I have explained before that the U.K. calculates real GDP differently from many other countries. It adjusts the cost of public services like health and education for real output where others just rely on money spent. The U.K. reported correctly a sharp fall in output in education when all the schools were closed and a substantial fall in health output when elective and non urgent activity was cancelled to leave more capacity for CV19 cases. Both services recorded sharp falls in productivity as a result.
If we look at nominal GDP figures based on spending the U.K. economy had a relatively small fall of just 2.2%. This was less than Germany, France, Spain and Italy though a bit more than the USA at minus 1.2%.
The big debate now is how do we get back the  lost real output and  reverse the decline in Nominal GDP. Some are briefing that the U.K. needs to return to austerity with tax rises to cut the state deficit. This would be a bad idea, leading to a larger state deficit than a policy centred on going for growth and recovery. As the figures reveal there has been a big transfer of spending from private to public sector as the state has tried to make up for the inability of millions  of people and hundreds of thousands of businesses to earn their own living thanks to the closures and social distancing imposed  to combat the virus. The way to boost real GDP and to cut the deficit is to allow many more people and firms to supply goods and services, boosting output  and tax revenue at the same time.
What we need is to expand output capacity. That needs keeping and reviving as many of the businesses as possible that we had before lock down. It also requires a positive environment for the  self employed and small business to invest cash and effort to meet more of the new demands of the post CV19 world. The state needs to rebuild its service output in health and education as quickly as possible which will make our real numbers look more like others. This is a time when lower tax rates will boost output and investment and cut the deficit by more than attempting to lower it with tax rises.
The worry is too much capacity amongst the self employed and small businesses will be lost as they grapple with up to a year of lost turnover and revenue and as they work out how to pay back the loans they have taken on. There remains a number of issues for government and Parliament to help work out over liability for past rents, Business rates, and the other costs of keeping a business which cannot trade. In future posts I will look at more of the opportunities for the UK to expand its capacity as we emerge from lockdown.
February 15, 2021
The social distancing rules must be scrapped. They make most businesses unviable.
No doubt Handcock will want to retain them and force us to wear masks for ever. Vaccine passports will drag the economy back especially as Bliar is promoting them
The government needs to get out of the way and things will return to normal.
February 15, 2021
The way the Fake Tory Govt torpedoed the travel and aeronautical industry last week makes me wonder whether this was part of the stupid left wing green agenda rather than anything to do with Chinese virus.
Criminals illegally entering the country given free four star hotels and free NHS taxpayer funded vaccinations irrespective of age or where they came from or whatever country they passed through. In stark contrast punitive punishments for U.K. Citizens to remain locked up! Sounds like Biden socialism to me.
February 15, 2021
Hope
Would be interesting to what the average temperature and emissions were was for 2020 given half of the Worlds industry was shut down for most of the year.
I wonder by how much it was all reduced, if indeed at all ?
Once you have that figure, it may help the arguments about climate change or not!
February 16, 2021
@Alan Jutson; But “half of the Worlds industry” was not shut down during 2020, most of China and all of the USA appears to have worked through out the pandemic so far, as it appears the case in Russia and India, even here in locked-down western Europe many industries have remained largely unaffected by such measures. As for such real world figures helping certain groups of people have an informed debate, no chance, facts make no difference to people who have long closed minds….
February 15, 2021
The trouble is that Boris and Gove are Guardianista Tories. Yes, they are pro-Brexit – but only so long as it doesn’t upset the EU. Just look at their policies:
The BBC? Keep the licence fee.
Illegal immigrants and bogus asylum seekers? Let them in, and mollycoddle them.
Northern Ireland? Sell them out.
Fishermen? Screw ’em.
‘Green’ extremism? Pile it on.
Civil liberties? Crush them.
Small businesses? Destroy them.
Teaching unions? Cave in to them.
I’m sure you could all add to the list. A fish rots from the head, and the same applies to the Tory party.
February 15, 2021
The severe negative effects of brexit will continue long after all covid restrictions have been lifted.
How anyone can claim to be serious about growth and yet have campaigned for the most distant possible relationship with the UK’s largest export market by far is an interesting matter on which to reflect.
February 15, 2021
With the UKâs largest trade deficit I think you mean MiC.
February 15, 2021
Another interesting matter is our massive trade deficit with said largest export market, reflect on that.
February 15, 2021
Indeed. And, of course, NO-ONE seriously campaigned for the ‘most distant possible relationship’ with the EU. There were a few nutters intent on ‘WTO terms’ but, of course, we didn’t end up there – did we?
Where we have ended up is with the EU acting like arses to us. My reaction would be to stop trade with the EU altogether. We can live without BMWs, Mercedes, Audis, Volkswagen, Bosch, Siemens, Philips, Ford, Vauxhall, Citroen, Peugeot, Zanussi etc. etc. Mind you, they sell a lot of their stuff here, maybe they would get upset if we suddenly stopped allowing their dodgy goods to be sold here.
February 15, 2021
Mike
Not forgetting horse meat and recently needing to call a garden centre to collect some pot plants of EU origin found to contain an unacceptable quantity of chafer grubs in all the pots. Serious issues with kitchen electricals and cars of EU origin over the years compared to other countries. Now buying elsewhere whenever possible.
February 15, 2021
Well said Mike.
February 15, 2021
A future Government needs to take the UK into the EU customs union and we can be same as Switzerland and Norway
February 16, 2021
Neither of which is in a customs union with the EU …
February 15, 2021
Your last sentence is spot on
February 15, 2021
Oh dear, they are still at it! Fixated on a shrinking market when there is a big world of growth out there.
February 15, 2021
They will be scrapped, in due course. I don’t see any sign that Matt Hancock wants to keep them any longer than is necessary to tame the virus, or to make it a manageable disease as he might put it. Personally I am getting quite cross that we have had to go through all this disruption over the past six months just because some people behaved carelessly last summer when we had got close to bringing the infection under control, and I really don’t want to go round the same loop again. And if anybody has the idea that mass vaccination alone will solve the problem they need to recognise that even if every person in the country had been given both doses there would not be 100% immunity, and at present we are a very long way from that. So we will have to stick with social restrictions as the primary means of bringing down the level of infection, with the main effects of vaccination being firstly to relieve the pressure on the NHS and secondly to bring forward the day when social restrictions can finally be lifted. By my rule of thumb when vaccination has given the UK population two thirds immunity that will be equivalent to the decline in the level of infection over 27 days at 4% a day, while if we ever got to 90% immunity that would be equivalent to 56 days at that rate.
February 15, 2021
It is not our fault that they allowed people in when most here were arguing to close the ports and airports.
February 16, 2021
Infection rates went down in the Summer and there were no spikes attributed to mass attendance events at beaches, cafes and restaurants (or riots).
Infection rates started to increase as anticipated when the weather turned and schools went back. Infection rates have dropped with the same number of people working at home but with the schools shut.
