than any army could have done.
By creating and empowering an innocuous-sounding supra-national bureaucracy they have stolen a continent. The organisation has steadily done what all bureaucracies do – grabbed more power and grown. The elite has grown with it, as have their obscene rewards.
They have deluded, and continue to delude, millions of citizens but what encourages me is that nationalism lives on. I hope to survive long enough to see the empire collapse. Meanwhile I keep my sanity on blogs like this, and look out for the very rare feelgood novels where the EU is the baddie (my latest read, The Golden Crown of Seville – wish I could find more like it…).
February 1, 2025
Saw that BBC interview with Mark Carney last evening and thought to myself how lucky these canadians would be to get someone like him at the helm – if he gets elected. Here all talk is about being cheated by the EU and by people who spent forty years or more in the political limelight I thought what else can someone engaged in politics for that length of time expect only to feel cheated – so why complain – just get on with it – because looking at north america now very soon british politics is going to be tested to the extreme by threats of more trade disruption and probably from other fronts as well there won’t be time to feel cheated.
February 1, 2025
Se thing is that he is better than Freeland!
Maybe Canada should opt for Trump and the 51st State option.
February 1, 2025
Musing further on the economics, the chronic shortfall of EU growth compared to the US:
http://johnredwoodsdiary.com/2025/01/20/welcome-president-trump/#comment-1494973
“on a per capita basis, real disposable income has grown almost twice as much in the US as in the EU since 2000”
works out at 2.9% a year compound over 24 years.
That is an astonishing gap, which cannot all be down to excessive regulation in the EU compared to the US.
In a letter before the 2016 referendum I wrote that in 2004 the EU Commission estimated that over-regulation had cost the EU up to 12% of GDP, and that I did not expect a joyous bonfire of regulations when we left but there should easily be scope to make up a one-off loss of 1% of GDP because we had left the EU Single Market.
Yes, here it is, page 10 in the EU Competitiveness Report of 2004:
https://aei.pitt.edu/45434/1/competitiveness_2004.pdf
“A significant part of research focuses on the role of product market regulation, market entry and competition policies. Regulations which inhibit competition are found to have a negative effect on productivity mainly because they slow down the technological catch-up. On the other hand, regulations adopted at EU level can have the beneficial effect of creating a level playing field for all participants in the market. The largest productivity effects of liberalisation measures have been found in services which have traditionally been most heavily regulated, in particular network industries such as telecommunications, postal services, electricity, gas, railways and air transport. The EU, in particular in comparison to the US, is seen to place a relatively heavy regulatory burden on enterprises. It has been suggested that an increase in competition in product and labour markets to US levels could raise euro area GDP by even as much as 12 %.”
Looking back at that now 2.9% a year over 4 years would give that 12% loss estimated in 2004, it is a consistent picture over nealry a quarter of a century, but how far could we actually go in reducing the “regulatory burden” even if we had a government which wanted to do that, rather than taking whatever rules the EU churns out?
February 1, 2025
The EU was built on lies – that is very clear.
Some suggest the EU was put in place to stop wars, but even that has only limited plausibility. None of the big states has been in a position to have another cross-border war.
The EU uses tax money to gain influence and persuade other countries to join, but what would be the ultimate aim of this regime that could never be called a sovereign state?
Had the EU been successful in its growth strategy, it is said that other unions awaited in the wings. With enough Unions around the world they could eventually merge and we’d have our very own undemocratic world union. Just as well the EU proved to be so open to corruption and misled socialist ideas, so that it was obvious it wasn’t the future, couldn’t be the future we needed.
Yes, the EEC started off as a way to combine big industries across Europe which was successful in most ways, but it seems major industries were the ones that profited most from the EU while the average citizen was denied freedoms and legislated for from birth to death.
February 1, 2025
I too voted against Brussels at every opportunity but I do remember wondering why so many politicians all over the Continent were prepared to sacrifice their Country`s independence in favour of being governed from Brussels.
The fact that the UK voted to leave the EU told me that the fierce independence of our people that has serves us so well for more than a thousand years has not been totally extinguished by the relentless campaign waged by Remainers determined to dissolve our country into a European soup. The fact that we are alone in having left holds no fear, in the same way as Margaret Thatcher was never afraid to hold a lone position in any dispute with Brussels.
Liking Europe and having lived in Germany for five years back in the 80, we have driven to almost every EU state. In no year in the last 50, except or the limits of Covid, have we not ventured across the channel, often several trips a year.
