The Treasury and Bank are still worried that the UK has borrowed too much. They want to slow everything down by forcing through tax rises. They want the Chancellor to follow austerity policies based on setting difficult targets to get the debt down. It’s the same playbook as after the Banking crash, and the same playbook as the EU debt controls, needed if you share a currency with others to stop free riders.
Let me have another go at explaining why we should not be so worried about UK state debt. The UK state has bought up £875bn of it, so that is no longer a debt. The Treasury pays the Bank interest on it, it is true, but the Bank sends the interest back as a dividend because the Treasury on behalf of taxpayers owns the Bank. I would not regard myself in debt if I owed money to myself.
Normally I would be against a state buying up its own debt by creating money out of thin air to do so.The extraordinary conditions of lockdown when government prevented a large amount of activity meant it was possible to offset some of the damage by creating money. It would normally be very inflationary, and would lead in due course to hyperinflation if persisted with. We have seen Zimbabwe, Venezuela and Argentina do that in recent years, and pre war Germany famously did it. It is a very destructive process, leading to poverty and economic breakdown, forcing people onto barter or foreign currencies to retain some value in their money and labour. I do not recommend the UKÂ doing any more money creation from here.
The truth the Bank and Treasury need to grasp is they largely got away with mass creation of pounds and buying in of debt. The inflationary consequences are not going to be too great if they stop doing any more now. The collapse of demand in the economy thanks to lockdown needed an offset which they provided. They did not do as much proportionately as the USA. They are right not to try to do anything like the huge amount Japan has done and got away with over the last couple of decades. Japan has an ageing and declining population with a high wish to save, so its money creation has not generated any inflation, contrary to usual form. Japan’s state debt is around 250% of GDP now, but the state owns half of it and the other half is financed at around zero interest so it is not a problem.
If the Treasury persist in slowing the economy with tax rises they will end up with a bigger deficit. They need to help energise the rest of the government to promote more UK based activity. The deficits they should worry about more are the balance of payments and trade deficits. Those need us to borrow in foreign currencies we cannot print, or to sell more and more of our companies to foreigners to pay the bills.There will be a bit more inflation in the year ahead thanks to world supply bottlenecks and the labour shortages.
October 16, 2021
Surely the old adage we were taught as kids is the only way to get out of debt is to work harder, longer and be more efficient in everything you do.
Don’t buy it if you cannot afford it and live within your means.
The social services budget is a huge drain on taxpayers money and IMHO that is what government should be addressing in reducing the numbers o benefits, reducing waste whether it be the big projects or massive ones like net zero. Let’s start looking after our own in house problems and stop all this millions here, billions there that seems to be announced every other time the government ministers are interviewed.
It it doesn’t bring value to UKplc don’t do it.
October 16, 2021
Well, I see your point of view.
However, what bothers me about Sir John’s insouciance is the fact that the supply of many services and commodities in the UK – including that of labour and of skills – is shrinking owing to the severe impact of covid19, notably on social venues such as pubs and restaurants, along with brexit-related supply and workforce issues generally.
It’s hard to see how pronounced inflation might be avoided without drastic problems for renters and for mortgagors – that is, for perhaps most people.
October 16, 2021
+1
October 16, 2021
The trick is to have less going out than is coming it! Not something Boris/Carrie/Sunak and this government are remotely interested in doing. As well as the benefit system (paying often healthy and capable people not to work or even learn how to work) we also have the state sector where many people are paid hansom salaries with gold plated pensions often to do very little of any value to the public. In many cases they do positive harm to the public and the productive. They care not, so long as they get their pay and gold plated pensions.
I see that Coldplay claim they’ll be powering their upcoming world tour partly via a dance floor that generates electricity when fans jump on it at the venues.
Great marketing plan guys (almost as good as Gwyneth Paltrowâs camdles), but an insanely inefficient way to generate trivial quantities of electricity & from that very inefficient form of energy – human food. Rather sad that the education that most people get means so many fall for it.
October 16, 2021
Imagine the emissions caused during the manufacturing, production, and transportation of the floor !
October 16, 2021
Indeed and in the human food production – growing, feeding to animals, butchering, packaging, distribution, freezing, cooking … the same food that fuels walking and cycling as transport!