It is not possible to control a virus
February 15, 2021
Following Sir John’s comments it would appear that an output (of public services) based gdp no. is the most realistic measure available at present. However as the economy recovers pent up personal spending will increase, this presumably is a cash figure. It would be interesting to examine how the increase in personal spending relates to output, maybe there is information on this already.
February 15, 2021
It’s not all bad news.
Direct trade between Eire and French ports is up 447% on last January.
Now that’s growth – and solidarity.
February 16, 2021
@Mic; “Now thatâs growth â and solidarity.”
No, it’s neither growth nor solidarity, just increased costs, meaning inflationary pressures will increase.
Also do not think there is little or no anti EU sentiment in Eire, if the UK can do a trade deal with the USA (by way of CPTPP hopefully) it is highly likely Irish anti-EU sentiment will grow, the historical ties between the USA and Eire run far deeper than with the other EU26.
February 16, 2021
Jerry in your dreams the Irish like the EU and think the Brits are off their rocker
February 17, 2021
@bill brown; The Europhiles used to say the same about support for Brexit here in the UK, and back in early 2014 the SNP insisted there was majority support for Independence, and indeed the opinion polling suggested they were correct, trouble is, published opinion polling all to often simply get the answers those who commissioned the polling wanted to hear!
The Irish might like the EU but are they prepared to have higher prices, higher inflation and/or less choice. We have already seen the Irish Govt side with the UK when the eurocrats tried to implement Article 16 of the NI protocol (due to a EU vs .UK dispute over access to UK manufactured CV19 vaccines)…
February 15, 2021
If I buy an electric vehicle this is presumably ” efficient” from an environmental aspect. From an increase in GDP it has less impact then a new convential car due 2 to lower servicing requirements etc. So gdp numbers however arrived at provide only a partial answer
February 15, 2021
GDP is indeed far from a perfect measure. But no, electric cars are often rather worse than efficient conventional ones when the manufacture of car, battery (rather short lived) and generation of electricity is considered in full. They are just emissions elsewhere vehicles.
Certainly not zero emissions as Grant Shapps seems to believe, perhaps this topic was not covered in Business at Manchester Poly, but could no âexpertâ at the DoT re-educate him?
February 15, 2021
@Lifelogic,
Your logic entirely misses the point that the world has decided to move to electric whether you’re right or wrong.
And electric will improve quickly – that’s the good news.
But the important thing is that we get behind Tech now – whether Green Tech or non-green Tech (it’s all getting more and more integrated) to help create the strong economy of the future.
And this isn’t just about good economics but about good politics too – the best way of keeping Labour out of power.
February 16, 2021
The world has âdecidedâ? Well perhaps if you say so but not most car customers, engineers or the laws of physics – not without large advances in battery and much other other technology.
February 15, 2021
@Ian,
I think all this talk about ‘Electric’ undermining GDP is redundant.
The world has decided that electric is the way to go whether you’re right or wrong. And electric will improve hugely over next few years.
Task for Tories now is to help entrepreneurs create the British Tech companies of the future that are all becoming more and more integrated, offering Green Tech, non-green Tech, Cars, Smartphones, Drones, Software, Satellites, Servers, Tech Services, Tech Finance and more.
If we help British entrepreneurs create the great British Tech companies of the future, then our GDP will be way stronger and more diverse as Tech increases wages, skills levels (in engineering, design and branding), productivity, exports – and sense of patriotism as people love being associated with companies that manufacture high quality British Tech and British Tech based in the UK.
February 15, 2021
âElectricâ is not a source of energy it still has to be generated somehow. A battery is just a very expensive, very small fuel tank that does not live very long and takes a long time to recharge. It also loses charge when standing and wastes energy when recharging.
February 16, 2021
At the moment. But no doubt things will improve dramatically. But the larger point is Green Tech in general. That we have to embrace it. Even if you think Man-made Climate Change is rubbish. The world has decided Man-made Climate Change is real. And there’s a lot of money to be made from Green Tech – and much more in the future, especially as Green Tech will become even more integrated with non-green Tech and as companies provide more and more diverse but integrated Tech Solutions.
The argument now is how to get The Tory government to do what they can do get entrepreneurs and others creating the Big British Tech Companies of the future. Instead of going down a rabbit hole about batteries (etc) in my view.
Also, there’s no substantial evidence either way about Man-made Climate Change. Although the science seems to tilting more and more towards Man-made Climate Change.
So you’re simply not helping the Tory Party, the country or Sir John (in my view – happy to be corrected) by focusing on batteries and stuff like that.
Best to you, sir
February 15, 2021
ED M
“The world has decided that electric is the way to go ”
No, the globalist minority and vehicle manufacturers forcing us into paying more for a pile of cheap to make useless crap, have decided we are going electric.
“And electric will improve hugely over next few years.”
Not without changing the laws of physics it won’t.
You might eventually get EV’s that will do 600 or so miles on a single charge…….but at a useless 30 -40MPH and no headwind, and daylight driving, and in the summer.
February 15, 2021
@Steve,
But what can you personally do about it? Not a lot – compared to what you can do to put pressure on our government and The Conservative Party to get more involved in helping entrepreneurs and others create the British Tech Companies of the future that will inevitably make large profits from Green Tech but much more than Green Tech, Tech in general (but more and more, non-Green Tech companies will be involved in the creation of Green Tech).
And Tech that could have a huge positive impact on our economy – and so for the long-term success of Brexit and more.
We need CREATVE solutions – not just saying no, no, no.
February 15, 2021
@Ian
By electric I guess you mean battery. The environmental damage this cars have already done in just getting to the market place is out of this World.
Then you get the big problem is that those that drive them are funded primarily by those that could not afford a new car. The taxpayer, the taxpayer that is scaping by is funding those that can well afford the purchase in the first place. All grants and subsidies fund those that can buy at the expense of those that cant.
February 15, 2021
Increases in taxes would indeed be a very bad idea indeed. We already have the highest taxes for about 70 years. We also get extremely poor value from these taxes and fairly dire public services from the UK state sector – witness, schools, universities, the very poor NHS, a very expensive, slow, perverse and very inefficient litigation system. A criminal justice system that has largely given up on trying to deter crime, poor roads, even collecting the bins efficiently has largely been beyond them.
We know Sunak is against entrepreneurs and the private sector and particularly the self employed. His first act was to cut entrepreneurs CGT relief by 90% and to continue IR35 and other measures. There is talk of wealth taxes but all the current taxes can easily steal 90% of your wealth off you (over 20 years or so) and yet he wants a wealth tax on top of these?
The next election might well be as soon as May 2024 and has to be that before Dec 2014 it would be a disaster to increase taxes and would raise less tax not more anyway. What is needed is tax cuts, tax simplification, cheap on demand energy and far, far less government. Much of it does nothing of value and much does positive harm. Taxation, beyond what is needed to provide those few things that government is best suited to provide, (say 20% of GDP) does positive harm. This, for the simple reason, that so much money is wasted in tax collection (also giving perverse and damaging incentives to people and businesses), then even more wasted in admin. and then spent very badly by government- mainly on the wrong things.
