A new economic policy?

It’s time to hear from the government a new economic policy. As we leave the EU we should abandon an economic policy based on the twin requirements of EU policy, the reduction of the running deficit of government and the reduction of state debt as percentage of GDP.

I know when I have mentioned in the past the importance of the Maastricht debt and deficit controls to UK policy some have written in to deny this. Let me remind you of the extent of the EU requirements on the UK since 2008.

The UK was under EU budget control from 2008 when Decision 2008/713 stated the UK was running an excessive deficit and had to take action to reduce it. The deficit worsened thanks to the great recession, so they reinforced the requirement. They required us to make spending cuts and tax rises worth 1.75% of GDP a year  (£38.5bn a year at current values) from 2010/11 to 2014/15. In 2015 they reviewed the position and renewed the requirement to cut spending or raise taxes as they remained concerned about the level of state debt to GDP. They set specific reducing deficit targets of 4.1% of GDP for 2015-165 and 2.7% of GDP for 2016/17. The UK government always filed the relevant figures and submitted to the discipline imposed, as it is required to do by Treaty .

In 2017 they decided the UK had complied and lifted the excessive deficit plan after a nine year programme of cuts. They however said “As from 2017-18 the UK is subject to the preventive arm of the Stability and Growth Pact and should progress towards the minimum medium term objective at an appropriate pace…and comply with the debt criteria in accordance with Article 2(1a) of Regulation EC No 1467/97.” (i.e. the aim of economic policy had to be to get state borrowing down to 60% of GDP from around 87% over the medium term).

As we come out of the EU this ceases to apply. The UK needs a new fiscal framework which helps us promote growth, jobs and higher real incomes. We need a purpose and guides to economic policy based on these good outcomes for people, not a policy based on getting state debt down as a percentage of GDP.

Of course there needs to be a prudent control on extra debt incurred. There is nothing unstable or unaffordable about current levels of state debt, especially taking in to account around one quarter of the state debt is owned by the Bank of England which in turn is owned by the state!

A sensible rule could be that additional  state borrowing should not exceed the levels of public sector investment. The government will ensure the current account of the government is in surplus or balance. On 2020-21 figures from the last Red Book this gives the state the opportunity to borrow 3% of GDP, the forecast level of investment, which would allow a sensible fiscal expansion. Tax cuts of around £10bn on top of the spending increases announced should  be possible. There could be a recession override allowing fiscal stabilisers i.e. a bigger deficit  to apply were there to be a nasty downturn at some time in the future. I am not currently forecasting a Uk recession

references

European Council Decision 2008/713/EC

2009/409/EC Council decision

2015/1098 Council decision

14852/17 Council decision

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148 Comments

  1. Mick
    Posted October 24, 2019 at 5:28 am | Permalink

    Off topic
    https://www.dailymail.co.uk/news/article-7606487/Will-Jeremy-Corbyn-bottle-election-Labour-smashed-polls-warn-half-MPs.html
    Here’s a new policy when you get back into power with a large majority I hope the first thing to put in place is a bill to repeal the fixed term act which as been devastating in the way it’s stop a government calling a GE , when the GE is called hopefully soon just watch the chickens coming home to roost in the labour heart lands , I’ve got news for them they are going to have a very horrible Christmas as we put them on the dole

    • dame rita webb
      Posted October 24, 2019 at 11:40 am | Permalink

      I would not be too sure of that. I live in a safe Labour (mainly rural) seat. People still get their kids christened around here and stand up for the national anthem at social events. However despite voting leave and Corbyn & Co being the antithesis of things they believe in, they will still keep on ‘verting layba’ it’s in their DNA. Something similar happens in safe Tory seats too. Unfortunately a large number of voters keep supporting parties that want to do them harm.

      • miami.mode
        Posted October 24, 2019 at 3:25 pm | Permalink

        Agree there drh. Saw the Daily Politics today and they had a Tory MP, Sir Charles Walker, but he seemed so smug about the current situation with other parties and acted as though the Tories already had the next election in the bag.

        As Lifelogic has previously pointed out, the Brexit party has the capacity to do enormous harm to the Tories and Boris continually says things such as “die in a ditch” and “lay in front of excavators” (or similar at Heathrow) but in the end they often turn out to be meaningless words. He might as well chunter along in Latin a lot of the time because it will have the same meaning for many people, they simply don’t believe him.

        • dame rita webb
          Posted October 24, 2019 at 7:49 pm | Permalink

          Boris has failed to push the Brexit party below 10% in the polls. When, on 1/11, he becomes the third Tory PM to have failed to have taken us out of the EU after the referendum, Mr Farage can expect a significant bounce. The Conservative party deserves what is coming to it. It does deals with the Unlib Dems and the DUP but looks down its nose on TBP, despite the results of the Peterborough and Brecon by elections showing a non aggression pact would work to its advantage. They are like the Bourbons

          • Hope
            Posted October 25, 2019 at 9:12 am | Permalink

            Well said. I hope the Tory party does become extinct. Ironically iis he only way it will recover.

            The penny dropped with Johnson when he was interviewed by Portillo and johnson asked him if he would vote Tory. Portillo like Widdecomne would not.

            Johnson knew at that point his party was done, unless it left the EU with a clean break without any further delay. Hense his bold claims that had the sentiment of the Brexit Party. Johnson had no plans on delivering it. He has already sent tee xtension he,boldly claimed he would not. Next week the U.K. Will remain in the EU under EU terms. He tried to spin he would leave no matter what. There was no bold plan to leave. All air and bluster.

            Mayhab claimed last year after her historic failed vote she would renegotiate the backstop. It turned out she never even asked! It has taken a year for a minor tweak to happen which Mayhab could have secured last year if she wished. She did not. She wanted close associate membership with a view to return.

            Johnson is dishonest to say her deal was dead and this is a new deal. It is not.

            Mayhab and Cameron before created a whirlwind of distaste against the left wing Tory party which is anything but conservative. Mayhab reaped the reward for her left wing tax grabbing social care agenda with her “building on” Miliband’s energy ideas!

            Now all Tory MPs voted for Mayhab’s servitude plan which they repeatedly criticised as vassalage etc. They have no credibility. As Melanie,aphillips,said this week on TV not Spartans but spineless.

          • margaret2
            Posted October 26, 2019 at 10:19 am | Permalink

            What appals me as well as the Vassalage Treaty itself (which I’d go as far as to say is worse than no brexit; one of its horrors is the anonymous junta or joint committee ,made up of eurocrats and British Britain -haters like TMay that will wield huge power over us) is stuff that’ s under the radar but set to be passed at the same time. In a few years time we will be able to thank the Tories for : protestors being maimed or killed by diplomatically immune EU paramilitary , cf Yellow Vests in France, arbitrary arrests etc. There are other ways of “cooperating over criminal justice and cross border crime” but the Tories won’t even consider them.

        • margaret2
          Posted October 26, 2019 at 10:23 am | Permalink

          PS I am referring to TMay’s proposed Security Treaty which will be quietly pushed through.Goodbye all our rights under English Common Law

      • Hope
        Posted October 24, 2019 at 3:34 pm | Permalink

        Johnson made a bold statement do or die, a sentiment of the life brigade that they would die rather than give in. He resigned from cabinet on Mayhab’s servitude plan vassalage he called it. As did JRM. Both then voted for it! The public noticed.

        Unfortunately for Johnson he has done worse. He made a do or die bold claim and he brought back a revised Mayhab servitude plan falsely calling it a new deal. Cameron falsely claimed he reformed the EU. Clegg never recovered from his tuition fee lie. Johnson is in that territory.

        Come next week we shall see the do or die of Johnson and his govt and party. Make no mistake.

        Coveney RoI already saying if UK wants a FTA it will have to be closely aligned to EU rules! No time limit to the servitude vassalage transition Johnson agreed to. At least three years of further pillaging from our waters, the EU will decide quotas during transition.

        Also a presumption goods to NI will forward to RoI. Why when the majority do not go there? Will this be a discreetdeceitful bung from U.K to RoI by not claiming back tariffs on those goods?

        JRs plan is for the fairies.

        • dame rita webb
          Posted October 24, 2019 at 7:54 pm | Permalink

          The correct way of dealing with Coveney and Varadkar is to threaten them with us voluntarily handing Ulster back. Its in the Irish constitution they can hardly say no

  2. Ian Wragg
    Posted October 24, 2019 at 5:31 am | Permalink

    How come no one knows these requirements when we’re not in the Euro.
    Why do Liebor and the Limp Dumbs want to continue these policies when we have no money for social care, policing, armed forces etc.
    Why aren’t you shouting this from the rooftops.

