The Chancellor must have expected to see car output down by 11% this July compared to last July. He and his colleagues wanted to put people off buying diesels, and many have heeded his warnings. His higher VED hit the top end of the car market, and the threats of more taxes to come on both diesels and petrol vehicles has put people off buying. Reining in car loans was also part of the successful plan.
Over the year to date UK car output is down by 4.4%, with production for the home market down a massive 16% within that. Looking at new car registrations in the UK we see diesel sales down 30% year to date compared to last year. This of course has nothing to do with Brexit, as all the alleged advantages of the EU trading system are still fully in place. This has been a car market collapse whilst still in the EU, created by domestic policies designed to cut demand for new cars.
The Motor manufacturers trade body says they need the continuation of “beneficial” EU trading arrangements to ensure growth in the future, without properly explaining why they have experienced such a big fall whilst enjoying these self same arrangements over the last year. They should instead be pressing for greater clarity on future car tax policies, and asking for some improvement in the present policy mix so UK people can afford to buy home produced vehicles in larger numbers again.
Encouraging more new cars and allowing more people to afford new cars should be good for the environment and for the economy. Modern cars are more fuel efficient with cleaner exhausts than most older cars. Governments usually want the car industry to do well.
I also see the latest consumer credit figures show a slowing there following authority’s instruction to rein in credit to slow the economy.
August 31, 2018
Running an old car saves making a new one which causes a lot of pollution.
August 31, 2018
Indeed and older car are often better, more reliable and cheaper cars to maintain, insure and fix. Even if they do use a little bit more fuel. Lots of complex and expensive things to fix on new one with green motion, reversing cameras and the likes. A new wing mirror can be £500 when on an old car £20 can cover it! They are designed to make money for the manufacturer and even have computers on board to tell you when to go and pay them some more cash!
Also you often bang head on the roof as they taper in to save a little fuel by being slightly more steamlined (so smaller).
August 31, 2018
They are also rather lighter which can often make them more dangerous in a crash than a heavier car. This a deceleration g forces can be greater in a light car. Light car hits a bus head on. Bus slows down from 30 to 25 mph on the impact. The light car goes from 50 to -25 mph in the same ipact time. So g forces on passengers in the car are 15 times greater.
August 31, 2018
All with the blessing, permission and sanction of May. She is PM after all.
JR, what does it take for leavers to oust May?
August 31, 2018
In London there is public transport, of some sort, 24/7 except for Christmas Day.
Saves sitting in traffic and looking for a parking space.
In London, Wales, Scotland and Northern Ireland but NOT England outside London there is free public transport for the over 60s.
August 31, 2018
I have been using free public transport in the Reading/Wokingham area since I retired. Is this an exceptional area?
September 1, 2018
If you have free public transport from age 60 it is exceptional. If you have free public transport from the standard retirement age then it is the norm.
September 1, 2018
hefner
I live in a town in the south east of england and we dont have public transport free or paid.
September 2, 2018
I lived in a village for years. The bus service was stopped under Tories, post office shut under Tories and govt doing its best to shut pubs. No street lighting, one short foot path, ambulance takes hours to attend and we never see the police. Yet criminals able to travel here!
August 31, 2018
Just the Chancellor doing his bit to create a recession so he can blame Brexit.
The man’s a liability.
August 31, 2018
Ian Wragg, Using the car industry as an economic regulator in the 1950s and 1960s was the real reason for the collapse of the British owned car industry. Using it now will result in the return of the infamous “stop-go” economy.
August 31, 2018
How about diesel trains, ships, lorries?
August 31, 2018
So people that would have bought a diesel don’t simply buy a petrol engine car ? What nonsense. The Bank of England engineered a consumer boom after the referendum shock, which is now tailing off. The slump in car sales was caused by Brexit fears and, ordinary correction from the artificial high. Hard to say which is the most important , my feeling is that it is about half each
Reply Not true. Look at the timings and numbers which show the car market fell away as soon as the new taxes and car loan restrictions came in
August 31, 2018
That is indeed tosh nothing to do with Brexit. Why spend £20K -£100K on a car you may not be able to use in some towns shortly. Better to delay and wait and see what the idiotic politicians and bureaucrats do first, with their climate alarmist, group think religion and agenda and banking micro management.
August 31, 2018
Absolutely right. I normally would have changed my Diesel this month at three years old but the trade in price was much below what I expected.
I am therefore waiting to see what will happen next between the two brain cells in Gove’s head before I make any move.
I anticipate that my car will be six years old when finally the spluttering fool realises that electric cars will not be the future until mid century if at all for all sorts of technical but obvious reasons to any one in possession of independent thought.
Most people I know think the same.
August 31, 2018
The car loans were not good. They tempted ordinary people to inflict upon themselves drive-off-forecourt depreciation every three years. One of the biggest wastes of money ever. Insane.
August 31, 2018
Indeed depreciation perhaps £10K PA+, interest on capital (or loss of investment return) perhaps £2K+ PA fuel saving £300 PA net cost £11,700 PA just to have a shinier car.
August 31, 2018
I would suggest that those that bought small diesels have now had the ability to trade in at a reasonable value taken away from them, thus will stick with their current car for a few extra years…
August 31, 2018
Very sensibly of them.
August 31, 2018
nwemania
Why would “Brexit fears” stop you buying a car?
Even if you had these fears I can see no connection with car buying.
Also there wasn’t an “artificial high”
Car sales were good but steady considering the extra population over recent years.
August 31, 2018
Newmania
As always with you , totally wrong
I have put off renewing my company fleet. It has zero, nothing, nada to do with Brexit
Most car makers make a high proportion of their vehicles as diesel , the tax rules on diesel vehicles are totally up in the air. No I dont “just” go and buy a petrol vehicle. Running costs, fuel and mileage pay a huge part in fleet car management We dont know which way this idiot chancellor is going to go next. Meanwhile this government has significantly down graded the rationale to buy electric vehicles. JR is right. Most new vehicles are leased, we dont want to tie ourselves into leases on vehicles that become uneconomic to run The government has made a complete mess of the car market
As you’ve never run a business you wouldn’t know any of this and as always you have no idea of how the real world works
August 31, 2018
I wish you luck selling tasty kebabs from your “fleet” but I`ll sell you this advice for free. Diesel is dead, they are going to tax it to nothing
Crack on …..
August 31, 2018
All thanks to the EU who told everyone that diesels were the future.
Fixated on CO2 emissions from petrol engines they ignored all the industry experts who said diesel emissions were worse and forced it through.
Political dogma not engineering common sense.
It has cost billions and extra pollution which now is said to have shortened 40,000 lives.
August 31, 2018
Makes me glad I went for petrol every time but where’s my rebate for being right all along ???
Always sticks and no carrots with Westminster – even when it was they who told everyone to go diesel.
August 31, 2018
I agree with that. Would you agree that the great diesel boom – as a result of which we have c. 50% diesel vehicles in the U.K. & EU vs c. 5% eg in the US – is a direct result of lobbying by the German car industry and the green blob, to huge negative effect on the health – and now the wealth also – of U.K. & EU citizens?
August 31, 2018
Newmania
Ignoring your racist post, You have just admitted that your entire thread before is a load of lies and cobblers. If you knew diesel is dead, it is, why post all that other guff.? You’ve just agreed with us all.
It was your beloved EU that forced us all to move to diesel under pressure from German car lobby, who lied about their emissions. You must feel a right mug supporting that lot.
smh
August 31, 2018
..Having previously caused a March boost to avoid the new tax. It is not clear this has any generalised affect and at the levels it seems unlikely to be significant . Diesel has long term problems but that cannot be a factor in overall car sales.
When the motor industry itself is telling you loud and clear that Brexit uncertainty is part of the story then , to me it seems sensible to assume they may know their own business
Reply Then why did sales go up for the first year after the vote, and down after the tax rises and loan withdrawals? It is just a big lie that this is the result of Brexit
August 31, 2018
Governments have two tools at their disposal. They can incentivise something to encourage us to do it, or they can penalise something to get us to stop. So why the taxes and limitations, and why at the Chancellor’s chosen time?
To paraphrase, if it looks rotten, tastes rotten, and smells rotten, then it probably IS rotten!
I feel certain that a Chancellor who genuinely wants the very best for this nation would have acted differently, so are we talking about Hammond’s incompetence, or is there a more sinister and underhanded reason?
(I think most will come to the same conclusion I did).
Tad
August 31, 2018
The period actually saw a flattening off in the long term upward trend in car sale but the fact that people were initially oblivious to the risks of Brexit is all too apparent. Additionally a loss of consumer confidence commonly has a time lag…
Honestly it hard to tease apart the various pushes, PPC deals currency shifts ,( inflation) the vehicle buying cycle itself and taxes are all suspects but when the motor industry is united in blaming Brexit … it seems bold to suggest they are all lying.