October 16, 2021
Exactly Alan. I am chuckling at tge foolishness of it. Well done you and L/L for pointing it out.
October 16, 2021
The trick is to have less going out than is coming it! The Micawber principle!
October 17, 2021
!!!!!!no! Common sense
October 16, 2021
Indeed. Live within our means. There are loads of things and places to cut costs but dont. Mass migration at ÂŁ3000 per capita in health and public services subsidising companies paying the minimum wage. ÂŁ1.4 billion annually supporting illegal immigrants in 4* Hotels. Councils, public sector to many staff doing nothing being overpaid whilst ” not working from home”. In work tax credits that could be replaced with higher income tax thresholds for families. An army of people employed to administer Browns benefit dependency. We’re still waiting for that bonfire of quangos,, stopping HS2, stopping the zero carbon con and taxing our electric Bill’s to build useless windmills. And on and on it goes.
October 16, 2021
Correct on all points
October 16, 2021
Itâs fine to borrow money and spend (on U.K. suppliers) investments which will yield a return.
It rarely makes sense to borrow on international markets to fund expenditure on foreign equipment, such as wind turbines.
What never makes sense is to borrow in order to fund current consumption.
October 16, 2021
In todays high tech world unlike years ago we should be working smarter not harder some would say. Very true but graft, real graft is commitment and strong work ethics and going for that extra mile . Sometimes the cheap easy way out is in the long run the most costly. Quality of product, services are more important today than they have ever been. We have to move away from the change it throw it away society in the critical areas of the way we live.
October 16, 2021
+1
Agree wholeheartedly with both your comments, but perhaps we are of generations that grew up with that ethos.
October 16, 2021
turboterrier
Agree with both of your points, and indeed that was the mantra that was instilled in me from my parents when i was growing up, the problem arises when having taken action, worked, longer, harder and smarter, you then find it really is not worth the bother, when you see the Government getting as much or more benefit from your efforts, than you do yourself.
In desperate times and in order to move forward, you put up with it, but when times are not so desperate, you tend to think, is it really worth it to sacrifice family life, a bit of enjoyment, just to work.
Once again the Government does not understand simple Human nature.
Ever increasing taxation reduces the incentive to work.
October 16, 2021
And yet the government appears intent on âtaxing âtil the pips squeakâ.
Does it possess a single grain of sense?
Hasnât it caused enough suffering?
Does it fancy a bit of celebrity space travel đ
October 16, 2021
@EH; But only those pips who do not put their money to work here in the UK though.
HMT should announce more advantageous tax relief for those investing to bring work back to the UK, or those investing in start-ups or refinancing of existing UK centric industries.
October 16, 2021
+1
October 16, 2021
VCTs (Venture Capital Trust) were introduced in 1995, EIS and SEIS (Seed Enterprise Investment Scheme) since April 2012 are all, one way or the other, related to start-ups. They usually offer a 30% tax relief at the initial time of investment. So HMRC already offers the incentive âŠ
And given that these are much more risky investment than shares, funds or ITs in an ISA or SIPP (around 90% of UK start-ups fail within five years) HMRC also offers some rebate on the money lost (within these investment vehicles) after such a start-up failure.
see all the gory details on gov.uk 06/05/2021 âEnterprise Investment Scheme and Capital Gain Taxâ.
October 16, 2021
They could start by stopping subsidies to wind farms which are all manufactured and largely owned by foreigners. Even the workforce is more often than not brought over from foreign shores.
October 16, 2021
@Everhopeful – it has nothing to do with the wealth, health, safety and security of the Nation Everything to do with ‘egotistical’ control
October 16, 2021
+very true!
October 16, 2021
If you overtax you will raise less tax in the end not more. This by killing the tax base. Businesses have less to reinvest or expand, they are less competitive and less profitable, people have less incentive to work or so overtime, less to spend, more incentives to move overseas or to invest overseas instead, more also then go black market and cheat the system, more bartering, more DIY on the house or car or childcareâŠ
So the Home Secretary orders an âimmediate review of MPsâ securityâ – Well Ms Patel the problem is all the dangerous and/or mad people we have on the streets. They are not just attacking MPs (we have about two murders every day in the UK). Many are well know to the authorities to be dangerous or dangerously mentally ill but little or nothing is usually done.
