On Thursday I set out the opportunity we have to set a new fiscal framework or economic policy once we are free of EU Treaty requirements. They have made us run our economy with the twin aims of cutting the government deficit and cutting state debt as a percentage of GDP. Labour, the Coalition and Conservatives in government since 2008 have accepted these imperatives and set the debt and deficit targets as required.
I recommend that the purpose of economic policy is changed to
The promotion of higher living standards through the growth in real incomes for all
The target should be
Government policy should aim to achieve over the next ten years a rise of one fifth in average individual spending power. Average net incomes should rise by one fifth plus the amount of inflation as measured by the CPI(H) index
The government should also continue to be prudent with public finances. It should adopt a Balanced budget rule. This should say
The government will ensure it collects enough revenue to pay for all current spending. It may apply a symmetric cyclical stabiliser, running a surplus during good growth and a deficit during a bad recession.
The government may borrow for public capital expenditure purposes. Each project approved must meet an appropriate test to establish it will make a decent economic return or to establish its importance to the provision of an approved list of public services free at the point of use.
This new fiscal framework would allow us to reduce the tax burden today to boost real incomes and promote more growth as a result
October 26, 2019
Good morning.
That’s an odd turn of phrase ?
Actually I’d really rather the government not do anything. It will just make a complete Horlicks of it. Thanks.
October 26, 2019
Yes, the road to prosperity does not run through Westminster except for those that manage to get their snouts near the trough.
October 26, 2019
“near the trough” – or Panama.
October 26, 2019
Well, if you insist on a policy such as leaving the European Union, which will cause a serious relative shrinkage in GDP, then in turn that lowers your tax take and – forgive my naĂŻvety – increases austerity.
But austerity is relative too, fortunately for those who would increase it whilst claiming that they are doing the opposite.
October 27, 2019
The serious shrinkage you talk of is actually a small percentage less growth compared to what it might have been had we remained in the EU.
And that is a 15 year guess into the future by the very pessimistic pro remain Treasury.
Pure remain propaganda which you have decided to believe.
October 26, 2019
Amen to that brother.
October 26, 2019
Yes, the thought of a UK government of the type present since 2016 actually being able to keep to any promises or rules is pie in the sky. Please Sir J don’t dream up more promises until past ones have been honoured.
The mood is swinging slowly back towards BXP as people realise that they might actually keep their promises.
October 26, 2019
In principle, I think that state intervention in the economy is a Bad Thing. The evidence for this is I think compelling. I also think it is morally wrong to force people to pay for things they do not want, even if they are good things to have.
That said, because the state HAS interfered with the economy so much, and so much damage has been done as a result, some remedial action by the state might be best – although the dangers of the state doing even more damage whilst trying to help are very real. The other thing to consider is that, politically, turning off the state money tap, scares many, many people, in the same way a timid child would be scared by the prospect of removing stabilisers from their bike. Of course, this timid child might not be imagining the freedom and happiness that would come with stabiliser-free cycling. But also, it would be irresponsible for a child’s parent to simply remove the stabilisers and leave them to their own devices. An initial helping hand would be invaluable in many cases.
As far as borrowing is concerned, their is a simple principle; borrowing to invest in order to generate wealth and yield a return is very wise. Borrowing in order to have something immediately, then living with a deficit and an increasing debt burden is very stupid.
October 26, 2019
But if you want say, to make cladding tower blocks with combustible materials illegal, then what agency other than the State can do that?
Regulation is intervention, and it is utterly essential.
We see, with the US aviation manufacturers’ now very serious problems, what happens when the State shrugs off its responsibility for enforcing such laws too, and instead contracts that, in essence, back to the industry supposedly regulated.
October 26, 2019
In theory, there should be no issues with the examples you cited, or nearly any other possible example; poor quality products will be unsuccessful at market and be naturally weeded out. In the instances where products are purchased only later to be found defective, of course one hopes that these defects can be identified in advance of serious repercussions. Responsible private individuals with a genuine interest in their own person and property would be best placed to react here.
It almost seems unfair to observe that the Grenfell tragedy was a result of a failure by the state (having assumed the responsibility) to regulate properly in the first instance, and then to fail to enforce regulations subsequently made in the second instance.
There are very few instances where state regulation is necessary. This is not the same as saying no regulation is necessary, but rather that regulation can be provided by private individuals and groups, and often provided more effectively.
All this said, you are dependent on responsible agents for the successful working of such systems. In practice, given the infantilisation of their citizens by ‘nanny’ states, a sudden switch to a society in which the state’s role is drastically reduced is not desirable. Nevertheless, an aspiration to a smaller state seems wise. Of course, there is no reason why groups of individuals cannot freely associate for the pursuit of common goods. A small state would, I think, lead to people within society looking to one another for mutual aid and assistance, rather than depending on the state.
October 27, 2019
There have been laws that mde killing or injuring people illegal for centuries.
But in that time a huge volume of rules, regulations, directives and laws have been added onto the productive wealth creating sector of the UK.
The State thinks it can stop things going wrong by passing ever more law.
But it cannot even stop dangerous failures in the sectors it does directly control like prisons, care homes, heath service and education.
October 27, 2019
Why were the tower blocks clad in the first place?