August 31, 2018
The industry isn’t blaming brexit.
It said it was a factor.
One of many.
August 31, 2018
Newmania, Yet another Remain lie to add to the bucket of Remain lies. Oettinger has just warned that the EU is in trouble without the UK’s cash. If we believed Remain then the EU ought to be better off without us due to the UK getting more from the EU than we put in – supposedly. The German car industry wants us Leave mugs buying their overpriced, over-hyped, cheating cars. But we’re fed up with being treated as mugs by the EU – Leave voters are going on strike.
August 31, 2018
How futile. If you created a UK map showing how big sales are of new expensive German cars like Mercedes, BMW and Audi by area, and then overlaid a map showing how those same areas voted in the referendum, I am sure you’d find a much bigger correlation with Remain voting areas than Leave voting ones.
I certainly am not changing my buying habits as a result of your Brexit.
I don’t want to have to spend 10, 15, 20% more for German cars or French wine or Italian cheese just to appease you for whatever dumb reason you choose to vote Leave, but the fact is that – like many Remainers – I can afford to. Leavers can talk of boycotts all they like, it really just shows how petty and toddler like some of you are.
September 1, 2018
First you tell us you don’t buy German cars….whi h isn’t very European of you…and then you tell us you won’t buy them in the future as they will be 20% dearer.
If the EU refuse to do a deal and if they EU refuse tariff free trade with us and if we use WTO tariffs the max tariff on cars is 10%
And when in the past the pound rose and fell versus the Euro by more than 10% tjevprices and sales of German cars hardly altered.
August 31, 2018
They lie all the time, JR; they cannot help themselves, because they have no integrity, no conscience; and for some reason nor does this government see it as being part of its job to nail the lies that are being spread around in an attempt to undermine its official policy – so why is that?
Here in the Daily Mirror today:
https://www.mirror.co.uk/news/politics/panasonic-moves-european-hq-london-13166172
not only do they misrepresent what is happening with Panasonic, they run the article with this sub-heading:
“It comes as experts reveal Brexit has already had an impact on British trade with exports down 15% since the referendum”
Which is a bit strange, considering that only two months ago the ONS were announcing:
https://www.gov.uk/government/news/uk-exports-at-record-high
“UK exports at record high”
“Exports of UK goods and services rose to a record high of £620.2 billion in the year to March 2018 according to new trade figures released today.”
Further down it emerges that the experts are at Warwick University, which has been allowed to become a publicly funded hotbed of dishonest political opposition to Brexit:
https://www.coventrytelegraph.net/news/coventry-news/warwick-university-brexit-lecture-13838814
“Warwick University politics professor presents “Brexit is s**t” slide during lecture”
and apparently those experts have produced a “paper”, which I’ve so far been unable to track down on the internet, which proves that while UK exports may be at a record high in the real world in the fantasy world of their defective economic models exports are 15% lower than they would have been if only we had voted to stay in the EU.
I recall that even the FT tried on something similar to that:
http://johnredwoodsdiary.com/2018/01/18/parliament-rejects-possibility-of-membership-of-the-single-market-and-customs-union-again/#comment-913545
“I’m staggered by the dishonesty of this graph which appeared in the FT before Christmas in an article entitled “The real price of Brexit begins to emerge” … ”
The EEC/EC/EU/USE project has always been deeply corrupting.
August 31, 2018
Newmania
How can you say ” diesel…can not be a factor in overall car sales” when the actual figures show this has been the biggest reason for drop in sales.
August 31, 2018
Newmania
News just in from planet reality
Uncertainty over diesel keeping buyers out of new car market The Motor Trader
The national government’s push to ‘eradicate’ diesel cars by 2040 in favour of hybrid vehicles has had serious ramifications on consumer confidence. The survey results saw 100% of brokers respond that uncertainty about the future of diesel – including possible legislation banning the fuel type, through to a potential for a collapse in residual values – has resulted in car buyers moving out of the market.
https://www.motortrader.com/motor-trader-news/automotive-news/uncertainty-future-diesel-keeping-buyers-new-car-market-20-06-2018
August 31, 2018
Yes since the Brexit referendum I have remained in my house, quivering with a mixture of fear and trepidation about a future without being told what to do by a bunch of foreigners. How will we manage? How will I manage??
No point in buying a car when WW3 is about to break out, planes falling out of the sky because they have no wings, we’ll all lose our jobs and there will be no medicine or NHS workers when we fall ill.
Just stockpile food, stay indoors, cross fingers and hope it all ends with a second referendum.
😕
August 31, 2018
Chancellor’s have a long and undistinguished record of screwing the motor industry for taxes at short notice because it is an easy mark.
August 31, 2018
A Chancellor taking and implementing policy decisions designed to damage economic growth to achieve a political objective. That’s cynicism of the highest order.
Hit the car market with higher taxes. Production and demand falls away. Chancellor then blames Brexit uncertainty for the contraction. Political objective achieved.
What have Tory supporters done to deserve this PM and this Chancellor? Are we being punished for some slight?
Why do we have to suffer the shame and embarrassment of May desperately trying to re-model the Tory party to show just how tolerant the party now is in terms of race and gender? She can stick her Swedish social engineering in the bin.
And Hammond, oh Hammond. Conniving doesn’t begin to describe his behaviour.
Two non-Tories in charge of a Tory government. What a pathetic rabble we have become
August 31, 2018
Exactly and his attack on property and tenants are even worse. Get rid of these two socialist remainers. Before they ban butter (too much fat) and bags of sugar (too much sugar) and coffee (too much caffeine and sugar too perhaps – an energy drink in fact).
Bonkers socialist woman at No. 10 and bonker grim reaper man at No. 11.
August 31, 2018
In my view they are evil and it shows in other fields, e.g. asking very small children at school what gender they identify with, the refusal to accept Christian refugees from Syria, the public approval a few days ago by Mrs May of the South African government’s policy of driving white farmers from their farms.
August 31, 2018
Iago, Indeed the plight of Christians in the ME is an outrage, and our not helping them is shameful. Then our government is ratting on the Afghan interpreters used by the British army. Yet they let back in ISIS murderers and won’t deport criminal immigrants. It is not justice, but it is nudge control of us. They think we don’t notice their depravity, because they have convinced themselves with their own propaganda that we’re thick and waycist.
August 31, 2018
The UK government won’t help Afghan and Iraqi interpreters because they are attempting to appease the far right at home. It is, and always has been disgraceful behaviour by our government – and a policy which the vast majority of right minded people would object to. These people have served our country. They need to be given unlimited right to stay and British citizenship if they want it.
It is, however, incorrect to say criminal immigrants are not deported – they are when appropriate. However, as a country which respects human rights and a the rule of law it is essential we ensure that nobody is deported to a place where they could be tortured or killed. As a country we are better than that. At least most of us are.
And they don’t knowingly let in ISIS murderers. It’s really rather dim to say so.
September 1, 2018
Quite amazing how you think you are virtuous because you support the human rights of foreign terrorists and criminals whilst at the same time hating your own countrymen and women who have led good lives and paid for the country you inhabit, simply because they have grown old. Typical leftie nonsense from the pre-pubescent mind of the intellectually challenged.
September 1, 2018
It is dreadful the way we treat these brave men and women who have acted as interpreters for our armed forces.
Perhaps they should claim asylum.
They seem to have a good case to present.
I think the vast majority of people in the UK would say give them and their families a safe haven here.
August 31, 2018
Exactly T May is wrong on almost every single issue!
August 31, 2018
What have Tory supporters done to deserve this PM and this Chancellor? Are we being punished for some slight?
You need to ask, 17.4 million of us voted to take the trough away!!!!!
August 31, 2018
I share your despair, Duncan.
August 31, 2018
The socialist green government has been leading beyond authority to cut the use of ICE cars and giving grants and promises to makers of electric cars and taxis. They just forgot to order the extra power stations and charging points and inventing them for people in flats and without front parking or garages.Tjeywill have to use buses. Big sisyhhss ordered and we must obey.
August 31, 2018
They will have to use buses. Big Sister ordered and we must obey.
Sorry smarty covers the script with computerise so that it cannot be checked.
August 31, 2018
Good morning
There are far too many people. Too many people leads to higher consumer spending and growth. When more people want something, the price goes up. When fewer people want something, the price goes down.
The car market like the housing market has enjoyed strong growth. This can be directly attributed to more people. People not necessarily with more money but, taking advantage of historically low interest rates. This is not sustainable. So slowing some markets down after government artificially pumped them up is the only logical conclusion. Personally I hate to see government involved in anything.
