Let me have an other go at explaining why I think we should be more worried about the balance of payments deficit than about the state deficit which seems to attract all the attention.
The state deficit will be financed primarily by UK savers. It means the state can spend a bit more and individuals choose to spend a bit less as they save. The state can always repay the state debt as it is issued in pounds and the state through its Central Bank decides how many pounds to create. Usually the state just rolls the state debt over when itĀ matures. Of course I wish to see good value forĀ money spending on national priorities, and to leave plenty of room for personal and business consumption and investment. There is always a political argument to be had over the total tax take, tax rates, and the growth rate of personal real incomes. There are important arguments over how much the state can and should do, and how much isĀ best done through a competitive private sector.
The OBR forecasts a large balance of payments deficit of 6% of GDP. This will also need financing. It needs paying for in foreign currency, as it represents the excess of imports of goods and services over exports and the excess of payments abroad to incoming payments of dividends and interest. The two main ways in which it is paid for is through the sale of UK assets to foreign buyers, and the assumption of foreign debt by UK businesses and individuals.Ā These foreign debts cannot be repaid by the Bank of England creating the necessary foreign currency as it can only create pounds. The debts can only be rolled over if the lenders agree. If we sell too many of of our productive assets we may see an outflow of jobs and activity from the UK, as some of the foreign buyers want to buy UK capacity to reduce it or relocate it elsewhere. They may also wish to acquire great intellectual property in order to earn the rents and licence fees on that in some other jurisdiction.
The government has passed legislation giving it stronger powers to resist foreign takeovers of companies with important technology and capacity in the UK that we should wish to keep. The best way to keep more capacity and good ideas in the UK is to narrow the payments gap to reduce the need to sell assets to overseas buyers. It is an important part of national security and defence to have sufficient capability at home. This capability should not just be in weapons manufacture, but also in food and basic materials necessary during a time of crisis toĀ be easily accessible. The US is scrambling to restore rare earths capacity given the troubles with trade with China, reminding us there are things you need to do for yourself.
March 6, 2021
You seem a bit relaxed about state debt saying it is fed by what people save. People do not in normal circumstances save very much. It is only the advent of covid that has prevented spending or produced more controlled spending. Saving due to not spending has no point. Nobody pays for your money and inflation reduces its value. Even those with a serious excess of capital get ripped off. Financial advisers expect to be paid a percentage of the capital they manage not a percentage of the profit they make. What a parasitic system. There is a market gap here that those not risk averse could fill.
Then we come to balance of payments where your solutions are much more robust. Make, in the widest sense of the word, and export much more of what we make than we import. That we were told was running well before Brexit, except where trade with the EU was concerned. So as you rightly point out we should replace imports from the EU with home produced, where we can provide for ourselves, or import from more competetive sources. I like the idea of a direct link by sea with Morocco because it is faster, and therefore for food
,fresher. Cheaper and better oranges, saffron etc. Thinking way ahead, a good place to produce solar electricity to produce hydrogen to propel our vehicles. A bonus benefit in that they get richer and no longer wish for a better life in northern europe. We sell them hydrogen propelled cars so that success does not pollute Morocco. We are in a win win situation providing HMG keep their sticky hands off what we win and therefore have no need of our money for virtue projects. We might then have some money left to invest in profitable enterprises.
March 6, 2021
A good financial adviser can be engaged on a transactional basis, charging a pre-agreed fee for advice and a separate fee for any implementation that the client may require. Fees expressed in money not in percentages, which latter often have a deleterious effect on the client’s wealth. Finding such an adviser may not be easy, but they do exist. Oh, and a fee based on profit achieved is dangerous, it is a potential recipe for excessive risk-taking with a client’s money.
March 7, 2021
Cannot agree with your last paragraph. I lived on a percentage based on orders delivered for 30 years. It is an honest reflection of endeavour. The only downside is client jelousy, particularly endemic in the UK.
March 6, 2021
People donāt save very much because the lack of āhonest moneyā has removed that option i.e. the money you save is actually lost via inflation and tax – you end up with less than you started with. Therefore Government policy for many decades has been to produce a nation of debtors, and it has done because people respond rationally to an irrational situation.
We see that even our PM, after a lifetime of high earnings, has no savings or investment to bolster his earned income. The day he canāt get out of bed and go to work, he will have to sell assets (assuming he has any – anyway most people do, that is how they āsaveā) or live on the British taxpayer.
What a mess.
March 6, 2021
Indeed. We need to be self sufficient in energy production so we can’t be blackmailed by the EU or in particular the French as they did in the recent negotiations. Silence by this Government.
Any news by Priti Useless on Covid boat people removals?
March 6, 2021
Relying on power from the EU is an act of treachery. Using the excuse that it is cheaper is nonesense as John says it adds mightily to our deficit.
France in particular has ageing nuclear plants and may not be able to supply us in coming years.
Self sufficiency in power is of major importance.
I see Leicester Council are talking of building a nuclear fusion power station in place of the Ratcliffe coal fired station.
It didn’t work in the 60,s and to my mind it still doesn’t.
March 6, 2021
…or indirectly blackmailed by Putin who provides a substantial (and increasing with Nordstream2) amount of energy into Germany which helps to provide the surplus in the EU to be able to supply us with power through the Interconnector.
March 7, 2021
Putin also sells UK 82% of its coal!
March 6, 2021
None. It was in the papers yesterday that 40% increase none of which sent home. However,Sunak announced in his budget visa applications will be reduced to make it easier to work here! It was claimed thousands refused to,become trained in nursing while thousands asked to come here! Mass immigration continues under this duplicitous govt.
March 6, 2021
At times I wasn’t sure if I was reading a history lesson or current thinking, the dateline could have been March 6th 1951… Not often I say this, I fully agree with our host!