    Reply I have tried to but the establishment media and pro EU parties find this an inconvenient truth.

    • eeyore
      Posted October 24, 2019 at 6:02 am | Permalink

      On this point of media exposure, I’d be surprised if a letter to The Times or Telegraph were rejected. Sir John is a very senior public figure and the topic highly significant.

      • Julie Williams
        Posted October 24, 2019 at 2:07 pm | Permalink

        The Times is quite a “remain” newspaper but The Sun would probably do something along with The Express, The Spectator, The Daily Mail (depending who is in charge that day) and the fairly lukewarm Telegraph.
        Any tv channel, the Guardian and the (pause for laughter) Independent: not a hope in a hot place.
        News isn’t so much about what you say as what you omit: that’s why it pays to cover all angles, even if you have to hold your nose!
        We should all ask ourselves why the Robin Tilbrook cases don’t get coverage when Jolyon Maugham and Gina Miller do.

      • wrítere
        Posted October 25, 2019 at 2:05 am | Permalink

        I watch Press Previews on TV showing headlines from each of newspapers’ regular columnists and their takes. Just the gist of what each wrote on the last occasion. I thought, I can write all of those with specific slants all by myself, just me. Then I thought, they must have much more to do all day. I can’t write all those of course. The Editors would not allow me. That’s all.

    • acorn
      Posted October 24, 2019 at 6:37 am | Permalink

      Some of us do know the requirements very well. The European System of Central Banks (ESCB) consists of the European Central Bank (ECB) and the national central banks (NCBs) of all 28 member states of the European Union (EU).

      The ECB is the currency issuer for the 19 Euro currency users. The other nine members issue their own currencies. They all work to the same ESCB rules based on neoliberal capitalism theory (austerity).

      Welcome to modern money theory JR. Once you get it clear that the treasury never has to borrow its own currency from anybody; and, Gilts don’t fund government spending, they’re savings bonds for pension funds, you’ve got it 😂

      • libertarian
        Posted October 24, 2019 at 10:28 am | Permalink

        acorn

        Great stuff means we can scrap all taxes , thats brilliant

        MMT is for me lets go

    • BOF
      Posted October 24, 2019 at 7:18 am | Permalink

      Reply to reply

      How sad that pro EU parties includes your own party Sir John. It must feel like spitting into a gale. A clear out is required in all parties.

      • margaret2
        Posted October 25, 2019 at 3:25 pm | Permalink

        Quoting Sir John: “As we leave the EU: ” I didn’t know we WERE leaving. If you’re referring to the Vassalage Treaty, surely you don’t call that “leaving?”
        Plus giving away our military capability and signing our liberty away once and for all by Mays Security Treaty. Call that leaving?

    • Everhopeful
      Posted October 24, 2019 at 8:20 am | Permalink

      Ian
      Absolutely agree.
      To my shame up until the Referendum I honestly thought the EU didn’t have much input beyond messing up our rubbish collections.
      Then I started to look into it!!!
      The deafening silence in Westminster over 45 years has been astounding.
      Silently our country had been given away and only the BNP and UKIP ever raised a ( very non specific) voice against it. I don’t remember them pointing out loudly that all our everyday tribulations were increasingly down to EU rules.
      Was Powell destroyed because of his anti common market stance …as a warning to all other dissenters? And the warning was heeded??

      • Posted October 24, 2019 at 4:14 pm | Permalink

        Yes – many of us started ”looking into it” once we knew that we had a chance of voting…
        This is why leavers are better informed generally than remainers, who simply imagined there was a status quo and that they didn’t actually need to research anything, as all was known and their lifestyles acceptable.

        Enoch Powell’s speeches were prescient. Especially his words:
        ”There is a name for appealing over the head of the Crown to an authority outside the realm, and that name is treason.”

    • A.Sedgwick
      Posted October 24, 2019 at 8:24 am | Permalink

      My thoughts exactly, I knew we are required to bail out failing Euro states e.g. Eire and this seems to continue with the BJ Treaty but the extent of UK’s liability is akin to giving your credit card to a stranger.

      • Julie Williams
        Posted October 24, 2019 at 2:14 pm | Permalink

        We aren’t talking billions, we’re talking trillions and it really does make you wonder why: are we really just a prop to the world economy?
        If so, kindly stop belittling the UK at the same time.

  3. Lifelogic
    Posted October 24, 2019 at 5:32 am | Permalink

    The main problem is that governments spending is far too high and delivers so little of any real value. This as it is spent so very inefficiently and much of it on totally the wrong things. Vast sums are spent on entirely pointless thing and quite a lot is spent on things that do positive and very real harm to people, inconveniencing businesses, over taxing them and damaging the economy.

    Of the money that is actually spent on sensible things (perhaps half of it at best) the actual value delivered is probably under 50p per £1 spent.

    A lot of government activity is about creating parasitic jobs for regulators and bureaucrats and crony industries in the private sector that harm and ride of productive ones.

    It is not their money so they care not what spend nor what value they get. They are for example just as happy blocking the roads with anti car traffic light, environmental areas or speed humps etc. as they are unblocking them. So long as they are paid and get a gold plated pension and perhaps on OBE who cares.

    Yet idiots like, tax to death IHT ratter Hammond complain about poor UK productivity, look in the mirror for the main cause mate.

    • Know-Dice
      Posted October 24, 2019 at 6:35 pm | Permalink

      50% is optimistic in some cases it’s probably 5%

      Their SOP is:
      1. Cover your backside
      2. Make simple tasks as complicated as possible
      3. Empire build

      And as a result of 1. 2. & 3. Complain that you are over worked under staffed and funded and do everything in slow motion

  4. Shirley
    Posted October 24, 2019 at 5:37 am | Permalink

    Why dream about ‘what could be’?
    Our undemocratic and EU loving Parliament will ensure we never leave the EU fully and completely. The majority are dishonest and undemocratic, so we can’t trust a word they say! They will promise anything to get elected, and then do the exact opposite! This has to stop. Give the electorate the power to kick out deceitful and dishonest MP’s.

  5. Lifelogic
    Posted October 24, 2019 at 5:41 am | Permalink

    If you want a strong economy get the government out of the way, deregulate, cut taxes, leave more money with the productive sector, relax planning, simplify taxes, give people freedom and choice, cull the litigation culture, reduce the size of the state, go for easy hire and fire.

    Kill unfair competition from the dire state monopolies especially in health care and education, start fracking, go for a sensible on demand cheap energy policy, cull all the worthless degrees and soft loans for them. Make the lefty propaganda organisation the BBC go to a subscription model and compete fairly. Clear all the lefty, pro EU loons from the Lords.

  6. Mark B
    Posted October 24, 2019 at 5:41 am | Permalink

    Opps ! Good morning 🙂

  7. Dame Rita Webb
    Posted October 24, 2019 at 5:52 am | Permalink

    JR you have just used the term ‘establishment media’ . I never thought you would write something like that, you will be joining the Brexit Party next

    • Fred H
      Posted October 24, 2019 at 1:11 pm | Permalink

      Dame RW – – a great idea. Sir John sometimes appears nearer Farage’s views than possibly 100 current Conservative MPs.
      He can always rejoin, preferably run, the ‘new’ Conservatives in a couple of years.

  8. Dominic
    Posted October 24, 2019 at 5:58 am | Permalink

    I deeply resent the EU’s influence over the UK’s fiscal and monetary policy but equally I find your Keynesian obsessions just as unnerving for I suspect they are the policies that are infused with the aim of achieving a political outcome. The function of the taxpayer is not to finance the political policies of political parties but to finance the provision of important publicly provided services.

    Unfortunately all parties now view access to the taxpayer chequebook with glee like children at Xmas. That attitude usually spells disaster for the wealth-creating private sector and party-time for the closeted public sector that lives like a king off our efforts.

    Japan. Germany. Two nations destroyed after WW2. Today, two of the most powerful economies on earth. How can this be? Well, you strip away the fat (reform) and encourage entrepreneurialism, encourage individuals and private firms to create, invent and produce. What you don’t do is allow politicians to feed off their efforts and go wild like a child in a sweetshop.

    Amazon. Microsoft. Apple. Facebook. Google. Walmart. Kellogg. These mega-companies started their journey as tiny organisms in a garage, a lab or even an idea. Today, they traverse the globe. You won’t find a politician or State employee involved in their formation.

    Reform the State not increase its size and therefore its capacity for waste and abuse of public funds. HS2 is a classic example of arrogant and destructive abuse of the taxpayer.

    And more state spending on an unreformed State means one thing, a stronger and more influential Labour party and a stronger union movement to pump out their Marxist crap.