Blaming BREXIT us fake news. Private media may use it as it is their reputation that is at stake. But state run media which is bound through statute to be fair and impartial, stop laughing at the back, has no such luxury. This needs to be dealt with. Harshly if necessary. But I doubt our Weak and Wobbly government will bother. Don’t want to be called nasty names, do they? 😉
August 31, 2018
Actually – here’s a brilliant thing. In the UK we are using less power than we used to. The mighty EU set strong energy efficiency targets – derided of course by the climate change denying Eurosceptic pensioners – and it turns out those targets actually work. Making one toaster or kettle or lightbulb more efficient may seem pointless. But it turns out that when 20m homes all have more efficient toasters and LEDs we use less power. Who’d have thought?
A fifth of EU energy is now renewable – wind, solar etc … meaning it is a more important power source than coal. As our homes, businesses and products get more efficient we can do more with less. It is a good news story and it is the EU which has pushed us towards it, with UK consumers embracing the change more than any other country. As a result we use significantly less power per person than comparable countries. Thank you EU. Thank you.
August 31, 2018
It was our own Climate Change Act and before that the Environmental Protection Act that led to reduced UK energy use and cleaner energy use.
Plus the UK’s agreements at U.N. climate conferences
Coal was dying out as an energy source from the 1970s onwards.
And technological and engineering advances which consumers liked.
But to you Andy, only the EU caused any progress.
August 31, 2018
“…with UK consumers embracing the change more than any other country. As a result we use significantly less power per person than comparable countries. Thank you EU. Thank you.”
Err – “Thank you UK consumers. Thank you.” surely ?
August 31, 2018
A certain amount of fake news here. ‘Renewables’ in your 1/5 includes hydro power which has always been in use in those countries where its applicable without the need for any directive from the EU (because it’s economic), and also ‘biomass’, the mad activity of tearing down hard wood forests in the US, pulping the wood to pellets, shipping it (using diesel powered cargo ships, LoL!) over to countries like the U.K. to burn. Wind and solar are about 12% of generation, and have of course come at a huge cost in countries such as Germany which have made a major push into wind. Meanwhile the US has outperformed all EU countries in CO2 emission reduction due to increased use of shale gas (effectively banned in the EU).
The EU banned incandescent lightbulbs before LED had become commercially viable, forcing huge unnecessary expense in converting to unsatisfactory low energy halogen bulbs (also with adverse business efficiency and health consequences perhaps?). The move to LED would have happened anyway once they were commercially viable – if only the EU had just got it’s interfering regulating nose out of it we could have saved the conversion to halogen and gone straight to LED!
August 31, 2018
Energy usage may be down, but bills are not. They never will be. The power companies still want their profits and their bonuses, so they just up the price. More pensioners will die this winter of the cold, so you will have something to celebrate, Andy. Is this mysterious multi million pound profitable businesss of yours in Funeral Directorships by any chance? If not you have missed your vocation – you could celebrate every death every day.
August 31, 2018
Andy, Yet again you show how innumerate and lacking in technical understanding you are. We use less electrical energy because we have lost basic industries such as aluminium smelting, and steel and glass production, not through higher efficiences which are mostly a mirage. EU and UK green-crap rules have driven jobs to less efficient and more polluting third world economies. It’s the same stupidity that created EU diesel cheating.
Except for Hydro, the so-called “renewables” are all intermittent so need some form of back-up: water or battery storage, and conventional natural fuel fired generating plant. You may not realise that thanks to your EU policies we now have STOR – where disused quarries are filled with inefficient, filthy, highly polluting diesel generators to take up the slack when the “renewables” fail.
August 31, 2018
A fifth of EU energy is now renewable – wind, solar etc … meaning it is a more important power source than coal
Your ignorance is breathtaking.
Discover the difference between baseload (coal) and intermittent (wind and solar) before you ever post again.
September 1, 2018
The US and Switzerland also use more efficient engines and light bulbs.
August 31, 2018
Don’t know what you expect us to say about this. There are far too many cars on the road as it is, maybe a policy should be put in place restricting car ownership to one car per family unit and tax credits given to people who abandon the car altogether in favour of public transport.
August 31, 2018
So what about:
the families where both parents work in jobs that require each have a car, and have 3 young kids who need to be taken to 3 different schools?
what about workers who live in areas without any reliable public transport?
what about couples of my generation, who are expected to help out with grandchild emergencies AND deal with their own aged parents’ urgent needs simultaneously?
August 31, 2018
Exactly. Totally impractical as usual. Anyway public transport is often far too slow and inflexible. It is not even any more energy efficient in general door to door and it is more expensive.
August 31, 2018
Don’t worry about the “aged parents needs” – lots of new arrivals have been allowed in to care for them, pay taxes and provide for our pensions. And with the radio reporting this morning that those in need of 24/7 care expected to double – we’ll clearly need a few million more waved in. It has gone so well up to now, a few million more will turn this country into utopia.
August 31, 2018
heythere can’t live outside of a major conurbation or he wouldn’t be so blase, a 15 minute vehicle journey takes an hour on the bus and there is only one bus an hour plus you have a 15 minute walk each end of the journey, the buses stop after 6pm and run less frequently at the weekend, that’s the reality for most of us, oh and they’re ridiculously expensive.
August 31, 2018
I completely agree. The buses in this city are a joke. My youngest daughter works 3 miles away but to catch the bus at peak times means a change and a 1 hour 50 minute end-to-end journey. I wonder how much Co2 and soot those things are churning out in stationary traffic?
And when she’s on a split-shift with a three hour break, public transport is completely out of the question. It never will be as convenient as the private car. With all the extra people parties of every persuasion seem hell-bent on forcing us to have, they should have increased road capacity to cope with the numbers, but that would have made any claimed financial advantages of immigration look jaundiced and that wouldn’t fit in with their beloved free movement – the thing they really want, but fare not admit.
This shower couldn’t plan a drinking session in a brewery!
Tad
August 31, 2018
Public transport doesn’t coordinate well either, the trains don’t connect to bus timetables, not even to connect to the town centre and the train only stops once per hour! It’s not rocket science.
A nine-minute car journey to the station just 4 miles away takes 40+ minutes by bus depending which bus you catch. To get the 0910 train you need to leave on this four mile journey an hour before and there are roadworks presently which is causing delays that the bus timetable hasn’t adjusted for it is touch and go if you will arrive at the predicted 08:58 and the only bus prior to the one at 08:18 is 07:39. It certainly isn’t like London with people complaining if the next tube isn’t within ten minutes!
August 31, 2018
No-one should be on a split shift in modern Britain.
September 1, 2018
Anonymous- a split shift jobs I’m aware of is a restaurant, open lunch 11:30-14:30 (Break) 17:30-22:00 7.5 hour working day, people can’t earn enough in just 3 or 4.5 hours.
August 31, 2018
So adults living with mum and dad into their late thirties* can’t drive to find work then ?
*The new way of life for many, unfortunately.
August 31, 2018
What is this public transport of which you speak? There is none of it where I live. If I drive 20 miles I will get to a train station where, if I want to go into London, I can stand in a cattle truck for the whole journey smelling the sweat from the people hemming me in.
No thanks.
August 31, 2018
hey there
What public transport? You obviously dont live in a rural area.
Heres and idea why not reintroduce incentives for the horse and cart market
August 31, 2018
Exactly – public transport isn’t an option where I live in rural Cornwall. Two buses a day at the bottom of the lane is all we get, one at 9.00 a.m and one at 3.00 p.m.
August 31, 2018
Or perhaps as in Singapore. No car ownership without off-road parking.
That would certainly take cars off the road and improve road safety.
September 1, 2018
Nudger speaking. We must obey.
August 31, 2018
If you cut credit availability, raise interest rates and taxes, and try to limit wage increases, then people have less to spend, no really difficult to work out is it.
On the other hand if you continue to borrow and borrow and spend and spend far more than your income, the day of reckoning will eventually arrive.
Far better to try and plan these things in advance if you can, with sensible limits of borrowing and expenditure.
We all need to live in a property, but perhaps not an ever more expensive one where you pay a huge cost each time you move.
Likewise, many need a car, but you do not have to change it for a new model every two or three years, when depreciation is at its highest.
The Chancellor is now raking in more and more in tax, but is still spending more and more each year himself, hardly a good example to the rest of society.
August 31, 2018
Yes. But let’s put the blame where it lies, not on Brexit.
August 31, 2018
No, that’s what happens when we have a Socialist Chancellor and Socialist PM in charge of our hard earned cash.
August 31, 2018
Frankly, British car buyers like don’t trust this Government and especially Hammond.
It seems extraordinary for a Conservative Chancellor to deliberately target one of our largest manufacturing sectors and inflict severe damage on it !
Eventually common sense will have to prevail and we will have to switch to Hydrogen fuel cell power for our road vehicles. The rush to pure electric cars is a cul de sac : No British government is ever going to agree to build the equivalent of six Hinkley Point Nuclear stations to allow a wholesale switch to electric cars.
