Yesterday I argued no one can accurately forecast the UK deficit or state borrowing for five years hence.The deficit is the difference between two much larger numbers, total spending and total income. If spending is £1.3 tn and income £1.2 tn the deficit is £100 bn. If the forecast is 5% too low on spending which is £65 bn then the deficit is £165 bn, or 65% higher.
The OBR has to make a whole series of assumptions about what will be happening in five years time. If they decide productivity disappoints, as they did for this budget, there is a bigger deficit to deal with. If they think interest rates will be higher, or tax revenues lower, again there is a bigger blackhole to fill. For this budget they upped the forecast of tax revenues so there was a forecast overall win, not a larger black hole.
Distracted by all this Chancellors spend time arguing over the assumptions which create big swings in requirements for extra taxes instead of concentrating on the much more important and real forecasts for the next financial year. The Treasury and OBR should be able to provide fairly accurate spending forecasts for next year. Chancellors should be pursuing proper controls over immediate spending.
The black hole in five years time approach can both lead to too many anti growth taxes and too little concentration on more immediate spending excesses. This last budget showed a Chancellor gaming the system with promises of tax rises to come and productivity gains in five years time to allow her to continue to spend and borrow too much for the rest of this Parliament.
December 14, 2025
It will be hard enough to forecast government income, spending and borrowing needs just one year ahead as recent OBR short term forecasts have demonstrated. But at least that will permit real focus on spending cuts and on the effectiveness of specific tax changes influencing economic behaviour. For example removal of stamp duty might both stimulate the housing and stock markets and simplify the tax system at the same time. A smart government in waiting could construct a whole tax reforming programme that sought both to stimulate economic activity and cut out hundreds, if not thousands, of the over 30,000 pages of UK tax regulations over the life of a parliament.
December 14, 2025
I see that we have a new Christmas single on youtube “Fairly Tale in the UK” – under the appalling serial liar two tier Kier. It gets the man about right.
December 14, 2025
Fairytale in the UK
December 14, 2025
Good morning.
With all this money, there should be no ‘blackhole’.
There problem is not spending. The problem is those that are doing the spending.
Maybe it is time to set hard spending limits on departments and, make individual Civil Serpents responsible for them. If their budget is over the limit three times in a row, or there time in five years, they are sacked.
I saw a YT vid the other day of a committee meeting between, Rupert Lowe MP and CS’s. Rupert Lowe MP pointed out to the CS’s that, their accounts are created in such a manner that, had they been working in Private Sector they would have been sacked and the company fined.
This is the standard of CS’s we have in this country. They feel that they are too big and important to let fail. As alluded to above, it long overdue that they were deprived of this notion.
December 14, 2025
Would you, owning an apple tree sales business, borrow large sums to spend on advertising gimmicks surrounding the tree, relying on paying it expecting when the ‘money tree’ provides say 20% more apples in 5 years time?
December 14, 2025
As I’ve said before, economic forecasting makes astrology look sensible.
I think it’s over 20 years since the government balanced the books thus we have been increasing national debt year on year.
The treasury likes to talk about the deficit as a percentage of GDP this of course can then be inflated away using inflationary policies.
Ultimately this makes us all poorer our savings less valuable and the pound worth less
We need a Thatcherite leader who will slash welfare foreign aid and destroy the useless Quangos and that’s not Liebour tories or limp dumbs.
We’re living beyond our means.
December 14, 2025
That’s 20 years of the country voting for borrow and waste governments, and their sweet lies.
How about governments borrow from the voters that voted for their party, not from the money markets? If there is a default, it rests with the voters not the state. If governments cover all their spending with tax there’s nothing to pay. If there’s a surplus (ha ha) either taxes go down or the voters get a dividend.
That would end the injustice of babies born in the UK with a colossal debt on their heads.
December 14, 2025
Britain is not the only country with high debt. Global debt is now approaching $346 trillion (Q3 2025 estimates; government, corporations and personal debt) which equates to about 250% of world GDP
(Sources IMF and BIS)
A moment’s reflection results in the inevitable conclusion that these debts are so huge, they can never be paid down. Economists – Sir John included – advise that economic growth is the only answer. However, one observes that global growth is never more than 2-3% and government spending always goes up, never down.
The UK is borrowing money every month (about £115bn a year) to pay the interest on our national debt. This then gets added to the principal; as sure as day follows night this will inevitably cause Zimbabwe-style hyperinflation. This is why the price of gold has inexorably risen to record levels this year.
Blaming all this on Reeves and her budget is disingenuous. Labour are having to deal with 14 years of the Conservatives’ tax, borrow and spend policies and the resulting near doubling of the national debt from £1.4 TRILLION to £2.5 TRILLION – with interest rates now fluctuating around 4.5%
Reply Responding to the pandemic with too long and too far reaching a lockdown led to a big incresse in debt tomorevrnt economic collapse. Labour wanted more lockdown and more subsidy. It is quite wrong of Reeves to make such huge increases in debt- another £628 bn planned- when we already have maxed out on borrowings.