    I actually think the Tories are utterly clueless but then I think they just might be lacking in courage about they know needs to be done

    You want economic growth? Smash Labour’s client state, slash taxes and free the private sector from the impositions and demands the Tory government and Labour’s State imposes upon us

    Reply I agree there is a good discussion to b e had – as I have done from time to time – over which areas of state spending are wasteful or could be done elsewhere. I opposed HS2 when Parliament decided on the project, and consistently opposed paying money to the EU for example. Japan of course has run large deficits and has built up a state debt three times as large as our state debt relative to GDP. I do not recommend anything like that.

    • Mark B
      Posted October 24, 2019 at 4:47 pm | Permalink

      Japan and Germany maintained a strong national identity. They had help rebuilding but, in the case of Japan, its efficiency, innovation and costs have all been undermined by other Asian countries. It has very high debt to GDP and has been in stagnation since the 90’s.

  9. Richard1
    Posted October 24, 2019 at 6:32 am | Permalink

    It is odd that more economic commentators aren’t on top of the difference between gross and net debt – they were very much on top of the difference between gross and net EU contributions.

    All discussion of U.K. economic policy is irrelevant until we get an election, at which the choice will be Boris and Brexit (albeit with some unsatisfactory May-legacy exit terms) or Corbyn and communism.

    This needs to come soon. Of course the real sword of Damocles hanging over the U.K. isn’t any variety of Brexit, it’s Venezuela by the North Sea

    • Richard1
      Posted October 24, 2019 at 6:33 am | Permalink

      Irrelevant is the wrong word – academic

  10. Wil Pretty
    Posted October 24, 2019 at 7:01 am | Permalink

    I would have thought that we need spending rules to stop the government from wasting our taxes on poorly thought out political schemes. Going carbon neutral will absorb hundreds if billions.

    • Wil Pretty
      Posted October 24, 2019 at 12:47 pm | Permalink

      Correction – hundreds of billions.

  11. Posted October 24, 2019 at 7:09 am | Permalink

    Brilliant !

    Brilliant !

    Brilliant !

    John.

    No politics, no ideology, the simple truth that…

    The government budget deficit = everyone else’s surplus to the penny. The national debt is just some of that surplus moved into gilts over time.

    No more gold standard, fixed exchange rate self imposed constraints. We are leaving for a better future not to remain in a straight jacket.

    • Simon Cohen
      Posted October 24, 2019 at 1:09 pm | Permalink

      Hi Derek,

      Although I agree generally, I think that proclaiming John’s blog post as ‘no ideology’ is a little naive, for the following reasons:

      1. He describes things as being ENTIRELY an EU issue.
      2. He gives the impression that the Tories would NOT have been so austerity minded outside the EU which beggars belief given:
      3. The Tories mouthed and espoused austerity with relish, vilfying benefit claimants, cutting essential services and blurting out myths about the Government being like a household as if there was no tomorrow.
      4. So why doesn’t John’s post balance the EU blame (which is correct) with the Tory alacrity on the application of austerity?

      Knowing the severe damage that the Tories wreaked and continue to wreak why didn’t he resign from the Party and sit as an independant from where he could have informed the public all the more clearly about the falseness of the Austerity Myth?

      John could have helped create a real debate about this and perhaps even saved lives as a result.

      Sorry, I don’t by the ideology free notion here although John is correct on the main points.

      Reply I have in recent years campaigned for an economic policy aimed at Prosperity, not Austerity.

      • acorn
        Posted October 24, 2019 at 3:54 pm | Permalink

        Ten out of ten Simon. The level of understanding of fiat currency macroeconomics on this site is zero, excepting a couple of commenters.

        Slashing government’s spending on goods, services and its own employee’s wages, leads to less money being spent into private sector businesses and increased private sector unemployment. How many private sector shops refuse to sell to government employees?

        Likewise, Neo-Anarchistic economies as proposed by LL on this page always fall down at the first sign of a crisis, natural or 2008 banking disasters for instance. “Why is the government not protecting me from this disaster” they cry. “What government” comes the reply; “we did away with the government; remember?

        • Edward2
          Posted October 24, 2019 at 8:49 pm | Permalink

          State spending is rising.
          We have never slashed spending.
          Who knew that the more the state spends the wealthier we get.
          Make me a millionaire.

  12. Andy
    Posted October 24, 2019 at 7:13 am | Permalink

    So now you blame the EU for Tory austerity?

    All of those people who lost their jobs – and in the case of Universal Credit – their lives, are down to Conservative policies.

    Universal Credit being an example of where Iain Duncan Smith knew best. Turns out he didn’t.

    Reply As I have made clear successive governments were bound by Maastricht rules and conformed with EU requirements on budget deficits. Why do you not answer that point?-

    • Richard1
      Posted October 24, 2019 at 10:26 am | Permalink

      what are you talking about unemployment is at a record low & 1m jobs have been created in the last 3 years. the opposite of what you and many others forecast

      • dame rita webb
        Posted October 24, 2019 at 10:47 am | Permalink

        What austerity? The Conservatives, with the best chancellors Labour never had, have managed to double the national debt and keep on deficit spending despite promising to eliminate it by 2015. Andy, you need to check up on how much the welfare bill has gone up by 2010 as well.

        • Lifelogic
          Posted October 24, 2019 at 12:16 pm | Permalink

          Indeed what austerity the only real austerity is in the over taxed and regulated state sector.

          • Lifelogic
            Posted October 25, 2019 at 3:56 am | Permalink

            private sector I meant!

        • Simon Cohen
          Posted October 24, 2019 at 1:14 pm | Permalink

          The national Debt is not an issue here, which John correctly points out.

          In fact, the deficit is not only too low, it needs to be much bigger.

          Private debt is always the precursor of crises and has been for the last hundred years NOT Government Debt (in the case of the UK as a currency issuer). The fact that the hopeless Osborne was forced to increase the deficit was a good thing!

          Remember: Government Debt (it’s only debt in an accounting sense) is, in fact, the private sector’s credit.

          • Edward2
            Posted October 24, 2019 at 3:28 pm | Permalink

            Ah, you are from the Zimbabwe School of Economics

          • dame rita webb
            Posted October 24, 2019 at 4:47 pm | Permalink

            Perhaps you would like to comment on the current account deficit and prove Carney wrong that we are living by the kindness of strangers?

      • simon cohen
        Posted October 24, 2019 at 1:19 pm | Permalink

        Unemployment at a record low?

        Err,,,,no it isn’t as most of the unemployment is hidden:

        1. massive levels of underemployment
        2. Poor quality jobs on zero hours
        3. ‘Employment’ defined as working for at least an hour

        To compare it to 1974 is like comparing apples and oranges. In 1974, housing was still affordable, wages kept up with productivity and inflation. Jobs were largely secure.

        Some economists, suggest, after taking into account underemployment, spurious self-employment and those who have simply given up leads to a real unemployment level of about 10% -close to the EU average.

        measurement is everything.

        • Edward2
          Posted October 24, 2019 at 3:27 pm | Permalink

          Messing with statistics is not everything.

        • Fred H
          Posted October 24, 2019 at 4:49 pm | Permalink

          Simon – are you in your twenties?
          A look back to 1974 – the Miners Strikes, British Steel falling apart, Health and Safety at Work etc Act 1974. We still had docks. British Leyland pulled together lots of failing car companies, it was partly nationalised in 1975. The start of horrendous instability of our workforce. Smell the coffee.

        • Anonymous
          Posted October 24, 2019 at 10:43 pm | Permalink

          Students who shouldn’t be students in full time education, add that to the real unemployment stats.

    • libertarian
      Posted October 24, 2019 at 10:27 am | Permalink

      Andy

      Austerity is an EU policy … see Greece for details

      Who lost their job ? We have the highest employment we’ve ever had in our history

      I was with the DWP yesterday … in polite terms they told me that the Universal Credit stuff is mostly BS from people who dont bother to talk to their advisors to get help

      • Simon Cohen
        Posted October 24, 2019 at 1:24 pm | Permalink

        Please see my comment above about the ‘highest employment we’ve ever had’ myth.

        Regarding Universal Credit, it is widely recognised as a disaster -please take into account you are talking about vulnerable people, some ill, struggling with Mental health problems. The notion that these people can cope with a five week wait for benefits to arrive is pure nonsense combined with the punitive sanctions regime.

        The Job Centres themselves are often staffed by pooorly trained individuals who are not best placed to help the people they are supposed to help.

        let’s remember that research has shown that there is a strong argument that austerity has cause around 120,000 excess deaths.

        Please start thinking!