I totally understand the point of small countries like The Netherlands and Belgium being happy to be consumed, after all, we pass seamlessly between those countries to France and Germany, often without even knowing it, but I cannot understand the French being prepared to do so. The Germans still seem racked by guilt for the second world war, so they can be understood, and I guess that an unbroken line of arrogant French politicans since DeGaulle thought that by being members, they could control the whole edifice. Even Macron has tried to maintained that delusion.
There are huge advantages to a large island nation like ours remaining independent. Long may it continue.
February 1, 2025
We are not alone:
EU population = 450 million
World population = 8200 million
Non-EU population = 7750 million = 94.5% of world population.
We are now part of that 94.5% and it is an useful education to find out how badly the EU can behave towards it.
February 2, 2025
Denis, unlike you the EU doesn’t blame anyone else for its failures. James
February 2, 2025
I do not recall the EU ever admitting to failure or accept blame.
February 3, 2025
http://johnredwoodsdiary.com/2025/01/31/the-voters-were-right-about-brexit-we-now-need-a-government-to-use-the-freedoms-we-have-gained/#comment-1496639
“Tom Haward said he had found a new client in Dubai, which was easier to export to than Dublin.
“It’s really easy: I write out an invoice, box the oysters up, send them to Heathrow and it’s job done.
“It’s all done the way we used to do it with Europe.
“It’s easier to get them into the Middle East than across the English Channel, that’s the madness of it.”
February 1, 2025
A set up which took the public in just as they have tried to stop us getting out. I did not have a vote as I was on holiday in the South of France and if you were outside the country Wilson did not allow you to have a vote if not here (was this the truth or another lie to stop us voting?) but I would have voted against joining any agreement as I have never thought it in our best interests to drop the Commonwealth who we had intimate knowledge of in favour of a group of people who we had been in conflict with on many occasions in the past.
February 1, 2025
#Miliband has promised the UN that we’ll slash climate emissions by more than 60% by 2035
#Starmer positioning towards a ever closer relationship with the EU, backdoor single market
#Reeves securing investment from china
#Cooper introducing yet more laws to stop the boat people
We’re doomed I tell ya, we’re doomed
February 1, 2025
My local council has published a notification on facebook today celebrating LGBT+ history ‘month’ ….but only a ‘day’ for remembrance day …..no doubt they’d be happy to rejoin the EU
February 1, 2025
We might not be returning illegal immigrats back to europe, but today we’re returning the Bibby Stockholm Barge which cost the taxpayer £34.8million
February 1, 2025
“Trump threatens trade war with EU” Trade War? Who started it? I personally have no idea when it began and haven’t the inclination to find out.
But the EU is certainly a master at weaponizing trade while ring fencing itself with bizarre regulatory barriers and standards, everything bent and twisted to create their own trade advantage. A cocoon of protection. Did China copy them or did they copy China?
Trumps reasoning is realistic, if the EU (which includes the UK as we are still in the EU as far as the rules go) imposes 10% tariffs on the US, while the US only has 2.5% on the EU/UK trade where is the reciprocity. The EU has a 400% uplift on trade with US while also taking other further regulatory measures to repel the trade and keep barriers in place. They are not protecting their internal markets, far from it, as these measures allow them to then export from their protected industries to undermine all of the Worlds Trade – they have weaponised trade and are fighting the World.
The EU suggests that with Trump wishing to level the playing field he is starting a Trade War, and they will retaliate. Is treating one and other as equals – War? Or is the status quo War?
February 1, 2025
Having the right to protect home markets against predators is one thing – as that is common-sense. But ring fencing your home-market so it has an in-built advantage when it then exports as its primary purpose is just simply weaponizing trade.
February 1, 2025
I came home from the colonies in 1975. We knew earlier than most, that Africa was doomed.
I could not believe that in fact there was no ‘home’ to return to. Having just lost everything and returned, it was a monumental shock to see the battle for Britain taking place.
So I joined in with whatever weight I could muster and added to the defence, it’s the last lb that sometimes pushes the boat out.
I have fought ever since – well until 2020, the last 5 years trying to keep those MPs who agree with JR to vote the right way. I did not win every battle, although of course nobody could lose the argument so strong has it always been.