Think of those childrenâs lunch boxes. They collect say ÂŁ50 in taxes waste ÂŁ20 in collection costs, then give ÂŁ30 to a company (doubtless one with good government connections) who provide little more than ÂŁ2 back in the form apples, bananas, bread, yoghurt, bakes beans and a tiny bit of cheese back. This is the UK government for you in a nut shell. This is repeated all over the place.
February 15, 2021
‘Increases in taxes would indeed be a very bad idea indeed. We already have the highest taxes for about 70 years.’
And we’re living in extraordinary times 1) Terrible recession a few years ago 2) Paying for Brexit 3) Paying for Coronavirus
In the meantime, sadly, taxes (to a certain degree) is the only answer to get us out of this mess. Then we can get focus on getting taxes down by building up our economy by building up the Tech industry which results in higher wages, higher skills, higher productivity, higher exports etc .. And to really, really bring taxes down, then you have to change cultural / social values. Like getting people to depend more on themselves and their families, sense of work ethic and public duty etc .. Far, far, far more effective than being over severe in bringing down taxes which could have all kinds of devastating consequences, resulting in anarchy, violence – that began, in a major way, with The French Revolution, but that we saw again in The Russian Revolution, The Spanish Civil War and so on. Being too severe ALWAYS back-fires in some way. You can only bring taxes right, right down through the hard work of building up our Tech Industry and by trying to persuade those in Education / Media / Arts etc to persuade people to depend more on themselves and their families, to have higher work ethic and sense of public duty (and it’s not just about good ethical behaviour but how good ethical behaviour also makes people happy!)
Lastly, if a Party becomes too severe or causes too many jolts in what they do, regarding taxations, then they’ll get booted out of power, in this case, the Tories will get booted out, and the Socialists will get back in. Do you want that? No, of course, not but that is what bringing down taxes too quickly, and especially right now, would do.
February 16, 2021
From the current hugely over taxed and regulated position higher tax rates will in the end result in less tax income not more. The solution is less government, a bonefire of red tape, lower taxes, far less government waste, cheap energy and a larger wealth creating sector.
February 15, 2021
Where do you get that figure from? I would love to know your source. I am keen to wave it under the nose of anyone I know keen to get Labour into power – so that taxes could be raised even higher.
February 16, 2021
I recommend you read Daylight Robbery by Dominic Frisbee Mike.
He calculates that we work for the government about 50% of the time and for ourselves the remainder – tax freedom day is indeed getting later every year – he equates it to the time a feudal serf used to spend working for his landlord to benefit from land and protection.
February 16, 2021
He is right. It is not just the tax itself compliance and endless other red tape enslave people even further.
February 15, 2021
LL
I don’t see taxes making much difference to conservative electability. Their downfall will be due to the electric car scam, HS2, net zero carbon scam and so on.
February 15, 2021
And no immigration rules letting in all and sundry to have the free vaccine before most of us.
February 16, 2021
This indeed is another problem and one reason they want even more taxes to waste on this lunacy.
February 15, 2021
Interesting article from Steve Baker in the Telegraph.
Comments even more interesting!
I donât think you lot even begin to understand what you have done to us.
Or maybe you do and always did?
February 15, 2021
Thank you for pointing it out. Excellent article. Donât agree with last line. I believe that the decision was the only one they felt they could make to prevent spread and be politically acceptable, dammed if they do, dammed if they donât with Starmer and the press hovering like vultures and actually in my network people agreed with it and were sanguine with no evidence of obesity, I lost weight or more drinking.
What I agree with is the decisions were informed by the uselessness of Whitehall/Civil Service, like so much else highlighted by this pandemic and needs a bloody good shake up, which of course Cummings was doing, and look what happened to him, so I am not holding my breath.
February 15, 2021
Indeed a good article from Steve Baker :-âWe must learn lessons from this pandemic
In future, government should be transparent about the economic and societal costs of lockdown.â
A lesson to learn right now is that Men of 60 are at the same risk as women of 65 and adjusting for this now in vaccine priority order would even now save hundreds of lives and thousands hospital admissions. But we are governed by complete donkeys.
February 15, 2021
Boris is doing about the same as most Western countries around the world. He’s got some important things wrong – but got some important things right too, like his approach to vaccinations. Overall, give him a big A for that.
Let’s focus more on what science and do and is achieving already in beating the coronavirus. That’s about the only thing we have real control over. The real enemy is the media who are whipping up a storm of fear over the coronavirus. The Media is the real problem – not Boris or politicians.
February 15, 2021
Also, you can’t over-ride the fear of ordinary people (if you do, then the Tories will get booted out of office – it’s as simple as that. Do you want the socialists back in power?). And their ‘fear’ is based primarily on the fear-mongering of the Media. Focus on them – not Boris and politicians who have got things right and wrong.
Lastly, science is the ultimate answer to all this – and that will involve not just eradicating / suppressing the disease in the UK but all over the world.
In reality, Boris has little power except to boost vaccination programmes here in the UK and to support it around the world.
February 16, 2021
The greencrap pushing, lockdown Socialists under Boris are in power.
February 16, 2021
@Lifelogic,
‘The greencrap pushing, lockdown Socialists under Boris are in power.’
If Boris is a socialist, then Labour are Communists. Better Socialist Boris than Communist Labour.
February 15, 2021
Agree
February 15, 2021
Good morning.
My concern is, ‘Government Displacement’.
One area of concern is the advertising industry and the knock-on effects from that. It is not only companies reducing their expenditure, it is that government has taken a large market share through its propaganda and is indirectly supporting an industry which, once funding is reduced or stopped, will have real issues re-aligning itself. It is the same with the railways, energy, education, health, social care, housing, you name it. It, government, distorts the market and creates dependency. Now it is trying the same with furlough and other schemes.
I have called for government to cut its spending plans but I now realise (see above) that this is no longer possible. They went for the penny and now they’re in it for the pound. it has grown drunk and lazy on cheap easy money.
Do what Iceland did, just let things happen and leave everything, and us, to work it out.
February 15, 2021
I quite agree. Less government control of our energy use and no more government-imposed ‘lockdowns.’ Just less government involvement in our lives.
February 16, 2021
Government interference in markets is never a good idea – you correctly identify advertising which our government has single handedly enabled to become a huge growth industry – see Access to work provided British sign language interpreters and childcare as areas where the price demanded has no reflection on the value due to government spend.
February 15, 2021
The U.K. needs enough jobs to enable full employment.
Companies with a high ratio of jobs to turnover should receive a jobs bonus, paid for by a job penalty imposed on companies with a low ratio of jobs to turnover.
The balanced point is about one employee per million pounds of turnover. For example, a company like Marks & Spencer would receive neither job bonus nor penalty.
The bonus would be on a sliding scale worth up to ten thousand pounds per employee for companies with many employees relative to turnover. The job penalty would be up to one percent of turnover for companies with high turnover and few employees in the U.K. e.g. Google.
