The UK trade figures were altered as we finally left the EU, disrupting comparisons. We are told they were changed from an Intrastate  to a Customs basis, and were told there were missing numbers from the early months after the change owing to data collection issues. As many Remain MPs and commentators thought the issue of the EU was all about trade it is irritating that the numbers were disrupted just as we left.

Now things should have settled down a bit we can compare 2022 as we came out of covid lockdowns with 2019 before covid and before exit. The 2022 figures show goods imports and exports both strongly up . I use goods because the Remain MPs never seemed interested in our good surplus in services and our success in selling services to non EU  Countries despite the absence of services chapters in EU trade deals with other countries.

Non EU trade has continued t9 grow faster than our EU trade as it was doing when we were still in the EU, and is larger than our EU trade. Our imports from the EU are still very large. We need to adopt the various policies I have been proposing to grow more of our own food, produce more of our own energy and make more of our  own goods. Governmentb has promised the first two and needs to get on with the methods to do so.

It was always strange that UK pro Remain MPs and commentators always pretended the EU was just a free trade area when it was a customs union as part of a much bigger Union where the other members saw the importance  of wide ranging EU level government, single  currency, common debts, common foreign and security policy and the rest.Even on the issue of trade the Remain MPs were wrong.Our trade has not been badly damaged by the exit. It is up, though as in the EU we still import  more than we export to the continent  and need to tackle the imbalances.

In 2022 the US continued to dominate venture capital investment in growing companies and backing new ideas. Although well down on 2021 record levels the US invested $245 bn, four times much as China in second place with $61 bn. The UK was third with $31bn, twice the French level  and two a half times Germany who were in fifth and seventh place in the world league. India was fourth and South Korea sixth.

Strong venture capital, backing many smaller, innovative companies and companies needing restructuring is crucial to good levels of economic growth. Business constantly needs to adapt and to invest as technology revolves and consumer expectations change. One of the ways the US ends up with more the largest quoted companies is it nurtures a large population of growing and innovative companies to give it more chance of success with creating the giants.

Venture capital can be encouraged by allowing easy access to licences and markets for safe products. The EU is suspicious of the new and slow to permit. The UK has to establish itself as an independent regulator , striking a good balance between protecting consumers from harm and allowing  changes to product and processes to proceed quickly.

I have set out before tax proposals to boost self employment and allow the faster growth of small companies during their early stages. We need to be friendly to small business and to star6t ups, as they will be the seedcorn for the new larger businesses we will need in the years ahead.

If we take the market value of quoted companies as a measure of success for economies to create and grow major businesses, the US dominates. The  top ten biggest in the all world index are all US. 7 of the top ten are digital technology giants, with Goggle appearing twice in the list with its two kinds of shares both in the top ten by their individual value. There is then a car company, a financial company and a healthcare company.
You have to go to number 14 to find a non US company. That  is Taiwan Semiconductor. The rest of the top fifteen are all US, adding an oil company, a bank, and two pharmaceutical companies to the top ten.
So we see the pattern. The EU with its 120 million more people and its self promoted single market has not just missed out on the great growth opportunities in on line shopping, data search, software supply, social media and semiconductor design and production. It has failed to get a large bank, pharmaceutical or energy company using older technology  into the top fifteen as well.
The EU which has taken the net zero revolution more seriously than pre Biden America has not produced an electric  car company that can keep up with Tesla. It has let China dominate in producing solar panels and wind energy. So what is wrong?

The EU has gone for the high tax high regulation model. Much of the tenor of EU regulation is hostile to innovation, seeking to lay down  in law how the main companies currently design and produce a good, limiting the ability to change or challenge the established products and players. There is less entrepreneurship. Major companies have a long gone entrepreneurial past and a bureaucratic  present management reacting more to government than to customers. These  businesses often seem out of touch with consumers and so vulnerable to better and more modern US and Chinese offerings. There must be reasons why JP Morgan is bigger than any EU commercial bank, why Tesla not a German company pioneered high priced electric cars and why the main pharmaceutical companies and new drugs are from the USA.

