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
Manchester, now Bondi Beach with at least 10 murdered it seems, so which beach, synagogue or city is next? Will Sir Kier, our police, social services, schools, the blob, the Mayor of London and judiciary’s continue with their evil two tier approach to policing to help augment this? I assume they will. How is the back door (one religion only) blasphemy law coming on?
‘Dominic Grieve’s working group does not seem to grasp that a definition forged for Muslims by Muslims is inherently divisive’ – Charles Moore. He certainly does not.
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
+1
Yes viewed it myself, incredible, they could not even explain the system properly themselves, three of them looking at each other for support when answering simple questions.
Clueless, absolutely clueless as to what is going on in the real world, and the absolute chaos they are causing with ever more taxation and changing policies..
December 14, 2025
He was referring to the poor performance of local government getting their accounts audited or even done in the first place. There were not enough sanctions in place to force them to do it.
So it is not central government civil servants who are to blame here, it is the vastly overpaid executives of our councils. They are the ones who should be fired.
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
SG
The problem is out of control spending and the failure to recognise or manage it.
The government are trying to manage our lives and the way we live through idealist thoughts and taxes.
It will all end in tears.
December 14, 2025
So when would you approve of belt-tightening to begin to reduce the ever more painful debt interest?
Handing out ever bigger and madder sums outside the UK, plus inviting hordes of costly immigrants and students plus families now, or in due course to expose drowning services of all types, plus ever more burdening the smaller taxpaying percentage? The result of the profligate distribution of what wealth still remains leads to the growing debt you describe.
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
Lifelogic
Absolutely agree, my wife’s 18 year old Toyota Corolla DSR 2 litre diesel, purchased as a pre-registered vehicle with 5 miles on the clock for £11,750 still looks good and is going well, does about 45 mpg locally, 50 mpg on a good run. Plan to keep it at least another 5 years unless something drastic happens.
Probably of no real value any more to the trade, but depreciation now for a few years has been nil.
When I changed my 23 year old Mitsubishi 4 x 4 just 3 years ago, (£14,000 when purchased new) I got £3,000 in part exchange, for a second hand 4 month old Mercedes GLB Premium Plus 220D SUV 2 litre turbo charged diesel, averages 48 mpg locally, and 53 MPG on a good run, thus up to 700 miles on a fill up which takes 5 mins.
Only disappointment, I have to pay the extra luxury car tax for 4 years, because the new full LIST PRICE was over the £40,000 threshold when new, although I actually paid less than the threshold for it.
Always ran our cars for very many years, usually until expiration !
December 14, 2025
The full electric 7 seater Volvo now cost about £90k rather than £25k for the V70, weighs nearly double, much worse range, much faster deprecation, reduced range, hours to recharge fully… and this is 25 years of progress!
Meanwhile compare the IPhone 17 with the IPhone 1 for progress!
December 14, 2025
The car “progress” largely dictated by our halfwitted governments!
December 14, 2025
So the car nearly four times the price and perhaps 1/3 as practical. A phone 25 years ago cost about the same as an Iphone17 now and might have 8g of memory. The 17 will have 256g min. 3 cameras, be is 1000 times faster, has 5g, a hugely better screen, is water proof, very hard to smash, can pay bills, show movies, videos calling, gives directions, can read to you, translate… so the same prices but at least 1000 times better!
The evil power of mad religions like net zero and government knows best to do vast net harm!
December 14, 2025
Can you call somebody and talk to them?
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
Only postponing it I heard!
December 14, 2025
“2024 (January to December): new passenger vehicle registrations in Britain increased by a moderate 2.61% to 1,952,778 cars. This was the second consecutive year of growth but the British car market remained far below pre-pandemic levels. Petrol remained the preferred fuel for new cars and although battery-electric car sales increased to around a fifth of the total British new car market in 2024”
In fact I believe the exact percentage of EVs sold was 19.1% SG.
This against a background that some drivers don’t have any choice now. I’ve driven the same car brand exclusively for over twenty years but they no longer manufacture a pure ICE vehicle. So looking at car sale stats and stating that EVs are becoming more popular is frankly very misleading – if you cannot actually buy a new petrol vehicle any more.
As a footnote – I also think the whole “Climate Emergency” argument is becoming discreditied. Yes, the climate is changing but not at anything like the ‘End of Days’ rate predicted. Ms Badenoch is being quite shrewd I think, in dis-associating the Tories from it – and hopefully also the closet Liberal Dems within her party that still worship it. Even the EU is belatedly back-tracking on it now (faced with the destruction of their car industry)
December 14, 2025
SG
Have you actually seen the depreciation of EV cars, it is massive when compared to ICE vehicles.
December 14, 2025
SG 80% of EVs sold in the UK are to business or Motorbility
Hardly a ringing endorsement for them, particularly when the government has to offer subsidies and forgo VAT. Stellantis and Toyota have both said they will cease UK manufacturing if the government insists on full EVs by 2035 and more so now the EU has cancelled the scam.