If you protect the MPs better these people will merely attack others – police, bus drivers, army musicians, bomb teenage girls at pop concerts or just have random attacks on the public with machetes, bow and arrows or trucks as we saw in France. You need to deal with the route cause dear not just review MPs protection.
October 16, 2021
+1
First para explains a lot.
We were saying exactly the rest of your reply here this a.m.
Absolutely agree!
October 16, 2021
What I donât understand above all else is why the government knowingly spent so much money on useless tests and dodgy medical gear etc.
Because the IMF told it to? Couldnât the billions have been used more wisely?
But surely if a govt./ the whole world tries to spend its way out of a (secret) recession then that debt has to be sustainable?
Was/is it sustainable for the U.K.? Is there now a panic on?
More incarceration on the cards?
October 16, 2021
Good morning.
Sorry, off topic.
I wish to express my shock and sadness concerning, Sir David Amess MP. My thoughts are with his family, friends and colleagues at this terrible time.
—
I very much agree with this. What concerns me though, is that there are far too few that see this and, it has been seen and used by governments as an easy fix for difficult problems. Classic long grass kicking.
Unfortunately we have a government that might as well be run by Push-me-pull-you’s! On one hand they want to stimulate growth whilst implementing policies that will destroy it. The only success will be the creation of an ever growing State will all the inefficiencies associated with it.
We also need to get a hold of Local and Devolved government spending. There needs to be urgent investigations into waste and bad management. Controls need to be implemented regarding higher salaries more managers and executives seem to be paying themselves and the growth of ‘non-jobs’ like Diversity Managers.
October 16, 2021
I see that YouTube has decided to let David Davisâs video stay!
Good!!
One little spark of good news at least.
October 16, 2021
Is it filed in the fiction category?
October 16, 2021
Not sure if you are being rude to me or to Mr Davis?
October 16, 2021
Do you really think this is is “good news?”
YouTube decided to ban Mr Davis’ video? An unelected, unaccountable, private businesses CENSORING a speech by an elected MP because some geek disapproved of its content announcing that it didn’t fit the approved narrative on Covid.
The fact that YouTube then also decided to relent because it realised it had overstepped the mark a bit and the consequences might be a little negative for it, is hardly something to celebrate….. in my opinion.
Who appointed YouTube to be the arbiter of what is considered FACT and what is allowed to be said?
October 16, 2021
Censorship, cancelling is rife.
Governments have been allowing, even legislating for it, over the years.
Seeing YouTube forced to relent seems positive to me.
Certainly not as negative as if the vid had been consigned to the âforever deletedâ pile.
October 17, 2021
It’s a private company.
They can publish or not whatever they want within the law.
October 18, 2021
And that is the problem NLH
They are platforms that hundreds of millions rely on to get their voices heard.
Yet they have power to cut you off if your opinion doesn’t match theirs.
October 16, 2021
+1 but rather tiny. Alas we then have Taiwo Owatemi, a shadow womenâs minister, criticising Prof Kathleen Stock, a professor of philosophy at Sussex for totally idiotic reasons.
October 16, 2021
+1
Yes. Very tiny.
Just me grasping at straws!
All these intentionally divisive rows strike me as being very much like:
“UnitĂ©, IndivisibilitĂ© de la RĂ©publique, LibertĂ©, EgalitĂ©, FraternitĂ© ou la Mort”
Either with us or agin us.
October 16, 2021
It’s a ginormous Ponzi scheme. The Japanese have “got away with it” because they have a substantial balance of payments surplus, we do not. Most of our debt is short-term paper that the Treasury/BoE/DMO roll over on an almost daily basis – because the capital markets let us. This may stop at short notice.
The quadrupling of the price of fossil fuel energy is highly inflationary and will inevitably cause the BoE to raise interest rates next year, possibly sharply. Everyone knows that when this happens, the game is up.
Those who hold hard assets will survive. The rest will be making use of the recent resurgence of pawn shops
October 16, 2021
At some point in Japan the bubble will burst, when the declining and aging population leave too few of working age to support the debt.
