Goldilocks policy?

Janet Yellen the US treasury Secretary wants to run the US economy hot. She wants Daddy Bear’s porridge straight from the cooker. The Uk authorities seem to be looking for Goldilock’s favourite, neither too hot nor too cold. The UK has done under half the monetary loosening of the USA. After a similar large fiscal response last year the USA is now doubling up with its monster $1.9tn further package whilst the UK is looking to phase out the special cv 19 assistance and get borrowing under more control this year. So who will fare better?

It seems likely the USA will grow faster this year than the UK and certainly faster than the EU which is struggling with vaccines and continued lockdown. The $1400 cheques for most adults sent by the state will combine with the substantial savings accumulated over the lockdowns by the many who kept their jobs but faced restrictions on travel and other spending. This means there is plenty of consumer firepower to unleash. As soon as enough states have relaxed restrictions on retail, leisure, entertainment, hospitality and travel there will be surge in new spending.

What is less clear is has the USA decided to overheat? Could some of that formidable spending power generate more price rises than is desirable? The thought of world re opening has already powered a substantial increase in the price of energy and some other commodities. There has been a sharp rise in freight rates as trade picks up, and a substantial price rise for semiconductors as a world shortage emerges. Will restaurants, hairdressers, holiday firms and hotels respond to a sudden revival in bookings to put up prices, in an effort to recoup some of the losses from the last year? Will there be many economic areas where capacity has been cut by closures that prove permanent, giving more pricing power to those who remain?

The authorities are relaxed. They want a bit more inflation, a bit more pricing power for companies to generate some cash again. The US expects inflation currently at 1.7% to rise towards 3% and to stay above their 2% target for a bit. They do not expect a price/wage spiral. The high level of unemployment and the need to get so many people back to work suggests to them wages will stay under control.

If the USA is right and it can get away with the huge stimulus it has administered without a worrying inflation, the UK has underdone it a bit. If the USA has gone too far with its monetary and borrowing bazooka, the UK may turn out to be Goldilocks after all.

152 Comments

  1. Mark B
    March 13, 2021

    Good morning.

    They want a bit more inflation . . .

    Inflation is the destroyer of wealth and savings. If they want people to go out and spend then they have to create market conditions that generate confidence. Confidence that you will have employment, a home and enough to spend on a few luxuries. Confidence that you can put enough to one side and not have the government steal it (eg pension raids and QE).

    Big State is the Piggy-Bank of the greedy fat corporates and Crony Capitalism. It would be better for all if the government just stuck to its core job and stop acting as some Great Benefactor with endless piles of cash.

    1. DOM
      March 13, 2021

      Mr Redwood’s a closet Keynesian though he conceals it will. Recourse to State spending makes political life easier than it would be otherwise be. Reforming State organisations generates negative headlines so for John’s party it is far more preferable if they don’t reform and keep spending your taxes to finance their party protection racket.

      Keynes like Marx and Foucault were poison and directly responsible for many ills we now see

      1. Richard1
        March 13, 2021

        Keynes was of the view that the share of state to GDP shouldn’t exceed 25%. I guess that puts a sliver of distance between him and Marx.

        1. Margaret Brandreth-
          March 13, 2021

          You see these financial ideologies are old hat Richard. There isn’t a basic structure according to any one person which is suitable for today .The global community is far more fluid than ever before.It is like creating a cameo of a time and place but everything all around is mutating.

      2. hefner
        March 13, 2021

        So who are your ‘maitres a penser’? Do not be shy.

      3. MiC
        March 13, 2021

        But today’s right-wing populism is a direct result of Postmodernism and silly interpretations of it. “Had enough of experts” being its succinct crystallisation.

        The Tories were elected on the basis that facts don’t matter to many voters too.

        You Leavers owe everything to Foucault.

        1. a-tracy
          March 14, 2021

          Oh Yes Martin because right wing populist Boris Johnson isn’t listening to the Sage experts at all, he isn’t continuing lockdown against his better libertarian instincts at all.

        2. Peter2
          March 14, 2021

          Which experts do you suggest we should believe mic?
          It is quite obvious that there are many experts and many of them have contradictory opinions.

        3. NickC
          March 14, 2021

          Martin, All your angst because you think we should be ruled by unelected bureaucrats in Brussels. It’s bathetic. And I don’t know about you, but I tend to believe the “experts” who have a track record of being right.

          1. hefner
            March 16, 2021

            And who are they? I would be keen on being told the names of the economic experts who have had tenable positions explaining properly the economy, say, from WW2 onwards.

    2. Walt
      March 13, 2021

      Mark B is right. Inflation is a destroyer and ‘steal’ is, sadly, the right word to describe our current government’s actions in changing a key formula (Carli for Jevons) in the Retail Prices Index so that it will rise at a lower rate (recently about 1% p.a. less) than it otherwise would. When this now authorised change comes into effect, people who chose to buy an RPI-linked lifetime annuity will get lower payments than those for which they contracted. If an insurance company unilaterally reduced contracted payments to their annuitants, they would be pursued in the courts for fraud.

      1. a-tracy
        March 13, 2021

        Walt, this is why politicians and people making these policy decisions on ‘maximum pot sizes’ etc. Should be in the same pensions savings vehicles the rest of us are left with.

        A final salary pension of ÂŁ35,000 pa at 65 with spousal transfer would need a pension pot ÂŁ900,000 maybe more if what you say is true. How many final salary pensioners are there at this level or over.

        They don’t even have to save for their retirement not a penny because no-one is going to rob their pensions at the last leg so they don’t give a monkeys about savings either, they can blow the lot.

        1. anon
          March 13, 2021

          QE for cronies. Malinvestment. In HS2 & Hinkley and countless others.

          If that money had been spent on deploying wind turbines and building facilities we would have overcapacity of electricity production spurring new industry. Greenish jobs, less imports of energy and no reason to import overpriced nuclear plant & boilers.
          Instead we close UK coal infrastructure & plant early to purchase coal & goods from overseas using electricity from coal plants. No carbon tax on imports, or WTO compliant protections for unfair import pricing.
          Utter madness, except its more likely cronysim. The financial markets may have remained able to provide signals to economic activity.

          So who pays , well lets guess working to middle class via inflation of things you need and deflation of things you don’t need like wages and conditions and poor value pension investments

          Should the Public Sector including MP’s share the pension disaster which awaits. Are all pensions going to be nationalised?

          Do we have a sovereign parliament? Capable of looking after the UK for a change?, prudently. Not just themselves . Or is it just turn to have a go? Then writing a note “sorry no money left” for you we have given it all away to . It seems a nice racket for some.

        2. Alan Jutson
          March 14, 2021

          a-tracy

          In addition the self employed do not get any contribution from an employer, it’s all their own money which is at stake, which they have to earn before they make a contribution.

    3. jerry
      March 13, 2021

      @Mark B; You appear to be getting confused between inflation and stagflation, the latter does what you claim, and indeed during the 1970s was of real concern. The opposite swing of the economic pendulum is also highly concerning, were inflation is unnaturally low, we only need to look at the problems Japan has faced, although theirs was/is an extreme case.

      The last thing any economy needs is any sort of obsessive idealogical thinking, much of it the cause of the current economic problems, that pre-existed both the current pandemic and the banking crash, of a decade or so ago are attributable to the sorts of policies you want!

      1. NickC
        March 13, 2021

        So you don’t hold that your thinking is ideological, then, Jerry? Just everybody else’s? How convenient for you.

        1. jerry
          March 14, 2021

          @NickC; No, unlike you I suspect I’m open to being pursued, for example, at the last election I considered all the major manifestos, how many of manifestos did you read in late 2019, why do I get the feeling you read at best one, that of either TBP or UKIP?