The job bonus/penalty can be revenue neutral. The Inland Revenue already collects the data on turnover and number of employees …
February 15, 2021
Oh, you mean something like the Selective Employment Tax introduced by the Labour government in 1966:
https://en.wikipedia.org/wiki/Selective_Employment_Tax
It’s a bit depressing that I remember that, just as I remember the abolition of proper British money fifty years ago today … the Irish are also remembering it, in their habitual anti-British way:
https://www.irishtimes.com/news/ireland/irish-news/irish-d-day-50-years-on-how-decimals-put-an-end-to-the-crown-in-ireland-1.4484693
But of course now they no longer have their own currency, with or without a crown on the coins.
February 15, 2021
Well, similar perhaps in encouraging manufacturing, but it was much more complicated, and put a cash flow burden on the very industries that it was trying to help. And because it was an indirect mechanism it wasnât clear whether it in fact helped exports and manufacturing.
A job bonus/penalty mechanism impacts directly on job creation. A company with above average number of employees for its turnover receives a bonus for each employee, incentivising the hire of more employees. A company with below average number of employees for its turnover reduces the penalty on its turnover for each additional employee hired.
Would need to be phased in over say five years with progressive increase in the bonus and penalty rates.
February 15, 2021
Tinkering to manipulate just wastes energy and creates nothing.
Google has the luxury of profiting directly from the wealth, health and well being of the nation while never having to contribute on a equal basis to any indigenous business. They are not alone we have an unequal tax system the smaller you are the greater the proportion you have to contribute. Generally even things like business rates as they for the most part are paid by how much frontage you have to the street and not the size of the business the small guy gets punished.
How do you encourage start-ups and the enterprising to get going when the first thing they have to do is subsidies the established – bonkers.
February 15, 2021
Correct, but will the nay sayers at the Treasury hold sway.
The millstone of government loans to the self employed should be first extended until they are back at work, and be treated like student loans. I mean remain on the books of those who took them until they are back in healthy profit and then be repaid at a rate that will not affect the business.
A further positive step for small businesses and the self employed would be to hike the point of paying VAT to ÂŁ500,000 and then to stagger its level so that a business did not reach the maximum until a turnover figure of,lets say, 2 million was reached. I would also introduce a programme of VAT reduction to 10% over the course of a parliament to incentivise business activity. VAT apart from being a disincentive to business activity is also an opportunity for the criminally minded to cheat, which combined with the lethargy of HMRC is an incentive for unfair competition.
Finally there needs to be a creative way of dealing with the lack of tax balance between UK shore based businesses and those who choose to incorporate offshore. Many of the latter have done a good job during the pandemic, they are an inevitable business trend, but it should not be allowed to continue to the detriment of onshore business and those brought to their knees by the pandemic.
February 15, 2021
Nice comments but re the loans, making them open ended will never see payback because the business will always claim it will adversely effect the business or get ready for a spate of Phoenix liquidation/receiverships. At a minimum they should be crystallised with monthly paybacks, say 5 years, with an appeals process similar to the one that granted them in the guest place to independently look where the Business claims hardship.
I guess the scheme was essential but the haste the loans were granted etc, to me make it a fraudsters charter.
Offshore I think is subject to international rules, double taxation etc so not quite so easy to just flick a switch.
What about corporation tax? Reduce it, increase tax take and attract more inward investment or have we privately promised the EU we wouldnât?
February 15, 2021
Why wasnât there a huge increase in health output?
What with the hospitals and GPS being overwhelmed.
I thought that Covid required the health service to run beyond normal capacity. Hence all non Covid healthcare cancellation.
If there had been dedicated isolation facilities health output would be up instead of some 27% down.
February 15, 2021
Good question. And surely the massive extra expenditure on PPE, testing, tracing, vaccines etc. should have appeared even in the output calculation ?
February 15, 2021
Yes!
+1
February 15, 2021
With 30-35k people added to the hospital system because of the virus and with 10 people need per patient. Out of the 2.5 million NHS workers only 15% were over worked and engaged the rest kept a low profile.
February 15, 2021
Leaked suggestions that the Chancellor intends to raise the rate of CGT with immediate effect when he makes his budget statement would not help. Every growing business needs more capital. Hammering private investors who are willing to make risk investments either in their own or someone else’s business is not the way to get back to growth.
February 15, 2021
I am sitting on massive capital gains over the last year from my investment in shares of technology companies like Tesla. This is nothing to do with my investment skill, simply that the massive stimulus injections in USA and UK have boosted the stock market artificially in those areas. I don’t particularly see why I shouldn’t be taxed on those gains at the same rate as my marginal income tax. Disentangling that from genuine risk investment in small businesses is tricky.
February 15, 2021
Well don’t sell them Roy – just wait for the price to collapse and complain then đ
February 15, 2021
I have started dabbling as money in the bank earns nothing and I donât want to be a landlord.
If I invest, for example, 10000 buying ÂŁ1000 worth of 10 different shares. From a capital gains point of view can I offset losses on the shares that go down against profits on shares that go up?
February 16, 2021
Roy Granger: “I donât particularly see why I shouldnât be taxed on those gains at the same rate as my marginal income tax.”
That’s fair. Now get your pen, open your cheque book and write the amount you see fit to the benefit of the Inland revenue. See, it is so easy.
You can report back to us, once you’ve paid the huge amount of tax you think you should have paid. I hope you’ve realized your capital gains, I’d not advise paying tax on unrealized capital gains. But, if you think that’s a good idea, go ahead, do it!
I believe you currently have a ÂŁ12K capital gains allowance. Why don’t you forgo that? I’m sure you’ll feel better for it.
But I suspect, what you are really saying is, you think other people should pay tax. Just come out and say it, why don’t you?
February 16, 2021
sell and give the taxed profits to Farage’s REFORM or whatever the new party name is.
February 15, 2021
Youâre correct about investment â however this isnât going to change while this government restricts Banks on paying dividends to its shareholdersâŠthat alone restricts investment across the board
February 15, 2021
What a crazy way for the UK to measure GDP, typical accountants/statisticians!
“[the UK reported] a substantial fall in health output when elective and non urgent activity was cancelled to leave more capacity for CV19 cases.”
On the flip side though, surely any lost ‘output’ due to the cancellation of elective and non urgent activity there was a corresponding and increased ‘output’ in CV19 related health care activity.
As for recovery, there is a case for true austerity (not the faux austerity of the Cameron govt. era), meaning the govt only spends on what is truly necessary, and not on candy projects, HS2 for example. How many new or extended and fully staffed hospitals would the projected for HS2 budget finance, or tax breaks for those investing in existing or new UK based manufacturing, or by how what percentage could UBR be cut etc?
Reply Not a fully compensating as hospitals took out beds and kept beds empty to help with infection control.