The UK too lacks a top fifteen company. Its long association with EU laws has not helped, and its current business taxes are too high.

Consider the 2022 figures for GDP per head

USA.      $75 000

UK.         $45 000

EU.          $37 000

The UK has spent the last 50 years trying to align itself more and more in trade, economic regulation and general laws with the EU on the grounds that this political direction and sacrifice would help our economic progress. The way the US has pulled ahead and stayed ahead of Europe shows this was a generally mistaken view. The US per capita figure is twice the EU.

I am not suggesting we should instead have sought a close political link with the US or should have accepted their law codes . Better would have been to make our own laws, set competitive taxes and traded as freely as possible with the wider world. The  Republic of Ireland showed how simply setting lower tax rates can make you prosperous and greatly boost tax revenues. Their 12.5% tax rate meant they attracted massive turnover and investment from the US giant corporations, delivering $ 105 000 per head of GDP last year, almost three times the EU average.

The truth is the US has set a legal, tax and educational framework that has produced all the great non Chinese world companies of the digital age. Apple, Microsoft, Google, Amazon, Netflix, Meta and Nvidia are the US giants that have generated so much cash, made so much investment and created so many jobs, boosting US success.

The EU and UK should be alarmed that they have produced no trillion dollar tec successes. I will write future pieces on why. Today I just wish to remind the UK it is free to set a competitive tax rate. As Ireland shows that allows your economy to get a boost from US success.

The Prime Minister has made clear Ministerial wishes. The asylum backlog of cases must be brought down. The NHS waiting lists must be reduced. Secretaries of State working within the relevant departments have reinforced these message and gone through plans with senior officials.

Large extra sums of money have been allocated to the NHS budgets, and specific additions added to cut waiting lists. There has been a surge in spending on asylum seekers, their lawyers, claim processing and their  care. Ministers have  not cut budgets or refused extra money when needed.

Staff numbers in the NHS have risen substantially in the last three years. There has been a  major recruitment of more people to process asylum claims more recently. So why are the trends still going in the wrong directions? How much of this is down to Ministers, and what should we expect of well paid senior managers in the NHS and the Home Office  now they have a clear Ministerial direction, extra money and extra staff?

Of course asylum claims need to be carefully assessed, to be fair and to avoid more legal challenges. They also need to be conducted with commonsense. Why were so any Albanian claims allowed to build up, and why were so many granted rights to stay when it is a safe country? Other Eruopean countries were firmer and quicker in saying No. Why can’t the staff prioritise the many easier  cases from safe countries and get on with making the decisions? It is not fair on the individual to keep them in a hotel for a couple of years and then to tell them No. They should be told much earlier.  It is also important not to delay unduly difficult cases where the answer is going to be Yes, as they have suffered already and would like to be put out of the uncertainty of waiting to hear how their case has been treated.

Either the management needs help from Ministers with better incentives to clear these backlogs, or it needs changing.

I have spent weeks this summer researching and  writing how the government and Bank of England could give us a better future. I have set some of these views on this website, in tv and radio interviews and through comment in papers. I have sent the main ideas to Ministers and advisers.

In the next few weeks I will be publishing an updated and improved version of my Central Banks lecture. This will reinforce the need for changes to their model, forecasting and current policy stance.

I will be launching another booklet on wider ownership, setting  out how we could help many more people to become owners of property, shares and businesses. It will set out ways to boost public sector productivity by involving officials in ownership and participation of delivery for public services.

I am just finishing a third on a supply side revolution so the UK makes and grows more. This  will need targeted tax cuts and a pro business approach in government departments.

These three pieces will provide a policy framework for a decent ownership and supply side revolution, against a background of a more stable and supportive money policy. They will also provide many individual  proposals government could adopt even if it is unable or unwilling to embrace the new vision,

The Bank of England’s way of fighting its inflationary mistakes of 2021 is to slow or stall the economy. They want to stop price rises by ensuring people cannot afford to buy so much, and to stop wage rises by increasing unemployment. This is all most unpleasant.