          No one party, usually, has a monopoly on good ideas/policy, for example when I voted for my Conservative candidate at the 1992 general election I had to hold my nose for I knew even then the proposed rail privatisation would be an utter disaster, but that was the least worse ideological evil on offer in the manifestos. My vote was a compromise, between the good and the idiocy of what the Tory party offered compared to the good and the idiocy from either Labour or LidDems.

          “Just everybody else’s? How convenient for you.”

          No not everyone, just the majority who post comments to this site!

          1. NickC
            March 14, 2021

            Jerry, It’s not difficult to discern your own ideology – it can be approximated as “Butskellism” – the desire to have 1950s UK socialism run by the Tories. Hence your admiration of the nationalised CEGB and BR, and your hatred of Margaret Thatcher. However my main point was that condemning another’s point of view as simply “ideology” without producing any actual rational arguments against it, is inadequate.

          2. jerry
            March 14, 2021

            @NickC; What ever! I voted Conservative throughout the 1980s, so why you think I have a “hatred of Margaret Thatcher” is beyond me. Nor do I dispute all of the Conservative policies from that era, just those I believe have not weathered the changing social and political climate of the years since. As for your last sentence, talk about trying to call the kettle out, have you ever produced any rational arguments -most appear to be just warmed up dogma, repeated from UKIP/TBP handouts…

    4. SM
      March 13, 2021

      Mark B, I agree with you, but this is the kind of cycle that has happened, in one way or another, throughout human history. Perhaps it whizzes by so much faster because of the speed of communication that has grown through our particular life time.

      ‘If you don’t learn from history, you are doomed to repeat it.’

    5. Iain Gill
      March 13, 2021

      correct

      but all our politicians are socialists in all but name and want to take away power from individuals and give it to the state

    6. Derek
      March 13, 2021

      Inflation is the destroyer of wealth value but not so much of savings. Inflation creates a rise in interest rates which positively reflect upon the returns of the various deposit accounts. Providing those “investment” rates are higher than the rate of inflation, savers will be protected.

  2. agricola
    March 13, 2021

    It is wet finger in the wind time, no one person or country has all the answers.

    There are Brexit problems that need sorting. Are they the result of incompetent negotiation or the stated intent of the EU to punish. They require some very robust action, such that the EU exporters realise what a shambles Brussels has created.

    Government has abdicated on the question of coal for steel. The green lobby being so blinded by ideology not to realise the coal will come from somewhere else in the World. Perhaps they are dumb enough to think that foreign coal carries less guilt than English coal. Who governs the UK, Parliament or virtue touting interest groups. One of them was touting a male curfew in answer to crimes against the female person only yesterday. As daft as locking up all females after dark.

    Will a railway industry responding to less long term pressure from commuters be able to create an appropriate business plan for a profitable future.

    Will the government get off the fence and organise international covid travel passports. The vaccinated, the travel agent and everyone in between, plus of course the destination hotels would like to know. Why not get one page in ones passport stamped with something suitably impressive on receipt of the second jab.

    The success or otherwise of government will be seen in the detail, and there is a lot of it at the moment, not in grand plans of dubious outcome.

    1. agricola
      March 14, 2021

      Seems you prefer fairy tales.

  3. Ian Wragg
    March 13, 2021

    Harris is a (leftie) and will use the pandemic to undermine the dollar and the USA.
    Many people will soon be regretting voting for sleepy Joe.
    Raging inflation and open door immigration what’s not to like.

    1. Dave Andrews
      March 13, 2021

      I don’t think there will be much regret, just further division – between those who generate the wealth and those who consume it.

      1. Mike Wilson
        March 13, 2021

        @Dave Andrews

        How do differentiate between a wealth creator and a wealth consumer? If a ‘wealth creator’ is a businessman who employs others, they would have no business unless someone consumes the service or product they provide.

        In this sense it is surely a symbiotic relationship and both are equally important.

      2. jerry
        March 14, 2021

        @Dave Andrews; “division – between those who generate the wealth and those who consume it”

        Except a business with no consumers is not a business but a liability to their creditors, those who create wealth the are the consumers!

    2. Bill
      March 13, 2021

      Vice President Harris might very well be elected president in four years time and if this is the case she’ll likely get a second term- looks like she could be around for a long time to come- leftie or not- so better get used to it. One thing for sure neither of them, Biden or Harris, will be coming over here sucking up to royalty and wasting tax payers money- not their style

      1. Richard1
        March 13, 2021

        I think we will see both of them over here. I don’t expect them to ‘suck up’ to royalty, but I have no doubt they will treat the Queen with the utmost respect, recognising it is in the interests of the US to do so.

        On the other hand they will most assuredly waste a good deal of taxpayers’ money.

        1. Alan Jutson
          March 14, 2021

          +1

    3. NickC
      March 13, 2021

      Ian, Given the way that Joe Biden cannot even read properly from his autocue, I suspect Kamala Harris will be PotUS within a year. Biden’s presidency is at sixes and sevens already with Harris falling out with Biden’s own defence secretary – it will only continue as the woke Democrats eat each other. The West is now China, but with woke and pseudo-green tinges, where top down statism rules the day.

      1. Tad Davison
        March 13, 2021

        Agreed, and it’s interesting to see how much of the stimulus package is being diverted to profligate and badly-run Democrat cities and states, to waste, in the worst traditions of the incompetent liberal left. But I suppose they’ve got to be able to pay for all those immigrants and at-liberty criminals somehow.

        How long before the bond markets force up interest rates, and communist China buys up US assets eventually leading to an ultimatum prior to their take-over?

      2. hefner
        March 13, 2021

        NickC, So that’s what your crystal ball has been telling you, or is your comment the results of your analysis of some provable/proven facts?

        1. NickC
          March 13, 2021

          Hefner, You don’t need crystal balls to see Biden fumbling his autocue.

          1. jerry
            March 14, 2021

            @NickC; Your bleating says far more about you than Biden “fumbling” his autocue, given the well know life-long speech stammer Biden has, presentation is not the issues here, polices are. But have it your way, the speeches of ex president Trump should make good diction autopsy specimens, assuming he bothered to write his speeches and thus use a autocue…

          2. NickC
            March 14, 2021

            Jerry, Fumbling, not stammering. Biden sometimes does not appear to know where he is, either in his speech or his location. I have a deal of sympathy for him – he is an old man who should be sitting in a rocking chair on his veranda. Whether you agreed with Trump’s policies or not he was clearly capable in a way that Biden isn’t. Why do you think the Democrats keep Biden hidden away from the press? We shall see who is right.

          3. jerry
            March 14, 2021

            @NickC; More proof you haven’t a first clue, no Biden doesn’t stammer, because he controls it, but in doing so he appears to fumble, as indeed did King Edward Vlll. But as I said, what has any of this got to do with policies?

            “he is an old man who should be sitting in a rocking chair on his veranda.”

            By that measure so was Ronald Reagan by the end of his second term, and was by then knowingly suffering from impaired mental capacity, should he have resigned?

            ” Whether you agreed with Trump’s policies or not he was clearly capable in a way that Biden isn’t.”

            That would be why Biden has done more in his first 53 days than Trump did in his last 353!

        2. acorn
          March 13, 2021

          Hef, it is near impossible for me to get passed moderation on this site nowadays; the disaster that is brexit has become real, even to leave voters and the ERG. NickC doesn’t know his monetary arse from his fiscal elbow, he proves it everyday along with several other regular commenters on this, increasingly comic site.

          I won’t waste time explaining but recently the Japanese government has created a “monetary base” that is now larger than the Japanese GDP. This means the velocity of circulation (VoC) of its currency is now 0.9. That is, every Yen the Japan’s treasury creates and injects into the Japanese economy, doesn’t even circulate once through the Japanese economy in a year. Hence, no Japanese inflation because Japanese households are saving the governments money and not spending it.

          Meanwhile, the VoC in the US is 4.1; in the UK 2.2. In China it is near 10.1. In the good times the US would expect a monetary base VoC of 14-17. Those were the days. One day, even Westminster politicians will understand how fiat currency economies actually work.