October 26, 2019
If we continue with the WA we will be subject to the EU treaty requirements for at least another 3 years possibly longer.
Do you still think we are going to leave on 31st.
October 26, 2019
The payments to Brussels will go from ÂŁ39 billion to ÂŁ65 billion.
Based on the maximum annual ISA allowance of ÂŁ20,000 it would take over three million years to save that amount of money.
October 26, 2019
A balanced budget with a Conservative government, especially under Boris, I cannot see that happening. More subsidies for renewables, 0.7% of GDP for foreign aid and an virtual open doors immigration policy. 300k more people a year, most of whom will be effective wards of the state for the rest of their lives, while those who do work need non contributory benefits to top up their wages. All I can see is more borrowing and more taxes.
October 26, 2019
Indeed Osborne and Hammond have given us the highest taxes for 40 years combined with generally dire public services too (while pathetically lying they were tax cutters). We need far, far less government and far less red tape it should be no more that 25% of GDP. It would then be a far higher GDP however. We need to cut all the countless parasitic, damaging and pointless jobs.
October 26, 2019
Higher taxes and we are still borrowing. I thought all these people we were bringing in would help to pay for all the expenditure the government keeps promising ?
October 26, 2019
We do not have an open door immigration policy and migrants, on the whole, contribute more than the natives.
October 26, 2019
GDP per head should be rising fast if you were right andy.
But it isnt despite about 300,000 new arrivals every year.
October 26, 2019
Eh you need to go through the Home Office data. We have one community that has 80% unemployment
October 26, 2019
Our fellow Europeans contribute, on average, seventy-eight thousand pounds more than they cost over the duration of their residence here, recent analysis has shown.
October 27, 2019
Flawed analysis which fails to take into account many indirect costs.
Why is GDP per head not rising rapidly?
October 27, 2019
Fellow Europeans? I didn’t know standing outside M&S hawking the Big Issue or picking fruit and veg paid so well.
That you don’t cite your “recent research” is notable and the fact you haven’t questioned it is not at all surprising.
October 26, 2019
Taxation is the gathering of the fruits of other people’s labours.
Since the imposition of the democracy scam this theft can be made to seem legitimate.
â Itâs what you voted for!â
But always, for the poor old workers, it is âJam tomorrowâ and tomorrow never comes. Never.
PS..is it true that Momentum has amassed a huge war chest for a possible coming election? If true the Tories should for once be prepared. They have screwed over the national psyche PLEASE donât let them land us with a commie govt.
October 26, 2019
Just like the Bourbons, the Tories will have learned nothing from the Peterborough by-election of what happens when you are up against a well organised and motivated group like Momentum. They do not need a load of money to know where their vote is and to get it out.
October 26, 2019
BJ is very firmly in the ‘One Nation’ Tory tradition. You are undoubtedly right. There is no good reason for people who value sovereignty, whether individual or national, and sound economics, to vote for the Conservative party. They are Labour-lite. For some, this makes them the least bad option, and so they might hold their noses and vote Tory. But they are submitting to death by a thousand cuts, rather than death by one hundred. Our kind host sadly does not represent what passes for Conservative thinking.
October 26, 2019
So perhaps now is the time to realise that even in the event of any type of Brexit under this administration, the future potential will be lost unless we have a change of direction. That is what people voted for in 2016.
It was as much about NOT letting 39 Vietnamese die because our government neither has the nous nor the technology to prevent entry of such trailers.
It was about us becoming more self-sufficient in food provision, meaning we don’t need to import so many trailers in the first place, making detection easier.
It was about us NOT having to concrete over the south east and midlands to build countless new houses, creating congested roads.
It was about us NOT being a free of charge concrete bridge to ROI.
It was about us NOT having to support non-contributors with welfare, housing, education, health and transport.
It was about us having a points-based system to allow entry according to OUR need, not immigrant need.
It was about creating a work, tax, welfare and trade system to suit the UK, not to suit EU and the wider world to our disadvantage.
It’s evident that a Tory government can’t even start on this path – Boris is reaping the harvest sown by the useless May, but who is to say another May isn’t waiting in the wings of the Tory party post-Brexit?
October 26, 2019
âGovernment policy should aim to achieve over the next ten years a rise of one fifth in average individual spending powerâ
This is a very modest aim indeed.
We could easily double spending power within ten years. Just halve the size of the state, cut the soft âloansâ for all the often worthless degrees, cut red tape ruthlessly, cut and simplify taxes, go for cheap on demand energy, relax planning, go for easy hire and fire, deal with the dire state monopolies in health and education, cull the litigation culture ….
October 26, 2019
Or we could easily halve it or worse by electing Corbyn/McDonnall/SNP.
October 26, 2019
If you want to slash state spending you need to get rid of spending on pensioners. Close to half of my taxes go on your pensions, your social care, your NHS plus all the other bits you get just for being old. My taxes could be virtually halved if we stopped these outrageous subsidies you lot get.
But, thatâs right. You want to target young people instead – who receive next to nothing.
October 26, 2019
yawn….
October 26, 2019
Didn’t England play well in the world cup?
October 26, 2019
Andy,
Youâre right.