February 15, 2021
The madness of politicos and appointed officialdom knows no limit. I see there is now serious talk about a tunnel between Scotland and NI, fine you might say, but apparently this will be a rail tunnel (at least in part) – might I suggest someone from GB and Network Rail goes and talks to someone at NIR (and Irish Rail) before they get to carried away, not saying it can’t be done, just that such a scheme doesn’t stop with the tunnelling if its going to be workable.
Mine that gap…..in the track gauge!
February 15, 2021
A fleet of large modern catamaran ferries would be much better. Cheaper, quicker to build, more flexible, more robust by supporting multiple ports.
Downsides? Slightly slower crossing, perhaps. But 40 or 50 knots is certainly possible, so itâs marginal. A few days a year with delays due to bad weather?
February 16, 2021
You can’t put a train on a catamaran
February 15, 2021
That will be a nice asset for Scotland when they get independence.
February 15, 2021
jerry,
I don’t think crazy. An unadjusted “money spent” only measure gives no indication of productivity
February 15, 2021
@Caterpillar; But ‘Services’ can not always be adequately measured by way of ‘productivity’.
February 15, 2021
Your last paragraph says it all JR, many small businesses and self employed people may never get back to the level of business they originally had and whilst some coped better than others where flexibility was possible, others have now been in dire straights for a year, and simply cannot flick a switch to get back where they were.
Tax rises are the last thing that they need, and that maybe the final nail in the coffin for many.
February 15, 2021
Yes – All very sensible… and it does need repeating, often; This is a time when lower tax rates will boost output and investment and cut the deficit by more than attempting to lower it with tax rises.
I’m glad we have the TPA pushing that hard.
Most of the emphasis rests with government — Are they just going to shrug their collective shoulders and tell us they have to increase taxes for the problem they ‘managed’ …. Or are they going to take a good hard, honest look at what needs to be done, and introduce resounding innovation into the way we trade and function as a nation – That doesn’t mean a great RESET, it means something far more valuable, a nation pulling together with sensible regulations to help us all.
All too often it seems like the government is acting in an autocratic manner, which helps nobody — We are all in this together, or should be, and we are SO SO tired of being pushed around!
They should start with civil service reorganisation and scrapping costly white elephants like HS2.
February 15, 2021
I keep hearing how successful the U.K. vaccination programme is. And yet, in time, we will see it as one of the biggest Tory Covid failures of all. Why?
Well, there is no doubt that the NHS has done a great job of getting needles in arms. This is a good thing. But this is a GLOBAL pandemic. This makes it a problem here until it is dealt with everywhere. And what has our strategy been? To buy massively more vaccines than we need – nearly five times what we need – effectively hoarding supplies of a life saving product.
Whilst all developed countries have bought more vaccine than they need among big countries only Canada has hoarded quite so badly as us. It is completely morally indefensible. But the Tories have never minded very much if poor people in other countries die. As we see through their attitude to foreign aid and their response to the 2015/6 refugee crisis in the Med.
The government has said that, in the end, it will donate surplus doses abroad. That is no good because they are needed there now not in a year or twos time. Our vaccine strategy is causing people to die in other countries. Outrageous.
Then, of course, there is the appalling way the Tories spent our money on vaccines. They literally took out the national credit card and went on a bender. We have bought nearly half a BILLION doses and we spent significantly more for most of these than the US and EU. In the case of the Pfizer jab we paid nearly double what the EU did per DOSE. And we paid more for the AZ vaccine too.
Isnât it amazing how Tories can suddenly find huge amounts of our money when the health of their elderly voters is at risk but they canât find a penny when poor kinds are starving.
Reply We are not hoarding any vaccine. We are using all that is supplied to us. When we do not need more we will look at how to offer future potential deliveries to others.
February 15, 2021
Andy, where have you got this idea from that we have more to use than we need at the moment?
We’ve been told our clinic is waiting for a supply, they are ready to go with more vaccinations but are now delayed by stock control.
February 15, 2021
Desperate stuff from you! The govt’s vaccine policy and its execution has been a triumph, and is widely recognised as such, including especially in EU countries (though not of course by the EU commission and its defenders and apologists like Merkel and Macron). the virus has hit hardest in developed countries such as W Europe and the US, so its just as well that – except of course for those countries cursed by subjugation to the EU procurement rules – they are on the front foot. Of course the vaccines will be distributed globally when possible. I have no doubt the UK will be playing an out-sized role there also.
February 15, 2021
very good idea – spread our 15m doses by population across the rest of the 7bn people.
February 15, 2021
Yes, I think that the Government threw our money at the over purchase largely to engineer the problems for other buyers such as the European Union.
February 15, 2021
Quite the most ridiculous thing you have said for ages. Our vaccination programme is a success. Get over it!
February 16, 2021
How foolish. We cast a wider net by backing several horses in the race, the idea being we should be on a winner – and we were! Grow up.
February 15, 2021
Andy,
I don’t agree with the world strategy of narrowly applicable 1 st gen ‘vaccines’ going beyond the most vulnerable, I think this could be terrifyingly irresponsible in evolutionary terms, so I would agree with you for different reasons. Concerns are further highlighted by the Oxford-AZ story. Initially I had understood that Oxford would license the vaccine freely to any pharmacy company as a move to change the structure of vaccinations in the world – they are usually not that profitable and so big pharm does not tend to develop as many. What seems to have occurred is that Oxford licensed exclusively, whilst other vaccines have even narrower applicability (increasing the likelihood of evolutionary escape). Rather than an economic structure arising of low cost, widely effective vaccines coming about, it might be that the world ends up creating a high cost, narrowly applicable model, with liability underwritten by the tax payer. I hope rumours of a broadly effective 2nd gen vaccine from Notts is true and that this is licensed freely/cheeply. Among the very many things that need to be investigated from this developed world covid response is the structure of vaccine market that has been produced. On the face of it, it looks bad.
February 15, 2021
Money up front has enabled research and production. Other nations will benefit from drugs we have provided them.
There is nothing this government could do right in your eyes so I think they should just ignore you.
February 15, 2021
Andy
Isnât it amazing how Tories can suddenly find huge amounts of our money when the health of their elderly voters is at risk but they canât find a penny when poor kinds are starving.
Well Andy, if it concurs with your sentiment – most of us older voters won’t be voting Tory anyway.
February 16, 2021
I am surprised that rubbish like this gets past moderation.
I assume you think a global government should have ordered all the vaccines and distributed them in some sort of arbitrarily equitable manner to each country.
Well, on a smaller scale, that is what your beloved EU has been doing. Look how well that is going. Those (people ed|) even tried to ban vaccines moving out of the EU. Very, very selfish and, oh yes, âmorally indefensibleâ. I bet you can defend it though. Morally reprehensible as you are.
February 16, 2021
No need for long refutations of Andy’s nonsense. He is simply deluded or in my opinion an outright liar as he has proved many times over Brexit.
February 15, 2021
Sir John.
The government cannot be perceived as letting all the taxpayers take the hit whilst every sector of its controlled area are all guilty of gross waste. The scales have got to be more evenly balanced to get the taxpayers really on side.