          1. NickC
            March 14, 2021

            Acorn, There is no “Brexit disaster” other than in the EU empire, or caused by EU vindictiveness. Agreed the WA and the T&CA do not amount to a full Brexit, being BINO. But you can blame the Remain Parliaments 2016-2019 for that.

          2. jerry
            March 14, 2021

            @NickC; Thee is no “Brexit disaster” here in the UK currently, but there is a political one looming, simply because there is no post Brexit vision. Give it a year without any obvious Brexit benefits and people will start echoing the europhiles calls of ‘we might as well have remained’. The only post Brexit proposal to come out of Downing Street so far are ones that often mirror EU policy, such as EVs and the nonsense that has been penned as a replacement for the CAP.

            If the inaction goes on beyond another 12 months there will likely be nothing to show for Brexit by the next due general election. Nor is such inaction caused by the pandemic, the last 12 months has been an ideal time for a correspondence of ideas, green papers and planning proposals etc.

    4. jerry
      March 14, 2021

      @ian Wragg; Only the hard right make an issue out of immigration in the USA, for a simple fact, unless you are of the 1.3% who have native American ancestry, you only need to go back one, two or three (life) generations before you start finding immigrants in your own direct blood line!

      The vastness of the USA economy is such that it still can not survive without migrants, Trump actually did more damage than good by his anti-migrant policies.

      1. NickC
        March 14, 2021

        Don’t be silly, Jerry, of course the USA economy could survive without more immigrants. However neither Trump nor anyone else stopped legal migration. Not least because illegal migration is grossly unfair to legal migrants.

        1. , all to often
          March 14, 2021

          @NickC; You are starting to read like a pro Trump version of those europhiles who can never accept any wrongs of the EU…

          Check your facts, Trump did restrict legal migration, he cut the number of Green Cards issued, without which it is very difficult to obtain work -legally at least. He also victimised the ‘Dreamers’, those who have done nothing wrong themselves, having being minors when they were brought to the USA, by reclining the “DREAM Act”.

          “Not least because illegal migration is grossly unfair to legal migrants.”

          Indeed, but a bonus for the employer who gets the same work done but without any of the usual overheads, and can hire and fire at will all to often without any realistic risk from the Fed or State authorities.

  4. Everhopeful
    March 13, 2021

    But it WAS all about a deadlier than deadly virus wasn’t it?
    Not about resetting economies?
    When we finally emerge, blinking like moles, will we be too traumatised to go out and spend?
    After all the shenanigans of “wokery” I don’t really feel like supporting certain companies!
    And I have learned a great deal about economical bulk buying and mending and making do.
    I look forward to the unlikely scenario of an ideal UK economy.

    1. Hope
      March 13, 2021

      This govt has shown ten years, yes ten years, of incompetent handling of the economy- historic deficit, historic debt, historic recession, historic low rates of interest for the prudent, historic high rate of taxation, historic bail outs for private banks- no one prosecuted, millions unemployed, thousands of businesses going bust, dire public services and now destroying energy, manufacturing, getting rid of cars, no education, no worship etc. Fake Tory Govt. to own.

      Freedoms and liberties stopped: house arrest of the nation for a minor virus, no peaceful protest, no dissent, watching your computer to see what you do, using govt and military to counter what they decide is misinformation!

      Anyone even suggesting this is conservatism?

      1. Everhopeful
        March 13, 2021

        +1

    2. jerry
      March 13, 2021

      @Everhopeful; The same could have been said about WW2, and the people were far more traumatised back then, some quite literally shell-shocked, but just look the economic growth and real gains of the 1950s, never mind the spend-spend-spend of the early 1960s. The only “wokery” is coming from your beloved hard right, you know the game is up, and was before the pandemic.

      1. Everhopeful
        March 13, 2021

        War is one thing…a “known known”…fighting WITH one’s government for one’s country.
        Being imprisoned and starved and isolated by one’s government is a different kettle of fish.
        And the lies!!
        Three weeks to flatten the curve!

        BTW…I have no political allegiance. But when last I looked the ballot box was still sacrosanct.
        What game?

        1. jerry
          March 13, 2021

          @Everhopeful; “Being imprisoned and starved and isolated by one’s government is a different kettle of fish.”

          A wonderful example of pure political on hyperbole on stilts.

          No one is being imprisoned or isolated, never mind starved, here in the UK during the current pandemic – well no more than anyone would be, under pre-existing decades old public health laws, should they be suspected or found to be suffering from certain notifiable diseases.

          1. NickC
            March 14, 2021

            Jerry, The untargeted national lockdowns did imprison people in their own homes specifically to increase their isolation. That was their entire rationale.

          2. , all to often
            March 14, 2021

            @NickC, No one was being imprisoned, just advised to shield.

            Or are you seriously suggesting public health laws should not be used to force those infected or suspected of being infected with CV19 to isolate, or those whose actions put themselves or others at risk of infect to desist, if that is what you mean then you are allowing your political dogma to override common sense – at trait not confined to the hard right, those on the hard left are just as obstinate!

          3. jerry
            March 14, 2021

            Apologies, “, all to often” is an accidental alter-ego of myself, tab-key trouble! 😳

    3. NickC
      March 13, 2021

      Everhopeful, Its all about making the peasants obedient. We are now used to government imposed lockdowns. Baroness Jones has jumped on the lockdown-for-your-favourite-bogeyman meme – in this case all men – with her curfew to prevent any man roaming the streets after 6pm. And I bet she has never read “Consider Her Ways” by John Wyndham.

      1. Everhopeful
        March 13, 2021

        +1
        Yes..I remember that story! I suppose that’s what they want? Or think they do.
        Personally I am always very grateful for a taller, stronger, (probably more sensible) person to lift heavy stuff etc.

      2. a-tracy
        March 14, 2021

        NickC after I read your comment I went to see what this Baroness had said. From what I have read it was in response to the Police telling women to stay in to stay safe. Perhaps the police will think twice now about making a statement like this.

  5. Nig l
    March 13, 2021

    I guess it won’t just be about prices/inflation in the US. What will the knock on effects of sucking in vast amounts of capital potentially raising borrowing costs/exporting inflation etc for the U.K.

    Lagarde looks out of her depth, no surprise there and what does it also mean for Europe?

    Another 80 billion promised yesterday albeit necessary. Our recovery better be turbo charged and either the the pandemic finally beaten or tough decisions (cuts) readied in the event of a resurgence or I feel we will be in real trouble.

    Unfortunately hubris cascades from Boris down but Plan Bs would be good to know.

  6. MiC
    March 13, 2021

    While the UK economy has been dealt a double hammer blow from the brexit shambles and from the epidemic, I see that the UK government have decided that what we need just now is to increase the number of nuclear warheads which the country can stock.

    Look up “cacotopia”, because that is what we so plainly have.

    1. NickC
      March 13, 2021

      Martin, If you think increasing the number of nuclear warheads was decided yesterday then you have no idea about the complexity of nuclear warhead manufacture.

      1. MiC
        March 13, 2021

        Where did anyone say “yesterday”?

        1. NickC
          March 14, 2021

          It’s a turn of phrase, Martin.

      2. Margaret Brandreth-
        March 13, 2021

        Nick I dont know anything about the demand for nuclear war heads :perhaps you could develop this a little more.

        1. NickC
          March 14, 2021

          Margaret, The manufacture of nuclear warheads is extremely complex, hazardous, and requires a long timescale. Hence my comment to Martin that the decision was not undertaken “yesterday”. The demand is settled for military and stategic defence reasons, and I know little about that process.