        • Edward2
          Posted October 24, 2019 at 3:33 pm | Permalink

          If you introduce a new benefits system there will be some problems.
          It is not “widely recognised as a disaster”
          That is your political biased opinion.
          But to take some cases which need improvement and then try to build a case to destroy the Universal Credit is ridiculous.
          Do you feel the old system worked perfectly?

        • libertarian
          Posted October 24, 2019 at 4:34 pm | Permalink

          Simon Cohen

          Sadly your comment is indicative of the believers in memes

          You are wrong . No idea what you do for a living but I own a data analytics company that specialises in researching and reporting on Employment and employment trends

          There are 1.2 million unemployed of which 400,000 are long term unemployed. They are generally made up of people without the necessary skills or ability or desire to find a job , the rest are known as friction unemployed , that is people who are looking for work or resting between jobs.

          2.4% of the workforce are on zero hour contracts of those 31% are FULL TIME students. 61% of zero hour ( flexible) workers refused full time employment

          There are currently 854,000 ( a rise of 39,000 over the year) unfilled full time jobs available 37% in construction average wage £42,500 21% of vacancies are in IT, Comms & Digital average salary £47,500 12% in professional services average salary £41,000

          All employment data conforms to EU standards and UN ILO reporting

          Stop talking cobblers

      • Andy
        Posted October 24, 2019 at 1:24 pm | Permalink

        Austerity is a Conservative policy. Universal Credit which – let’s face it is a policy to eliminate poor people – is a Conservative policy. Brussels role in both is negligible.

        Reply Austerity started in 23008-9 under Labour with big cuts as the crisis unfolded, owing to these EU rules. The same rules then informed a Coalition government and a subsequent Conservative government. See the continuity? Universal credit is not as you define it and offered more money or maintained money and better service to qualifying recipients.

        • Simon Cohen
          Posted October 24, 2019 at 4:20 pm | Permalink

          Universal credit is not as you define it and offered more money or maintained money and better service to qualifying recipients.

          This is quite wrong please read the following links which show you are wrong:

          1. Many claimants lost their severe disability allowance and the Government was FORCED by the High Court to offer transitional payments after much hardship caused.
          (https://www.disabilityrightsuk.org/news/2019/july/compensation-loss-severe-disability-premium-through-claiming-universal-credit)
          2. The five week wait has pushed many into food bank use (https://www.thesun.co.uk/money/9371306/universal-credit-pushed-using-food-banks/)
          3. Although in aggregate there is an increase the Jospeh Rowentree Foundation analysis shows 5.5 million will be better of BUT 3 million already in poverty will be worse off -whats the point of the latter?

          • Edward2
            Posted October 25, 2019 at 11:06 am | Permalink

            So problem number one has been addressed, problem number two is being dealt with and waiting times are reducing and problem three is by a left wing pressure group who use the relative measurement of poverty which says we have millions more in poverty compared to 100 years ago which us plainly ridiculous.
            Glad to see you agree funding for welfare and Universal Benefit is increasing under the Conservatives

  13. Mike Wilson
    Posted October 24, 2019 at 7:17 am | Permalink

    As always, no mention of getting rid of government waste and mid-use of our money. I am bored listing them. The farcical attendance allowance for the House of Lords. Paying the expenses for previous prime ministers to run their offices. The absurd cost of renovating parliament. 200k salaries for council leaders. The promised bonfire of the QAUANGOs – which never happened. 6 BILLION on two aircraft carriers. HS2. The list goes on and on and on. But NOTHING is ever done. It just gets worse.

    And, I have asked this before, but never get an answer – if the Bank of England owns a quarter of government debt, why doesn’t it create more money and Quantitatively Ease the rest of the debt? Why just a quarter?

    Finally, how much of our money is now being used to pay the interest on government borrowing? Latest figures I can find is for the first quarter of 2018. Then it was 48 billion a year. About 4% of GDP or 8% of government’s tax take.

    The answer, as ever, is apparently more debt!

    Reply As you should know I have identified billions of pubic spending we need not do starting with HS2 and EU contributions.

    • Mike Wilson
      Posted October 24, 2019 at 9:45 pm | Permalink

      What about the rest?

  14. oldtimer
    Posted October 24, 2019 at 7:18 am | Permalink

    Unfortunately the House of Stupidities, by its Surrender Act, has passed the buck on deciding our future to the EU. We are in stalemate. This is causing untold damage to business, to jobs and to the social order not to mention the conduct of government and the appropriate division of responsibility between government and legislature. One day there will be a day of reckoning. Let us hope it will be via the ballot box.

  15. Johnny Dubb
    Posted October 24, 2019 at 7:20 am | Permalink

    Excellent and informative article, explaining why “Austerity” was imposed all over the EU, while infrastructure investment and tax refunds to the public (instead of the bank bail outs) were the obvious remedies. Osborne et al simply following orders yet everyone keeping quiet about this. More evidence of the EU code of silence in play.

  16. grant
    Posted October 24, 2019 at 7:21 am | Permalink

    You say “I am not currently forecasting a UK recession”- so what exactly does this mean? does it mean you have some kind of superior knowledge but you’re not going to tell us? or does it mean you’re not going to tell us yet?

    Then if you know so much how come you’re not running the BoE- or how is it you’re not in No.11 doing more important work like balancing the nations budget in line with your undoubted ability instead of continually talking about it?

    Reply It means I currently think we can escape recession, but I have forecast the sharp slowdown we are experiencing as you well know.

  17. Dominic
    Posted October 24, 2019 at 7:22 am | Permalink

    The higher the tax take from the State, the more powerful the State becomes and the greater the grip the State has over our lives. This is the political paradigm the British political class has embraced

    Social control. Political advertising. Indoctrination. All driven by an obsession with social engineering and all financed by YOU, the private sector taxpayer

    In effect, we are financing our own subjugation and the rise of political and social authoritarianism

    We expect this form of pernicious politics from the freaks in Marxist Labour but not a party that has always elevated freedom, the individual and a small state above all else

    The Tory party’s caved in to the left and they’ve done it in the most sneaky way imaginable

    Depressing, utterly depressing but utterly predictable

  18. Posted October 24, 2019 at 7:24 am | Permalink

    I have said for the last 8 years and Why I was on BBC radio that the gold standard, fixed exchange rate self imposed constraints do not apply to our monetary system.

    The budget constraint should be replaced by an inflation constraint. As the only constraint the UK faces after we leave is a skills and real resources constraint. Things we can run out of.

    The treasury and BOE can never run out of keystrokes. Keystrokes that credit reserve accounts and gilt accounts. So the BOE can hit its overnight interest rate in the overnight interbank market. Those that provide goods and services to the UK government’s bank accounts. The small and medium size businesses.

    If you stood in Glasgow John I would vote for you. Finally the truth and finally at 49 years old something to vote for.

    All that is left to get rid of us the taxes fund government spending myth. Another hang over from the gold standard.

    • Edward2
      Posted October 24, 2019 at 3:35 pm | Permalink

      We have inflation now.
      Tell us what annual level of inflation is OK.

      PS
      Nice to know we don’t need to pay any tax.

  19. Dan
    Posted October 24, 2019 at 7:27 am | Permalink

    I think a new economic policy needs to stem from complete reform of our tax code. Indeed, a great deal of our political framework, in terms of funding, spending, taxation and so on could stem from a Great Tax Reform. At over 21000 pages, our tax code is just ridiculously large. If you consider that the best tax code in the world is that of Hong Kong and is stands at 276 pages. 21000 pages plays 276! I am not saying we should aim at that number but simplifying and reducing the tax code would be to everyone’s benefit (except maybe tax lawyers and accountants!). Perhaps, Mr Redwood, you already have something similar up your sleeve?

  20. Dave Andrews
    Posted October 24, 2019 at 7:29 am | Permalink

    Is this one example of where EU membership is a good thing, in that it protects citizens against the over-spending of governments they elect?

  21. Johnny Dubb
    Posted October 24, 2019 at 7:30 am | Permalink

    Sir John.
    Off topic I know but “Tusk recommends an extension to EU 27 in order to prevent no-deal” is the headline today. I thought they weren’t worried?

    • Martin in Cardiff
      Posted October 24, 2019 at 12:57 pm | Permalink

      More Infantile Absolutism.

      Doing the very easy to avoid mutual serious problems – but mainly for the UK – does not amount to being “worried”.

      Incidentally, recent lack of steadiness in the Dow has been attributed at least in part to the UK’s woes too.

      Its negative effects are global.