That said, the current govts treatment of Nurses pay (and public sector hospital staff in general) is despicable, even more so given the govt lead plaudits of the last 12 months, the govt pleads hard times ahead for public finances, yet they can still afford unnecessary vanity projects such as HS2 – never mind apparently millions spent on a White House style Downing Street press briefing area.
What is more, even if the savings from cancelling HS2 were not all spent on the NHS, other targeted state investments could help boot our balance of payments.
March 6, 2021
@Jerry
Why do you think the public sector deserves better treatment than the private sector? Many in the private sector have either lost their jobs or been furloughed on 80% wages. Many in the private sector dream of a secure job with a pension and wage increases.
March 6, 2021
I’m sure their dream does not include a very direct exposure to Covid19 while undertaking their stressful occupation. I too am in favour of a significant hike in all health workers pay, it should go way beyond the doctors and nurses.
Why is it that professional politicians cannot read into the politics of the devious crassness of a 1% offer. Have they all arrived on the bus from Mars.
March 6, 2021
Many people in the private sector, supermarket checkout workers for example, are probably exposed to a lot more people each day than a typical health worker exposed just to those on their ward – who will have been tested anyway.
March 7, 2021
@Mike Wilson; Stop being so utterly crass, yours is just the usual 40 year old dogma, the vast majority of those walking around supermarkets are not carriers of CV19, walking onto a ICU ward full of CV19 patients is a whole different ball game!
March 6, 2021
Private sector employees can only dream of ‘career progression’ annual increases for time-served regardless of i) ability and effort of the individual concerned and, ii) despite the fact that in later years (late 40s, 50s and 60s) employers know that it is more difficult for private sector employees to move jobs and so they are inclined to reduce pay in real terms in many cases rather than increase it each year.
March 6, 2021
@Mike Wilson; Because 2% had already been agreed and, as I suggested, the countries finances can afford such a wage settlement if only this govt would get its priorities and policies sorted out.
As for your silly furlough argument, I’m sure many nurses, in those moment of stress and despondency (perhaps after loosing a colleague), must have dreamt about been in careers that had to be furloughed even made redundant, rather than putting their own lives on the line each shift to care for patients (possibly) infected with a highly contagious deadly virus. Of course, being the underpaid professionals they are, they snapped out of it and carried on, for now…
But I take your point about the private sector, people who can only dream of a secure job with a pension and annual salary increases, mostly those on the NMW and/or a zero hours contract, who are also grossly under paid! It’s one thing to face a pay cut when your only worry is having to consider cutting out totally discretionary spending, the golf club membership perhaps, it is another thing altogether having to consider cutting back on heat or food for fear the utility bills or rent/mortgage will go unpaid.
March 6, 2021
@Jerry
Oh come on. When they are stressed or have lost a colleague, they can take weeks off on full sick pay. Not a luxury afforded to many in the private sector. As for your silly comment about them dreaming of being on furlough on 80% wages. I don’t think so.
I have just looked up the pay grades for nurses. Apart from regular bi-annual increments up to year 8, a senior nurse after 7 years can be on Ā£72k. It doesn’t sound too bad to me.
March 7, 2021
@Mike Wilson; What a load of nonsense, SSP is SSP regardless of what sector you work in, and so what if the NHS treat their employees with compaction and civility, all your rants do is display the flaws in the private sector!
Ā£72k pa is a gross underpayment for a NHS senior nurse after 7 years, considering their skill set by then, educated well beyond any degree level. You write as if you think nursing is all bedpans and blanket-baths still, no doubt Carry-on style! Either than or you are trying to compare apples and pears, a hospital worker with someone flipping burgers on the NMW and ZHC…
March 6, 2021
Correct Mike. And many in the private sector have lost their lives keeping the country going while doing their jobs. Just in case people haven’t noticed, there have been thousands of lives lost and they are not all nurses or front line workers. When you sign on to be a nurse you have to be prepared for pandemics and national emergencies. If you don’t want to take responsibility then don’t do the job.
March 7, 2021
@FUS; “When you sign on to be a nurse you have to be prepared for pandemics and national emergencies.”
Yes and as citizens, living in society, we also need to be prepared and do our bit also too, that far to many refuse to do, hence lockdowns 2 and 3. Also, considering all workplaces (including the self-employed) have had a duty since at least last May to use appropriate CV19 PPE in the workplace, or take mitigating measures, I do wonder about your assertion that non essential workers have died keeping the UK economy going, just how many actually became infected away from the workplace?
“If you donāt want to take responsibility then donāt do the job.”
What has that got to do with pay rates, it’s even less relevant than the price of Smoked Haddock!
March 7, 2021
Jerry, all nursing staff since at least last May have had full CV19 ppe too and take mitigating measures. I actually do think ICU and covid staff deserve a one off bonus for each of the days they were in work last year. Nursing staff also get around a 25% employer contribution to their defined benefit pension that they can claim from age 60 I know a couple of comfortable retiree nurses that were sisters when they retired. I again am not saying they donāt deserve it but I am saying that it must be considered in their wage package – either that or they should be offered NEST and given the 22% gross on top (the NHS would then pay the other 3% into their NEST but theyād have to remember they couldnāt get at it until they were 67) today the government would get nearly half of it back straight away anyway! Sick pay – to get a sick pay scheme with 100% salary compensation for any sickness from day 1 is a massive benefit in kind – then half pay afterwards for another half a year, how much would that even cost in insurance if such a scheme were available, even on a bog basic qualified nurse salary of Ā£25,000k [I wonder how much sick pay cost the NHS last year and how much sick pay is paid in an average year so that people have an idea of the cost of that benefit?]