I have never understood why young people appear to have a preference to vote Labour – a party that always wants to increase spending on pensions, social care, the NHS etc. and hence increase the countryâs national debt which the young people will have to deal with.
It was Niall Ferguson in his 2012 Reith Lectures who said :
âIf the young knew what was good for them they’d join the Tea Partyâ
âYoung people should welcome austerity measures because it means huge government debts are less likely to blight their futuresâ
October 26, 2019
Andy,
What elixir are you taking which stops you getting old yourself? I think we should be told.
October 26, 2019
Expecting pay rises is a greedy emotion and should not be promoted. Expecting tax cuts is quite normal. It means government is working better, more smartly and obviously returns our money incrementally to us by its own thrift and increased production.
October 26, 2019
You raise an interesting point. What is the government actually for?
Is it, as some people seem to think, to make us better people? (Obesity, public health issues, behaviour on the internet, safeguarding, LGBT in schools)
Is it, as some others are thinking, to provide stuff? (Schools and hospitals and ending austerity – aka paying the office workers for the government more and more).
Is simply to do the basics? (defence, Police, law and order and perhaps a few roads)
Me, I am coming round to the last one. I like the idea of going in with the USA a bit more.
October 26, 2019
What is government for? Defence, law and order – not much more than that. 15% of gdp is more than enough for that.
What do politicians and bureaucrats think they are for? To interfere in almost every single aspect of our lives from cradle to grave while ordering us around and mugging us. This while taxing us to death and pissing most of our money down the drain. They really do think they know best – despite all the abundant evidence to the contrary.
Essentially a parasite that nearly kills the host it feeds of.
October 26, 2019
Me too.
October 26, 2019
Mike …..pick and mix? Public Health (services), Schools & Hospitals, Roads (ie Capital spending) Defence, Police.
October 26, 2019
Off topic
https://www.theguardian.com/politics/2019/oct/25/rebel-mps-look-to-thwart-boris-johnsons-brexit-agenda
So the democracy deniers are still at it, do they honestly think for one minute that should they get another referendum and won that the leavers would let that result go unchallenged not on your nelly we wouldnât, it is as clear as the nose on your face that which ever party brings a deal to Parliament there never going to get it through, so there is only two options, a General Election or we leave with no deal on October 31st as laid down
October 26, 2019
I doubt that the remain MPs have any capacity to envisage a future outside of the next three months other than a rosy-tinted EU future, a happy family with some small problems that can, allegedly, be changed!
With regard to government investment : that’s like throwing mud at a wall and hoping some sticks.The short-term nature of our political system makes it more important that they make their mark with a vanity project or something different from their predecessor, like the new boss that comes in and restructures the organisation.
What the UK needs is long-term strategy for large projects, including the NHS and energy, instead we’ve got political football’s.
October 26, 2019
I’d much rather have a referendum than have BJ’s BRINO. It would be fittingly absurd to see Faragists campaigning to revoke A50 rather than BJ’s ‘great deal’, which would inevitably be exposed as appalling over the duration of along campaign. A landslide for ‘remain’ in such circumstances would in no way constitute an endorsement of the EU. In the ensuing GE, it is easy to envisage the Brexit party doing exceptionally well. BJ’s Tories would, of course, do rather less well, with the credibility of their ‘great deal’, and by extension that of their leader and indeed the whole party, in tatters.
Or we could have a GE, in which the leave vote is disastrously split, whilst the remain vote, in conjunction with tactical voting, cooperates. A hung Parliament would be almost inevitable, and it certainly wouldn’t be BJ and Farage in a position to form a coalition, even if they wanted to. (Though BJ could conceivably be ditched for a leader willing to work with Farage…)
October 26, 2019
We have witnessed an EU/remainer Parliamentary coup which is totally undemocratic and fraudulent as leave won 64:36 by constituency and because so many Party and individual GE 2017 manifesto pledges have been broken.
At the very least, those MPs who have changed party allegiance should be resigning and submitting themselves for re-election.
Thus I am not expecting a GE to take place until either a second referendum has taken place, with a new set of rules designed to favour remain, or Article 50 has been revoked.
But when this second referendum is held I shall still be voting for BRINO because however bad it is full EU membership is even worse as it is complete colonial status with the added disadvantage that our tax money will continue to be used by the EU to corrupt our MPs, civil service, corporates, educational establishments, judiciary, quangos etc..
It will be easier to continue the fight for our freedom from outside of the existing EU treaties.
October 27, 2019
I have sympathy for your view, but think that maintaining our EU membership on existing terms, together with the power to unilaterally leave at some future date when, one hopes, how exactly that is to be done has been properly thought through and obtained popular consent, represents a stronger position from which to achieve true independence.
It seems to me that the new treaty BJ is hawking, whilst it offers the tiniest of openings to achieve true independence at some unspecified point in the future – if that’s what the government of the day desires – whilst in the meantime subjecting us to the EU, and paying for the privilege, will, in all likelihood, result in a symbiotic relationship with the EU where we are ‘de jure’ independent, but ‘de facto’ a colony.