In the meantime there is no realistic alternative to Diesel or Petrol so why can’t the government publish a ten year plan to give some certainty for those like me who want to change their primary car but won’t because of the complete lack clarity we have at the moment ?
It is simply ridiculous for Hammond and May to be attempting to kill off UK car manufacturing in the way that they are doing.
August 31, 2018
And where does the hydrogen come from? Electrolysis of water – but this needs electricity so more power stations/off-shore wind harms (no typo)/photovoltaic cells to cover an area the size of Wales. Or perhaps stream reforming of fossil fuels – but that means too much CO2 being produced.
Bicycles and trains anyone?
September 1, 2018
Most commercial hydrogen is already formed from natural gas gasification which, while not exactly green, does not require electricity. It does, however, allow all of the greenhouse gas emissions to be created away from human habitation and cities would suffer no pollution whatsoever caused by vehicles.
Other methods are under development. The most promising being the use of nuclear fuel to heat and split water. This would produce unlimited quantities of hydrogen with no emissions at all.
August 31, 2018
Can we also blame the chancellor for yet another business moving it headquarters to the Netherlands? Still, I expect that in the end, an agreement between EU and UK will be found.
Reply Dutch taxes are better for some corporates so yes it is about UK Treasury policy.
August 31, 2018
Short term gain until we can get a Chancellor who puts the UKs interests first.
Some how you have conveniently overlooked a report yesterday that said that the U.K. was the number one choice for Foreign Direct Investement and fifth in the world despite so called uncertainties due to Brexit.
Imagine what we could do if truly independent and reduced our corporation tax.
No wonder peter you are desperate to keep us enmeshed in your protectionist inefficient trade bloc.
You know that outside apart from Germany we would blow the rest of you away.
August 31, 2018
Does FDI include selling ready made businesses to foreign buyers? If so how is that a Good Thing, except in the narrow short term for the shareholders. After the money ‘comes in’ even if that is the way it happens, the cash goes out year after year after year and operating systems change to suit the purchasing company. I tried yesterday to criticise this policy and state of mind which says selling everything that’s any good in a comment about Adblue but my post seems to have been withheld.
August 31, 2018
@Nig l: Let me bow for you in apology for this huge (FDI) oversight! SHould I have asked if we can blame/credit the chancellor for this? 🙂
You come over as a bit overly nationalistic. And please, don’t let me repeat over and again that I don’t particularly want you “enmeshed” in our EU. IMHO “Out” will probably be better, even though you may expect some anger about all the damage that the UK will be causing.
For my side, I would like a prosperous UK as it will provide new business opportunities for us: With WTO (if not blown up by Trump) or otherwise, Rotterdam will be competing with other continental harbours to become the port of choice for British and Irish goods, by offering as smooth a handling of goods as possible. The Netherlands, as a small country but still the world’s number 2 or 3 in agri-exports could assist Britain in how to increase its agriculture productivity. And so on. As a successful euro-based economy we don’t just do business around the globe where the economic growth is highest, we also do business with countries nearby, within or outside the EU.
August 31, 2018
PvL, You are more nationalistic about the EU than you claim Nid1 is about Britain, and irrationally so (because the EU is just a political construct, not a nation). And you can’t have it both ways about the benfits – if it is “better” overall for the EU that the UK leaves, that is the reverse of “damage”.
August 31, 2018
He was proud of his own country as you could have seen. And rightfully so. You you agree that Britons are not the noly people who can be proud of their country. Whether that country is part of the EU does not matter. Besides, what makes you so angry about others showing THEIR national pride?
August 31, 2018
Peter is the authentic voice of Brussels. Always focusing on the negative. It must be very frustrating for him that all economic pointers are positive.
August 31, 2018
Most unfair. Peter vL is much the most measured of those who post here from the Remain point of view. Nor can we really blame citizens of the Netherlands, or other EU countries, for wanting what’s best for them (a big leaving present from the U.K., continued tariff free access to the U.K. market, as much control over U.K. regulation as possible to stifle competition). But of course, our interests are different….
August 31, 2018
The FDI figures may also reflect the fact that UK companies are much easier to take over than elsewhere in Europe and beyond.
August 31, 2018
Mitchel
No they aren’t
You might want to find out how many overseas companies have been taken over by British companies. More than 1,000,000 people work for British owned companies in the USA for instance
One reason that not so many European companies are taken over is that they aren’t attractive. The UK is at the leading edge of technology
August 31, 2018
Reply to reply: And crime in the UK.
August 31, 2018
Well the police have clearly given up there are no real deterrents. Two people murdered the other other day as it seems failed to respond sufficiently well to several 999 calls. On the many occasions I have had to reported crimes over the years nothing useful has ever been done about any of them. Just a crime number and often an attempt by the police to avoid taking the report if they possible can.
August 31, 2018
Such as Panasonic may move but we cannot let business determine that we cannot have home rule and must be a vassal state.
We’re already being threatened with the IRA as it is.
August 31, 2018
Panasonic have said they are moving in order to avoid a big potential tax bill in Japan !!!
August 31, 2018
A potential tax bill which would be caused by the UK leaving the EU and subsequently adopting policies which would mean the UK is considered a tax haven by the Japanese government. Panasonic have also stated that they have concerns over the future movement of goods and people, and that is also a factor in their decision.
Panasonic are simply hedging against the possible, currently unknown, consequences of the UK leaving the EU by going for certainty which is perfectly understandable behaviour in the circumstances. They are not the only company making such decisions.
September 1, 2018
By tax haven do you mean a democratic independent nation that has slightly less high tax rates than the EU.
September 1, 2018
Peter Parsons
But if but if if but
The reason that Panasonic didn’t move to Dublin is that their tax rates already fall foul of Japanese rules. Panasonic has a HQ staff of 30 and only 10 are moving.
You remainers get more desperate each day
Meanwhile
Google, Bloomberg, Goldmans Sachs , Facebook & Deutsche Bank have all opened new HQ’s in London oh and Dutch firm TMF have moved from Amsterdam to London
August 31, 2018
My response of yesterday still hasn’t been posted Anon. Strange, as it is all about dealing effectively with crime and giving everyone a good environment in which to live and raise families. It could easily fit in with today’s topic too as crime is hugely expensive and a drain on the nation’s finances.
I guess what marked it down though, was my condemnation of gutless, contemptible liberal politicians and their inability to deal with crime in a meaningful way.
Tad
August 31, 2018
Tad – I’m frustrated too and crime is a threat to our credibility and trustworthiness as an economic power.
It is the issue everyone is talking about and which will do for the Tory party. “Corbyn couldn’t possibly be worse, I’m staying at home on polling day.”
August 31, 2018
If you mean Panasonic – we are talking about 20 people (out of 30).
The British economy can and will create more jobs than it loses when we leave the EU.
August 31, 2018
@Norman Porter: Most of the relocation only mean few people are actually relocated. Not a reason not to welcome them over here. We are a welcoming country!
August 31, 2018
PvL, You are not a country at all, you are a Dutch speaking area of the EU empire.
September 1, 2018
@NickC: I must confess that I feel very much at home when in Paris, Berlin or Antwerp, but we are still different and distinguishable nations in a European project, a hybrid structure, not an empire.
September 1, 2018
@libertarian: For TMF, London is indeed nearer to Panama!
In the Netherlands, they’ve had money laundering problems. The London stock exchange has more suitable regulations for TMF
September 2, 2018
PvL
“The London stock exchange has more suitable regulations for TMF”
Really? And what would they be then?
September 3, 2018
@libertarian: The fact that the head office is moved to London has to do with the listing in London, says TMF. Because in the first instance only 25% of all shares will be tradable on the stock exchange, TMF as a non-British company would not end up in an index. Index funds are traded more frequently. To comply, the company should have had at least 50% tradable shares. 25% is enough for British companies. (source: financieel dagblad 5-10-17)
September 1, 2018
Peter v L
Hmm Dutch firm TMF have moved their Amsterdam HQ to London prior to a $1 billion float on London Exchange…. good swap….for us
August 31, 2018
PvL
Only if you also blame him for the dozens of businesses who have built their new HQ’s in UK
August 31, 2018
UK Treasury policy is simply following the Conservative government’s latest version of the “fiscal mandate”. The Conservative Party’s 2017 manifesto similarly committed to “a balanced budget by the middle of the next decade”. It started off being the middle of this decade!
The OBR has mapped out the spending reductions and the tax increases required to achieve that. http://cdn.obr.uk/EFO-MaRch_2018.pdf Chapter 5 Performance against the Government’s fiscal targets, is worth a read.
Neo-Liberal Austerity AND Brexit. “Stupid is as stupid does” said Forest Gump.
Reply I am urging a different policy, including tax rate cuts that increase revenue, and spending the £39bn Mr Hammond wants to give to the EU here at home
August 31, 2018
Acorn, People like you often sneer that the government’s finances aren’t like those of a family. But it is not a case of “austerity” (we haven’t had it, but parts of the EU have), it’s a case of living within our means. Continual long-term borrowing is unsustainable. So it won’t be sustained.