    2. glen cullen
      March 13, 2021

      All parties support Trident and its update/replacement….not even sure if the green party support CND

  7. Sea_Warrior
    March 13, 2021

    I see that in one US state – New Jersey, I believe – a workless family will be able to gather in some $92,000 from government while having no obligation to find work. The bill signed by President Biden yesterday was a monstrosity. The Democrats have taken the opportunity of the COVID pandemic to advance their own wealth-destroying/socialism-promoting policies. And you, Sir John, and your sensible fellow back-benchers, need to resist any such measures coming out of No 10 or from mouths across the floor.

  8. Roy Grainger
    March 13, 2021

    It seems plausible the USA policy will work because one necessary condition for high inflation – wage rises – are unlikely to happen due to the very high unemployment levels resulting from Covid shutdowns. That is the same situation in the UK, wages won’t rise with 10% unemployment. So running “hot” until unemployment comes down substantially seems a good policy. I suppose UK will benefit to some extent from USA’s actions anyway so maybe we don’t need to do so much.

    I am interested to see what loopholes and dodges companies will use to pretend they are doing genuine capital spending to get the 130% super-deduction – it’s certain that not all of that spending will result in higher productivity – property speculation maybe ? Buy now and sell in two years time.

  9. Denis Cooper
    March 13, 2021

    Off-topic:

    Further to a comment I submitted yesterday evening about this article:

    https://www.politicshome.com/news/article/exclusive-government-accused-of-ignoring-expert-civil-servants-on-big-brexit-decisions

    “Government Accused Of Ignoring Expert Civil Servants During Decision To Delay Brexit Checks”

    this morning I see this article:

    https://www.cityam.com/farmers-union-slams-free-pass-for-eu-imports-as-uk-food-exports-face-red-tape-and-higher-costs/

    “Farmers union slams free pass for EU imports as UK food exports face red-tape and higher costs”

    Basically the NFU wants the UK government to introduce unnecessary checks to obstruct imports from the EU in retaliation for the unnecessary checks the EU is now using to obstruct our exports to them.

    I repeat that as the EU action breaches the WTO treaties so would the reaction demanded by the NFU.

    I would also point out that the UK and the EU have agreed that it is crucial for the land border on the island of Ireland to remain just as open as it was before, when the UK was a member state of the EU, and so while we could unnecessarily delay EU goods imported into Northern Ireland across the new sea border created by Boris Johnson there is nothing we could do to unnecessarily obstruct the goods imports from the EU carried in from the Irish Republic across the land border.

    Unless, of course, the NFU is expecting the UK government to oblige it with a “hard border”.

    There is a lot of talk about the Northern Ireland Protocol being essential to protect the integrity of the EU Single Market in the face of a completely open Irish land border but potentially it could cut both ways and the new checks at Belfast and Larne will do nothing about that.

  10. oldtimer
    March 13, 2021

    If demand runs ahead of supply then prices will go up, as night follows day. For those businesses forced to close by the government during the pandemic price rises might be the difference between survival and death. The issue is whether inflation will get out of control, 1970s style, and deal the final death blow. The risk looks very real to me. For the moment the USA gets away with it because it is the global reserve currency. But given the financial profligacy of successive US government’s, the days (years) of retaining that status are probably numbered. A currency basket system is waiting in the wings – it has been trailered often enough by central bankers and others.

  11. jerry
    March 13, 2021

    More context would be helpful, banding about a countries borrowing is pointless without.
    $1.9tn sounds horrendous here in the UK when our total GDP is just under ÂŁ3tn, but the USA has a total GDP of over $20tn (PPP). Also what is the current level of US borrowing before this extra (?) $1.9tn. Whilst it’s important to keep inflation low, it is also dangerous if it dips to low, given that many otherwise economically successful counties have higher inflation than the UK target, perhaps the UK is trying to make our porridge with iced water and no stove?

    As for hospitality venues increasing their prices to try and claw-back some of their losses over the past 12 months, madness, both businesses and govt need to take a longer view. Otherwise, having got used to thinking local (in the true meaning of Staycation), eating-in, watching a streamed or DVD movie, many people might simply decide they are not going to be fleeced in, their minds, money saved on expensive holidays, expensive evenings out, expensive meal followed by cinema or theatre, can be better spent elsewhere in the economy resulting in a more long lasting personal gratification. I know a couple who are planning to have their garden re-landscaped instead of spending several thousand on a cruise….

    1. No Longer Anonymous
      March 13, 2021

      End social distancing much sooner rather than later.

      1. jerry
        March 14, 2021

        @NLA; So you want Lockdown No.4 then, I assume,. of does science pass you by?

        1. NickC
          March 14, 2021

          Jerry, The untargeted national lockdowns have not worked, as can clearly be seen from the ONS “all deaths” graph.

          1. jerry
            March 14, 2021

            @NickC; Non so blind as those who choose not to see I guess…. What the ONS data actually shows is how disastrous the anti lockdown bleating and protests have been over the last 12 months, far from allowing hospitals to treat more non Covid patients, removing many restrictions (and thus allowing by and large unrestricted CV19 infections) actually meant many hospital wards became full of nothing but Covid patients, whilst highly skilled medical staff from almost all departments had to be redeployed away from their usual work even if their own surgical wards were safe and Covid free.

            If you want more cancer patients treated, more joint replacements carried out, more elected surgeries carried out, then you should be supporting the current restrictions, if not calling for them to be strengthened still further!

  12. Norman
    March 13, 2021

    Rampant insanity.

  13. Narrow Shoulders
    March 13, 2021

    Price rises for returning services must surely be driven by demand and more importantly how much supply remains.

    Travel prices will rise as the capacity has been decimated, hairdressers and restaurants will initially have to maintain the increased prices as they can’t fill their premises. After the initial surge and the relaxing of spacing measures in June there might be more supply than demand so we could see a drop in prices, it all depends on how many businesses remain.

    USA’s helicopter money must surely increase the cost of living by $1,400 as everyone has this amount to spend and so demand will rise by that much. This will increase asset prices globally.

    AS inflation increases so the benefit of saving at low interest rates become less attractive and those with savings will look for different means to secure their cash pile. This will go into assets and increase demand further. Bitcoin will surge further as will precious metals. Time to raise interest rates to prevent the transfer out of savings.

    The cash stimulus in the UK has done its job in saving as much of the economy as possible, now we need baby bear’s porridge with a small contraction of the money supply and an increase in interest rates but just enough to keep people spending on a daily basis.

  14. Iain Moore
    March 13, 2021

    Someone has looked at the US’s Covid relief bill, sorry it is a bit long , but detailing $1.9tn of spending takes quite a bit of space. The lesson is never ever allow a Government to push something like that through on the back of a pandemic, for then everything , including the kitchen sink, gets chucked in under the cover of it.