March 7, 2021
@a-tracy; The most recent official paper, published in the last 48 hours I believe, states that hospital PPE is often NOT Covid 19 secure, something doctors and nurses have been saying for a year now. Even if PPE was Covid secure accidents happen, an unfortunate fact.
As for pension packages, no they are not part of the wage package, they are a benefit in kind (so to speak), no help with current or near future living expenses, unless very unwise decisions are taken.
March 6, 2021
We should certainly have never started HS2 and it should be cancelled now.
That said, the current governmentās treatment of Nurses pay (and public sector hospital staff in general) is not at all despicable. The NHS average pay is far higher than the average pay in the UK plus they nearly all get gold plated pensions on top. The people paying these wages are not the government but these other workers many of whom are on 80% of pay or have lost their jobs or self employment. Many too have little or no private pensions at all.
Also in the UK 3% of people who caught covid died, a record far, far worse than the average country which is about half this rate. The UK health system has performed very badly indeed in international comparisons as they usually do. Though clearly there are many saintly and hard working people working there.
March 6, 2021
@LifeLogic
Until I looked recently, I had no idea the bloody thing was in a tunnel from Euston out to Ruislip – roughly following the route of the A40. I daftly assumed it would be coming in overground to London using the many existing lines. No wonder it is so expensive.
March 6, 2021
The UK is in the mess it is because, for decades after WW2, it overtaxed businesses and individuals, under-invested in new technologies and overpaid itself for self indulgent consumption. Some beneficial tax reforms appeared in the Thatcher years. But the UK remains burdened by an over complex tax regime. Not much seems to have changed for the better over the past ten years. It is getting worse under the Johnson government as he seems unable to grasp the elementary implications of cash flow – whether it concerns the cost of refurbishing his Downing Street living quarters or the devastation wreaked on millions by the compulsory closure of businesses they own or are employed by. It is time the Conservative party put in place someone more competent to fill the office of Prime Minister.
March 6, 2021
Excellent pieces by Douglas Murray and Robert Tombs today in the Telegraph today.
The EUās little Napoleons are heading for a fall.
Europe is using trade as a weapon, but the result is likely to be the same as the last time this was tried.
Robert Tombs
March 6, 2021
Robert Tombs is 71. Douglas Murray is 41.
The EU will outlive both of them.
March 6, 2021
Perhaps it will but only if it changes very significantly.
March 6, 2021
Empires have risen and fallen throughout the world’s history, none are eternal.
March 7, 2021
The European Union isn’t an empire though, is it?
It’s actually historically unique.
March 6, 2021
Not so- it is the UK that is diverging- the EU is just standing still and acting in accordance with its’ own single market rules. Unfortunately Brexit has brought about many unforseen consequences some only starting to show now but hardly the fault of EU Napoleons
March 6, 2021
@Jackson; Err, run that past me again, the EU Napoleons are not responsible for the many unforseen consequences of EU policies signed off by the many EU Napoleons – so just who is responsible in your opinion, Widow Twankey?!
Nor is the UK diverging, well not any more, we have rejoined the RotW.
March 6, 2021
No Jerry- the Eu is not responsible for trade policies signed off by British politicians- British politicians are responsible for our own mess- and we can’t blame twenty seven other countries because we have lost JIT or there are no European seasonal workers to pick the daffodils while the growers cannot find home workers to do. Next will be the falloff of tourists and students and a disaster in the hosputality sector as we will see soon enough when the pandemic furore dies down because nobody will want to come to a country where they do not feel welcome- and then of course the fishing boats- what young people in their right minds are going to want to go out today in all weathers and through the dark nights to fish when they can be home safely tucked up playing with their computers? our betters should have thought about all of this before
March 7, 2021
@Multi-id; Nonsense, or are you seriously suggesting the UK negotiated with its-self a EU – UK Withdrawal Agreement, and then forged a eurocrats signature or two?…
The EU is responsible for signing off on the mess that is the WA and NI protocol, no one else, the UK had simply wanted to carry on with the same trading terms as we had before or, failing that, similar terms as almost any other non EU26 or EFTA country has. Can you tell me of another country that has had to implement a customs post within its own internationally recognised sovereign territories to obtain a FTA with the EU.
Just a pity that the UK did not pull-stumps back in early Dec. last, it would have been disastrous trading wise for the EU had the UK gone down the WTO route, never mind the EU either having to backtrack on their threats to NI or forcing Eire to impose a hard boarder. The EU decided very early to punish the UK for Brexit, doing it so obviously that rather than weaken the British voters resolve towards Brexit polling (and two general elections) suggests more people would now vote for Brexit that did so in 2016.
I see you have been caught hook, line and sinker by that BBC anti Brexit bias yesterday. Ever stopped to wonder why farmers & growers have been employing migrant workers, when in past years unskilled British workers would have done such the work? Whilst tourism is, and will be for a while yet I suspect, affected by Covid, not Brexit, and quite why you think Brexit is going to stop visitors from the USA, Australia, Japan etc. etc. visiting the UK I have no idea!
March 7, 2021
You have a very low impression of the British Multi-id what County are you from? I know hard working British farmers, landsmen, joiners, landscape gardeners, labourers, brickies but Iām from the North and donāt view people doing those jobs as some sort of sub-group. Perhaps the daffodil growers you know need to pay a proper hourly rate even for piece work.
March 6, 2021
LL – Fully agree. The EU is heading for a fall. Nothing can stop what is coming NOTHING.
March 6, 2021
One way to view the past two centuries is British journalists being mocked for pointing out negative trends in Europe – Europe always being perfect, according to our amateur philosophers – and then being patronised by the same people who mocked them when the whole thing duly blows up, as it seems to do about every fifty years.