August 31, 2018
Indeed “the government’s finances are not like those of a family” they are like those of a family who can legally steal a large percentage of the income and assets off all the people who live in the UK and then borrow billions more off the back of these same people.
Usually this is then pissed down the drain on idiotic lunacies, endless waste, vanity projects, the feckless, buying votes and bureaucratic parasites.
August 31, 2018
I think Mr Barnier has a different idea. http://europa.eu/rapid/press-release_STATEMENT-18-5403_en.htm
August 31, 2018
JR, the big worry is, will the Treasury / BoE (they are one and the same in fiat currency issuing terms), defend the Pound Sterling if it comes under attack? The nearer we get to Brexit Day, it is very likely the whole world will be short selling Sterling. (Shades of Soros and ERM.)
The BoE has issued a US Dollar Bond to start getting some ammunition for its own, and the Treasury, Exchange Equalisation Account (again, one and the same in reality).
Would Hammond, let Sterling fall significantly (10%) against the Euro?
That would be the traditional way of killing the UK’s large Trade deficit; and, reduce the requirement for some public, but mostly private sector, debt increases, to pay for essential imports. Assuming continuing austerity budgets, to get to a budget surplus in 2025.
August 31, 2018
All of 20-30 people….for a supposed Japanese tax advantage just in case the UK cuts corporation tax…
September 1, 2018
Can anyone see either Labour or the current Crypto-Blairite conservatives cutting corporation tax to make the UK a tax haven ?
Thought not !
August 31, 2018
Actually it seems to be more about Japanese tax policy.
For some reason, perhaps stupidity but much more likely malice, somebody has been spreading the idea that once we are out of the EU the UK might reduce its corporate taxes to the point where Japanese law would start treating the UK as a tax haven, triggering massive back taxes.
People like Labour MP Chuka Ummuna who welcome Panasonic’s decision to transfer maybe 20 members of staff to the Netherlands as more evidence of the massive economic damage that Brexit will cause, unless it is stopped, are in fact celebrating a tax avoidance scheme.
A point of interest is why Panasonic has chosen Amsterdam rather than Dublin to execute this manoeuvre, and the Irish Times is silent on that aspect:
https://www.irishtimes.com/business/technology/brexit-panasonic-to-move-european-head-office-out-of-uk-1.3612537
“It is understood that Panasonic’s decision is linked to concerns that Japan could see the UK as a tax haven if it cuts corporation tax to attract businesses post-Brexit.
If it that was the case, Panasonic could face higher taxes back in Japan.”
But is it likely that the UK would cut its corporate taxes so much that it would start to look like a tax haven compared to some other countries, such as Ireland?
August 31, 2018
Denis, look up “A double Irish with a Dutch sandwich”. The number one tax dodge in Europe.
Westminster acted to let Northern Ireland (NI) reduce its Corporation Tax to 12.5% to match the Republic, from April 18. Unfortunately, NI does not have a functioning government to commence the Act.
September 1, 2018
Thanks, interesting.
August 31, 2018
Consumer credit and car sales down.
I wonder if there is a correlation? It might not just be about VED.
Leasing a new car and giving it back after three years is not a good model for consumers. As someone who advocates purchasing one’s home rather than renting how can you be a cheerleader for not making one’s car an asset?
August 31, 2018
Indeed I buy second hand for very little indeed and generally run the car into the ground, by far the cheapest way in general. The lease route is a way to make you buy new every couple of years.
August 31, 2018
If you buy carefully it seems you can come out in front. My son had an Audi S5 convertible on some sort of contract with a residual value at the end of it. As he approached the end of the contract the car was worth about 3k more than the residual value so he sold it and paid off the finance. Looking at what the car was worth when he bought it and what it was worth when he sold it, it cost him less to finance it than the depreciation and, of course, that does not take into account any interest he would have lost if he had had the money to buy outright in the first place – which, admittedly, at the moment would be the square root of zero.
Another son had a brand new S5 on a straight ‘2 year and give it back contract’ which cost him £375 a month. So, £9k to own a new 40k car which would definitely have depreciated more than that. And he could do 15k miles a year.
August 31, 2018
To put in perspective I’ve made a £7k car last 12 years and sold it for £500. Still looking neat and working OK.
August 31, 2018
I’m on a good screw and £4.5k a year on a car is unthinkable.
What sort of money is your son on ?
August 31, 2018
There will always be exception @Mike.
Well done to your sons. They did well.
September 1, 2018
My 2004 Ferrari 575M, bought five years ago, is now worth double what I paid for it.
Despite the inevitably high servicing costs, it ha been the cheapest car I have ever owned !!
August 31, 2018
Narrow shoulders
Well thats because unlike property ( homes) cars dont appreciate in value , they depreciate which is EXACTLY why consumers are far better off with personal contract hire leases
August 31, 2018
The depreciation and running costs on an old Ford or Vsuxhall are negligible @lib
Not everyone needs to buy new
August 31, 2018
A car is a dubious asset compared to property, surely? I buy vehicles with full service history that are several years old…no depreciation to worry about, although eventually I may get a repair bill almost the value of the car, which is when I dispose of it. However, buying a “marque” vehicle in the first place means there are generally enthusiasts willing to acquire it from me. At no time is my car a “valuable asset”.
I, too, am sceptical about the move to electric cars. Apart from the danger of technological obsolescence every few years and environmental issues (which proponents never mention), the costs will effectively deny access to private transport to those on low incomes.
August 31, 2018
David L, Another problem with the move to electric cars (vehicles) is that the current road vehicle energy consumption is greater than the current total of electrical energy produced for the entire country, its infrastructure, commerce and industry. Unless we increased the capacity factor of existing and new plant (and there is obviously limited scope for that) we would have to double the number of power stations.
August 31, 2018
@David an asset does not have to provide investment returns. Assets can also be used.
Once the lease is up the car is given back or a further payment needs to be made. The outright purchased vehicle can be driven as long as the car is maintained.
August 31, 2018
The Swedish trade commissioner said they were willing to zero car tariffs with the US subject to a deal etc.
Why has she not said this about the UK? Why has Theresa May not been banging on about it as a ‘side deal’?
Where is the Trump like character to stand up for us?
August 31, 2018
Why should they? Seriously – you do not want to be a part of the EU, so stop demanding favours from them.
The fact is the duty of every government is to look after its own people first. Not to look after the irrational whims of Brexit shouties.
The fact is that Brexit is a once in a century opportunity for European countries to attract well paid British jobs to the continent. They will not miss the chance.
August 31, 2018
Andy, Doing a deal over car tariffs does not mean being part of the EU. We could do a similar deal with the USA. Would you then demand we should be part of the USA? Don’t be absurd.
“Oldies” like you who hate their own country shouldn’t demand favours from your own government. If you don’t like what’s going on don’t shout at us, go and shout in Brussels. Brexit is a once in a century opportunity for the UK to return well paid British jobs to the UK, and tax foreign businesses to death.
September 1, 2018
If Merkel was not so terrified that Brexit will prove to be a success she would be insisting that all 675,000 German cars sent to the UK would attract zero tariffs.
Instead, she seems bent on doing as much damage to her own car industry as Hammond is doing here by refusing to discuss any kind of sensible trade deal.
The s**t will hit the fan when Bavarian politicians see No Deal approaching in the fast lane of the Autobahn. Both BMW and Audi are based there and will suffer most from Merkel’s stupid negotiating strategy.
August 31, 2018
Trump stand up against the state organised land thefts (often with violence too) in South Africa. Unlike May and our pathetic government who approve of their land “reforms” or rather state thefts.
August 31, 2018
Well said LL. My criticism of May on this subject was too upsetting for Mr Redwood and didn’t see the light of day.
August 31, 2018
@ Prangwizard
I have the same problem from time to time.
The problem is two fold;
Firstly we are not allowed to tell it like it is, if we do then we are branded extremist.
Secondly the political correctness so damaging to democracy means our host really has to watch out for litigation, not his fault at all but the way things are now.
You might be better off writing to May directly, or like the vast majority of us simply don’t vote conservative at the next election. They need to be shown what happens when you incur the wrath of the electorate.
August 31, 2018
Isn’t Sweden in the EU? They can’t think for themselves. The EU trade commissioners do that for them. It’s a good ploy though – who would by an America car. I can’t think of one I’d like to own.
August 31, 2018
Sweden is the country that the EU trade commissioner knows best.
https://en.wikipedia.org/wiki/Cecilia_Malmstr%C3%B6m
September 1, 2018
There is not much wrong with a Corvette or a Tesla.
August 31, 2018
Where is the Trump like character to stand up for us? I know I will be blasted for this but his name is Boris!