    //Dividing the cost by every American is $6,051.74 The government could have given every person over $6,000, but instead will give $1,400 to each adult under a certain income. Want to know where the missing 96% of your tax dollars went? Here you go. .
    1. $300,000,000 for Migrant and Refugee Assistance pg.. 147
    2. $10,000 per person for student loan bailout
    3. $100,000,000 to NASA, because, who knows why.
    4. $20,000,000,000 to the USPS, because why the hell not
    5. $300,000,000 to the Endowment for the Arts – because of it
    6. $300,000,000 for the Endowment for the Humanities/ because no one even knew that was a thing
    7. $15,000,000 for Veterans Employment Training / for when the GI Bill isn’t enough.
    8. $435,000,000 for mental health support
    9. $30,000,000,000 for the Department of Education stabilization fund/ because that will keep people employed (all those zeros can be confusing, that’s $30 BILLION)
    10. $200,000,000 to Safe Schools Emergency Response to Violence Program
    11. $300,000,000 to Public Broadcasting / NPR has to be bought by the Democrats.
    12. $500,000,000 to Museums and Libraries / Who the hell knows how we are going to use it.
    13. $720,000,000 to Social Security Admin / but get this only 200,000,000 is to help people. The rest is for admin costs.
    14. $25,000,000 for Cleaning supplies for the Capitol Building / I kid you not it’s on page 136.
    15. $7,500,000 to the Smithsonian for additional salaries
    16. $35,000,000 to the JFK Center for Performing Arts
    17. $25,000,000 for additional salary for House of Representatives
    18. $3,000,000,000 upgrade to the IT department at the VA
    19. $315,000,000 for State Department Diplomatic Programs
    20. $95,000,000 for the Agency of International Development
    21. $300,000,000 for International Disaster Assistance
    22. $90,000,000 for the Peace Corp pg. 148
    23. $13,000,000 to Howard University pg. 121
    24. $9,000,000 Misc. Senate Expenses pg. 134
    25. $100,000,000 to Essential Air carriers pg. 162. This of note because the Airlines are going to need billions in loans to keep them afloat ($100,000,000 is chump change.)
    26. $40,000,000,000 goes to the Take Responsibility to Workers and Families Act This sounds like it’s direct payments for workers pg. 164.
    27. $1,000,000,000 Airlines Recycle and Save Program pg. 163
    28. $25,000,000 to the FAA for administrative costs pg. 165
    29. $492,000,000 to National Railroad Passenger Corporation (Amtrak) pg 167
    30. $526,000,000 Grants to Amtrak to remain available if needed through 2021 pg. 168 (what are the odds that doesn’t go unused) Hidden on page 174 the Secretary has 7 days to allocate the funds & notify Congress.
    31. $25,000,000,000 for Transit Infrastructure pg. 169
    32. $3,000,000 Maritime Administration pg. 172
    33. $5,000,000 Salaries and Expensive Office of the Inspector General pg. 172
    34. $2,500,000 Public and Indian Housing pg. 175
    35. $5,000,000 Community Planning and Development pg. 175
    36. $2,500,000 Office of Housing//

    1. Richard1
      March 13, 2021

      Good post. I imagine, like Obama’s $750bn stimulus in 2009, quite a bit will find its way back into the coffers of Democrat Party political supporters.

    2. glen cullen
      March 13, 2021

      +1

    3. Mike Wilson
      March 13, 2021

      The mind boggles. Still it’s good to know ours is not the only nutty government.

  15. Bryan Harris
    March 13, 2021

    Isn’t this all out of the idiots guide to socialism?

    SPEND SPEND SPEND

    Corbyn wanted to do a similar thing although he had trouble in finding his money-tree.

    I fear this illiterate attempt by American socialists will do nothing but increase their already huge debt beyond which it can ever be managed — Without the great reset coming into play

  16. Alan Jutson
    March 13, 2021

    Price rises already happening JR, in fact been happening for the past year in the construction industry.
    Timber prices now up 30% or more in the last few months alone as demand exceeds supply.
    Similar with many other products and basic materials.

    1. Bryan Harris
      March 13, 2021

      Indeed – and not just timber.
      Already we see increases in costs on basic things we need to survive with.

      There has to be a point reached where we are going to see major shortages with so many countries closed down.

      The supermarkets will be the first place most likely to experience problems – we will see shortages and increases – No doubt rationing will be imposed on us, especially when petrol pumps run low

  17. Andy
    March 13, 2021

    The US has got it right. There the money is going to people. Americans are getting $1400 – about ÂŁ1000 – each. And most will spend it. That will help the economy and create jobs.

    The Tories are not giving money to people. There’s been a lot of money for banks. There has been a bit for some businesses. There has been a lot of money for some businesses linked to the Tory party. But many people have had nothing. They have nothing to spend.

    The modern day Tory party is economically illiterate. It is embarrassing. We have witnessed a 40% reduction in exports to the EU and the unelected Mr Frost is musing on Twitter about the cause. Somebody buy the goon a mirror. Just don’t try to import it.

    1. Richard1
      March 13, 2021

      The U.K. furlough scheme is widely recognised as amongst the most generous support packages in the world. One of the reasons it has worked so smoothly is the (eventual) successful implementation of Iain Duncan Smith’s much maligned universal credit system. Let me guess – you were against that?

      Your point on goods trade in January, which has been trumpeted triumphantly by the leftwing media, is plainly nonsense. Nothing can be read into a month’s data. Imports also fell, though the U.K. – as has also been widely publicised – has implemented no extra controls at all.

      Support for Rejoin down to 39% now. Your posts will be doing their little bit to keep it falling.

      1. Andy
        March 13, 2021

        Why do you think it matters what polls say about rejoining the EU say? We aren’t rejoining soon.

        We must not only wait for Brexit to fail miserably but for the majority to recognise it has failed miserably.

        It really is irrelevant what elderly leave supporters think. We are playing the long game and, frankly, most of you won’t be around to vote at the next referendum.

        1. Richard1
          March 14, 2021

          I am middle aged like you. Whilst I wish you good health and long life, I have as much chance of seeing another referendum – should one happen in the coming decades – as you do.

          Not that I think there will be one. As you recall, you and others were saying opinion would move steadily in favour of rejoin as older leave voters died and young potential remainers joined the electorate. In fact the opposite has happened. Perhaps young people in the U.K. now see all the folly and failings of the EU, and – like young people, eg, in Italy – are now happy to be out. Perhaps that’s why opinion polls have moved?

    2. a-tracy
      March 13, 2021

      Andy, ? The Tories are giving money directly to people. Figures from the Treasury show furlough numbers rose sharply 2020. At the end of 2020, the furlough scheme was supporting roughly four million people up from 4.05 million in Nov but lower than the 8.9 million people supported in May 2020 (source D Exp). Im not sure if these figures include the public sector workers paid full pay but furloughed. “ The statistics, published today by HMRC, show that up to 3.4 million of the UK’s 5 million self-employed are eligible for SEISS. Of these, 2.4 million claimed a total of £6.974bn between the 13th and 31st May. The average award was £2,900 per claimant. ” source ipse

      1. Andy
        March 13, 2021

        No, the Tories are taking money AWAY from people. They have ordered many businesses to shut. And they are only compensating people with 80% of what they would have earned.

        1. a-tracy
          March 14, 2021

          Andy, you said “ The Tories are not giving money to people.” Thanks for confirming the Tories are giving money to people.

    3. NickC
      March 13, 2021

      But Andy, you told us we left on 31 January 2020. Weren’t we supposed to collapse back then without the EU holding our hand?

      1. Andy
        March 13, 2021

        It is amusing you think Brexit is going well. It is far worse than even I expected.

        The lack of lorry queues is not a success. They have simply stopped exporting loads of stuff. Good are not leaving UK factories destined for EU buyers.

        It is an epic car crash. And all of you will own it.

        1. NickC
          March 14, 2021

          Andy, Whether you think Brexit is going well or not, your predictions of disaster when we left (31 Jan 2020) aren’t. On the other hand my predictions that the EU would be vindictive, intransigent, and beligerent are spot on.

    4. Mike Wilson
      March 13, 2021

      Did you read the list of items the US is spending its stimulus on? And they have it right?!

      The mind boggles.

      It would be nice if the government here gave pensioners a payment of ÂŁ1000. It would be a big help towards the next holiday.

  18. MiC
    March 13, 2021

    The global shortage of semiconductors is caused in large part by the explosive inflation of cryptocurrencies such as bitcoin, and the expansion in the grotesquely wasteful, energy guzzling mining centres, as well as of cyber crime, in the recruitment of millions of private computers by viruses to use their combined power to mine bitcoin for criminals.

    These are tailor-made for the world of crime, like the dark web and various encryption networks. The recklessness of the likes of Elon Musk, and now of supposedly responsible financial institutions in promoting them is utterly egregious.

    I doubt very much whether the Right will do anything about this here or anywhere else in the world, and for very obvious reasons, however.

    Let us hope that the Biden administration will.

    1. NickC
      March 13, 2021

      Martin, I thought you were all in favour of the tech giants censoring wicked Right opinions? Or have you now come round to our point of view that the woke tech giants need reining in?