March 6, 2021
@oldtimer; The UK started to get into a economic mess in the very late 1960s, due to the FX markets, not taxation, then followed Nixon’s decision to pull the USA unilaterally out of the 1944 Bretton Woods Agreement, and to top all that we then had the (first) “Oil Shock” in 1974. This all lead to the IMF crisis of 1976, which lead to the Labour govt having to impose Monetarist policies at the behest of the IMF, these were carried forward and expanded on by the Tory govt of the 1980s. Taxation rates, bar perhaps the “brain drain” period of the mid 1970s, played little part in the creation of our economic woes, in fact some of our best economic years, paying down our debts and improving our balance of payments were during periods of relatively high taxation.
March 6, 2021
+1
March 6, 2021
I have little doubt that most people on this website (not including myself) would make better a PM than Boris and Michael Gove and gang.
Why doesn’t Sir John Redwood and Ken Clarke team up as PM and Chancellor and DP – they’re the ones with the best brains / business experience. Let Ken Clarke be PM first and Sir John his Chancellor and Deputy PM. And after 5 years, swap.
Chancellor Adenauer, one of Germany’s best Chancellors, was 89 when he retired as Chancellor.
Sir John and Ken would unite the party as well as compliment each other in terms of style / approach / thinking / vision (compliment – as in challenge but in good way).
March 6, 2021
@Ed M
Ken Clarke as PM?????!!!!! He’d have us on our knees and back in the EU in no time.
March 6, 2021
Absolutely right to distinguish internal and external debt.
I am concerned that the budget super deduction will lead to a large increase in imports of capital equipment. While I generally favour simplicity, there would be merit in giving a different allowance for investments in domestic spending such as on training, infrastructure, R&D, from investments in acquisition of assets from overseas, such as equipment, and IP.
There is a real risk that the budget is going to spark a massive two year boom in capital equipment imports.
March 6, 2021
@GilesB; If the UK is to re-establish our UK own manufacturing base we need the machinery and equipment to do so, unfortunately we no longer make/build much of it ourselves any more. Of course we could, and we do have the engineering talent needed, but we do not have our own developed products to actually make -other than perhaps under licence. In the short term a boom in capital equipment imports is inevitable.
March 6, 2021
I agree this is likely because the best machine tools and robots are made in Japan, South Korea, and Germany.
However, this is a short-term problem as, when the kit has been bought and installed, the factories will be much more efficient and capable of producing goods that will be more competitive around the world, creating export opportunities that would otherwise not exist.
A little more worrying will be the loss of jobs which will be the direct result of the new machinery, however, our unemployment level is a lot lower than our EU competitors so that should not be too much of a problem. Hopefully, some of it will also be alleviated by newly-redundant unskilled workers returning to their home countries in Southern Europe.
March 6, 2021
The foreign currency cost of importing capital goods should be netted off against the foreign currency benefits of operating those capital goods to produce exports. Think of BA buying an American aircraft and then selling tickets to foreign travellers for twenty years. For that matter, think of the US running a trade deficit all through the 19th century due to imports of capital goods, and then becoming an exporting giant in the first half of the 20th.
March 6, 2021
Good morning
Sorry Sir John but I disagree with your reasoning.
My view of debt, any debt, that it is in in itself not bad so long as it is serviceable. But when it comes to government debt, whilst it is serviceable as you describe, it being the issuer of pounds, this debt creation for government spending has other impacts which you do not cover.
I have in the past touched upon what I call ‘government displacement’. It is where, once private investment and industry identified and market and serviced its needs for profit, (eg rail, cars, telecommunications, housing, aeronautics, energy, education etc) government has moved in and through both its spending power and ability to legislate in its favour (Nationalisation and environmentalism), it has displaced and distorted markets. The latest being advertising where, companies are reducing their advertising budgets due to lockdown, only to see government fill their coffers with its propaganda. This creates a form of dependence and, where there is a political element, undue influence – witness the aero-industry and car industry.
In short, too much government money sloshing around creates an environment for cronyism, dependency and corruption. This is why I believe that the likes of HS2 will never be cancelled – too much vested interest š
Less is more.
March 6, 2021
Agree totally. Look at Europe somewhere Sir JR constantly criticises but is happy for HMG to copy. Associated to this is it failing to publish details of 200 ish contracts claiming to be too busy. Pinocchio said.
Bizarrely they should also to have been added to the EU list of such contracts. Why? I guess because we are still tied by our so called Brexit agreement allowing the EU to have their day/control?
March 6, 2021
@Mark B
Indeed. My wife listens to LBC quite a lot. The next time I hear that, to the bloody Mayor of London, ‘Every Journey Matters’ – Alexa is going through the window. Almost every commercial break – every 10 minutes it feels like – the same message. And, of course, others about ‘staying safe’ etc. I imagine the government must keep LBC afloat.
March 6, 2021
+1
March 6, 2021
Resist foreign takeovers, a fine way to keep British companies inefficient. How many zombies across Europe protected needing masses of support to keep going, skewing competition and taking funds better invested elsewhere.
BT an excellent example with its dead hand still on the throat of our fibre economy after 30 years reducing this country to the something like thirty fifth in the world.
Protectionism, you rail against it in Europe but somehow OK in the U.K. nothing to do with the economy, all politics.
March 6, 2021
OK, so on one and the same day we have paranoia about dreadful foreigners buying up British business to move them overseas, and paranoia about dreadful British businesses being protected from buyouts, leading to less competitive behaviour.
So maybe we should worry less about the Government having “policies” and let the market make the decisions, which is usually best in the long term, although it often involves short-term discomfort.
March 6, 2021
Exactly right.
You say āOf course I wish to see good value for money spending on national priorities, and to leave plenty of room for personal and business consumption and investment.ā
Me to but this is surely a triumph of hope over experience.