August 31, 2018
The same way he “stood up” for Nazanin Zaghari-Ratcliffe ? God help us.
August 31, 2018
Nig1
Sweden is in the EU they can’t negotiate anything with anyone without the EU’s say so
August 31, 2018
Nobody in government is standing up for us, our political leaders are still conniving with the other EU leaders against us just as they have been doing for decades. And that is what Dominic Raab now tries to justify as “pragmatism”.
CityAM has an interesting story today:
http://www.cityam.com/262204/eu27-prepare-irish-fudge-secure-11th-hour-brexit-deal
“EU27 prepare Irish ‘fudge’ to secure 11th hour Brexit deal”
Apart from not liking the sound of what is supposedly being cooked up, which you can read about for yourself, I also do not much like this:
“”They were going to s**t all over the Chequers plan, but when they looked at it and saw how badly it was attacked by both sides [in the UK] they thought they needed to give [Theresa May] some room,” said one government source.”
Give the British Prime Minister some room to dupe the British people; just as her immediate predecessor did, and his predecessor, and his, and so on back beyond the Maastricht traitor John Major telling us that it was “Game, set and match for Britain” to Macmillan via Thatcher and Wilson and Heath …
August 31, 2018
Actually, the problem is that no one in government is standing up TO you. Rather than telling the Brexiteers enough is enough they are trying to humour your dangerous and economically illiterate guff.
There is no Brexit scenario which leaves your children and grandchildren better off. And I do not just mean economically. Every Brexit outcome leaves them living not only in a less prosperous country but a country with less influence, less importance, fewer opportunities, a lower standing in the world. On every count you are making our country worse. And so says the vast bulk of evidence from business, from academia, from all the people you so scandalously deride.
The Brexiteers are charlatans. They were always this but the more this fiasco goes on the more evident it becomes. A strong government would stand up to the Leave liars and lead the country out of the Brexit quagmire the right of the Conservative party has created.
September 1, 2018
Still basing your argument on that dodgy Treasury 15 year future prediction Andy.
Despite Project Fear 1.0 not coming true you still believe all the nonsenses of Project Fear 2.0
September 1, 2018
“There is no Brexit scenario which leaves your children and grandchildren better off.”
You know nothing; if you had paid any attention since you started to troll this site you would have seen it demonstrated again and again that the economic impact of EU membership has been marginal, but more likely negative rather than positive.
That is why I am confident that my children and grandchildren will not be lamenting that they are poorer because their country left the EU, nor saying we should have listened to EU loyalists like you.
August 31, 2018
We are a massive net importer of cars from the rest of the EU:
http://johnredwoodsdiary.com/2018/03/06/complex-supply-chains-and-industrial-integration/#comment-923426
“… there is the picture that was painted by David Cameron, George Osborne et al:
“80% of the UK’s automobile production is exported, of which 52.8% (worth €14.6 billion) goes to EU member states.”
And then there is the other side that they very carefully never mentioned:
“THE OTHER WAY ROUND, the EU represents 81% of the UK’s motor vehicle import volume, worth €44.7 billion.”
€44.7 billion imports divided by €14.6 billion exports = 3.06.”
August 31, 2018
Here we have a Chancellor who should be trying to encourage our economy to grow.
But, no, all he is doing is to slow the growth with his domestic policies in an effort to bring about the Treasury’s dismal forecasts on the effect of Brexit. As an ardent remainer he should never be Chancellor.
We need a Chancellor who will do all he/she can to accelerate growth to minimise any after effects of Brexit whilst planning to use the £39bn on our domestic services. He is a ”snake in the grass” who frequently speaks with a ”fork tongue”!!!!
August 31, 2018
Philosophy, Politics and Economics do not inspire for leadership after Brexit. Even at present I get the impression that he is trying , with a compliance of the Treasury, to do the economy down to suit their collective remain preferences. Once Brexit is a reality, if not before, we need a wholesale change of leadership. I cannot think of anything worse than being led by people who have no belief in the future of the UK as a sovereign nation.
August 31, 2018
John,
1. Increasing interest rates do not slow down credit at the macro level. When the cost of credit increases those costs gets passed onto the consumer via higher prices.
Which is why after 7 US rate hikes inflation in the US is at a 6 year high.
2. You have the interest income channels. Interest income is basic income for anyone who holds $’s the larger the debt to GDP ratio the bigger the effect.
Interest on Treasury Securities is $252 bln, up $19.3 bln an growing at 8.3% y-o-y
3. There is another aspect to the foreign exchange channel, interest rates, and inflation. The spot and forward price for a non perishable commodity imply all storage costs, including interest expense. Therefore, with a permanent zero-rate policy, and assuming no other storage costs, the spot price of a commodity and its price for delivery any time in the future is the same. However, if rates were, say, 10%, the price of those commodities for delivery in the future would be 10% (annualized) higher. That is, a 10% rate implies a 10% continuous increase in prices, which is the textbook definition of inflation! It is the term structure of risk free rates itself that mirrors a term structure of prices which feeds into both the costs of production as well as the ability to pre-sell at higher prices, thereby establishing, by definition, inflation.
4. Bank credit up $12.4 bln to $12.795T, the growth rate held steady at 3.7% y-o-y. That’s after 7 US rate hikes.
Reply If you hike rates enough it brings credit expansion to a halt, which is why some CBs do that!
August 31, 2018
Thanks for the reply John
But the inflation rate follows the interest rate they have it all backwards. Erodgan is right when he says Turkey should be cutting the interest rate.
It is not that they halt credit they volcker the economy by pushing inflation up until the economy breaks.
Starting in November 1970 when Arthur Burns was the Fed chairman the discount rate was 5.75% and inflation was running at 5.6% annually. By 1974 Burns had jacked up the discount rate to 8% — a 60% increase — and inflation had gone from 5.6% to 10% annually.
By November 1976 Burns had reduced the discount rate to 5.25% from 10% and inflation had fallen to 5% annually. Then by August 1979, which is when Volcker was appointed as Fed chairman, the discount rate was all the way back up to 10.5% and inflation had jumped to 11.8%.
Volcker continued to raise rates, pushing the discount rate to 13% by February 1980. The economy entered a recession in March of that year, but inflation was still running at 14%. Inflation would have kept on going and the recession, which at the time was the most severe in post-WWII history, would have deepened if rates had gone higher. However, other factors drove down prices: the deregulation of oil and gas industries; major oil discoveries in the North Sea and Alaska; and Ronald Reagan’s firing of air traffic controllers plus the period it ushered in, which was the breaking of the labor unions.
By 1992 the discount rate had fallen to 3% and inflation was running at about 3%. Then, when the discount rate was raised to 6% in 2000, inflation bounced back, too, and came in at just under 4%.
higher rates do not impede the growth of loans and credit. For example, in November 1976, when the discount rate was 5.25%, year-over- year loan growth was 7%. Yet in February 1980, when the discount rate was 13%, year-over-year loan growth was 13%.
One of the most enduring clichés is the following: “Paul Volcker broke the back of inflation.” Whoever came up with this is a marketing genius because people are still walking around today, 38 years later, repeating this ridiculous lie.
August 31, 2018
Hmmm. Who to believe? Mr Redwood says the decline is nothing to do with Brexit.
Yet, when releasing the figures, the Society of Motor Manufacturer and Traders specifically mentions the uncertainty caused by Brexit.
The SMMT calls, again, for the existing ‘beneficial’ relationships of the single market and customs union to be maintained.
Why are the people who run the car industry wrong when you are right Mr Redwood?
(I note, also, that the people who run the aviation industry, the pharmaceutical industry, healthcare, freight and farming are also wrong).
Reply I doubt these statements come from the people who run the companies. They usually come from a spin doctor working for a trade body. No reason why they should be right
August 31, 2018
People connected with the 6% of UK businesses which export 12% of our GDP to the EU, who believe their interests should be given priority over the possibly conflicting interests of the other 94% of businesses producing 88% of our GDP.
And, luckily for them, they have a Prime Minister who agrees with them:
https://www.gov.uk/government/speeches/pm-speech-on-our-future-economic-partnership-with-the-european-union
“Our default is that UK law may not necessarily be identical to EU law, but it should achieve the same outcomes. In some cases Parliament might choose to pass an identical law – businesses who export to the EU tell us that it is strongly in their interest to have a single set of regulatory standards that mean they can sell into the UK and EU markets.”
She could have said: “The six percent of UK businesses who export to the EU …”, or even “The small minority of UK businesses who export to the EU … ” but of course that would have rather given the game away after all these long decades of pretence that our economic prosperity is critically dependent on our exports to the rest of the EU, and therefore on our EU membership.