      • libertarian
        Posted October 24, 2019 at 4:38 pm | Permalink

        Marty

        Stop with your infantile absolutism theres a good lad

        • margaret howard
          Posted October 24, 2019 at 9:47 pm | Permalink

          libby

          He’s right though.

          • libertarian
            Posted October 25, 2019 at 8:27 am | Permalink

            Maggie

            No he’s not and like you just parroting the same old incorrect stuff over and over is not a good look

    • Fred H
      Posted October 24, 2019 at 2:32 pm | Permalink

      Perhaps Macron will inintentionally come to the party and say Non, Je ne regrette rien. I totally understand his frustration in attempting to wrestle more power in the EU, all the while kicked back by 27 having a say in our Brexit.

  22. Sir Joe Soap
    Posted October 24, 2019 at 7:33 am | Permalink

    A bit of a red herring unless you’re an advocate of sticking by the rules which we never actually agreed to. Where was that promised vote on the Lisbon Treaty which could have removed us from these rules much earlier? And why did we obey these rules when other countries’ deficits were worse than ours and they skated round them?

    We seem to be sticklers for these rules in their rules based system.

    Equally I can’t imagine certain other countries wanting to leave the EU going through all this aggravation of paying billions, waiting 4 years and so on.

    Many countries would just do it, without the consequences we seem to have brought on ourselves. That was what the country voted for in 2016.

  23. Ian Wragg
    Posted October 24, 2019 at 7:34 am | Permalink

    As time progresses more and more faults will be found witb the WA. A good scrutiny is what Boris fears. Electoral oblivion awaits is this is passed as the voters will see it for the sham it is.

    • Chris
      Posted October 24, 2019 at 11:32 am | Permalink

      See the response to the Boris deal in the comments section of an article by Craig McKinlay on why he voted for Boris’s deal. They are excoriating in their criticisms of McKinlay support for a deal which they claim is BRINO.

      CCHQ might do well to heed the messages coming form this website. It is very reputable, often has excellent articles, and the commenters are often very well informed and usually measured. However, they will not be taken for fools.
      https://www.conservativewoman.co.uk/why-i-voted-for-boriss-imperfect-new-deal/
      “Why I voted for Boris’s imperfect new deal”

  24. Posted October 24, 2019 at 7:48 am | Permalink

    Actually the “Austerity” of the Labour Party might be a good thing. It might – just – cut down the numbers of Head Office People and allow a little freedom to the people who actually do the work?

  25. Pete S
    Posted October 24, 2019 at 7:53 am | Permalink

    Scotland, if you take away the Barnett provisions, has a massive deficit. So why are they desperate to join or stay in the EU ??

    • Fred H
      Posted October 24, 2019 at 4:41 pm | Permalink

      Pete – -new entrants historically get funded rather generously…a clue. Does that help?

    • turboterrier
      Posted October 24, 2019 at 5:51 pm | Permalink

      Pete S

      Scottish people have been brainwashed by the SNP that when they join the EU it will be a repeat of when Eire first joined and they received shed loads of funding. As we all know in the real world it doesn’t last that long. The first letter and wotd in the Scottish alphabet and dictionary begin with F. FUNDING. if it don’t get funded it don’t happen. I lived and run a business in Scotland for 15,years and eventually it wears you down on the waste of funding on things that make the majority of the population dependent on handouts and not worth getting a real job. If ever there was a real deepo investigation and realistic audit the rest of the UK would explode at the waste that actually happens with all the free handouts given in the quest to get the population to back independence. The Scottish Government have already been advised that joining the EU (if they are allowed) will impact heavily on their social policies. But as it is down here do they really listen to common sense?

  26. Hope
    Posted October 24, 2019 at 8:09 am | Permalink

    So why was this never mentioned or used as a good reason to leave the EU?

    reply I did raise it
    PS I am not going to publish your inaccurate personal attacks on me.

  27. glen cullen
    Posted October 24, 2019 at 8:34 am | Permalink

    Its not our economy ….not while we are subjected to the EU regulations …and under this WAB there regulations are going to apply to us for years and years
    The PM must not accept any extension

  28. Dominic
    Posted October 24, 2019 at 8:45 am | Permalink

    It isn’t a ‘new economic policy’, it’s simply a regurgitation of Keynesian profligacy and State-driven political spending of taxpayers money

    Just admit that all government spending is now filtered through the prism of political advantage rather than public necessity. It is the arrogance that I find deeply offensive

    Such a policy is an admission of defeat to the parasitic forces of Labour’s client state strategy and as ever the private will be forced to pick up the tab

    You’ve sold out to the left ‘big time’. Have the decency to admit it

  29. Alan Joyce
    Posted October 24, 2019 at 8:59 am | Permalink

    Dear Mr. Redwood,

    Whenever economic policy and / or spending is debated in the House, we here cries from the Opposition benches of ‘Tory Austerity’ or ‘Tory Cuts’. On many, many occasions, this has simply gone unchallenged by Conservative MP’s.

    I doubt very much that the public knows and understands that the ‘Tory Cuts’ were in fact EU-mandated cuts. Still less that the UK has to comply with debt and deficit reduction rules even though we are not in the Euro.

    • Caterpillar
      Posted October 24, 2019 at 4:48 pm | Permalink

      Unfortunately Osborne defended the cuts fundamentally. It does though appear that he managed to destroy people’s savings, cut the spending on universal credit, cut indexing on historic deferred pensions and inflate assets to increase wealth inequality (particularly housing).

      Fixing these is hard (though there are potential routes), admitting/explaining them is harder (perhaps the EU is a contributing factor, possibly the culture of the IMF single playbook and of course Liam Byrne’s note/joke).

  30. Fred H
    Posted October 24, 2019 at 9:05 am | Permalink

    Does this Boris WA MKxxxx release UK from the requirements of the Maastricht rules immediately or some years in the future?

    Reply The UK should have a reflationary budget this autumn and get on with the post Maastricht world, but technically it should adhere to the budget requirements until December 2020.

  31. sm
    Posted October 24, 2019 at 9:31 am | Permalink

    I await some reasoned responses from the usual Remain posters to this important post, rather than sneers and jibes please.

  32. James Bertram
    Posted October 24, 2019 at 9:46 am | Permalink

    So the Labour Party wants to:
    – end ‘Austerity’ (against EU requirements to reduce debt to 60% of GDP)
    – safeguard workers rights (However, workers rights are often much lower in the EU. Too, most of the progressive legislation on workers rights comes from the UK, not the EU. Freedom of Movement allows large businesses to keep wages low by importing Labour and outsourcing manufacturing to countries in the EU where wages are lowest)
    – Nationalise industries ( Prevented by EU laws on State Aid).

    Can anyone tell me why Labour is a Remain party rather than a Leave party?

    • Caterpillar
      Posted October 24, 2019 at 11:05 am | Permalink

      James Bertram,

      I agree there can be no policy or core value reason for Labour to have become remain, or to favour the Single Market, CU and alignment. I think the only reason is that they are further from winning an election now than they were when PM May lost her majority. The Left-of-Centre policy arguments were clearly made by Guinan and Hanna in the New Statesman 20 July 2017 (I’ll put a link as a separate comment). What is absurd is that I have read/heard thoughts around areas that Left of Centre would argue coming from Redwood (e.g. reflationary policy), Johnson (e.g industrial strategy) even Fox (e.g. progressive trade). PM Johnson even offered that the HoC could all meaningfully contribute to the next stage after the contested WA – it seems to be not about policy and country in which there could be surprising agreement across the HoC, rather it seems to be about ‘them’ vs ‘us’.

      Whenever the next debate on Brexit appears I would enjoy it if a Tory of Dr Redwood’s capability made a hypothetical argument for some of the Left of Centre policies that would be possible on leaving.

      Despite the problems of the WA and WAB all that was needed was to quietly read through both, flag the issues (including the misinterpretations) and fix them. To hear Labour incessantly make neoliberal arguments is strange,

      • Caterpillar
        Posted October 24, 2019 at 4:14 pm | Permalink
        • James Bertram
          Posted October 24, 2019 at 9:54 pm | Permalink

          Thank you, Caterpillar.
          Very good article.
          To me, whether Left or Right, Brexit is very simple.
          We make our own laws, and not have them made for us by unelected bureaucrats in Brussels.
          From that won independence, we decide what we want our country to be like, and then have to fight for that (now unencumbered by 27 other countries wishes – small is beautiful).
          Brexit is about taking responsibility for governing ourselves, and fighting in a smaller pond for our dreams.
          Why anyone does not want that, and wants to be run by unelected bureaucrats, beats me.

          • Caterpillar
            Posted October 25, 2019 at 6:50 am | Permalink

            Totally agree.