It was a hill worth dying on. Many a good man – some of the best have died on it. Norris and Ross McWhirter, Enoch Powell, Betty and Ron Simmerson of the Anti-Common Market League who mortgaged their house to fund the distribution of Powell’s speeches (and who Farage never knew because he never was a member). Probably millions of others – they did not live to see the great day in 2016 when British people voted to survive.
February 1, 2025
From the Media – “Boris Johnson has launched a scathing attack on Sir Keir Starmer, accusing the Labour leader of planning to drag Britain back into the “clutches of Brussels” five years after Brexit.”
Yet Johnson just as May refused to let the UK leave the EU. This was followed by the Sunak/Hunt catastrophe of ensuring that Kemi kept us tied to their apron strings by retaining EU Laws and Rules. ( now we have a fully fledge continuity team running the Conservative Party) They denied the UK the right to have its own legislators, creating UK Laws, that they alone could amend or repeal – they have denied the UK a Democracy.
A hate Labour with a passion, and think Starmer/Reeves and Red Ed are ideological terrorists our to trash what is left of the UK – but which ever way you try to shake it out they are just continuing the project of return stated be the previous crowd. UK MP’s and Parliament don’t want to do their job, they want to fight their constitaunats and the country to return to a place where they just take orders from the unelected unaccountable.
Boris calling the ‘kettle black’ – pure hypocrite
February 1, 2025
Johnson voted for Mays treacherous Bill.
February 1, 2025
May and Johnson sold us down the river ….no one voted for a deal, we voted to leave
February 1, 2025
‘Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows’…
These were the historic words that preceded the Acts of Parliament I was first called upon to enforce, when I joined the Civil Service.
Compare that to the soulless legalese of the EU Directives, (so assiduously embraced by many) and you can see that something of our sovereign identity was being subjugated. Our CS enforcement briefing sessions invariably left me with a head-ache, literally – something wasn’t right, being contrary to all that I identified with, culturally and spiritually. Its very sad that so many are ready to fall for this political ecumenism, even today.
February 1, 2025
‘Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows’. Contrast this with the preamble to European Directives. It’s a different spirit, and alien to British cultural history.
February 1, 2025
I voted to Remain in the 1975 referendum. I was young (23) and, I guess, naive. I actually believed what politicians said. Brought up to respect my elders, I assumed anyone who was PM was a person of capability and integrity. How wrong can one be! But, notwithstanding the assurances that we had simply joined a ‘Common Market’, the main reason I voted to remain was the hope that being in the EEC would mean we would never go to war again with our neighbours. As a child of the (early) 1950s, my childhood was filled with the war – in the sense that our comics were full of war heroes and stories and the TV (when it arrived) had lots of war films and references. As I grew up and learned history at school, the childish playground games of ‘All in for war’ – and making sure you weren’t a German or, even worse, a ‘Jap’ – faded into the stark realisation that war was no fun and that the people that sent young men to war didn’t go themselves. That’s why I voted to Remain. But, as they say, ‘Fool me once, shame on you – fool me twice, shame on me. So, in the immortal words of The Who ‘we won’t be fooled again’ – I voted Leave in 2016.
February 1, 2025
Thank you Sir John for all the hard work you done in the past. Hope fully this inept bunch won’t ruin it, however I am loosing a lot of faith
February 1, 2025
Agree
February 1, 2025
Afternoon John, Hope you are well.
There should have been a debt management review when we left the EU.
Recent headlines have painted an alarmist picture of the UK’s debt situation, rife with half-truths and outdated comparisons. Even the ordinarily rational Andrew Neil has succumbed to monetarist misconceptions, claiming that Investors will not take on any more British sovereign debt without a substantial risk premium
Before drawing flawed parallels between the UK and Germany by comparing borrowing costs within entirely different currency frameworks. Meanwhile, Faisal Islam at the BBC noted that Government borrowing costs have hit their highest level in 16 years.
This type of analysis still contributes to the broader narrative of misplaced panic.These commentaries fail to grasp the key issue: the current debt management framework is a relic of outdated policy, ill-suited for the realities of the modern financial system. It’s time to reconsider and update our approach.
The UK’s current ‘full funding’ rule dates back to 1985 when it was introduced to neutralise the public sector’s influence on the M4 money supply.This framework was solidified by a 1995 review long before critical developments like Bank of England reserves, interest on those reserves, and Quantitative Easing (QE) reshaped monetary dynamics. The rule’s foundation—derived from fixed exchange rate thinking and monetarist orthodoxy—does not reflect the operational reality of the UK’s fiat free floating exchange rate regime.