The envy tax on cars over ÂŁ40k is a classic example of not understanding that a little often is better than a once in a while big hit. Vehicles manufactured or assembled in the UK should be subject to less tax to grow the internal market, increase production creating more jobs and the companies pay tax on their improved output and turnover. Now we are out of the EU surely the government can come up with a scheme to put the working population and the country first. It is time for ministers to start having a real hard look at their departments and start thinking outside the box. You have often stated on this site , less taxation can result in more revenue to the a cheque. After all at the end of the day it is our money they are playing with, so some consideration should not be beyond the realms of applied common sense.
February 15, 2021
Mr Raab tells us we have to take a â10 year viewâ to Brexit. Not helpful to the many thousands of small and medium sized businesses suffering with mountains of Tory red tape today.
But an improvement on Mr Moggâs 50 years to see the benefits claim.
Personally I think it will be 15-20 years until we see the public inquiry and prosecutions of the Brexiteers. There are plenty of cells for all of them.
February 15, 2021
Firstly, only a small minority of businesses are suffering from that extra red tape.
Taking an extreme view:
https://facts4eu.org/news/2020_oct_truth_about_UK_exporters#
“99.3% of all UK businesses do NOT export to the EU”
While looking at it more broadly:
https://briefingsforbritain.co.uk/the-government-should-ignore-the-special-pleading-from-business-by-john-longworth/
“Only 8% of UK businesses export to the EU. These exports represent just 13% of the economy. In fact, 17% of the economy is related to exports to the rest of the world and 70% is domestic. Even a so-called âhardâ Brexit â which is actually global trade on World Trade Organisation (WTO) terms â would have only a marginal (if any) impact on exports to the EU, while it would considerably boost the 87% of the economy not related to the EU.”
February 15, 2021
Secondly, it is your wonderful EU which insists on most of that unnecessary red tape, despite having signed up to the WTO Agreement on Trade Facilitation:
https://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm
“Bureaucratic delays and âred tapeâ pose a burden for moving goods across borders for traders. Trade facilitationâthe simplification, modernization and harmonization of export and import processesâhas therefore emerged as an important issue for the world trading system.”
But not for the EU.
February 15, 2021
Mogg did not say that you have deliberately misquoted him. I would say the jury is out on Brexit, and we will only see benefits from it if this and future govts take advantage of the freedoms it offers. So far we have the vaccine triumph and exemption from participation in the âŹ310bn eurozone transfer to chalk up. The 60 or so FTAs are another brilliant success. and there are no big queues and over-flowing lorry parks at Dover.
February 15, 2021
Most of us will be dead, but leaving you with the satisfaction.
February 15, 2021
So which GDP calculation does the EU use to assess our payments to them? The same measure they all use or the one the UK uses doesn’t that mean we would be paying more into the EU because we’re inflating our GDP where we “adjust the cost of public services like health and education for real output where others just rely on money spent”.
I recall the extra big bill we got from the EU for undeclared GDP income from prostitution and drugs it was something I was particularly annoyed about as we all got stuffed for the bill that only a small % of us are legally allowed to partake so the Country doesn’t tax it. [UK contributes up to ÂŁ10 billion a year to the level of GDP.15 Oct 2014]
February 15, 2021
‘illegally’ allowed to partake[sorry].
February 15, 2021
The UK is unhealthily reliant for growth and confidence on the housing market. We know that’s not desirable, but it is built into our psyche and could not be easily or quickly changed.
The first thing that the Chancellor needs to do is extend the Stamp Duty relief beyond 31st March and he should do it now. Our son is in the process of buying a house and that has been delayed by the other side losing the property they expected to be buying. If they find another, it will almost certainly not be able to be exchanged before the end of March. The avoidance of several thousand pounds in tax for our son’s first house purchase would be very welcome.
Given the very strong activity in the housing market and the corresponding trickle down into the economy of more DIY and work for self employed contractors, it should be evident even to this Government that Osbourne’s ludicrously high stamp duty (and CGT ) rates are deeply harmful and counter-productive.
February 16, 2021
It is annoyingly unfair. When my son bought a house a while ago, I stumped up 13500 to pay the bloody stamp duty. 13500 of my ALREADY TAXED income.
February 15, 2021
Tax rates have an effect on economic activity.
It’s nothing new.
In the 17th century, Louis XIV’s Minister of Finance said (presumably in French) ‘..the art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing”
Sounds like a plan.
February 15, 2021
So now you’re going to try and convince us that 1. Government is the one to trust to promote growth. 2. That those statistics even remotely reflect reality and 3. This economic disaster was not entirely and completely the fault of the ruling class whether through criminal incompetence or planned evil.
You’ll probably suceed with the bulk of people going by their complete acceptence on every lie pushed their way. However there is a lareg group that didn’t fall for it and it’s numbers are swelling as reality bites.
February 15, 2021
How ridiculous to have a different GDP measure from the rest of the world, handing criticism and ribald comments from detractors to the media on a plate!
By all means use and justify the UK method but the Treasury should insist on a like-for-like measure being announced to the media too for goodness sake?! A contraction of only 2.2% would have barely made the inside pages of the press.
February 15, 2021
Are we to expect Sir John soon telling us about the percentage growth of UK GDP compared to other countries (be it GDP(Expenditure), GDP(Production) or GDP(Income)] this quarter without quoting how much the ânegativeâ growth has also been within the individual countries in the previous quarters?
February 15, 2021
I am not encouraged by this governments plans for growth especially growth for the SME
They donât need some jazzy plan or support via third parties â what they need it NOT to be taxed to death for the next 12 monthsâŠ.for SMEs stop business rates, employer NI, corporation tax, VAT and allow free parking in high street
BUILD BACK GROWTH BETTER
February 15, 2021
Mr. Redwood, a question, if I may.
Why was austerity the right policy in 2010 but the wrong policy in 2021?
Could it be that austerity in 2010 was the wrong policy?
Reply I disagreed with 2010 policy if you check back. There was however a big difference. 2010 was th aftermath of excessive build up of debt in both the pubic and private sectors. 2021 is about recovering from a collapse of demand created by anti pandemic policy.
February 15, 2021
Austerity might have been the right policy in 2010, but it was never tried. Instead, the government carried on increasing borrowing, as it has done for every year since then.
February 15, 2021
I don’t think the public will accept tax rises. The 5% increase in council rates is unacceptable considering the current level of inflation. Kier Starmer is right the 5 % increase should be dropped, and funding for care should come directly from the government.
Should the covid debt be paid back ?After all the government has made some poor decisions and wasted millions, why should we pay for their mistakes. The covid debt can never be paid back, why punish people just so the money markets will continue to have confidence in Great Britain.
Many people, and businesses haven’t recovered from the financial crash, then why go and make it worse. If the debt has to be paid back then it’s because the government wants us to pay it back. The debt should just be left on the Bank of England balance sheet for a hundred years and inflated away.