      1. MiC
        March 13, 2021

        What have FB etc. to do with the existence of and promotion of cryptocurrencies?

        1. a-tracy
          March 14, 2021

          MiC, are you joking did you see the Elon Musk tweet about crypto, it gave crypto lift off? Then there was the debacle over gamestop stocks all done over social media.

        2. NickC
          March 14, 2021

          Martin, You have it completely the wrong way round. The chip shortages are due to a variety of factors, principally covid and lockdowns. The shortages have then impacted on crypto currencies – and much else besides such as servers provision.

      2. hefner
        March 14, 2021

        NickC, you ‘thought X was all in favour of’ or you ‘were under the impression Y approved of’.
        When are you going to think your own thoughts instead of only be able to react to others’ presumed thinking?

        1. NickC
          March 14, 2021

          Hefner, Some comments I agree with, some I don’t. In order to counter a point of view which I believe to be wrong, I tend to quote, or summarise, that opposing view first. It gives everyone the opportunity to see where I’m coming from. Quite clearly I do then give my own thoughts. Why not?

    2. Mike Wilson
      March 13, 2021

      To mine Bitcoin for criminals? What are you on! I own Bitcoin. I am not a criminal.

      1. MiC
        March 14, 2021

        People who plant viruses on other’s computers for that purpose are criminals.

        Do you not even get this?

  19. formula57
    March 13, 2021

    “She wants Daddy Bear’s porridge straight from the cooker.” – I see! (Political economy has become an even stranger subject since the days when I undertook its formal study.)

    There must be the suspicion at least that U.S. economic policy is really steered by considerations about its social and cultural ills, deeply rooted and intractable as they are, and the desire above all else to avoid the high unemployment levels that would make those factors even worse and finish off Biden’s presidency.

  20. Chris S
    March 13, 2021

    As expected, Biden has gone over the top with his spending priorities. Rather than send every American a $1400 cheque, the same stimulus spent on US infrastructure and support for US manufacturing would produce better results. Ironically, it will be Ch ofina that will benefit most as a good proportion of all those $1400 cheques will be spent on goods made there, rather than in the USA.

    1. Bitterend
      March 13, 2021

      What’s Biden gotta do with us.. same as EU..not our business anymore..we voted out end of story.

  21. Newmania
    March 13, 2021

    Its like an Agatha Christie this post tricking you into false assumptions . Well allow me to be Poirot :

    The UK and the USA do not run even remotely comparable risks by allowing debt to get under control
    ( Gasp)
    The UK is already has interest rates at o.1 % so the UDS are only loosening to where we are already
    ( No!!!!! )
    Inflation now is not the only risk of high debt and inflation at any point is not the only problem associated with ,lunatic debt .
    ( Faint …)
    So this whole post is a based on entirely false assumptions !
    (Ahhhhhh )

    Redwood runs for it over the croquet lawn but is apprehended by plod

    1. NickC
      March 13, 2021

      I was under the impression you approved of MMT, Newmania? So why are you so bothered about national debt when it can be MMT’ed out of existence? Alternatively, you simply like to whinge and to hell with consistency.

      1. Newmania
        March 13, 2021

        Allow me to slightly correct you there , MMT is in my humble opinion simply Magic Money Tree by another name and a big fat excuse for politicians to do what they always want to do , spend our future on their now .

        1. NickC
          March 14, 2021

          Newmania, My apologies, I accept your correction, which I understand to mean that you are not a supporter of MMT. I agree with your description of MMT.

    2. jon livesey
      March 13, 2021

      If UK debt is lunatic, why are financial institutions buying it at such low interest rates? A hint is that it has to do with risk.

  22. Stephen Reay
    March 13, 2021

    A policy destined to make the rich richer off the backs of the poor. It happened last time and will happen again. Rich people love a recession and are gleefully rubbing their hands whilst our mp’s sit back and watch. Never has a newer approach to recessions is needed now . Company CEO’s will get massive bonus of the back of QE whilst employees sit back and receive less than inflation pay rises if they are lucky.

  23. William Long
    March 13, 2021

    As you infer, the proof of the pudding, or porridge bowl perhaps, will be in the eating. My guess would be that with the much more agile industrial economy in the USA, they do have a chance of getting production going fast enough to provide goods in time to meet the enhanced demand before inflation really takes off, but I would not be too confident. I would not give much at the moment for our ability to achieve the same thing here so perhaps, for once, the UK treasury is right to be more cautious. One thing that does seem pretty certain though, is that the EU are going to be the real laggards, and I read this morning that the German courts are raising a fresh challenge to the legitimacy of what limited stimulus the ECB is trying to provide.

  24. NickC
    March 13, 2021

    The last splurge of QE was mopped up by the banks so did not appear as high general inflation. Though inflation did occur despite the finely tailored “baskets” which hide the true costs. I wonder if the latest QE will be similarly mopped up? Perhaps that’s the real purpose of Boris’s “green revolution” – to waste the excess money artificially created in response to his lockdowns?

    1. glen cullen
      March 13, 2021

      Boris’s “green revolution” = taxpayer subsidy on inefficient products and services to support social engineering and the EUs grand plan

    2. Mike Wilson
      March 13, 2021

      QE, as you say, is mopped up by the banks and they carry on lending. Most of their lending is for mortgages so, surprise, surprise, house prices inflate.

      The money supply has increased on average by 11% a year for the last 40 years. Much of this money has been lent as mortgages – hence the never ending inflation in house prices.

      1. NickC
        March 14, 2021

        Mike, Actually I said that the last splurge of QE (ie 2009 on) was mopped up by the banks. We’ve yet to see where the latest QE will end up. A lot has been passed on to unproductive people and businesses via grants and furlough, so may drive general inflation. I was being somewhat cynical about it being mopped up by Boris’s green revolution – even though the green revolution is a massive waste.

  25. glen cullen
    March 13, 2021

    ”Goldielock”
.thought it was ”Gridlock” and the new Tory green policy on transport and EVs

  26. weary eye
    March 13, 2021

    The UK’s fish and shellfish exports to the European Union dropped by a whopping 83% in January, while meat sales dropped by two-thirds, with Brexit being blamed as the primary reason.

    Office for National Statistics (ONS) figures released on Friday showed that the UK’s total exports to the continent decreased by 41% in January.

    It was the first month of the UK’s life outside of the EU’s Single Market and Customs Union and with new checks and red tape in place.

    Exports of food, which have been hit by a wave of new health and customs paperwork since 1 January, dropped by 63%, the ONS found.

    Fish was the worst-affected industry. Fish and shellfish exports to the EU dropped by 83% in January as the new paperwork led to lengthy delays and European customers cancelling orders.

    Sir John you seem to have missed the Brexit news from yesterday, I was certain you’d have something to say is there a reason why you are rather muted?

    1. Alan Jutson
      March 13, 2021

      Interesting comment, we have a family member who works in transport logistics.

      Comment, yes some stuff being held up going into the EU for up to a week due to failing/incorrect paperwork, lack of people in post on the EU side (due to Covid) thus far from us not being ready, the EU side is in a far worse state..
      Perhaps the EU will take the situation rather more seriously after they ratify the treaty, which they still have to do.

      Apparently flowers due to be delivered into the UK Garden Centres from the EU are dying at the ports due to excessive waiting times on their side.

      Of course the BBC only report problems on one side as is usual.

      1. MiC
        March 13, 2021

        Even if your silly nonsense were true, your claimed disorder on the European Union side would only be disrupting a small percentage of their hitherto total exports. Many exporters there have simply given up even trying to export to the UK, because they have the luxury of not needing to bother.

        However, here, it is getting on for what used to be half of it – nothing like now, of course, and it will be sadly fatal for many concerns.

        1. Alan Jutson
          March 13, 2021

          Mic

          Oh Dear, seems you would sooner believe the media rather than someone who is organising and shipping and recieving product all over the world for a living, and has first hand knowledge of what was happening before and after Brexit and Covid, what a sad attitude you have to actual facts.