I believe this awful destiny is one subscribed to by all the established parties. Only the Brexit party truly desires independence (though what they’d do with it we don’t yet know, for they are still, for the timebeing, a single issue party, albeit the only issue that is constitutionally, and therefore foundationally, relevant). And the biggest obstacle to the Brexit party is obviously the Tory party. Ergo…
October 26, 2019
With Johnson placing all his political capital on the May deal reheated, the Brexit Party will gather a large number of votes, not enough to get any seats at all in a GE, but sufficient to oust a number of Tories and a few Labour as well. Result – we have an even more hung parliament than we have now.
This means the indecision continues, as the EU will extend till the cows come home.
If the Tories adopted the Redwood Plan, that might swing things, but it’s not going to happen is it.
October 26, 2019
I cannot see a balanced budget being able to be self imposed.
Politics is all about spending money.
Witness the difficulties football clubs get in when left to their own devices.
October 26, 2019
Whatever you believe to be the most beneficial financial policy for the UK going forward, it is all useless speculation until Brexit is done dusted and behind us. Without Brexit the main tenets of a new financial direction are irrelevant because ultimate control is in the EU. Until then we are a herd of cows producing milk for Brussels.
While a majority in Parliament.appear terrified of this freedom, having no faith in our ability to succeed once the umbelical is cut, a group of thirty nine Chinese/Vietnamese have just sacrificed their lives to get to the UK. Every one of them was a greater potential asset in the future of the UK than all those of negative defeatism in Parliament.
October 26, 2019
How does this fit with the fact that your Brexit makes us all pointlessly poorer than we would otherwise be?
You canât realistically claim to want to increase prosperity while, at the same time, pursuing a policy which results in GDP being 5-10% lower.
Of course we donât know precisely because Mr Tantrum in No10 wonât publish economic impact assessments because he knows they will make unpleasant reading.
October 26, 2019
Assessments from our Treasury have proved so inaccurate as not to be taken seriously. Your predictions of GDP are equally irrelevant. Left to your level of enterprise you may be correct, however there are infinitely more of an entrepreneurial turn of mind in the UK whose enterprise, given our hosts approach to fiscal matters, will result in a very resilient and successful economy. This is a pot half full atfitude as opposed to your negative predictions for the UK economy post Brexit. Who dares wins sunshine.
October 26, 2019
Where is your data predicting we will all be poorer?
All the 15 year guess by the pessimistic Treasury said was that we might be a tiny bit worse off than we might have been.
And they missed out the effects of positive actions taken by governments in that period.
So not poorer.
October 26, 2019
Andy, the basis of your ideas has always been that leaving the EU is “a leap in the dark” ( where you don’t know what will happen). You have reminded of this several times. But you continue with the scratched record and make out you can see. Are you blind or forgetful?
October 26, 2019
I donât think itâs a leap in the dark. We can see very clearly where we are jumping – and it is rubbish.
I have always said the economics is the least worst thing about Brexit. And the economics are terrible – but everything else is worse.
October 27, 2019
Andy …..try looking up Samaritans. Maybe a long-term counselling help.
October 26, 2019
Andy,
No-one can foretell the future.
If we leave the EU it will be up to the UK voters to decide upon who runs the country and thus its prosperity.
On the other hand if we remain in the EU then laws, budgets, taxes, fines and policies (trade, energy, environment, foreign, immigration etc) will be decided by people we have not elected and cannot remove. This is definitely more scary.
October 26, 2019
Andy
“I have always said the economics is the least worst thing about Brexit.”
You know what the best thing about brexit is ?…….you don’t like it. To me that is highly satisfying.
Also being five years off retirement I have decent pensions to look forward to. More than you will have, I dare say. Accordingly; less for you and your kind, which is also highly satisfying.
October 26, 2019
We need much more accountability and transparency for public sector spending.
As a start each household should get a personalised statement of the amounts spent on their behalf. This should include not just income tax but also an estimate of their contributions through VAT, Corporate tax and Excise duties. The spending on NHS , Education etc should be broken down between the spending on front line workers and the amount spent on âadministratorsâ. For each spending line there should be an indication of the number of public servants paid more than say ÂŁ100k per year.
More transparency will lead to pressure for the money to be better spent.
It would also help keep parliamentarians more honest if taxes (including the deceitful ânational insuranceâ scam) were hypothecated, with for example road tax and tax on fuel , including VAT, committed to investments in transport infrastructure, and taxes on cigarettes and alcohol and VAT on restaurant receipts assigned to the NHS etc
âFollow the moneyâ is always a good strategy. Until there is a much better appreciation of where, how and why the money is currently spent, it is impossible to have an informed debate on any proposed spending plans.
October 26, 2019
“We need much more accountability and transparency for public sector spending.” In that you could mean Local Authority spending, that would mean hundreds in my Local Authority alone and retired, going to jail for the rest of their lives. We should build more jails first. We should wish to treat them with due respect.
October 26, 2019
Sir John – a suggestion, request for a future piece of your analysis… the gov “forecasts” of April 2016, and Nov 2018, from which it seems to be almost all the Remain negativity arise (namely the WTO -7.5% over 15yrs guess)… the rest in very substantial part on what look to me ridiculous assumptions about the impact of NTB’s on EU/UK trade – bearing in mind that starting from identical positions these would appear to require the deliberate malice of their active introduction (subject to our regs not deviating in a way that precludes mutual recognition). Your thoughts would be most instructive!