  33. Posted October 24, 2019 at 10:02 am | Permalink

    The U.K. is part of phase 1 and phase 2 of the Euro. We are compelled to run our economy for the benefit of the EU and not for the benefit of the U.K. anybody who does not understand this is has not been able to weigh the desperate necessity for Brexit by 31st October at the latest!
    However as the PM has surrendered the Government to a Parliamentary coup and cooperated to trash our constitution, he is just another a rudderless May.
    I will never vote Tory again.

    • Chris
      Posted October 24, 2019 at 10:27 am | Permalink

      There is a very interesting/revealing response to Craig McKinlay (S Thanet) who has written an article on Conservative Woman website on why he voted for Boris’s deal, despite being a “Spartan”.
      https://www.conservativewoman.co.uk/why-i-voted-for-boriss-imperfect-new-deal/
      Why I voted for Boris’s imperfect new deal

      The Conservative Woman website is very reputable and has high quality articles, and commenters are very often very perceptive and measured. However, the response to McKinlay and his voting for boris’s deal is excoriating.

      Sir John, I hope that CHQ can look further than the polls (which they claim are reassuring to Boris and his current push re the tweaked May WA) and get out into the real world, and listen to ordinary people and read what they have to say.

    • Chris
      Posted October 24, 2019 at 10:35 am | Permalink

      LA, I agree with you. I also think that Boris is weak and is being buffeted about by those in his Cabinet who are not wanting an election and advice from Cummings, who it seems does want an election.

      I think there has to be an election, but the Cons will be lucky to win it with a convincing majority if they follow Cummings’s policy, which seems to be driven by a visceral loathing of Nigel Farage (there are also plenty of Cons MPs who have a similar loathing, which was made clear in public comment during the Referendum campaign). This apparent hate of Farage is severely clouding C’s judgement in my mind and is preventing an alliance of some sort between the Cons and the Brexit Party.

      A landslide in an election is attainable for the Cons plus Brexit Party for the clean break that we voted for. A fudge such as Boris’s current tweaked May WA was not on the Referendum ticket. Anyone in any doubt, look up old videoclips – there is a splendid one by David Cameron spelling out exactly what Brexit would entail (not to mention the government leaflets and broadcasts).

      • steve
        Posted October 24, 2019 at 6:07 pm | Permalink

        Chris

        Yes indeed. Because truth be known they’re sh*t scared of Farage.

        I don’t think Conservatives wouldn’t win an election now. Labour and the Libs will go down for good.

        My own view is Her Majesty should drag them by their ears and force them to face the music.

    • Robert McDonald
      Posted October 24, 2019 at 11:08 am | Permalink

      How on earth can you point the finger at our PM for the coup supported by conservative traitors ? Boris has done his best to drive the deal through and it is entirely down to the Hammonds of the world that he has been thwarted. I will only vote Tory, not even BP, as the true Conservative party, and our nation, are now being lead … at last.

      • Lifelogic
        Posted October 24, 2019 at 12:11 pm | Permalink

        Indeed, but surely no one sensible can vote Conservative if the party is to allow any of the 21+ Hammond/Gauke/Grieve traitors back. Nor if they go into the election promising to push this (still putrid) treaty through. It is clearly far worse and far more expensive than no deal. It virtually ensures endless years of trade negotiations and with both hands tied behind our back.

        • Caterpillar
          Posted October 24, 2019 at 4:35 pm | Permalink

          Lifelogic,

          You may be economically, democratically and sovereignly correct but …

          As long as the withdrawal treaty allows a unilateral way out at the end of 2020 and the DUP recognise that if there is an FTA NI is as the rest of the UK, and if there is not an FTA the NI Assembly has its 4 year consent mechanism then I can understand the PM going for an election based on this.

          1) Project Fear 3.0 and Extremism cannot be used against Conservatives
          2) Potentially it might give ‘excuse’ for NI Assembly to reform (NI gets CA from the WA)
          3) It allows pressure to protect fishing, just leaving may leave waters unprotected.
          4) It might release some delayed investment now.
          5) Currency increase may put downward pressure on supply side allowing a fiscal loosening (hopefully pushing the hospital, school, transport build)

          Still, I am in a very pro-Labour constituency and would be looking to vote TBP if there is a candidate. Conservatives wouldn’t win anyway so some type of agreement that protects point (1) would be ideal. (I also think Conservatives need to somehow devolve at least part of immigration to face off SNP. Also need to move to English Parliament not just regional devolution, the latter looks aimed at maintaining London centricity. Dumping Heathrow 3 (play the nitrous oxide card) and backing both Birmingham and Manchester as transport hubs is also needed.)

      • Posted October 24, 2019 at 1:48 pm | Permalink

        Boris has no need to revert to Parliament which had legislated for WTO Leave. By doing so he is deliberately allowing the rabble Parliament o hijack the agenda, we have to assume he wants them to do so as May did.

        There was no need for Boris to grant the Benn ‘bill’ Royal assent as it had been enacted unconstitutionally. He ha there colluded with trashing of our Constitution.

        ‘A deal’ was always shorthand for ‘a trade Deal’ – so because May colluded with the EU to trash the Article 50 spec, we are definitely going to leave without a ‘trade deal’ as Labour correctly point out.

        May as well leave without a Withdrawal Deal as well! Business is in hell waiting for these really stupid people in Parliament to do as they have been instructed!

      • James Bertram
        Posted October 24, 2019 at 2:02 pm | Permalink

        Robert, was that ‘lead’ as in lead coffin? (Lead lining a coffin makes sure that the smell and any toxins from a dead body can’t escape and harm the environment). Hopefully the treacherous Tory Party will soon be buried – more than they deserve.
        Their epitaph:
        Betrayal of the Union.
        Betrayal of 17.4 million Leavers.
        Betrayal of the Nation.
        RIP.

        • Fred H
          Posted October 24, 2019 at 2:27 pm | Permalink

          or here lies a Con man, too often proven.

        • Posted October 24, 2019 at 5:16 pm | Permalink

          With one notable exception. Our host, who may well not be a Conservative soon when he is punished for sticking to Conservatism!

      • Martinez
        Posted October 24, 2019 at 3:18 pm | Permalink

        Robert- Boris is up to his old tricks again saying to Tusk we have asked for an extension but we really don’t want one- we can get the WA done and all of this nonsense all a la D Cummings. Rom their point we know that the EU would like to see this business settled but not at any cost. If the door closes by default or by accident it won’t be because the EU were not trying but more like a catastrophic failure on the part of British politics both Tory and corbanysta for which generations of our young people some not even born yet will pay the price

  34. Simon Cohen
    Posted October 24, 2019 at 10:48 am | Permalink

    Whilst I applaud John’s acuity of analysis regarding the bogus and damaging EU deficit rules and the absurd and arbitrary goals of a debt/GDP ratio regardless of the actual state of the economy, I find him tardy, over the years, in vociferously critisising his own Government in a public overt way.

    While the EU austerity rules are damaging, this blog post gives the impression that the Tories were under the EU yolk and were were forced, unwillingly to accept them. On the contrary , from 2010 the Tories spouted austerity myths like there was no tomorrow and built a whole ideological program based on them involving:

    1. The vilification of the poor, vulnerable and ill (remember Osborne’s ‘those that get up in the morning/those with their blinds drawn-not to mention the grotesque attack on the disabled all leading to, arguably, thousands of deaths?
    2. The appalling council cuts that saw basis services wrecked and reduced including social care, mental health, libraries and housing provision.
    3. The way the Government exploited divisions between the in work poor and benefit claimants, the poverty of the former being largely the result of high housing costs and stagnant wages. The Tories knew that they could exploit this frustration in order to avoid highlighting the REAL problems.
    4. John rarely, in a noticeable way, challenged Cameron’s illiterate comparison of the Government’s spending capacity with a bank credit card – a myth that persists and Osborne’s illiterate drive towards a structural budget surplus.

    On the positive side, I often use John’s work in talks to the Labour Party, pointing out how it is a Right Winger who actually understands the monetary system whilst the Left flounder in confusion!

    I’d take exception to the last paragraph of this blog. The distinction between current spending and capital is rather mott and artificial as current spending on health, well-being, socila care is JUST as much an investment than on material structures that become an asset on the Government’s books -in the end a distinction without a difference.

    • Edward2
      Posted October 24, 2019 at 3:39 pm | Permalink

      Strange austerity when state spending was £340 billion in 2000 and is predicted to hit £875 billion in 2020.

      You think an even bigger state will cure all the problems you mention..
      Your solution is like a shipwrecked sailor in a life raft drinking sea water to quench his thirst.