          1. MiC
            March 14, 2021

            Hearsay on a blog, which is what you apparently believe, is inadmissible in Court and for very good reasons.

            Peer-reviewed analysis such as the ONS’s and RHA’s is, I think, more reliable.

            I refer in particular to the extraordinary claim that “the EU is in a far worse state”.

            Less significant details might be true on the other hand.

      2. Denis Cooper
        March 13, 2021

        The EU has already ratified the most relevant treaty, including its Article 7:

        https://www.wto.org/english/docs_e/legal_e/tfa-nov14_e.htm#art7

        “ARTICLE 7: RELEASE AND CLEARANCE OF GOODS”

        “4 Risk Management

        4.1 Each Member shall, to the extent possible, adopt or maintain a risk management system for customs control.

        4.2 Each Member shall design and apply risk management in a manner as to avoid arbitrary or unjustifiable discrimination, or a disguised restriction on international trade.

        4.3 Each Member shall concentrate customs control and, to the extent possible other relevant border controls, on high-risk consignments and expedite the release of low-risk consignments … ”

        For twenty eight years from January 1 1993 the EU was content to treat goods coming from the UK as being sufficiently low-risk that they did not merit intensive controls or routine inspections as they crossed the frontier; that was still the case on December 31, and the risk level did not suddenly change overnight.

        What we have been seeing with the EU since then has been “arbitrary or unjustifiable discrimination” and “disguised restriction on international trade” in contravention of the WTO rules.

        1. Lindsay McDougall
          March 13, 2021

          Agreed. So why aren’t we withholding the ÂŁ10 billion that we are supposed to be paying the EU over the next year and invoicing it for the avoidable delay costs incurred by UK exporters? What’s wrong with the UK? It’s become not only a Nanny State but a Ninny State. And why haven’t we scrapped the totally unnecessary Northern Ireland protocol. Sovereignty is no use unless we actually use the powers regained. We are not the EU’s poodle or Biden’s poodle.

          1. Denis Cooper
            March 14, 2021

            My guess is that the UK is often so weak in its approach to the EU because most of the people in our government and Parliament and civil service are still pro-EU; they may accept our departure but they still regret it, and consciously or subconsciously they may find it more comfortable to stick with their ingrained habit and side with the EU. Then if they do strike a more aggressive pose they may over compensate and go beyond anything that was suggested by those who genuinely wanted to leave, for example by hinting that innocent well-behaved and well-integrated EU citizens long settled in the country at our government’s invitation could face deportation.

      3. jon livesey
        March 13, 2021

        And have you noticed how selective the EU’s economic sabotage is? No-one in the EU is going to be harmed by one box of shellfish more or less, one ham sandwich, or one bunch of flowers. But they make splendid crocodile tears headlines.

        What you will never see the EU risking grounding Airbus by refusing to accept UK designed and manufactured wings and engines.

        Oh, and this morning Coveney suggests that the UK should “slow down” and do a joint UK-EU FTA deal with the US. A deal that would lock us into the EU negotiating position, of course. “Slow down” when a year ago the EU story, backed by our good friend Obama, was that the UK was too small, too poor, too dirty and too backward, for the US to even bother with.

    2. NickC
      March 13, 2021

      Weary, So you think the EU has nothing to do with the EU not buying our shellfish? It’s all the UK’s fault, despite the shellfish being the same, from the same UK waters, as the EU accepted in December 2020? And then you wonder why Remains have been so unsuccessful in converting Leaves to Remain.

      1. Denis Cooper
        March 14, 2021

        On the shellfish Richard North, who is no friend of this government or of its “bodged”Brexit, has argued that the EU is breaking WTO rules as well as its own rules:

        http://www.eureferendum.com/blogview.aspx?blogno=87900

        “This is, of course, is the way the system works – the way it must work in order to comply with the terms of the WTO SPS Agreement, which prohibits measures which arbitrarily or unjustifiably discriminate between Members “where identical or similar conditions prevail”.”

        In that sentence “Members” refers to “WTO members”, not “EU members”, and that is important because the argument seen here and elsewhere that “This is what you voted for, to be treated the same as any other third country” is not valid under either WTO or EU rules, with the latter being “the law” here:

        “What is very evident in this part of the law is that no distinction is made between member states and third countries. Both are equally bound by it. And there is no requirement, specific or implied, that requires third countries to submit molluscs collected from class B production areas to purification before entry into the Union customs area.”

        Complicated stuff, and all about something worth perhaps 0.0006% of GDP.

        1. NickC
          March 14, 2021

          Denis, Thank you for the specifics to flesh out my comment.

    3. Nick
      March 13, 2021

      The belligerent and Britain-hating EU was always going to try and make life as difficult for our exporters as possible, so this is hardly unexpected. But it wouldn’t be a problem if we reciprocated. After all, we import more than we export, so a trade war would benefit us and we could redirect exports to British supermarket shelves in an import substitution drive. Unforunately we are governed by idiots and/or traitors, and we are doing the very opposite! We are suspending controls on imports from the EU in order to help EU exporters, instead of focusing on helping UK exporters. No wonder the NFU are so upset about this! The government may say that they are ensuring our food shops remain well-stocked, but they should be pressuring supermarkets to switch suppliers so that we import from countries OUTSIDE the EU. The EU produces nothing we cannot get elsewhere – or produce ourselves!

      What is particularly curious about all this is that it seems it is once again Michael Gove who is responsible for this treacherous idiocy – just as the concessions on the NI Protocol which have caused so much difficulty were his responsibility. I do not know all the secret machinations going on in government, but wish we could be told! Is Gove personally responsible for all these betrayals, or is he acting under Boris’s instructions? I would really like to know.

  27. Original Richard
    March 13, 2021

    If I lived in North America I would be more worried by the current administrations’s policy of unlimited open door immigration than running the economy hot.

    Once the left have bankrupted California and southern US states the migrants will be travelling northwards and into Canada where they will be able to more easily access free food, housing and healthcare.

    1. MiC
      March 13, 2021

      In a country which has forty times the land area of the UK, but only five times its population, and also strict controls on immigration, why should the average American be terrified of legal immigration?

      Not everyone is like you, Richard, you know?

      1. Peter2
        March 13, 2021

        Is there any limit to this immigration mic?
        Considering billions would like to leave their current national home and go and live in America.

      2. NickC
        March 13, 2021

        Martin, The immigration the “average American” is worried about is actually illegal immigration, mainly across the southern border as a result of the Biden administration’s announced relaxing of border controls.

        1. MiC
          March 14, 2021

          Biden has not proposed to deregulate lawful immigration.

          You misrepresent as ever.

          1. NickC
            March 14, 2021

            Which is why I was careful to say “illegal immigration”, Martin.

      3. jon livesey
        March 13, 2021

        Indeed. In fact, most people, unlike you, understood what he wrote.

    2. Lastgasp
      March 13, 2021

      Yes but migration ti tge north and to tge south has been going on for centuries. Three hundred years ago it was the illegal whites from the north who moved into California Texas and the other southern states and pushed the native populations aside. Now the native populations are migrating north again- I don’t see what the problem is?

  28. Nick
    March 13, 2021

    Sir John, I see your latest tweet says: “The U.K. shellfish industry should consider government help to purify their catch in the U.K.” This seems to imply that (i) the UK government has definitively offered this help and (ii) the UK shellfish industry has not taken up the offer. Is that so? If true then I am delighted that the government is finally doing something positive and cannot for the life of me see why the shellfish industry wouldn’t be eagerly agreeing to this. This is certainly the way forward.

    On fishing in general though, I have just read today that EU boats are allowed to catch more than 90% of the Channel cod! This is madness. What a betrayal of our fishing industry and our own domestic interests. How could the government sign up to such a one-sided and treacherous agreement?