October 26, 2019
It may not be a vote winner but raising wages is pretty futile. Raising MPs salaries has rendered the majority of them unproductive for three years.
If you raised wages for ball-bearing workers only to see them , make them , pack them, put them on a truck, take them off a truck, unpack them ,melt them back down and then make them over again, pack them, put them on a truck, take them off a truck that is what Remainer MPs are doing, moaning, literally screaming at times and going to the loud factory piped music Speaker producing repetitive nonsense anyone right in their minds would not wish to hear albeit it is honorable and assiduously played and testimony to that dates back to 1605 when in was in the Topeth Ten, beating “Burn the Witch” into a poor second place with “Chopeth off the King’s Head” a new entry and selling well.
October 26, 2019
Few Labour voters will believe the Tories are going to give them loads of money.Giving loads of money to Councils to burn , yes.
Tories need to make a deal with Farage.
Then it can be done, then immediately cut taxes and continue to cut taxes and , cut taxes and cut taxes and just as a btw, get rid of the TV licence fee completely.
But all that would be heaven. Anything short of that is hell. So head for the heights! You may just get there.
October 26, 2019
We’ve been living without the ÂŁ13 billion or so per anum that has been handed over the the EU for many years. We should keep that in a ring fenced fund for government capital projects rather than fritter it away on current expenditures. No one will notice where it goes spent on bits and pieces and there’ll be no thanks for it.
October 26, 2019
We need a REF on capital projects – they are always way to optimistic, on both cost and delivery. The public have a better cynical feel for it than so many officials with a vested interest.
October 26, 2019
I do not see any practical and legal means by which the Tory Party will be re-elected to govern. The Remainers have won.
You have all betrayed us.
Tories offer a lousy deal with the EU because of the Remainers still in the Tory Party. So the Party is going to do, has to do, another trade off with Corbyn’s Remainers too for the Tories to stay in power until a General Election more favourable to Labour.
All of you cannot respect even one simple X which you all wished us to have just so we would vote your way. You have all destroyed Parliamentary Democracy and you hang on to power with your dirty claw-nailed nicotine-stained, is it, fingers for dear life.
October 26, 2019
Maisie
“You have all destroyed Parliamentary Democracy and you hang on to power with your dirty claw-nailed nicotine-stained, is it, fingers for dear life.”
Yeah that sums it up perfectly.
October 26, 2019
Ditto.
October 26, 2019
Everyone blames Boris for the state of Brexit at the moment when they should be looking at the disgusting behaviour of remainer mps. I would love to see the Limpdims and Leibor lose big time at the next election. Those Tories who went against their own party should also go.
October 26, 2019
Fedupsoutherner
“I would love to see the Limpdims and Leibor lose big time at the next election.”
Don’t worry, they’ll be knocked out of political existence. Why else do you think Corbyn wriggling like a worm?
I’d say the conservatives would come a poor second, barely surviving, and Farage wins.
In any event Boris cannot win a general election, he’s gone back on his word three times now. Firstly by complying with the Benn act, secondly by not getting us out by 31st which Mr Javid has confirmed will not happen, and finally for flobbing us off with May’s deal which he said was dead.
The electors will not tolerate that.
Fact is they’re all rotten. They’re either pathological liars, EU’s agents, snouts in the trough, frightened that they might have to do some work for the money if we leave the EU, ungrateful sectarians with an obvious hatred of England. It’s all there.
The one good thing to have come out of brexit is that everyone is now very aware of the kind of corrupt traitorous rubbish that runs this country.
Next election we kick them out for good – and they know what’s’s coming. They’ll hang on like rats on a sinking ship, but eventually there will be judgement day.
October 26, 2019
Unfortunately, you are not alone in subscribing to this narrative that BJ is the victim of irresistible remainer forces. This is why, at least for the time being, the Tory party’s polling is holding up as well as it is (though seriously, 35% is nothing to shout about). If you honestly believe BJ has done all he could do deliver a Brexit worthy of the name, then I can only hope there is sufficent time for you to be persuaded otherwise before you are asked to vote.
As I have noted previously, if BJ wanted a proper Brexit, he first needed a Parliament that would approve one. It was always obvious that a GE was needed to achieve this. However, BJ’s priority was always to reunite the Tory party (which, despite the ejection of the 21 rebels, most of whom are wanting back in, or have decided to retire anyway, he has done an excellent job of, at least for the moment). A proper Brexit was mere collateral in this endeavour.
October 26, 2019
I disagree, albeit slightly. Johnson could have filibustered the Benn Act, thereby preventing it becoming law. With that done it would have left, ‘No Deal’ as an option. An option that the EU would have to have taken seriously.
October 26, 2019
The Referendum aftermath has revealed what probably the largely silent majority of the population suspected: the UK is in a non reversible downward spiral: economically, politically, socially, culturally.
The blindingly obvious is continually ignored. It is too painful to list the inadequacies of leading MPs on all sides.
If a country has only stayed relatively solvent by selling its assets, real and intellectual, for decades with a perpetually falling currency , cannot feed itself, has depleting natural resources, which are denounced as planet wrecking, hardly manufactures anything in entirety, then tinkering with economic models is not the answer.