Government not only get very poor value for money for tax payers money but often they spend it on things that actually deliver negative returns. They not only waste money raising in taxes but they pass endless laws that force the private sector to also waste billions on compliance with nonsense. Absurd costs, obstacles and delays to obtain planning permissions, idiotic employment laws, absurd restrictions on fracking, the rigged energy market and millions of other things.
They often send money on different government departments who are both actively working against each other at vast expense while achieving nothing or even negative results for the public.
March 6, 2021
Spot on and everyoneās snouts in the trough from financial to political rewards to effect change.
Zillions wasted over the years but the same old āliesā peddled.
March 6, 2021
Loads of laws and regulations passed to enable vested interest in the private sector to parasite off other people and businesses too. Doubtless in response to lobbying and paid āconsultanciesā for politicians. The renewable lunacy for example.
March 6, 2021
I understand your arguments JR, so why then does then the Government not do as it preaches, but instead sells off the basic essentials of life like electricity and water supply to foreign owned companies, who then suck further annual charges out from the Uk population direct.
I understand that Nationalised Companies have failed in the past, and have proven to be absolute money pits, but is that because of political interference over who is put in charge, and political decision making over investment and the like.
March 6, 2021
If you put right wing ex-public schoolboys who do not believe in public enterprises – and who have no experience in the respective industry – in charge of everything including those, then oddly they will not do so well, especially when they are briefed to make a case for their privatisation.
March 6, 2021
and when heads must roll the old boys job rotation kicks in and they reappear in some other role.
March 6, 2021
@Alan Jutson; No, the nationalised companies did not fail in the past, although their senior management did, and much of that management were people installed by the politicians of the day!… š®
March 6, 2021
You say:- The OBR forecasts a large balance of payments deficit of 6% of GDP.
To correct this we clearly need to be far more competitive so:- a bonfire of red tape, cheap on demand energy, get fracking, far lower taxes, far less state sector (at least 50% do more harm than good), real and fair competition in education, broadcasting and health care (not virtual state monopolies), cut all the soft loans for virtually worthless degrees (about 70% of them), easy hire and fire, unlock now and cut all the green crap.
Alas Boris and Sunak have clearly become (or perhaps always were) moronic, climate alarmist, big government, high taxing socialists with zero interest in the country becoming competitive. Or in winning the next election.
Allister Heath has it right:-
Tories have trashed Thatcherism and embraced Europeās politics of decline …………. This was an avoidably bad Budget that will haunt the Tories for years to come.
March 6, 2021
Past nationalised companies can claim to have fulfilled the goals they were given, since those goals were not profitability goals, but mainly to do with fostering the illusion of creating jobs, when in reality nationalised industries often simply sucked in local labour, regardless of skills. For example, when the nationalised Steel industry was being prepared for privatization, it was able to shed 50% of its then workforce, while meeting production targets. That suggests a roughly 100% level of over-manning.
March 6, 2021
According to an article in The Telegraph the cost of Zero Carbon ( stupid, childish sound bite, as ever) has been vastly underestimated.
If this is true …and of course, our politically correct, terrified politicians dare not debate the subject…then attempts to reduce the balance of payment debt could by stymied/hampered.
In addition to miscalculation of cost, the ZC predictions ( lol) only apply to emissions created within the UK..it does not include emissions of transport, shipping/flying nor of UK industrial capers abroad. ( Didnāt think of that?).
So no doubt this will lead to more āoutsourcingā and buying of imports.
And how about steel and cement? No idea how to de-carbonise them apparently!
Fancy committing to a policy of unfathomable ( and untruthful) cost before working out how it can be achieved because of being frightened of appearing a ādenierā…ooooo…shiver!
And why would anyone be keen to save? Where and how to get a decent return without unacceptable risk for the ālittle personā?
March 6, 2021
Why do I keep getting this after only one attempt at posting?
āDuplicate comment detected; it looks as though youāve already said that!ā
Then often the comment is posted twice!
March 6, 2021
If we hadn’t flogged off all the state nationalised industries – and much else – to the foreigners so we have to keep paying them huge dividends, the public finances would be much better off. Not to mention having less sewage poured into our rivers when it rains too much.
Shame we just lost the nurses’ vote. Something else Hancock can be blamed for.
March 6, 2021
Agreed, Sir John. However, too many of our governments from and including Atlee’s have lived beyond our means, promising more to the electorate than we can afford, failing to invest in the long-term success of the country and selling the ‘family silver’ to bridge the difference.
March 7, 2021
Agreed. But the ‘Family Silver’ was pilfered by the Attlee and other governments from those who created the wealth. Those train and car companies were not created by the State. Individuals created them and they were then hooked on government money and then forced to merge when the government said it would withdraw funding if they did not. Pure political gangsterism.
March 6, 2021
Very interesting take on the two deficits.
Almost as interesting as the 05/03/2021 Brexit & Beyond on
chrisgreybrexitblog.blogspot.com
March 6, 2021
The balance of payments will not be helped by a preferential trade deal with the EU which will almost certainly benefit them more than us, by a factor of two on the estimates recently published by the EU Commission. Why did MPs approve a trade deal which will help our neighbours to maintain their chronic massive trade surplus with us? Why was Boris Johnson prepared to sacrifice Northern Ireland to protect the the economies of the EU countries, and in particular that of the Irish Republic? And why is he now prepared to sacrifice our reputation as a trustworthy counterparty to international agreements by brazenly reneging on that poisonous deal with the EU , which he should never have agreed and which Parliament should have refused to approve without a proper period for careful scrutiny? Does he even have a sound basis in UK law for what he is doing?