August 31, 2018
Andy
Let me help you with that, heres who to believe, the people that actually sell new cars
Uncertainty over diesel keeping buyers out of new car market The Motor Trader
The national government’s push to ‘eradicate’ diesel cars by 2040 in favour of hybrid vehicles has had serious ramifications on consumer confidence. The survey results saw 100% of brokers respond that uncertainty about the future of diesel – including possible legislation banning the fuel type, through to a potential for a collapse in residual values – has resulted in car buyers moving out of the market.
https://www.motortrader.com/motor-trader-news/automotive-news/uncertainty-future-diesel-keeping-buyers-new-car-market-20-06-2018
September 1, 2018
Yes, experts carefully chosen for a reason. Seen many times in medicine. Experts so they call themselves and the public actually believes it. Data and percentages collated on false premises. Cause and effect to suit the argument.
August 31, 2018
The fiscal conservatives are in for a shock that will probably lose the conservatives the next election.
It doesn’t take much with their gold standard, fixed exchange rate nonsense. All it takes is two sentences to destroy any economic theory they have ever written.
Japan debt to GDP ratio 253%
Japan 10 year bond 0.09%
Carney increasing the interest rate will cause inflation not fight it making inflation worse in the UK. It is central bank groupthink they keep raising interest rates thinking they are fighting inflation when they are actually causing it.
The last thing you do when your currency comes under attack is raise interest rates. Carney will Volcker the UK economy pushing inflation higher and higher whilst he thinks he’s fighting it.
Pick a graph any graph after 7 US rate hikes. There’s not one graph of real data out there since Dec 2015 when the FED first starte hiking that backs up the theory that increasing interest rates fights inflation and makes the $ stronger. Not one.
August 31, 2018
Proof that for every 100 economist experts there is always one economic expert that firmly believes the opposite is right.
August 31, 2018
Don’t take my word for it Edward.
Take a look yourself at the real data since Dec 2015 when the FED first started hiking.
You tell me after 7 US rate hikes if the $ has got stronger and if inflation has got weaker.
It’s all there in black and white and I’ve described above why rate hikes are price hikes.
The only proof that I can see Edward over the years I’ve been posting on here is people still believe we use the gold standard and fixed exchange rates. It has to stop.
We live in a spend and tax economy not a tax and spend economy. Even the Romans knew you had to spend the coins first before they could ever collect the coins as taxes and take the out of circulation to control inflation.
The Treasury does not need rich peoples taxes to spend it is ludicrous and it is about time political parties told rich people the truth.
Where on earth do you think people get their £’s from that allows them to pay their taxes in the first place. The Romans knew it is written on every bank note.
Where on earth do you think people get their £’s from that allows them to buy gilts when the government borrows. The Romans knew it is written on every bank note.
The government budget deficit is the private sector surplus to the penny and the national debt is just that private sector surplus moved into gilts.
It’s not rocket science it is simple T accounts pure and simple. You need to learn to look left on a balance sheet it is where all the assets are.
Brexit is the time to tell the truth and we would be foolish not to do so.
September 1, 2018
correlation and causation….take two bits of data and say one affects the other.
August 31, 2018
Edward,
When governments borrow all they are doing is borrowing back £’s from the private sector that they had already spent into existence.
Previous budget deficits provided the private sector surplus that allowed the private sector to buy the gilts.
The commercial banks can create ‘money’ (liquidity) by creating loans (credit). But they cannot create new net financial assets because the asset (loan) is offset within the non-government sector by the liability (debtor).
Only transactions between the government and non-government sector can create or destroy net financial assets.
The government is also the monopoly issuer of the currency (notes and coins). The commercial banks can get access to that and distribute it (vault cash) but only by sacrificing bank reserves held at the central bank.
September 1, 2018
Essentially it’s the magic money tree theory that the more the state taxes borrows spends and wastes then the richer we will be.
August 31, 2018
Derek
How are you doing with your MMT stuff? Lol
August 31, 2018
Making a fortune libertarian and MMT’rs are the only ones who describe how central banks operate correctly.
I should know liberatarian I’ve spent the last 7 years studying the accounting between the central bank, commercial banks and the treasury. They are bang on the money.
I’m very careful what I post on here and make sure what I post is 100% correct.
It’s time to start telling the truth and brexit is that time because whoever is left holding the gold standard, fixed exchange rate lies will be out of office for a generation.
September 1, 2018
We don’t have “gold standard fixed exchange rates”
August 31, 2018
libertarian,
Since Dec 2015 when the FED first started hiking I’ve been short
USD/JPY
USD/CAD
US treasuries
Long
AUD/USD
NZD/USD
And I cashed in my long GBP/USD @ 1.21 and long EUR/USD @ 1.06 which bought me a house on an island in Croatia.
I’m staying with all the other positions as long as the FED is in rate hike mode. Rate hikes do the exact opposite of what they say they do. The very same people said QE would be inflationary and they were wrong then and they are wrong now.
The FED will announce well in advance when it is ready to stop hiking.
August 31, 2018
Whereas modern cars would be more fuel-efficient than older cars, the energy consumed & pollution caused by producing new cars deduct from the difference.
August 31, 2018
Tory chancellors can never stop meddling . Stamp Duty , VAT , sugar tax , beer tax .every third pint of beer is for the taxman . Your party and your Liebour allies need to be swept out of Parliament John .
You are all past your use by dates . Brexit into Brino under Sharia May points it up starkly . “Taxation is nothing but organized theft “.
August 31, 2018
As well as all the negative policies listed by our host that the Chancellor has hit the car industry with, nearly every major city is now planning clean air zones.
My nearest city is in a period of consultation where so far we know the proposed zone area and the charge which is £10 per day per car to enter.
What we are not sure of yet is what vehicles will be exempt.
So like many others I am not changing my car until they announce their rules.
This is another major reason car sales are down.
August 31, 2018
Mr. Redwood – will you ever get up in Parliament and attack the chancellor for his absurd actions – so that all your Conservative peers can jeer him too? I have been following politics since I was a teenager – 50 odd years ago – I have never known any MP (who is a member of the governing party) express such outright condemnation of the actions of a chancellor or PM.
Reply I have made these points in Parliament and outside in speeches as well as on this site.
August 31, 2018
Mike Wilson – you have an unusually short memory. Just to jog it a bit:
– Heidi Allen’s maiden speech in the HoC attacking Chancellor George Osborne’s proposed tax credit cuts (20 October 2015)
– Attacks by several Tory MPs in the HoC on David Cameron’s planned negotiation demands – November 2015.
– Attacks by David Miliband MP on PM Gordon Brown – 2008
– Constant attacks (and attempts to force resignation) by PM Blair on his Chancellor Brown, and vice versa – too numerous to list (1999-2005).
– Attacks on PM John Major over Maastricht by cabinet ministers
– Attacks on Chancellors Geoffrey Howe and Nigel Lawson orchestrated by PM Margaret Thatcher.
– Attacks on Margaret Thatcher by Geoffrey Howe, Michael Heseltine, and the Tory wets.
– Attacks by Iain Macleod and Enoch Powell on Edward Heath and Reginald Maudling.
– Attacks on Harold Wilson by Tony Benn, Richard Crossman, Tony Crosland, etc etc.
– Attacks on Chancellor Selwyn Lloyd by several backbenchers and by Macmillan himself.
– Attacks on Anthony Eden by Tory backbenchers, forcing his resignation.
– Vicious Labour attacks on Stafford Cripps (1947-50).
– In 1940, attacks on Chamberlain’s competence as a war manager, leading to his resignation and Churchill’s appointment.
More recently, you seem not to have noticed the general harsh criticism by numerous Tory backbenchers of the PM’s EU negotiations, and of Philip Hammond’s fiscal policy.
You seem to have slept through the whole of modern political history of Britain like some latter-day Rip van Winkle or Sleeping Beauty, dreaming of the Peaceable Kingdom.
‘Taint so.
August 31, 2018
Correlation doesn’t imply causation. However much you might want it to be otherwise.
Modern cars are much better built than cars pre-millennium. Which is rather a good thing given the current economic situation. You need to pay more attention to the economic pressures your constituents are facing. My Wokingham based employer has frozen salaries this year due to the uncertain economic outlook .
There are numerous upward pressures on the household budget – petrol rising from just over a pound/litre to £1.30ish/litre. Likewise price rises for utilities don’t help either (and that’s after shopping around for the best deals). Oh and more text books to buy for school thanks to your government’s funding formula.
The family car being replaced comes down to a question of whether it needs replacing because it has become too expensive to maintain or too unreliable. What Mr Hammond has done in taxation doesn’t come into the decision of when we replace the car. Maybe it does for those with reliable salary or pension increases, but for the majority of us , not so much.
August 31, 2018
If no one bought new cars, there would be no second hand vehicles for you to buy.
I normally buy a new car every 3 years and sell them privately with about 25K on the clock.
With the antics of the Chancellor and our local towns, I may delay buying until the rules are clear. A clear loss to UK car manufacturers.