February 15, 2021
Long ago during the process of leaving the EU the Remainers were swift to point out the problems our economy would have outside. Did they know that the only problems would be with the bloody mindedness of the EU themselves, as these are the only ones that have arisen. Prompted by early signs, our Covid jab rate, that we would be better off outside. Indicating that free flexible business planning works.
I am reluctant to read too much into exchange rates. The dealers take bets to suit their business. However there is a suggestion at the moment that they have faith in an EU free currency. Lets see what the budget does to exchange rates.
February 15, 2021
As mentioned several times in passing over the years(e.g. https://johnredwoodsdiary.com/2017/04/23/deficit-reduction-and-eu-rules/#comment-865901), the U.K. needs to be reporting a clear topline such Skousen’s Gross output in order to see the structure and health of intermediate industries on the supply side. The USA adopted a slightly bastardised version of this in 2014.
February 15, 2021
I think we should thank Gordon Brown for educating us about “quantitative easing”, aka “money printing”, because that is how the Treasury has been able to support businesses and individuals during the pandemic; and as long as consumer price inflation remains low and sterling does not crash against other currencies I have no great problem with continuation of that as a short to medium term strategy until we are back on a sounder footing. In fact my far bigger concern is that the Treasury may succeed in pressing for a premature reopening of the economy and kick off the virus again.
According to the author of this article:
https://capx.co/the-treasury-has-put-accounting-before-economics-and-we-are-all-bearing-the-cost/
“Boris Johnson and his Number 10 operation have faced criticism for repeatedly acting slowly and indecisively, with delayed lockdowns leading to more disruption, greater restrictions, and more deaths. But multiple sources say that on virtually every occasion the department pushing hardest against restrictions was the Treasury.”
February 15, 2021
I do not accept that Covid debt can be ignored, it would open the door to socialisms money tree. However I see no compulsion to repay it as a result of the next budget. Baring in mind the rates at which government has borrowed and their timescale for repayment, I see no compulsion to demand early repayment. In fact if government sow the seeds for a profitable acceleration of business activity, the much reduced rates of tax I advocate could generate the finite and larger tax take to cover the Covid bill. At current interest rates it is a valid bet to place.
I do not however agree with government flinging other peoples money about on none profit making schemes dreampt up by politicians set on making a mark. IK Brunel would have loved the engineering challenges of HS2, however I doubt he would have persuaded many to invest in it. Government do not suffer the restraint of the profit imperative.
An important part of Covid recovery must be local and national government restraint. How about both suspending pension contributions for the next two years to balance the hit that the private sector has taken due to Covid. Suspension directed at a direct discount on rates bills. Give it some thought.
February 15, 2021
The ONS specifically stated that the UK`s poor performance relative to other countries was not a statistical trick . Rob Kent Smith , head of GDP at the ONS ( an expert âŠ) said that even excluding public services the decline up the third quarter of 2020 was still one of the largest of the G7 .
Sir John Redwood is keen to include the better than expected last quarter to polish the apple . That was the period in which the second surge was created Government Policy and directly lead to our heart breaking death toll 1749 ,per million compared to ,( for example ) 783.1 in Germany. Not sure I would pat myself on the back for that.
Norway 110.7
Sweden 1208.3
Of course we all know what business would like .No Brexit
February 15, 2021
And reduce public sector spending.
February 15, 2021
Sir John, for a long time I have been arguing that no lockdown would be needed if those with Covid were given better treatment in hospital, preventing deaths and allowing them to be discharged sooner. In particular I have argued that ALL patients should immediately, on arrival in hospital, be given both Calcifediol and Synairgen’s interferon inhaler. This report in today’s Telegraph proves, once again, that I am right: https://www.telegraph.co.uk/news/2021/02/14/giving-hospital-admitted-patients-vitamin-d-could-cut-covid/
The lockdown, with all its costs – financial, social, educational, etc – has been completely unnecessary and unjustified. The government’s handling of this issue has been abysmal and unforgivable.
February 15, 2021
The only measure needed for our service industries is a complete lifting of ALL restrictions, and a return to normal life as it was in 2019. Eating and driking out, shopping, travel and tourism – let’s get back to normality.
As for our manufacturing industry, here a few things are needed: Firstly, a ‘full expensing’ for all capital and R&D investment, allowing companies to claim all this spending against tax without delay. Secondly, a government commitment that ALL public sector purchasing (both national and local, or by government agencies) will ONLY be of UK-made goods, and with UK-based companies. And thirdly, a large programme of state aid into those industries – such as aerospace, SMR power stations, battery manufacturing, hydrogen production, etc – that are (or are going to be) key to the economy.
February 15, 2021
What on Earth is “real” output? Don’t recall that being mentioned before. I assumed the ‘output’ of the public sector was what it cost. I recall some discussion with regard to the amortisation of capital expenditure over its ‘useful’ life. How is real output measured and where does the difference between cost and output value go? On the balance sheet as a profit/loss figure? Looks like we made a wacking loss last year; how is that to be made up when patients have died and children have grown a year older without learning much?
It’s vitally important that things aren’t done simply to massage the way government expenditure is presented such as the lease of buiildings and maintenance; the government has as much money as it wants; we are not in currency union. Time to stop pretending the UK is a business; it leads to some really idiotic ideas.
February 15, 2021
The site w3.unece.org (United Nations Economic Commission for Europe) allows the comparison of various parameters computed the same way between different countries per quarter over the years, for example GDP(O) (GDP output) and related to a base, say 100 in 2010. As an example one can get:
…………… 2020Q1. 2020Q2. 2020Q3.
UK…………113.3…….90.4………105.8
Germany 113.7……101.3………111.8
France……106.5…..92.0………104.9
Different conclusions can be drawn from these comparable figures.
NB: Information provided for allowing people to make their own mind without a politician taking them by the hand to where he wants them to be.
February 16, 2021
hefner from the BBC 12 Oct 2020 â… The lockdown in Germany was milder than in other European there were never restrictions on going outside, for example. It was also shorter, meaning that businesses suffered less of a hit. Mask-wearing has become ubiquitous, so there have been few outbreaks on transport, in shops, or at other services such as hairdressers.
February 16, 2021
What are you trying to prove, that you cannot read what I wrote? You are very successful indeed.
February 15, 2021
Sir John, when oh when are they going to make you Chancellor instead of all these inexperienced beginners??
February 15, 2021
In these days of freedom ( alleged ) we need to make decisions now which may take years to mature and benefit us but stick with them.
One of these must be to protect businesses which are still home owned from foreign acquisition. Sales have been encouraged and welcomed by governments and those who think of ‘the economy’ alone for decades. Let’s call it preserving our sovereignty and identity. We need an economy brexit, remove foreign domination.
The short-termism of our City spivs encouraged by government policy has destroyed us. I want English or UK owned brands but there are almost none. I want spivs discouraged and their greed punished. Look around and see what dominates. There are many people who don’t care of course, let’s not waste time on them.