March 6, 2021
From November 26 2017:
https://johnredwoodsdiary.com/2017/11/26/the-irish-border-with-northern-ireland/#comment-903216
“So we should now say that rather than kowtow to the stupid destructive intransigence of the EU we will fall back on WTO trade rules and only seek agreements on the practical or technical aspects of continuing trade.
That would do us some economic harm, although nowhere near as much as portrayed by the Remoaners, and it would do the other countries more economic harm, albeit it would be spread around among them, but on most projections the country which would suffer by far the greatest economic damage would in fact be Ireland.”
March 6, 2021
We must improve our branding. ‘Made in England’ is still respected.
Government restrictions on foreign takeovers are just on paper. There isn’t much of a will to act and deter. And the City must be required to change its practises; the only way our home owned and grown businesses stay home owned is to stay private and stay out of the City’s power. New forms of funding must be made available for business expansion which don’t involve share grabbing.
March 7, 2021
This is it – The City (Spivs). They just love a merger / takeover. Lots of ‘consultancy’ money to be made. Plus hedge betting. Perfectly good companies having their stocks downgrades and, very bad ones inflated to catch the unwary – criminal !
March 7, 2021
TPW, Along lines parallel to your comment, an intriguing item by John Kay āRIP Plcā in the April issue of Prospect, with his discussion of private equity and VC in the birth and growth of 21st c companies.
March 6, 2021
‘The US is scrambling to restore rare earths capacity …’ Welcome news.
March 6, 2021
The problem with the State deficit, is not, as you say, with its financing, but with the appalling record of Governments of all colours, of how they spend their taxpayers’ money. This one with HS2 and now its 95% mortgage guarantee seems intent on ‘Bread and circuses’. This is why there needs to be some discipline and questioning of every decision. And of course what you say immediately shoots Mr Hancock’s argument about ‘affordability’ squarely in the foot!
March 6, 2021
I imagine most people in this country have no idea what you are talking about. I must admit, I don’t. The person going out today to buy a German or French car is not thinking ‘I shouldn’t really be buying this as something of ours will have to be sold to pay for the car’. What they are thinking is ‘I’ve got 20k in the bank, I am going to buy a car from the showroom up the road.’
Is there some sort of data to illustrate your position, Mr. Redwood? We often hear of the ‘balance of trade deficit’ but never hear that ‘Company A, B, C, D and E and 500 houses in London have been sold to foreigners because people in this country bought foreign cars’.
In fact, I have never heard your argument made before – apart from on here, of course.
March 7, 2021
I agree. The argument that because you buy a foreign product we must sell a company too them in return does not make sense. Particularly as the government does not own the sold company or is liable for the debt of the foreign product purchased.
March 6, 2021
The glowing ember vaccines in Johnson’s time in Downing St is in danger of being extinguished by foolhardy bravo of policies and spending. Surround yourself with sycophants and supposed scientists who can shoulder the blame for everything, but no they can’t. The electorate looks to the PM for leadership and expects realism and common sense…all now lacking.
March 6, 2021
oops – ’ember of vaccines’ and ‘foolhardy bravado’
March 6, 2021
āThe US is scrambling to restore rare earths capacity given the troubles with trade with Chinaā¦ā
Natural global warming which started at the last glacial maximum 22,000 years ago is being used to push a green energy agenda in order to destroy the Westās industry and then democracy by ensuring we become dependent upon China for our raw materials and manufacturing.
Evidenced by the fact that there is never any criticism of Chinaās energy policy.
March 7, 2021
Welcome aboard.
March 6, 2021
It goes on and on.
This is for converting No. 9 Downing Street so you can have American style lobby briefings to journalists.
There are no doubt hundreds of government buildings in London that could have been used for this – and, even if conversion was needed, at a much lower cost than converting a Grade 1 Listed Building.
YET AGAIN, the government pisses our money away like drunken sailors and then has the front to tell nurses they can have a pay rise of the price of a sandwich a week. You just really don’t give a toss.
March 6, 2021
Stop voting for them then.
March 6, 2021
Yes, it’s odd, that…
March 7, 2021
Most voters have been faced with a choice of putting that cross in the box of the Party who is expected to do the least damage. Sadly in each of the last 3 GEs it is extremely uncertain the least damaging party got elected.
March 6, 2021
I voted for them once and once only – in 1979. Never again. I vote Green these days and have done since Clegg made such a dog’s breakfast of the coalition and failed to get PR.
March 6, 2021
@Andy
And in case you are under the illusion that it is only Tories that treat us and our money with disdain …
https://www.telegraph.co.uk/news/politics/1581014/Public-foots-10000-bill-for-apartment-re-fit.html
And I seem to remember wallpaper at Ā£260 a roll when that office was decorated before.
March 6, 2021
John, this country is haemorrhaging money abroad at an alarming rate. Why are we paying furlough payments and social security benefits to people who choose to live abroad? Why did we sign such a one-side withdrawal and trade agreement with the EU?
Reduce the dependency on foreign workers by training British workers to do these jobs. Much of the money they earn is sent abroad. The jobless figures are expected to rise shortly so put in place measures to help the unemployed in this country. Give priority to UK citizens for training places, unlike the current situation where foreign students get priority.
I see parliament looks set to stop the reduction in foreign aid. Yet again going against the wishes of the majority of people in this country.
March 6, 2021
If the Pandemic and the recent behaviour of the EU has taught us anything, it is that we need to be much more self-sufficient in every aspect of National Life.
The good news is that this will also reduce the current account deficit, particularly in regards to foreign currency.
The Government therefore needs to make a concentrated efforts to produce whatever we can here in the UK and particularly in England as there has to be some doubt as to the future status of Scotland and NI. There is no point in us spending English taxpayers money building new industries in Scotland if they are going to vote for independence, as seems very likely, if Sturgeon can somehow survive her present difficulties.