December 14, 2025
Its not market led, its government led …in my book thats communism
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
Cheating, fiddling, market rigging or even blatant fraud!
December 14, 2025
How would EV’s fare if it wasn’t for the forced taxpayer support? The taxpayer gets fund the purchase price, the taxpayer is forced tofund the filling/charging stations, the taxpayer then gets to subsidies the road usage through massive on going taxpayer breaks. Yet even more dishonest spin is in reality it is those that can’t afford a new car is not rewarded likewise by the taxpayer – the poor are forced to fund those with the money already! I would suspect a high percentage of EV’s are company perk vehicles
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
@@Lifelogic – the bit these political religious ideology nuts forget, if they in the first instance created a growing resilient sustainable economy, they would have the money to squander to stroke their personal ego. But no, they cancel everyone’s future to bolster thier personal, very personal esteem
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
I’m sure that will be the case OB – but how much irrepairable damage will they do in that time?
December 14, 2025
Hopefully less than 3 years. But will the government that follows actually ever undo the damage. Churchill did not undo Attlee’s damage, the vast harms of Blair and Brown were not undone by Cameron, May, Boris and Sunak they even built further on them! They did not even attempt to!
December 14, 2025
Yeah. Ad probably the rest of the UK with them.
I fear that TTK fancies himself as a war leader. Someone seriously needs to have a word.
December 14, 2025
@OldAlbion – I would guess they will sneak in tax breaks just before the election with promises of more if elected, the great following of State employees and benefit recievers will say “there, they told us the sacrifices would work” we need more so let’s keep them
As one of the previous Labour frauds Harold Wilson said after crashing the £, a week is a long time in politics. He keeps getting proved right
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
Also by ditching VAT on school fees and the abolition of Non Doms both will have a huge net cost to the country!
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
@hefner – lazy management (parliament) comes to mind, they cant manage themselves let alone getting around to holding the so-called executive to account.
The logical comparison is that UK.plc has to compete in a competitive World Market place for its future, so it has to run as a business not a ‘religion’, a political religion. What passes as MPs are UK.plc’s board, placed there to act on our behalf as such they own the output of the team ‘they’ appointed to the top table.
All the time they refuse the owners, the electorate, a voice anywhere else that would be a criminal offence.
The two tier world of them and us. It is the ‘us’ that gets to pay the bills
December 14, 2025
..and the next significant volcano to seriously damage flights both business and pleasure.
On a different event imagine what will happen to the EU and UK businesses should Putin take military action in Finland, Estonia, Latvia, Lithuania.
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
Rod
Ideology (speed records) of the Captain/Owners/Designers lead to the sinking of the Titanic.
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.
December 14, 2025
Management is simple you manage what you know, that means today. Then you build in a buffer to cope with the unknown. On the face of it the way Parliament handles its self, its refusal to manage, its refusal to take up its responsibility as ‘the’ UK Legislator, its refusal to hold the ‘executive’ to account, they are proving they are a waste of space. The waste of our money the destroyers of our future.
The OBR & the ONS are jobs that were always handled by the Treasury and managed by the Chancellor. They provided ‘if this then that’ scenarios. Parliament allows people not fit for purpose to be Chancellor, so we get a ‘wet’ Chancellor that tries to create a buffer a pseudo disengage of responsibility to just seemingly have others make unelected unaccountable decisions for the country. They are wrong the Chancellor and Parliament own the output , they own the cost of this additional layer.
The mistake is for Numpties to be allowed to steal the power over 70million lives to peruse the personal religious ideology without reference or approval for a 5 year period. A Parliament fighting the people so becoming in ‘fear of the people.
December 14, 2025
We need a Government that follows the simple rule of only spending just below our income. In fact to start repaying debt we need to spend around 80% of our income as the UK. !0% can then go to debt repayment, and 10% to reduce the heavy burden of taxation. When it happens, and it will, everyone will feel the pain, but nothing like the pian of the UK going bankrupt.
But we have a Government and MPs who don’t understand basic economics, lack common sense and live in a fantasy land of economic stupidity.
December 14, 2025
An incompetent Labour Chancellor isn’t working.
December 14, 2025
@Bloke, which one? The one that says what she is told to say, or Torsten Bell the one Kier Starmer says he appointed to create the budget. Surely no one honestly thinks these are the work of Reeves.
December 14, 2025
Unfortunately the Chancellor and the PM are not even close to what it takes to run this country
Hopefully they will move on soon
John could we revisit defence at some point ?
Why the EU & Uk are unable to deal with the reality of Russia
Inviting war by constantly displaying weakness with the expectation that the US will sort it
December 14, 2025
737 unknowns where allowed to illegally cross the channel yesterday ….and next week they’ll be walking our streets and staying in our hotels, free to do whatever they like
December 14, 2025
Complaining about the weather, the food, the rooms…..