August 31, 2018
I don’t think this the main reason car sales are reducing.
Several tax increases, restrictions on credit and therefore thevcosts of credit, dieselgate and great uncertainty over the future of diesels, town centre charging zones and the gtestly reduced trade in values of existing vehicles has all played its part.
Many like me have postponed changing until all these things become clearer.
August 31, 2018
I was recently driving around the Thames with an old friend, and as we were stuck in traffic in his spanking new two-seater, he remarked that buying a car was no longer something young people did as a rite of adult passage. His son and daughter – 20-something professionals – had no interest in getting a car, as the running costs/parking charges/fines made it unaffordable for them. They chose where to live based on the public transport options. (So I guess they won’t be moving to Berkshire any time soon…)
The same goes for property: for a singleton professional buying a flat in London was the norm in the late 1970s/early eighties. It is now unaffordable.
August 31, 2018
Who uses cars today when we have the fabulous low cost on-time railways?
You have the added benefit of reflecting on how much better they are since we sold them off at a knock-off price.
August 31, 2018
VotedOut, Network Rail is owned by the government and provides the operating slots for the train operators. Blame Notwork Rail.
August 31, 2018
Many years ago I had car problems so I went to the main dealer locally .The Chief mechanic told me the only solution was a brand new or a reconditioned “new” costing me, then , a mint.
So I looked at the car major-manual as I knew nothing.. I found the fuel pump was worn out. I bought a brand new generic spare..price £15 and using the manual replaced it in minutes.
The car market still and servicing remains to be sorted out. The UK would save a mint by doing so.
August 31, 2018
new engine that is
August 31, 2018
It’s worth looking at the CityAM article on a possible “Irish fudge”:
http://www.cityam.com/262204/eu27-prepare-irish-fudge-secure-11th-hour-brexit-deal
“… it is hoped that the transition period – during which the UK will remain a part of the Single Market and customs union – will offer enough time to thrash out a final deal.”
“But we’re in the world of fudge, and there’s plenty to go around… at the moment they just need to kick it on to give themselves some breathing space.”
So essentially the cunning plan would depend upon kicking the can down the road for a couple of years of oxymoronic “status quo” or “standstill” transition, that period of change during which nothing at all will change, the betrayal agreed back in March:
http://johnredwoodsdiary.com/2018/03/20/uk-energy/#comment-925967
So what will happen at the end of those two years?
Well, we know the answer, don’t we; the “problem” of the Irish border would still be there just as unsolved as now and apparently just as insoluble as now, so the transition period would be extended, and then extended again, and again, indefinitely …
August 31, 2018
Yep, get ’em hooked and bleed ’em dry.
Next trick?…ban internal combustion engines and force us to have crap electric cars.
Oh I forgot to mention it’s rumoured Afghanistan just happens to have vast reserves of lithium. Now there’s a thing.
You can see what’s coming; everyone forced to have the capitalist’s version of the trabant, movement and freedom severely restricted due the crap things needing to be recharged for a long, long time.
Oh and….”your car needs new batteries sir, that’ll be 23,000 euros.” That’s assuming you didn’t get electrocuted by your own quisling government for non-compliance as soon as you left the house.
What a bright future we have, the full on prospect of a living Orwellian nightmare.
August 31, 2018
Mr Redwood, the stated objective of BoE policies is not to slow the economy. The objective is to maintain monetary stability, one of the necessary, but not sufficient conditions for healthy long term growth.
That people buy fewer cars may be caused by (1) general cautiousness, given the highly uncertain economic outlook as some believe (2) a shift from diesel cars by fleet owners (3) budget constraints.
Only the third could have something to to with BoE policy and if that is the case, it is probably a good thing. You would not want the UK households to be overextended, or the banks being vulnerable to revalutations of their lending books.
August 31, 2018
These figures will have been distorted by a problem with licensing new cars in June and July. The new EU regulations on emission disclosure were implemented, and there was a problem with IT between SMMT and DVLA. Newly built cars were stuck in the factories for weeks, and since they couldn’t be registered they couldn’t be “sold”. I ordered a Jaguar at Easter, delivery was scheduled for 1st July, but it was delayed until 30th July. I’m amazed that it wasn’t reported in the press.
August 31, 2018
Sky News tonight says “using social media affects you mental health. ”
Sky News are good at self-satire. Not worth the TV licence fee though
August 31, 2018
Off topic John. This is what I have received from my MP Bill Grant over the Chequers Agreement.
Thank you for contacting me about the Chequers agreement and Brexit. I hope that I can take this opportunity to dispel some of your fears and set out the Party’s position, and why I support it.
I completely appreciate your strength of feeling on the agreement reached at Chequers, but there is no other workable solution that respects the referendum result, delivers the Government’s commitments on Northern Ireland and preserves the constitutional integrity of the UK. I strongly believe that the Prime Minister’s proposals represent a realistic and practical vision that delivers the referendum decision in full.
The UK will leave the EU, including the Single Market and the Customs Union, on 29 March 2019. As we leave the EU, free movement and the jurisdiction of the European Court of Justice will no longer apply and the days of sending vast sums of money to Brussels every year are over for good. We will also leave the Common Agriculture Policy and the Commons Fisheries Policy and we will once again be able to strike our own trade deals. The decision to leave the EU’s agriculture and fisheries policies will be particularly beneficial to Scotland, which has long been disadvantaged by both schemes.
The Chequers agreement provides a commitment for the UK to maintain a common rule book on industrial goods and agricultural products so that we have a free trade area with the EU, but it will be Parliament that has a final say on any new rules or regulations. These rules have been relatively stable since the 1980s and the Government has always been clear that UK standards should be as high, if not higher, than those of the EU and so I believe that having a common rule book as a minimum is a reasonable proposal.
Having common rules on goods, as well as a new business friendly customs model, will also ensure that there is no hard border in Northern Ireland or any border down the Irish Sea and that the integrity of our precious United Kingdom is safeguarded. As a Scottish Conservative who has spent a career defending our Union from the SNP, this was one of my main concerns.
The EU, in contrast, had effectively proposed to keep Northern Ireland in the Customs Union and parts of the Single Market. The Prime Minister had always been clear that such a move, damaging the integrity of the UK, was completely unacceptable. The EU’s other option would have been for all of the UK to stay in the European Economic Area and the Customs Union, keeping free movement and accepting all EU laws. This was also unacceptable.
I do not agree that Theresa May is not delivering the result of the referendum. Under her leadership, the UK will leave the EU, including the Single Market and Customs Union, in 2019. She has, rightly, opposed calls for a second referendum or to reverse the result. This is more than can be said for the SNP, Labour or the Liberal Democrats. The Chequers agreement contains sensible, common-sense proposals that deliver on the Brexit promises that people like yourself voted for, works for businesses and ensures we take back control of our borders, laws and money.
Thank you again for taking the time to contact me.
Yours sincerely
cid:EFC7E19D3BD14F039C597860EB7E7755@louisePC
Bill Grant MP
Member of Parliament for Ayr, Carrick & Cumnock
This is what we are up against.
September 1, 2018
We can only hope the EU will reject this dreadful Chequer offering.
September 1, 2018
“… there is no other workable solution that respects the referendum result, delivers the Government’s commitments on Northern Ireland and preserves the constitutional integrity of the UK. ”
Firstly there are doubts about whether it is even workable, secondly leaving us under the thumb of the EU for anything to do with goods does not respect the referendum result, and thirdly there is another solution to “problem” of the Irish border, namely for the UK to put in place legislation to control exports to the Irish Republic and prohibit the carriage across the border of anything that the EU tells us is not allowed within its Single Market.
“The UK will leave the EU, including the Single Market and the Customs Union, on 29 March 2019.”
So what about this?
http://www.cityam.com/262204/eu27-prepare-irish-fudge-secure-11th-hour-brexit-deal
“However it is hoped that the transition period – during which the UK will remain a part of the Single Market and customs union – will offer enough time to thrash out a final deal.”
September 1, 2018
Nobody bought diesel cars because of concern about CO2 emissions or the EU rulings. They bought them firstly because of punitive fuel taxes (eg the fuel duty escalator) and secondly the oil price spike in 2007 which all the so-called experts said would get worse.
What is cloying is the chancellor loftily declaring that UK car sales will suffer due to Brexit when he should well understand by now it is his policies and those of his predecessor that have been killing sales thus far. Absolutely no consequence of Brexit is as dangerous to the economy as the combined effects of a tax-mad finance minister and a clueless BoE governor.
September 2, 2018
Those tax rises were to change our behaviour and get us rapidly into diesel vehicles.
It was EU policy that had to be followed.
Company car tax was changed and based on CO2 output and that had a huge effect on business fleets going away from petrol.
September 2, 2018
Or maybe those tax rises were only meant to bring more money into the treasury from a soft target and any excuse will do when it comes to taxing us more.