It is deeply disappointing to see firms like Jaguar and Triumph Motorcycles transferring thousands of high-value jobs to Slovenia and Thailand to the detriment of workers here in the UK and our balance of payments. If we are not careful, this will happen to jobs at Vauxhall and Ford where the onwers will use the excuse of the switch to Electric cars to justify their decisions.
Somehow this process has to be stopped by our government making it more attractive to manufacture here. It is far more costly and difficult to attract or create new jobs than it is to stop existing ones being exported.
March 6, 2021
I’m pleased to see you raise the issue of the balance of payments deficit, so often neglected.
The question is however, what to do about it? Clearly as you say we can make it more difficult for foreigners to buy all our young companies and promising technology but that’s just defensive.
The only measure that is really going to work is to increase exports and that’s where we need to focus our efforts. Liz Truss is making a great start, a competitive exchange rate is a help, are there other useful actions government can take?
March 6, 2021
Received a saturday Times magazine today in a bio degradable, semi opaque, plastic bag. I know not whether the material can be produced in a transparent form. If it can then we should switch 100% to its use. Even at semi opaque it has vast possibilities for us to rethink our use of none degradable plastic. Politicians should show more interest in technological answers to problems for which their first reaction is to reach for their law books.
March 6, 2021
Probably starch based, possibly PLA (poly lactic acid) a biopolymer produced from plant sugars and the primary plastic used in hobbyist 3D printing. It is also used in food wrapping, some cold drinks packaging, medical and other applications.
The “natural” version of PLA can degrade by hydrolysis at 60c or so to water and CO2 though most PLA in practice has additives to modify it’s physical properties, colour etc. In theory this can happen in a commercial composter though I don’t know of any council that will take PLA for recycling, which is a pity.
March 7, 2021
I agree. We need to reduce our dependence on waste plastics.
March 6, 2021
If I buy a German car, they get money I get a car. The currency out, is precisely equalled by the asset gained. Conversely, if we export goods and services, we import foreign financial assets. The Balance of Payments always balances you see.
The mis-use of what had become an obscure accounting of international flows of money and products was last popular in the 1970s, often used to justify protecting lame duck industries and as an expression of panic at the extent to which the UK was left behind by its Continental neighbours.
The Government, need it be said, can print money, so can Hasbro; neither can create wealth.
Not to worry; a post telling us trade is bad and debt is good will soon be followed by one arguing the reverse. So back to the 70s we go then ā¦..Inflation, entertainers with bad teeth and worse predilections,TR7s, awful
expensive food, Blue Nun, rip off Britain, IRA bombs ,and drivelling on about gender fluidity, as if anyone cared.
We used to have a future.
March 6, 2021
@Newmania
If back to the 70s means me getting 10% risk free on my savings – bring it on!!!
March 7, 2021
So what do they do with the money? This is the small detail that unilateralists never talk about.
Presumably the foreign holder of sterling buys some sterling based service or product and everyone is happy with the mutually beneficial cycle.
Except this isn’t what appears to happen, the foreign holder instead buys up our companies and property reducing our ability to trade.In effect importing goods and services become a “debt” that can only be paid from our dwindling production and material assets. Going on foreign holidays adds to the “debt”.
The financial community obviously win in this game because they make their money from a fee on each transaction regardless of the direction. But a large and increasing number of people in this country do not
and jobs in the exciting worlds of nail bars, vaping shops and cafes do not replace the lost growth and commerce from industrial, technology and engineering endeavours.
March 6, 2021
I think generally borrowing ,whether state or other has become too sophisticated. The mindset created from individual to companies and state is one of complacency . When money is borrowed it is seen as being owned and not debt. It is not a healthy way to exist. Loans and borrowing are even referred to as products . What is productive about debt for the borrower?
I do read your reasoning and others arguments and self sufficiency as you have mentioned is all important . I like to think of a less convoluted way of gaining UK strength. Approx 30 years ago I imagined a situation , perhaps worse than we have now , of over reliance on others for everything. The world is a less trustworthy place today . We have unseen enemies amongst us who would like to bring others down rather than reach up and improve their own lot. I see a collective spite where competition is ‘dirty’ , kowtowing to superficiality , money and rather unreliable qualifications has taken the place of down to earth good sense. Money is not an objective asset . It is not worth anything when not connected to the people / countries who use it . Whilst free speech is available to all , there are consequences attached to things written and said.
March 6, 2021
@Margaret Brandreth
It can put a roof over their head and, after 25 years, they own something to live in that means they never have to pay rent to someone ever again. A very productive use of debt.
For others it means starting or expanding a business. Again productive.
For others it means a nice holiday. You are a long time dead. Why not borrow to have the holiday of a lifetime? You might die before you pay it back!
March 6, 2021
Large numbers of staff could leave nursing when the pandemic is over after being offered a 1% pay rise, the Royal College of Nursing (RCN) has warned. Patricia Marquis from the RCN told Times Radio it made staff in England feel they were not valued and would worsen the NHS’s recruitment issues.
The body representing NHS trusts has joined unions to criticise the offer.
But the government defended its proposal, saying public finances were under unprecedented strain.
Ms Marquis, south-east regional director of the RCN, said “significant numbers” of nurses were planning to leave and “this slap in the face from the government really has just reinforced their belief that they are not valued by either the government or perhaps some of the public in the way they would want to be”. She said there were 40,000 nursing vacancies when the pandemic began and there was a “real risk” of more experienced staff leaving. So where do these thousands of nurses think they are going to get jobs? They might move from one region or Trust to another but will still be working for the NHS! If pubs and restaurants feel it worth re-opening maybe they will get waiting on table jobs, zero hours contracts.