A clean break from the EU was a glint of hope but that has gone with another useless PM and the unbelievable political shenanigans. We are owed a few favours from continental Europe, maybe they will refuse an extension and kick us out.
October 26, 2019
I concur.You missed out the printing of vast quantities of money as debt,pretending it can be repaid.Well,it can’t,therefore it won’t and therefore it’s worthless.Subtract these “financial assets” from balance sheets that hold them-pension funds,insurance cos,etc and it’s not a pretty picture.The national debt is in effect the national capital- soviet style;it could only ever be conceivably repaid by mass confiscation of private assets.
October 26, 2019
A. Sedgewick
Agree. Though I think we as a nation should demand that those responsible for this country’s weakness be outlawed as criminals and dealt with accordingly.
October 26, 2019
Steve ..Some can be reversed, and re-engineered. We need a non-PC Farage in all parties who will call a spade a spade.
October 26, 2019
I do not disagree with your points. But I do not look or expect favours from our European, American and Commonwealth cousins. We should learn to make our own luck.
Politics and politicians in this country are given too much of a celeb’ status. Too much in the news. Their views and opinions too often sought. They should go about their business quietly like the rest of us.
October 26, 2019
Having a measurable aim of increasing peoples personal spending power would be a great idea. Unlike much of the waffle that goes for politics it would both mean something and put a political focus on reducing costs.
Today the most expensive employee of the NHS does not have world leading medical knowledge, he sits in an office doing admin. Here I would put the power over each hospital into the hands of medical professionals and have the admin report to them – I do not believe a brain surgeon would choose ÂŁ160,000 staff to oversee paperwork.
On brexit I have not heard any threats to end EU funding, is this Sajid blocking things? Next week will show if Boris is really serious about brexit.
October 26, 2019
Gareth Warren
“Next week will show if Boris is really serious about brexit.”
I suspect the EU will give a lengthy extension, thus providing opportunity for their saboteurs in our parliament to mess things up further.
There is no way the EU will refuse an extension.
October 27, 2019
I’m sure the EU tune would change if we stopped shoveling them money
October 26, 2019
I wonder if I might take the liberty of sending an analysis of responses to yesterday’s piece on ‘greening’
If we summarise government policy as along the lines human instigated climate change is a serious problem and drastic, probably costly measures are needed to counter it, seven respondents (if anything generous as a few were ambiguous) favoured this line whilst 114 were opposed, thus 94% are against government ‘green’ actions. This analysis excludes second or more postings from one contributor, those covering detailed technical issues on matters like heat pumps or any addressing other issues.
Obviously contributors are not a random survey of the population but many are clearly well-informed and have given considerable thought to the subject. The Government may may making a grave mistake if it believe policies like banning gas boilers or covering our countryside in wind turbines will be electorally popular.
October 26, 2019
To be honest I am a bit ashamed by the lack of backbone. Just leave on the 31st October under WTO and take the hits laterâŠ..Youâd be surprised by the support of the UK people.
We need to start ruffling feathers and take control of our own destiny and stop appeasing the EU and remainers
October 26, 2019
glen – – very true. Us Leavers seem to quiet and pacifist by nature. Start shouting and screaming – THE LIES, THE DAMN LIES !!
October 26, 2019
Glen Cullen.
Yep, that’s the problem – too much pandering to minorities including remain.
Incredible isn’t it ? …..having now got to the point where the losing minority of a democratic ballot get to have the say on what happens.
October 26, 2019
I don’t think your plans have any hope of working if you don’t drain the swamp.
Polly
October 26, 2019
The swamp does need draining.
October 26, 2019
Off topic
Locals near dreadful container lorry tragedy claim to have seen many newly arrived people, shoeless, in distress being picked up by mini buses.
Authorities informed…do not want to know! Comfortable with illegal immigration??
WHY?
October 26, 2019
Everhopeful
Was on the news earlier the Coroner Office says the victims died before the container arrived at UK.
Belgian port authorities (missed the problem ed?)
October 26, 2019
Higher living standards for all? how can we enforce this . We all know that throwing money at individuals doesn’t culminate in higher living standards ; for example more money to gamble with!
Symmetric cyclical stabiliser : this sounds like hedging funds.
Can we be sure of good economic returns or will they be projections which in the past, e.g. pensions didn’t happen ?
The relativity of what we need and what we want as years go by, usually adds up to more waste, although I do not want to be a kill joy.
October 26, 2019
Margaret
“Symmetric cyclical stabiliser : this sounds like hedging funds.”
Or put simply: a Zimmer Frame.
October 27, 2019
We can never solve the feckless. People will always waste money on drugs and gambling.
But the vast majority are not feckless and would spend their money well.
October 26, 2019
Save yourself the bother. John, you will be retired before then and before 2030 the UK will be in a banking bail-in with the gov handing out food stamps and electric vouchers with the system in a reset and there is no way around what coming.
October 26, 2019
The English are joiners. The others, not so much.
October 26, 2019
John,
The so-called balanced budget over the cycle rule.