December 14, 2025
The new Leader Kemi Badenoch, heavily influenced by the pro-fossil fuel, anti-EV, anti-net zero far right of the party has announced that if the Conservatives win the next election (ribald laughter) she will scrap the ban on ICE cars by 2030. The initial plan for a 2030 ban was first announced by former Conservative PM Boris Johnson in 2020
Sunak, also heavily influenced by the fossil fuel cartel, changed the timetable for the introduction of EV’s to the British market; this change was opposed by the SMMT. Nissan then stopped production of their popular Leaf EV in the N East, BMW moved production of their electric Mini to Germany. Honda shut their Swindon plant completely and Aston Martin gave up on EV’s altogether. This deluded political decision has already cost us thousands of well paid manufacturing jobs
Currently EV sales are doing very well here;
2024: A record year with ~382,000 BEVs sold, a 21% increase from 2023, reaching 19.6% market share.
September 2025: Record month for BEVs (72,779 units, +29%), boosted by the new £3,750 Electric Car Grant (ECG), making electrified cars over half the market.
November 2025: Growth slowed (3.6% BEV rise) to its weakest in two years, just before new road taxes took effect, despite EVs still making up over half of all new registrations.
Year-to-Date (2025): BEVs accounted for ~22.4% market share with ~386,000 registrations by mid-year, while Plug-in Hybrids (PHEVs) saw even stronger percentage growth
Nobody is going to vote Conservative in May 2026 because they are anti-EV. The election will be all about immigration.
Reply This policy of closing down our petrol and diesel car making is industrial self harm. Let people decide what cars they want to buy.Most individual buyers do nit want an EV
December 14, 2025
Well EVs are subsidised and petrol and diesel cars hugely over taxes. Despite this people prefer the latter. Why this warped market? EV do not even save CO2, cause more road damage and more tyre wear to as heavier.
Keeping your old car is actually the green thing to do. I still have my old Volvo V70 diesel circa 22 years old, does 50mpg, carries up to seven plus luggage, cost me £13k second hand at ~ 2 years old. Had I used EVs I would have needed three costing perhaps £120k to do the same mileage. Finance costs and depreciation would have been about £240k rather than about 1/10 of this with the VOLVO plus the Volvo is a far more practical car. London to Mont Blanc for skiing carrying five on one tank of fuel. Has only ever needed usual servicing plus a new clutch in those 22 years.
December 14, 2025
I saw a report yesterday stating even the EU has realised the stupidity of the ICE cars ban and is looking at removing it.
December 14, 2025
Yes, I think “gaming the system” is a very apt description. Of course we used to call it cheating…
December 14, 2025
Indeed as you say:- The black hole in five years time approach can both lead to too many anti growth taxes and too little concentration on more immediate spending excesses.
But a bonfire of red tape and ditching net zero would save money and grow the economy too a negative cost win win. Alas Starmer, Reeves & Miliband, even more than Cameron, May, Boris and Sunak, just love ever more of this parasitic, fake job creation and real job destruction lunacy.
December 14, 2025
The only assumption i’m making about the country in five years time. Is Starmer and his ramshackle circus will be consigned to history.
December 14, 2025
The last budget was spend today review later in order to keep the Chancellor and the Prime Minister in power.
The Labour back benchers have them by the short and curlies. Welfare is the government’s leaving the EU, with a doctrinal view on immigration from the back benches on the side.
Cross party collaboration is the only hope
December 14, 2025
And they could always save some extra cash by ditching the net zero religion
December 14, 2025
Why bother making a five-year forecast for the UK economic conditions when international earthquakes happen, like Covid in 2020, the Ukraine war in 2022, or a new PotUS in 2024? What might it be in 2026?
December 14, 2025
The ship of state is a slow changing vessel. It is captained by experienced crew but is occasionally subject to mad ideas/policies of a new captain and or his first officer.
The crew are well versed in how to keep the vessel afloat and running on the course set by the captain.
They are well trained in how to repel boarders who might overwhelm or upset the balance of the ship.
The crew are trained to spot threats and report them allowing timely action and decisions from the officers to avoid them.
The crew monitor the resources needed to keep the ship of state in good order.
The well honed maritime disciplines have served HMS United Kingdom and Northern Island well over the past centuries.
The question we now have is, why is the officer class not listening to the crew’s feedback?
December 14, 2025
In a nutshell what is suggested is Parliament is just guessing as to what the future is as such sets out to mislead the electorate.
Do we need a parliament that is incapable of ‘management’.
Political Ideology is just another religion and is usually the output from those that have no self-confidence and brain of their own.