We must rebuild confidence in those do care but are too often ignored or belittled.
February 15, 2021
See also ons.gov.uk âInternational comparisons of GDP during the coronavirus (Covid-19) pandemicâ.
February 15, 2021
All recent governments have forgotten Ronald Reagan’s famous statement of the nine most terrifying words in the English Language – “I’m from the government and I’m here to help”
It was a lesson learned during the Reagan/Thatcher period and it worked
Over each decade, Governments need to lay a benign foundation of taxation and regulation to allow enterprise to flourish. Growth and prosperity will follow, as night follows day.
Instead, we have been given nothing but excessive taxation and tight regulation, the former from Chancellors such as Brown and Osbourne, and the latter from our late membership of the EU.
Now we have left, I want to see a bonfire of regulations and a drastic change in taxation to encourage growth and business. They could start with doing something about our derelict town centers. Don’t waste money trying to revive them, it will undoubtably fail and billions will be wasted as internet trading will inevitably take over.
We are constantly told we need more housing so, make it easy to demolish all those huge department stores in town centres and the boarded up shops immediately off the High Street, and replace them, predominantly with houses plus a few flats, rather than take up greenfield sites.
February 15, 2021
PS : I omitted the worst Chancellor of all : Hammond.
It is certainly the case that it was Brown that had the unique achievement of being both an utterly hopeless chancellor and the second worse Prime Minister (after Teresa May), but at least he kept us out of the Euro, against Tony Blair’s wishes.
February 15, 2021
Ah Ha!
So …no arbitrary dates for the end of âlockdownâsays Raab.
As I said I said tâother day and was deleted…someone has been telling fibs….again!
How long can you play âcat and mouseâ with us?
February 15, 2021
And now Boris is saying transmission rates still âtoo highâ.
February 16, 2021
EH, Do you realise (I guess not) that having received the vaccine (specially the AZ one) does not guarantee 1/ that one will not be infected, 2/ that if infected the consequences (the disease) will be much milder, 3/ that if infected the potential transmission is interrupted/reduced. And that without any consideration to variants.
So now tell me, on what basis can you criticise Boris for saying that transmission rates are still too high. Present clear arguments, please, for a change.
February 15, 2021
Taxation has two purposes, neither of which is funding government spending. One is to stop the non-government sector doing things the government doesnât want or like, Tobacco tax for instance. The other is to redirect non-government output to the government sector. All for the common good and wellbeing of society in general. You will not find any MP that understands the second purpose.
Tax has to be paid in the governmentâs own fiat monopoly issued currency by law; hence, you have to get some of it to stay out of jail. Thatâs what makes the governmentâs money valuable. The government spends long before it taxes or pretends it has to borrow its own Treasury created monopoly money that canât be got from anywhere else.
Remember, there is nothing the government sector canât afford to buy, that is available for sale in its own fiat currency. Likewise, there is no invoice it canât afford to pay that is presented in its own currency. The governmentâs job is to spend to the point where, at any moment, it is using up 99.9% of the nations available resources; particularly, the labour resource. That is 0.1% short of pushing its demand into inflation territory for any individual element of production.
The government will know when it is getting it correct. The labour force will stop fearing for its future; stop excessively saving and paying down debts, and starts spending the governmentâs money like there is a tomorrow.
February 15, 2021
Its worth repeating Covid-19 cannot spread from one person to another when there is no interaction between them. In a situation of lockdown the virus dies out when it cant find a host within 3-5 days. An actual real lockdown of 14days would have wiped the whole virus out completely never to return
So the bizarre bit is every time the pressure is released on society and interaction is started up again the infection rate ‘instantly’ rises. The logic there is some people have been ignoring the basics all along and are in fact the ones that are perpetuating the situation for longer than needed. We are coming up to 12 months still fighting something that would have been long gone by now, with that oh so not ‘common sense’ missing from the human race.
February 15, 2021
I can only conclude that you’ve been scrupulous in complying with the regulations Ian and are now finding out to your intense displeasure that everyone else in this country hasn’t. So what are we to make of this? Essentially you can conclude that most people are idiots and will take what they can get when they can get it – bad luck!
February 16, 2021
Ian you seem to base argument on static population. Tens of thousands of visitors, illegals, returning citizens have been coming into the country the whole time of the pandemic. What we term a Lockdown was never really…
February 15, 2021
If there has been a “big transfer of spending from private to public sector” that means that the public sector is running a deficit and the private sector, which is the ultimate recipient of Government spending, is running a surplus.
When the emergency comes to an end, how do you want this situation to be resolved? Do you want that accumulated private sector surplus to go into an inflationary burst of consumer spending that sucks in large amounts of imports?
February 15, 2021
The reduction in GDP and in capacity is of course important and worrying, although perhaps it is what will happen when the Chancellor finally stops furlough is more worrying, given the large number of firms who may well “go bust” when hiberbation ends and creditors come calling.
But whilst there will undoubtedly be a long period of uncertainty and pain, the fact is that we live in a competitive world, and whilst our neighbours in continental Europe have problems of their own making to deal with, there are other economies that will be angling to pick up business lost in the UK. The only way to deal with this is policies that acknowlege that red tape, unnecessary regulation and a Keynsian government is not the way forward. HS2, airports in the Essex marshes, tunnels between Northern Ireland and Scotland, even 5G, are all vanity projects we can’t afford, and which will take resources away from the productive private sector. On the other hand, freeports, reduced regulation and tax simplification will work wonders.
What worries me most is that President Johnson and Vice President Hancock doen’t seem to understand this. But that understanding will be critical if we are to get through this challenging period!
February 15, 2021
More power cuts in the ice and snow, this time in Texas of all sensible places. Texans are complaining it is due to unreliable sources of energy seizing up in the freezing weather and not enough reliable sources. Our government must attend to this hazard if we are to have growth. California was the last state to suffer from power cuts, in the extreme heat.
And HMG must wake up about NI. It sounds from the leaks Gove is presumably planting as if they haven’t a clue about how very serious this situation with the Protocol is. He is just letting it drift. We must get rid of the Protocol, and the sooner we do it, the better for everyone. We are to have a token virtual debate on Mrs Foster’s petition on Feb 22nd.
February 16, 2021
This analysis ignores the fact that high occupancy rates on public transport may reignite the COVID-19 pandemic. Perhaps you should face the fact that many people who have worked from home may wish to continue to do so. I had a couple of years in my career when I commuted to London. Train + tube in both directions added more than 3 hours of travelling to my working day. I would have welcomed the opportunity to work from home except for one day a week in the office co-ordinating projects – and I would gladly have accepted a 10% cut in salary to avoid the cost and hassle of travelling. I don’t believe I am alone in this and I believe that the current work force will make their wishes known. The heyday of bossy extroverts is over, as is the pre-COVID use of public transport.
And when are you going to accept that maximising income per capita within a sound fiscal framework should be the objective of UK economic policy. To achieve this will involve a small State, massive deregulation and a complete tourniquet on immigration.