While many progressives think that is a sensible strategy â the reality is that it is an unsustainable fiscal rule to try to follow.
A deep understanding of national accounting, tells us that if a government was successful in achieving this fiscal goal (balance over the cycle), then the private domestic sector balance (the difference between its spending and income) would be equal, on average over the business cycle, to the external balance (the difference between income flows in and out of of the nation).
The import point of this is that if a nation was running a continuous external deficit, then the private domestic sector will also, on average, be in deficit. Which means it would be continuously accumulating debt â an unsustainable posistion. As the Clinton surpluses proved beyond doubt.
The discretionary budget position (deficit or surplus) must fill the gap between the savings minus investment minus the gap between exports minus imports.
In otherwords
(G â T) = (S â I) â (X â M)
Which says for income to be stable, the budget deficit (G â T) will equal the excess of saving (S) over investment (I), which drains domestic demand, minus the excess of exports (X) over imports (M), which adds to domestic demand.
If the right-hand side of the equation: (S â I) â (X â M) â is in surplus overall â that is, the non-government sector is saving overall then the only way the level of national income can remain stable is if the budget deficit offsets that surplus.
A surplus on the right-hand side can arise from (S â I) > (X â M) (that is, the private domestic sector net saving being more than the net export surplus) or it could be associated with a net exports deficit (draining demand and adding foreign savings) being greater than the private domestic sector deficit (investment greater than saving) which adds to demand.
It could also occur if both balances on the right-hand side are in deficit.
However, that simple observation doesnât mean that the discretionary fiscal policy associated with this position is desirable. we have to think of this in terms of dynamic flows (which combine to render the balances).
At the point where the UK sectoral balances balances sum to zero. That condition will be satisfied by national income adjustments. So if, for example, we had all balances equal to zero and private consumers became pessimistic and consumption fell (so saving rose) then the right-hand side would go into surplus, immediately.
But it wouldnât stay that way because the resulting downturn in economic activity and fall in national income would impact on the other two balances. Imports would fall pushing the external balance into surplus and taxation revenue would fall as welfare oriented public spending rises (the automatic stabilisers would kick in ). That would push the budget balance into deficit. The national income adjustments would stop when the balances were summing to zero â but now we would have a budget deficit.
The important point though is that the âlevelâ of national income where these adjustments ceased â that is, the macro-equilibrium or steady-state â may not be very desirable and there could be mass unemployment.
Reply You are ignoring the stabiliser
October 26, 2019
The fact remains the ONS publish the reports on our sectoral balances.
There is no ideology no politics they are pure accounting of our flows. They follow certain rules and if we try and break those rules like Clinton did you end up in big trouble.
They show you the damage done to the private sector caused by austerity.
October 26, 2019
“You are ignoring the stabiliser”. The effect of the stabilizers (unemployment benefit; housing benefit etc) will show up in G minus T (the budget deficit) in the identity Derek quotes.
To simplify; if the government sector is running a balanced budget, then the domestic private sector has to pay for the current account deficit (net imports). If they can’t manage that with their income, they have to use their savings and/or increase their debts.
Anyway, JR’s prosperity plan is, unfortunately, old-style conservative neoliberal “gold standard” thinking, that leads to the same old results where the 1% win and the 99% lose.
Until we get a government that removes the massive tax advantages to land and property speculators; 20% of whom are foreign non-resident money launderers, the UK economy will remain moribund. It is much more tax efficient to punt on land and property capital gains for UK punters than actually making goods and services to sell to foreigners. Hence, nothing will change for worker households; currently paying higher rates of tax on their income than spiv city speculators.
Please please have a read of section 3, at least, of https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/quarterlysectoraccounts/apriltojune2019 Fig 1 shows where the government money created and the commercial banks’ credit created, flowed in the economy by quarter periods.
October 27, 2019
Tax on property in terms of capital gains tax and corporation tax apply to money made from property just like any other sector.
In fact recent changes have made their treatment worse than other businesses.
Workers do not pay higher rates of tax on their income than those who make money from property development.
Higher earners now pay record amounts of tax.
Another ridiculous politically biased comment from you acorn.
October 27, 2019
Naive as usual Ed. Are you not aware of the numerous discounts, reliefs and exemptions that are available to land/property for CGT, IHT, ATED? At least HMRC has caught up with the EBT tax-dodging scam and IR35 off-payroll disguised employees.
October 27, 2019
Continuing your habit of not being able to post without making a personal comment acorn.
There are many tax breaks to incentivise many different wealth creating sectors.
All allowed and perfectly legal and available to those in business.
But I realise your aim is to tax wealth creators until they either fail or leave the UK taking jobs and tax revenues with them.
I don’t see anything that alters the post I originally made, nor your plainly politically inspired bias against the property development industry in this country.
October 26, 2019
John,
Sorry, but I am not ignoring the stabiliser. Acorn understands it and I know just by looking at the UK sectoral balances graphs you will get it also.
I even mention it in the 2nd last paragraph.
The flows are very important which is why I brought them up. They cannot be ignored as Bush found out after the Clinton surpluses. His Surpluses because the US runs a trade deficit pushed the private sector into deficit ( spending more than their income) and caused a recession.