The floating exchange rate fundamentally alters how government spending interacts with a currency area. When the government spends, in effect it gives the private sector the money it uses to buy government bonds. At an aggregate level, in the UK, the choice boils down to holding a gilt or a Bank of England deposit. There is no other alternative. This interdependence makes the lifetime price of a gilt a reflection of expected Bank of England deposit rates over the same period.
Yet, the Debt Management Office (DMO) remains shackled by 1990s thinking, issuing long-term gilts into a market seeking shorter durations. For instance, recent ultra-long gilt sales forced the country to lock in a 5% running yield on £2.25 billion—higher than the current Bank Rate of 4.75%. This mismatch is costly and entirely avoidable.
The DMO should never sell gilts at yields exceeding the Bank Rate. Instead, it should align its operations dynamically with any market preferences for shorter maturities, as determined by current redemption yields. At a minimum, the UK government should adjust the DMO’s remit to ensure gilt issuance is always cost-effective regardless of market conditions.
Moreover, the outdated full-funding rule, grounded in discredited monetarist beliefs about the M4 money supply, should be scrapped. By default, HM Treasury should leave deficits on the Ways and Means account at the Bank of England, paying the Bank Rate. This approach eliminates redundant cash management processes, saving costs and streamlining operations.
The DMO’s role should shift to reducing this default cost by issuing gilts and Treasury Bills on tap, priced in line with Office of Budget Responsibility (OBR) yield curve projections. It should only issue securities if doing so would be cheaper than the projected floating path alternative, ensuring interest payments on any deficit increase remained within budget.
The UK’s debt management framework is stuck in the past, constrained by Thatcher-era monetarist principles that never applied in the first place. Just as the government recently updated its debt definition from Public Sector Net Debt to Public Sector Net Financial Liabilities, it must now overhaul debt management practices to reflect modern monetary realities. By embracing a more flexible, cost-efficient approach, we can discard outdated constraints and better support the nation’s renewal.
A debt management review is well overdue. Let’s make 2025 the year we move beyond 1990s thinking and embrace a framework that fits today’s economic challenges.
It is imperative we stop and move away from always applying gold standard, fixed exchange rate theories and policies on modern money. This is what is causing all of our problems as they no longer apply to the modern money we use.
Whenever I watch TV, read a newspaper, listen to the radio. It is all gold standard, fixed exchange rate analysis. Hence, why tariffs are once again back in the news. We use the £ not the Euro.
Reply I urged the government to fund longer when yields were ultra low. I agree they should not be issuing so many long dateds at these levels of interest cost. I also see no need to pay full base rate on reserves. I disagree that we can ignore growth in broad money.
February 1, 2025
Although the Conservative Party has long sold itself as being the party of common sense and therefore a sensible alternative to the irrational Far Left ideology of Labour there is no doubt that it is often infiltrated with disastrous consequences for the country. PM Heath took us into the Common Market and was so desperate to achieve his goal he lied about sovereignty and gave away our fishing grounds. PM Thatcher brought back some sanity but as a result was deposed by infiltrators so that PM Major could sign us up to the Maastricht Treaty. Further insanity followed with PM Cameron putting us the wrong energy path by making nuclear as expensive as possible by using China to finance Hinkley Point C and thus making its electricity nearly two and half times more expensive than exactly the same technology used in Finland. Winning the Scottish referendum gave him the belief he could take on UKIP and keep us in the EU. He resigned when he lost to be replaced by another infiltrator, PM May, who not only tried to Scotch Brexit but made the Far Left Net Zero into law followed by PM Johnson ramping up this economy and national security destroying policy plus copying the Far Left policies of high wasteful spending to justify high taxation together with mass immigration.
Fortunately it now looks as though there is at last an alternative to these two Far Left parties…whose first job will be to reform the Civil Service.
February 1, 2025
The EU is a club and network building is a large part of of what’s needed to get ahead but if you’re going to sit at table for years and just expect everyone to bend to your ways then I can see how you would not be happy and so are better off out – up that creek for a period of reflection.
February 3, 2025
My father Geoff Tootill worked for European organisations and on European committees in the 60s and 70s and that experience convinced him to vote to leave, both in 1975 and 2016. After retiring, he was one of your constituents in Wokingham until he died and always voted for you. He’s known for his work on the first stored program computer at Manchester in 1948.