March 7, 2021
So if there are 1257 hospitals Ms Marquis says there are 40,000 nursing vacancies so thatās like 35 vacancies per hospital or do some need a lot more than others. Just how many nurses do we train each year? How is this figure reached? What is the replacement rate and what age do nurses retire now is it still 60 surely as a Manager she is making this calculation and suggesting increasing training numbers in the areas that need the staff? We need to attract a lot more men into nursing, a lot more pay increases follow increased male participation in jobs, they donāt need as much leave and willing to do more overtime, bit controversial but when you have young children female staff often donāt want to work more than three 12 hour shifts and we are regularly told they canāt cope with these 12 hour shifts and feel too exhausted at the end of their shifts so perhaps these should be dropped to 10 hours maximum.
March 6, 2021
HS2 is good for increasing the balance of payments deficit as well as the taxpayers’ deficit using 200-year-old technology as part of the EU TEN-T high speed railway designed to transfer national wealth to Continental railway manufacturers and our steel industry owned by the Chinese. Apparently, though, it is a good thing because it will save Carbon. 200 years ago England led the world by creating the world’s first commercial railway between Stockton and Darlington. Sadly HS2 is not a world’s first on any score: it does not use any technological advances and it is not particularly fast for ‘high speed’ rail. All round, HS2 is a good example of misdirected and wasteful government investment which will add to the taxpayers’ deficit for as long as it is running.
March 7, 2021
But it makes a lot influential people very rich !
March 6, 2021
A bit late to add this non-PC. Dave Allen has 2 programs on BBC2 TONIGHT. Not to be missed.
March 6, 2021
The cry for the blood of politicians to pay out on the NHS for their efforts during the pandemic can only be considered when politicians make perfectly clear where, who and what departments are going to lose finding to pay for it. The problem is the NHS is a massive operation and is is handicapped with being over staffed with too many middle and higher management positions. Those who were actually on the front line the real front line may feel they have a good case. But that is what they signed up for from day one. Nursing the very sickest of patients and trying to keep them alive. No one wants to experience what they have gone through but it is what it is, sometimes a plague comes along and has to be dealt with. The country is virtually on a near war footing and everybody private and public services have to take the same hit. These NHS people have not lost their jobs and their pensions they have performed outstandingly but others will continue to pay a much higher price.
March 6, 2021
Sorry,finding should be funding
March 6, 2021
You got something right at last.
March 6, 2021
There are actually three main ways the current account deficit is financed. In addition to the two you list, foreign investors can use the Sterling they accumulate in order to create new businesses in the UK. This is a lot less scary than the image of them buying existing businesses, because no-one is going to create a new business in the UK simply to move it overseas.
Also, that image of existing businesses being bought up to be moved overseas doesn’t really match the reality that the UK – which uses international measures of unemployment, just to head off a pointless discussion about what unemployment “really” means – has significantly lower levels of unemployment than its nearby dear friends and allies, and has had for decades.
March 7, 2021
It is clear that businesses producing products for the domestic and overseas markets have been lost to foreign ownership and operations moved elsewhere. It is unhelpful to pretend this hasn’t happened and continues.
I would like to see an independent, trustworthy analysis of this “reality”because my sense is that very few new “British” businesses are created by foreign investment compared to the asset stripping M&A activity. I do not mean businesses that pop up and then employ imported staff nor those that simply employ people but use internal transfer pricing to ship profits elsewhere.
Working in a nail bar or vaping shop does not generate the foreign currency that the steel, vehicle, electronics and engineering manufacture did so a simple “employment” number does not measure the viability of an economy so increasingly dependent on imported goods.
March 6, 2021
Many British companies are setting up within the EU due to export tariffs.
Finance companies are relocating to EU capital cities from London.
A proportion of GDP deficit is entirely due to Brexit.
I also note that spring flower bulbs are rotting in fields due to lack of EU seasonal workers and British workers don’t want the work. This is an early indication of things to come with seasonal produce.
Brexit is a ticking time bomb.
As an aside but related to finance and pressures I thought Nurses pay was a priority?
March 6, 2021
@David Brown
What are the tariffs and what goods are they on?
Are there any tariffs now on goods from the EU into the UK?
Mr. Redwood, if there are tariffs on our goods going to the EU but none on their goods coming to us, may one politely enquire – ‘What on earth is going on? Is this some sort of joke?’ We leave the EU and they levy tariffs on our goods but we don’t levy tariffs on theirs? Seriously?
March 6, 2021
I notice in the Daily Telegraph today an article reporting that Mr Farage has apparently given up on politics and will not be leading the Reform Party. I can only imagine that many of the regular commentators here – including that substantial number who have declared their intention to desert our host’s party at next GE in favour of Mr Farage’s alternative – will be rather disappointed at the news, but that our host himself will be rather buoyed by it and may have indulged himself in a sherry this evening.
Reply I do not drink sherry. I never thought Mr Farageās parties would win any seats in a GE, though they did win one which a Conservative MP had won and then switched parties. THe next GE is likely to be a choice of a Conservative or Labour government according to the polls.
March 7, 2021
and both likely to have reduced share of a very small turnout. Both parties proving they are not to be trusted and capable of choosing an incompetent joker as leader.
March 6, 2021
So it seems to me that the treatment of the English cricket team by India over the past few weeks is a reasonable analogy for what will happen to English businesses if free trade is attempted with India, as was advocated by Daniel Hannan (no friend of mine) recently in the Daily Telegraph. I have long thought that the dominant actors in the global economy this century will be those governments with >500million population: China, India, probably Nigeria soon, possibly Indonesia or Brazil. These people are going to know how much commercial leverage they have and will be determined to use it. India is no friend of ours.
March 7, 2021
All those countries you mention have high levels of poverty. The poor do not buy Rolls Royce’s.