October 26, 2019
The only things that I want a supposedly conservative government to do is
1) Stop meddling
2) Scrap Browns ridiculous IR35 laws
3) Scrap the evil loan clawback attack
4) Design a simple tax system that suits a digital, 21st century so called “gig” economy , by the way this is the easiest of all to do if anyone in government actually spoke to the self employed
October 26, 2019
Did you know that most self-employed persons became so because they couldn’t hold down a job as an employee? They just couldn’t adapt to a corporation that had standards of performance that required an ability to teamwork and demonstrate a teamwork ethic to their subordinates.
October 26, 2019
Acorn – one word…. rubbish.
October 26, 2019
Complete twaddle acorn and a ridiculous generalisation.
October 26, 2019
or couldn’t adapt to the nonsense politics of corporations?
October 27, 2019
All answers as expected from confirmed “Denialists”.
October 27, 2019
Fred H – much closer to the mark.
October 27, 2019
Acorn try telling that to a man who has a City and Guilds in gas fitting and worked for BG for over 33 years and only left when thousands were made redundant in the 90”s. My husband wanted to work another 10 years but was unable to so left and started his own business. Don’t tar everyone with the same brush. Working for yourself is in many ways harder than working for a company.
October 27, 2019
The BG severance payment and the free added years to a very good pension scheme will have helped I expect.
October 27, 2019
Having done both in the private sector you are talking utter rubbish.
October 27, 2019
ps
Acorn you told me you were never going to engage with me again. So thats another one added to your growing list of being very economic with the actuality
October 29, 2019
acorn
My destruction of your silly post sadly failed to pass moderation
So as you told me you weren’t ever going to engage with me again I guess we can ignore that post of yours anyway
October 26, 2019
The gov has been aiding and betting the stealing of public money for years, most of the money is offshored or put into investments the elite will never sell and therefore will never pay any tax on the assets and will only be taxed on some income depending on where they hold the assets or where the person concerned is in any one country to pay tax, you might say how is this so, it comes about by lowering interest rates and by the gov borrowing money and QE which ends up in the pockets of the elite, that is what the gov calls growth, in fact, that only growth the gov has.
You can see it in action in the USA since September this year after putting the interest rates up the elite have rebelled, and the fed is now lowering interest rates again and printing more money out of thin air.
The only time the elite have to worry is when the interest rates go up and the gov stops printing money out of thin air and then leave you to pay the bill for the gov largest.
October 26, 2019
You keep calling these people ”elite”, Ian. Why?
Do you still believe they are?
October 26, 2019
The gov forget to pay you any more money to pay for gov largest for the elite.
October 26, 2019
Interesting. Sounds rather like Ed Ballsâs plan circa 2015!
October 26, 2019
Hi Mick,
Yea with you on that, I would say do both, an Election soonest,and Just get the hell out, what are we afraid to cross the road now.
We are the People who put this rubbish in both Houses , we as a nation voted Leave.
Both Houses are un fit for purpose , the majority of occupants are not carrying out our wishes , not carrying out what they promised in there Manifesto, should be banned for life from ever holding office
October 26, 2019
“It may apply a symmetric cyclical stabiliser, running a surplus during good growth and a deficit during a bad recession.”
Will never happen. Govt will always reasons to spend any ‘surplus’ and will borrow more during recessions/other periods of low tax take.
“The government may borrow for public capital expenditure purposes. Each project approved must meet an appropriate test to establish it will make a decent economic return”
The appropriate tests used by public bodies inc govt are always political rather than financial. As a learning exercise, do a financial review of recent public ‘investment – e.g. in the NHS, in so-called Smart Motorways, in any nuclear power station etc etc
October 26, 2019
“They [the EU] have made us run our economy with the twin aims of cutting the government deficit and cutting State debt as a percentage of GDP.”
We ran our economy with these twin aims because we believed it was the right thing to do – and it was. As far as State debt goes, it still is.
October 26, 2019
Didn’t England play well in the world cup ? Great stuff.
October 26, 2019
Cricket, Athletics, Rugby ? (ha ha )
October 26, 2019
The BBC lady said so, then linked into a Scottish female colleague who agreed in saying “Yes, it’s a wonderful day if you’re English (exclamation mark)”
Does Scotland play rugby?
October 26, 2019
Can we please just ban fireworks, except properly organised displays.
It’s not like it’s just November the 5th, every single night since they went on sale again we have been surrounded by the small minority who insist on letting them off all night.
To use the current fashionable reason for everything, it’s not green to burn this many fireworks.
October 26, 2019
“The government may borrow for public capital expenditure purposes. Each project approved must meet an appropriate test to establish it will make a decent economic return”
No government, even a Conservative-led one ever keeps to this sensible rule.
Otherwise why would we have Hinkley Point and HS2 ?
October 27, 2019
“The government will ensure it collects enough revenue to pay for all current spending. It may apply a symmetric cyclical stabiliser, running a surplus during good growth and a deficit during a bad recession.”
You’re allowing yourself some wiggle room with your later comment about capital spending. However, you need to include the effect of a current account deficit in your thinking.
If we have ÂŁ billions leaving the country to pay for our net import bill then they will need to be replenished from somewhere to prevent the economy falling into recession in the first place.