  29. Alan Holmes
    March 13, 2021

    Real inflation is America is already running at around 10% and the gigantic money printing will soon give the Fed a whole lot more inflation than they can handle. The amazing thing is that so many people are so ignorant of economic reality that any faith in “authority” remains. Giving criminals the power to create money is insane when what we need is a complete separation of the state and money supply.

    1. Mike Wilson
      March 13, 2021

      We have effective separation of the state and the money supply. Money is created by banks when they make loans. They, not the government or the Bank of England, have increased the money supply by an average of 11% a year for the last 40 years.

      That said, it should be the government’s job to control how much money the banks create. But they don’t. The banks keep creating money and lending the majority of it as mortgages. And house prices go up and up pricing young people out of the market and making our economy uncompetitive. How can you compete with other countries when people here need to earn what are, in global terms, incredibly high wages to pay, again in global terms, incredibly high rents or massive portage payments.

  30. Lindsay McDougall
    March 13, 2021

    The history of the economic cycle in western economies is that Governments tend to do too much to late. They stimulate when the patient is already up and playing golf and they take measures to counter inflation when the worst is already past. I would hardly describe UK policy as prudent, only so by comparison.

  31. Stephen Reay
    March 13, 2021

    The people do not want the government to print money , sooner or later the ordinary people will have to pay for it, and not so the millionaires. We would rather see the economy driven by demand by reducing VAT , and yes dropped us all a grand each to spend as we wish, at least this would the the people’s QE rather than the rich profiting by it.
    But who are we, the very people who put in government to represent us . The problem with parliament there’s far too many millionaires in it who make it work in their best interests and not the best interests of the people. It would be nice to know how many MP’s are millionaires, it about time that more ordinary people are encouraged to run for a MP’s role.

  32. David Brown
    March 13, 2021

    A strange choice of words for today’s topic.
    I hope The US President sides with the Irish Gov and refuses to do a trade deal with the UK on its own and insists the EU and Canada is part of the overall package.
    If the UK Gov does not back down over the amendments to the Irish Protocol I hope the US simply ignores the UK and does a Trade Deal with the EU inc finance.

    1. Mike Wilson
      March 13, 2021

      Off to the tower with you!

    2. Denis Cooper
      March 14, 2021

      You are declaring yourself to be our enemy, but no matter because what you hope for will not happen and even if it did happen it would hardly matter:

      https://johnredwoodsdiary.com/2021/03/12/continuity-in-us-policy/#comment-1215624

  33. glen cullen
    March 13, 2021

    Scotland have implemented a new Hate Crime Law

    This has the support of each country in the union

    Otherwise they’d opposed it

    Free speech is dead in Scotland – England next

  34. hefner
    March 13, 2021

    I have just started ‘The Deficit Myth’ by Stephanie Kelton. It looks like a few people here could benefit from reading it. But will they, and anyway would they understand that intervention on budget for countries emitting their own money is more efficient than monetary-aimed intervention?

  35. jon livesey
    March 13, 2021

    I would not pay too much attention to the concepts of Goldilocks and trying to abolish boom and bust. They may be the dreams of politicians, but in the real World every boom creates investment, some of it bad, and bust is inevitable as we get rid of the bad.

    Growth in the economy is not driven by some politician cleverly setting some lever in No 11 just right, but by entrepreneurs reacting to perceived needs for new products. We know three very important things. One is that the UK’s very large share of European start-ups indicates that it is an attractive destination for new businesses. Second is that an AI start-up is very unlikely to be deterred by the EU refusing to accept some box of shellfish. Third is that for all its pretensions, the actual interaction between the UK and EU was in trade, and that the EU did not actually run the UK economy.

    Brexit is really an old-economy story, while growth is new. So-called teething problems are not just going to be temporary, but they are in a small section of trade, with one trading partner, that was shrinking anyway.

  36. Denis Cooper
    March 13, 2021

    Off topic, again … Simon Coveney has finally cracked up under the strain:

    https://www.politico.eu/article/ireland-foreign-minister-simon-coveney-uk-trade-nationalism/

    “Irish foreign minister accuses UK of ‘perverse nationalism’ on US trade”

    “EU, Britain, US and Canada should do four-way deal, Simon Coveney says.”

    And none of it would be worth much, whether separately or combined.

  37. Derek
    March 13, 2021

    Regardless of the (in my view, OTT) stimulation efforts of the now socialist USA, they will be subjected to the actions within the Bond markets. In July 2020 the US T Bond yield bottomed at 0.61%. Yesterday it closed at 1.629% a level not seen since Jan 2020. It seems the market does not like what is happening within the US Government and must worry about the declining value of the USD on the FX. Rising Bond Yields are the prelude to rising Bank interest rates and will adversely effect both workers and their employers alike. Ditto in the UK.
    The 10 year Gilt yield also bottomed in July last year at 0.11% but yesterday it closed at 0.826% and the trend is up! Once reality sets in, it’s going to be a very bumpy ride. If Gilt yields rise to 2% our current debt of ÂŁ2 T will eventually cost us ÂŁ40 Billion per year and that is around the whole Defence Budget for last year. What will happen if they rise further? Nothing good, I suspect.
    James Callaghan once told us that we cannot spend our way out of a recession and he was the Labour PM at the time. It seems his declaration is being ignored and at our peril.

  38. Ian Pennell
    March 13, 2021

    Dear Sir John Redwood

    I think Rishi Sunak’s budget hit the right balance in terms of trying to placate the bond markets (with the promise of some tax rises) whilst providing enough fiscal fire-power in the short-term to ensure the British economy does indeed recover to something resembling where it was before Covid struck in February 2020. The economy will recover and Rishi Sunak’s longer- term policies should well placate the markets enough to stop the cost of borrowing becoming a huge headache.

    What Joe Biden’s government and the Federal Reserve are doing in the USA is not only making the bond markets jittery but the massive stimulus is likely to overwhelm the productive part of the US economy with a massive surge in demand: Inflation in the USA will likely be over 5% by the end of the year. The Fed will be forced to stop printing money and start raising Interest rates- leading in turn to greater borrowing costs for the Democrats- who will in turn tax wealthier citizens in the USA a bit more to pay for it and to maintain high levels of public spending.

    Back here in the UK, the big concern remains the effect of all the Quantitative Easing to date combined with what happens when people rush back to the shops, pubs and hotels after Lockdown- whilst the productive side of the economy has not fully recovered. If Inflation rises over 4% that would put great pressure on families and businesses, whilst the Chancellor would have limited room for manoeuvre to help them with borrowing costs rising should the Bank of England slam the brakes on. Chancellor Rishi Sunak may have to start introducing taxes on Wealth- such as a Luxury Levy of 20% on items such as fine art, yatchs and expensive jewellery- to service the rising borrowing costs and provide funds for struggling families. Higher marginal tax rates in the USA from the Democrats and high taxes across Europe will, fortunately, give Rishi Sunak cover to tax the rich a bit more because there is less risk of “Capital flight” when other countries in the West are also taxing wealth more.

    It’s still going to be tough for the next few years with the Public finances- and the Chancellor needs to be careful not to have political howlers like “1% increases in Nurses’ Pay”: Boris Johnson promised an End to Austerity, so it is worrying that ÂŁ5 billion Cuts to Public expenditure have been included in the Budget. So because borrowing more will not be an option Conservative MPs will have to overcome their aversion to taxing the Wealthy a bit more- using relatively economically harmless taxes on consumption (like a 20% Luxury Levy, but not politically-toxic VAT hikes)- so funds can be raised to support Public services, start funding Social Care better- whilst avoiding political bloopers like stealth taxes on the Poor, cuts to NHS pay or Welfare cuts. And regarding Welfare, the ÂŁ20-a-week increase in Universal Credit needs to be made permanent because cutting that at the end of September will also be politically-toxic: Do persuade Rishi Sunak that that is a “Political No-No” when Boris Johnson promised to Level Up the country!

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