I have often pointed out it ignores two ways of sorting out inflation. The first is to avoid excessive money and credit growth It is true the Bank without saying so has now flipped from monetary excess to monetary tightness. The second is to promote more supply, which the Bank and government working together could and should do.

Yesterday the updated survey of UK business found that the average figure had fallen to 47.9 where 50 is the tipping point from no growth to growth. Services were at 48.7 and manufacturing at 43.3, so both sectors are now in retreat. This mirrored the Euro area whose Central Bank made the same mistakes in 2021. Their overall figure is 47, with services at 48.3 and manufacturing at 43.7.

Euro area interest rates have been held lower than ours and their Bank is not selling bonds off in the market at huge losses. When will the Bank of England get the message that it may now be lurching to too tough? It needs to get better at forecasting inflation  and to build a model which reflects the realities of the lag between raising rates and the impact on jobs and activity.

So we learn that UK state borrowing was £11.3 bn less in the first four months of this financial year than the OBR forecast.Spending was up so the main reason for a further large error once again was understating tax revenues. Income  tax was up by a massive 13% . The OBR often understates revenue when the economy grows a little.

I renew my question to Ministers. Why do you make the OBR five year forecast of the deficit the key control on your economic choices? As the OBR cannot get within £10 bn for the immediate year why believe the 5 year forecast? If the OBR model regularly understates tax revenue why accept advice to hike tax rates?

The numbers were further distorted by the transfer of £14 bn to the Bank of England to pay losses, taking the total to an astonishing £24 bn in just four months. The Bank’s decision to sell bonds at the low prices it has driven them down to instead of holding them to repayment has added to the misery and inflated government ex Bank borrowing and spending.

Spending on benefits was up £11bn, on staff costs £8.2 bn  and  grants to Councils up £3 bn, making a total increase of £24 bn so far this year. If the government would introduce a freeze on public sector recruiting save for key personnel like medics and uniformed roles the government could start to control some of these outgoings.

Debt interest remains very elevated. More than half the stated costs do not entail any cash payments out or additional borrowing given the way the accounts treat indexation of some bonds.

The government needs to look through these confusing numbers and forecasts. The underlying reality is it could cut the rate of increase in spending, boost public sector productivity and cut some  tax rates to grow the economy and revenues more. OBR forecasts are an ill fitting restraining jacket that falls apart every time it meets reality. Why keep stitching it up again when it delivers wrong forecasts and wrong policy responses?

In order to close the gap with net zero ambitions governments and companies pursuing this agenda need to revise the way they account for it. Here are some questions they need to answer.

1. As China, Russia, India produce more than 40% of the world’s CO 2 output and their output is still growing, how do we get to the 2030 and 2035 targets? What actions are being taken to get the largest and fastest growing outputs by these countries  to be reined in?

2.Why does the system assume electric vehicles are a win for less CO 2? Will the figures include the fact that many EVs are being recharged with electricity that may come from more fossil fuel than renewable generation? What allowance is made for all the CO 2 produced in mining  and smelting the raw materials for an EV and its battery? And for total assembly and delivery? How many miles does an EV have to travel before it generates less CO 2 than carrying on with an older ICE vehicle,assuming it can get 100% renewable electricity or putting in accurate figures for the CO 2 content of the electricity likely to be used.

3. Why does the accounting system credit a country with lower CO2 because it has closed down fossil fuel based activities, only to import the products needed? This will usually raise world CO 2 by the amount of extra transport involved.

4. When attributing success to more renewables shouldn’t you need to also factor in the extra  costs and extra CO 2 from the standby fossil fuel generation needed to prevent black out when the wind drops?

5. What will be the CO 2 impact of needing to put in so much more grid capacity and cable to allow a major switch from gas to electricity?

6. When calculating the CO 2 impact of rail travel it is important to include connecting travel by road vehicle and do a whole journey calculation. It is also important to use a realistic mix of electric and diesel trains and allow for times in stations with engines running.