  35. Mark B
    Posted October 24, 2019 at 10:54 am | Permalink

    Good morning.

    So you deleted my post which shows that the UK Government was exempt from EU Budget and deficit restrictions and therefore had no need to implement them. Only EURO countries were bound by them.

    Reply It is not true. The UK is under the Maastricht rules as the Council decisions I have cited shows. We do not know what would have happened if a UK government had refused to comply because UK governments accepted advice that they had to file their numbers and respond to the requirements of the Excessive deficit procedures as the documents I quoted show.

    • acorn
      Posted October 24, 2019 at 12:42 pm | Permalink
      • Mark B
        Posted October 24, 2019 at 4:36 pm | Permalink

        acorn

        Thanks. But define best endeavours ? My original, which was deleted, was very specific. It said we were excluded from the EU relevant legislation as we were not in the EURO.

        • acorn
          Posted October 25, 2019 at 5:25 am | Permalink

          The UK is not a member of the single currency and cannot face sanctions under the EU’s SGP. The UK’s obligation under the SGP is to “endeavour to avoid an excessive government deficit” as a result of its Protocol to the EU Treaties (Protocol 15). The Convergence Programme sets out the UK’s medium-term fiscal policies. https://www.gov.uk/government/publications/uk-convergence-programme-2018-19

          Reply You deny and ignore the requirements placed on us by the Excessive Deficit procedure 2008 to 2017. These were Treaty obligations accepted by a Labour, a Coalition and a Conservative government controlling us for nine years

          • acorn
            Posted October 25, 2019 at 5:23 pm | Permalink

            JR, it is becoming obvious to people like me, how little you understand the EMU system.

          • Edward2
            Posted October 25, 2019 at 7:09 pm | Permalink

            You switch onto EMU when faced with your original argument in ruin acorn
            There are treaty obligations which financially affect the UK.
            Just admit it.

          • acorn
            Posted October 26, 2019 at 6:52 am | Permalink

            EMU is the collective term for all the subsequent nonsense that’s the SGP, EDP, FP etc etc. The following link is the principal reason the EU is failing. UK Conservative governments were and still are the keenest advocates for EDP, it was the best excuse for blanket austerity. It will be difficult to blame the EU for post brexit austerity. https://www.ecb.europa.eu/mopo/eaec/fiscal/html/index.en.html

    • Posted October 24, 2019 at 1:50 pm | Permalink

      They would have been fined because they are compelled to implement the phase 1 and phase 2 Euro regulations. Our opt-out is from phase 3 ONLY – ie the actual use of the coin.

      • Fred H
        Posted October 24, 2019 at 2:26 pm | Permalink

        Lynn . . you won’t get much for a Euro coin, even the paper buys very little.

        • Posted October 24, 2019 at 5:13 pm | Permalink

          Fred I will never own a Euro. I’m one of those stubborn sods who refuses to own a German car etc. 64 years and counting, I will walk rather than give them a living, and I’m certainly never going to support German Europe and it’s institutions.

          • Fred H
            Posted October 24, 2019 at 8:05 pm | Permalink

            Lynn….German cars are mostly well, but over engineered, pretty good quality. However, if, and its a really big if, you want to move in a car from A to B (I would avoid dodgy German diesels ha ha ) will a cheaper, simpler car do? If you feel boastful, that you can afford a very high priced German car on your drive, then carry on buying. Should a canny common sense prevail consider fewer cars per couple, per family and buy when you must a used car.

          • margaret howard
            Posted October 24, 2019 at 9:37 pm | Permalink

            Lynn

            I suppose you refuse to support our German royal family from the House of Saxe Coburg Gotha and former kings of Hanover as well. Still they have ruled this country rather well for over 300 years.

          • Fred H
            Posted October 25, 2019 at 7:23 pm | Permalink

            MH – – you lost me on the subject of German cars… Do the ‘German’ Royal Family make cars? Why mention?

        • hefner
          Posted October 24, 2019 at 5:47 pm | Permalink

          Funny remark: how much of a cup of coffee do you get for £1, about 3/4 of a cup in Gregg, 1/2 in any of the more “upmarket” chains. How much for €1, about the same but today £1 = €1.15.
          So tmalss a £ appears not much better than a €.
          And a weekly shopping basket of fruits and vegetables in France is a bit cheaper in € (and usually of better quality for the same price in £) than in SE England.

    • Mark B
      Posted October 24, 2019 at 4:34 pm | Permalink

      Reply to reply

      So why did you not let the original comment, complete with the section from the EU legislation you linked to stand and just correct it, like you did when I referenced the wrong Temeraire ?

      Reply Because I have quoted the EU Council decisions which you ignored.

  36. Oxon
    Posted October 24, 2019 at 12:26 pm | Permalink

    Here we have a clear illustration along with suffocating regulation why the EU continually underperforms economically. The closer we align to the EU the more we ape the EU stagnatory economic growth resulting in a reduced tax take with less scope for investment in public services.

    The sooner we separate cleanly from the EU and lock in the Brexit gains to ensure accelerated economic growth, then coupled with sensible taxation to maximise the tax take whilst encouraging entrepreneurship and competitiveness, the investment challenges for the NHS, Social Care and Education can all be met.

    • Rock-a-bye
      Posted October 24, 2019 at 10:10 pm | Permalink

      I watched Mario Draghi LIVE while Opposition parties were queuing up at the toilet when in danger of a General Election against Boris
      You haven’t missed much. He spoke for a long time. He always speaks for a long time. Each time he speaks for a longer time than last time. Then he takes questions for a long time, each one relating to a previous long speech when he spoke for a long time and then journalists fall asleep at about 3am utterly exhausted. That’s about it for Mario Draghi. A lot about nothing. No he is not Ex-Speaker of the Italian Parliament.

  37. oldtimer
    Posted October 24, 2019 at 12:46 pm | Permalink

    I was astonished to hear, on the BBC`s WATO, Labour MP Ben Bradshaw describe Brexit as a “minor issue”.

    That, it seems to me, is a measure of the incomprehension of a committed Remainer of the views of those who voted for Brexit. I imagine he might want to revoke Article 50 too. He, and others of the same thinking, should be careful what they wish for. If he imagines that all 17.4 million people who voted for Brexit would accept quietly its result being overturned obviously does not understand the British.

    • a-tracy
      Posted October 24, 2019 at 4:32 pm | Permalink

      oldtimer, you say these MPs don’t understand the British. Perhaps they do and that’s why they are behaving as they are. Let’s face it the English allowed our MPs to vote student loans and maintenance loans only for our children giving them taxes of 9% above just £17000 loan 1, and 15% if they did a Masters too and they got away with any repercussions and we still just take it. English Prescription charges, English social care charges, £250 per day one lady I know is being charged until her house value runs out! Perhaps this is just one more push too far and the whole damn lot will fall over.

  38. Slackwater
    Posted October 24, 2019 at 12:56 pm | Permalink

    John as a large country at the EU top table we had more than a fair share of clout over the years if only our inept politicos had exercised it..but they didn’t..they went along with everything like sheep obeying all the rules without kicking up a fuss and here again we have more excuses for our collective failings and still trying to lay it at the door of the EU..so just who do you think we’ll be able to blame for the next economic downturn from next year..still the EU’s fault? Jeez It’s near time for my hols..this time the Canaries

    • Robert mcdonald
      Posted October 24, 2019 at 2:33 pm | Permalink

      The maths disproves your statement that we had influence in the eu. We were the 2nd largest payee, and at least 20 of the 28 were net receivers. All with equal votes … however the eurocrats were the ones who dispensed our money around. Guess whose whims the 20 were most likely to bend to.

  39. mancunius
    Posted October 24, 2019 at 1:09 pm | Permalink

    One of the main points about GDP is that it is not GDP per head. It is easy for any government to increase nominal GDP by increasing immigration. The effect is to raise GDP and make the individual no better off, or even poorer.

  40. Pragmatist
    Posted October 24, 2019 at 2:29 pm | Permalink

    I was speaking of Labour Party and trades union meetings in Yorkshire’s industrial areas. We have heard about “daft” southern everything normally expressed as “in London”
    We have for one reason or another a priority of Order. It seems almost genetic. Perhaps it is. It has to be orderly! Everything! Parliament goes against the grain and so do Labour MPs, strangely. Their behaviour is not appreciated. Nu gud

  41. glen cullen
    Posted October 24, 2019 at 3:10 pm | Permalink

    The withdrawal agreement cannot be renegotiated (see Article 50(3)TEU EUCO XT 20006/19 section (11)) …..its EUs own law that they can’t negotiate a further extension …..they and our government seem to be ignoring the rule of law

    • Edward2
      Posted October 24, 2019 at 4:47 pm | Permalink

      They do what they want.

    • steve
      Posted October 24, 2019 at 5:57 pm | Permalink

      glen

      “…..they and our government seem to be ignoring the rule of law”

      And they also make new laws in express time just to suit themselves.

      The whole thing stinks.

  42. jane4brexit
    Posted October 24, 2019 at 3:26 pm | Permalink

    Sir John, I am not a banker so do not know exactly how it worked but some years ago, in an article printed in 2014 I think, I read that because we are in the EU we have to pay interest on gilts that we otherwise would not, which I suspect is linked/similar to your point about The Bank of England.

    The article said that not doing this would save the UK £12.5 billion a year and I have tried to draw many peoples attention to it, both before and since the referendum, as if correct this means this charge adds an additional £12.5b to our annual cost of being an EU member. In fact I expect the amount is likely to be even more five years later.

    Last time I looked for the article it said it had been withdrawn from the internet. If this ‘gilts’ charge is related to your point about our debts to our own bank, which I think was how the article described it, could you please confirm whether we could save an amount of around £12.5b+ every year in this way?

  43. Bob
    Posted October 24, 2019 at 4:19 pm | Permalink

    If you saved up to the annual ISA allowance of £20k pa, it would take almost £2 million years the save £39,000,000,000. Two million years!

    • hefner
      Posted October 25, 2019 at 6:48 am | Permalink

      That’s very nice of you to want to pay these £39 bn all by yourself. Thanks a lot.

  44. ian
    Posted October 24, 2019 at 4:24 pm | Permalink

    The con party think they can win GE outright with BJ, most people do not like BJ and know they will be stitched up on any deal with the EU, and that goes for leave and remain, voters alike. People are fed up with NEO LIBRAEL KEYNESIAN POLICY, they see the money going out, but it never gets to them, government spending 250 billion a year from 2010 when it was 650 billion a year, also government procurement contracts and servicing contracts going to 25 private companies of which 20 are based in offshore tax havens who pay no tax in the UK, why do you think that is?

  45. a-tracy
    Posted October 24, 2019 at 4:47 pm | Permalink

    I keep reading that we have thousands of male refugees unable to work in the UK, then I read our male prisons are becoming care homes with a high % of social needs over 65’s. We need to sort out economic policies that help all groups that are currently living off benefits and taxpayers money in total. If we take in Refugees and don’t ask them to leave when they fail their first asylum claim and their second, then their third making up millions for our legal profession then lets accept them and put them to work and give them lodgings in new buildings connected to our hard to fill vacancies on minimum wage, then charge them social rents on student like digs until they learn sufficient English and skills to be totally free to apply for work outside of the public sector. If these refugees are genuniely looking for a safe home and good work then what could be more satisfactory than caring for people.

  46. BillM
    Posted October 24, 2019 at 6:42 pm | Permalink

    There is something, (to put it politely) very unsavory, about the EU telling us, the sixth richest Nation in the World, how to run our own economy.
    That die-hard remainers accept this status quo is bewildering. If the true facts (like these) were published in our Daily Newspapers and on the BBC, I believe there would be less Remainers and more Leavers upon our streets.
    Yet Remainers insist that those who voted to Leave did not know what they were voting for. I suspect that it is the ordinary folk out there who were frightened into voting to Remain within the EU, who were completely mislead by the scare stories concocted to do just that. But I do not hear any such challenge from the Leave Campaigners.
    For the outrageous claims by the Europhiles not to be publicly discredited and rejected on our National media is a huge mistake because not loudly shouting them down lends credence to the Remain assertions.
    Alas SJ’s suggestions will be on the back burner util we have actually left the EU, lock, stock and both barrels. Nothing can be done until we know we really have our desired independence.
    Surely Brussels realises that Britain can be good as a neighbour across the Channel but a complete source of disruption to them should we remain under their control in any way whatsoever.
    I trust the EU Commissioners will prefer to deal with us rather than fight us.

  47. margaret
    Posted October 24, 2019 at 6:57 pm | Permalink

    I find that instinctively I want to shoot down the mouths who keep making irrelevant hot headed comments which in effect are showing off, however as in all things I am here to learn. I certainly believe John that austerity was a directive from the EU .I believe that there are many deals to be made without being told which deals are suitable. I believe that John could set out a way forward for prosperity, but I don’t believe our population is geared to thoughtful hard work and keeping to a plan.

  48. Polly
    Posted October 24, 2019 at 8:06 pm | Permalink

    So it looks like Boris is going to plunge Britain into a dreadful crisis if this poll is right….

    ”If the deadline for the UK to leave the EU has been extended beyond the 31st of October 2019″:

    LAB: 27%
    CON: 26%
    BREX: 20%
    LDEM: 18%
    GRN: 4%

    via @ComRes, 16 – 17 Oct

    If so, it will be entirely the fault of those individuals who failed to understand the serious nature of the anti Brexit conspiracy, and who failed to confront it before time ran out.

    Polly

    • Lifelogic
      Posted October 25, 2019 at 12:54 pm | Permalink

      Indeed we do not want the May deal with a few fig leaves on. We want real Brexit and a Brexit Party /Conservative deal. What part of 9% and fifth place do the Tories not get?

  49. ian
    Posted October 24, 2019 at 8:26 pm | Permalink

    Yes a-Tracy, but what you don’t know is that the ones who do get through the system receive the top disability ward of 190 pounds a week and out of work benefit of 110 pounds a week plus housing paid for with rates, why do you so many are risking their lives to get to the UK.

  50. ian
    Posted October 24, 2019 at 8:28 pm | Permalink

    Plus grants for new furniture and so on.

  51. Lindsay McDougall
    Posted October 24, 2019 at 8:38 pm | Permalink

    The UK is not de jure obliged to comply with the EU Growth and Stability pact. This is a direct consequence of opting out of the single currency. It only appears that we have a de facto obligation because Osborne did in fact comply with it.

    “One quarter of the State Debt is owned by the Bank of England and is in turn owned by the State.” If that is true, then there can be no objection to forgiving that portion of State Debt and formally wiping it off the balance sheet. Or have I missed something?

    That would reduce State Debt to 65% of GDP. You may be happy with that but I’m not, particularly as it seems that we are in for a bout of fiscal incontinence, driven by higher State spending. The private sector needs as much capital as it get to finance import substitution, investment in new export markets, in new technology and retraining.

    Reply We are under Treaty obligation to comply with the economic semester, and did so under Council decisions. UK government requires Ministers to obey EU law.

  52. Lindsay McDougall
    Posted October 24, 2019 at 9:01 pm | Permalink

    Breakdown of UK public expenditure for FY2020 – source http://www.ukpublicspending.co.uk from HM Treasury’s PESA report:

    Protection 4%
    Welfare 15%
    Defence 6%
    Education 11%
    Health Care 19%
    Transport 4%
    General 2%
    Other 14%
    Interest 6%
    Pensions 19%

    Key features:
    – Expenditure on debt interest matches that on defence
    – And is 50% higher than that on transport
    – Welfare, health and pensions expenditure totals 53%

    Reply We pay one quarter if the interest to the Bank of England which sends it back as a dividend

    • a-tracy
      Posted October 25, 2019 at 7:53 am | Permalink

      I’d like to break that Pensions down.

      State Pensions to people with more than 39 years contribution history
      Pension Credits and pension top-ups to people without a contribution history
      All final salary Public Sector worker pensions
      Total of defined contribution public sector workers pensions

      • Caterpillar
        Posted October 25, 2019 at 11:25 am | Permalink

        OBR has net public sector pensions at about 1.6% (~0.6% GDP) of total expenditure (net because 43bn payments about 30bn contributions). OBR also has state pension at about 12% of total public expenditure.

  53. Mark Richmond
    Posted October 24, 2019 at 9:59 pm | Permalink

    I think it is truly jawdropping to learn that “Tory austerity” was mandated by Europe and the implications for understanding the way our political parties communicate with voters are immense. AFAIK no politician, on either side of the political divide, has ever explained this before. And AFAIK no mainstream journalist has written about it.

    What it means is that the Cameron governments preferred seeming tough on debt and preferred to encourage the myth of “Tory austerity” rather than admit they were just obeying treaty obligations and dictats from Brussels. Meanwhile the Labour opposition prefer posturing, scaremongering and tribal warfare to giving voters a proper understanding of what is going on.

    The conceit is beyond belief and I am personally coming to the conclusion that the only sensible move at a general election is to vote for a political party that has not participated in this charade and that has consistently campaigned against an overbearing, undemocratic EU.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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