Not to worry though, a generation will rise who will say “not our debt” and those who own Japanese debt will discover it is worthless.
October 16, 2021
The British economy is being run not for our benefit but that of the Globalists and their ‘Great Reset’ agenda; and that means avoiding the collapse of capitalism at the cost of foregoing democracy. Catherine Austin Fitts is very interesting on the subject of the banks ‘Going Direct’ since the 2019 repo crisis. This is a coup. You will own nothing and be happy.
October 16, 2021
@Sakara Gold + 1, Governments get to run great big ‘Ponzi’ schemes at every level – anyone else it is more than life in prison
October 16, 2021
The Japanese have been using some of their massive fake-debt-as-money creation to buy some of our not quite so massive fake-debt-as-money creation.So what is it,two drunks proping each other up?
On the other hand the Russians who know how to run a solvent,sovereign economy have recently sharply reduced their already small holdings of gilts in their sovereign wealth funds and also removed the dollar.
October 16, 2021
+1. Very good points SG.
October 16, 2021
Fully agreed. The tax rises arenât enough to make a serious dent in the level of borrowing but are enough to disincentivize economic activity, and send completely the wrong message. With this and the relentless green posturing – none of which of course is supported by reference to actual data and to costed policies – the U.K. will struggle to do what it needs to do to call Brexit a success: become the most attractive destination in Europe for investment, innovation and entrepreneurship.
October 16, 2021
Slash State spending, most of it is political in nature anyway. Ignore the public sector unions. Ignore the left. Slash public spending which will slash waste in the public sector. I reckon 30% of all State spending is political rather than utilitarian and pragmatic in nature.
A high spending State is a dangerous political animal that sees the public as the enemy
October 16, 2021
Dom ….. you are suffering from the delusion that the people in Government have a spine. Tragically, we haven’t had a PM with a spine since the Blessed Margaret.
The current one, for all his ability to produce an entertaining After Dinner Speech, doesn’t seem to have much in the way of genuine brainpower either.
October 17, 2021
+1 – but much more than 30% is wasted.
October 16, 2021
Printing money is only a symptom.
The cause was shutting down the economy for a virus that only kills 0.3% of people who could have been protected and given vitamin D and anti viral drugs for a year. The cost would have been an order of magnitude cheaper and there would be an order of magnitude less collateral deaths.
In otherwords bad Government creates higher taxes.
October 16, 2021
What “anti viral drugs” – effective against covid19 two years ago – were these them Jav?
October 16, 2021
“sell more and more of our companies to foreigners to pay the bills”
Do the Government own anything to sell? Most companies are owned by shareholders. These shareholders live around the World. I own shares in Indian and Chinese companies. It’s more the case that we need companies to invest in jobs for UK workers. The Government’s main job is to make this country a good place to invest. Tax rises aren’t the answer.
October 16, 2021
As always, the parallel universe that is the British State runs contra to the real world of the private sector in which reality will always assert itself. Private sector cash is real and limited. Public sector cash is political, unreal and unlimited.
Money printing is designed to feed the State’s thirst for continual spending on anything and everything without due care or any sense of responsibility. The British State now knows no limits to its actions and doesn’t give two hoots about the destructive consequences of its irresponsibility. The private sector cannot afford such largess and infantile behaviour as it’s constrained by the cash held in its bank accounts.
The private sector is keeping our nation alive without which we’d sink. The State and the public sector has become a ravenous wild beast that can never satiated
Thatcher spoke the truth about the State and was demonised for it by the Marxist sect. Johnson must pull back from his leftward lurch and all that this entails before he causes existential damage to Britain
October 16, 2021
How do you think that the private sector would do without public education, health, police, fire, judiciary, local services, and national defence, Dom?
October 16, 2021
Which is what the private sector pay for.
Do you actually understand how it works NLH?
October 17, 2021
Not correct as written above by P2: the taxpayers pay for about two-thirds of the public education, health, police, fire, judiciary, local service, and national defence.
See http://www.gov.uk
– âHow public spending was calculated in your tax summaryâ, 18/12/2020,
– any of the PESA (Public Expenditures Statistical Analyses) annual reports,
– Income Tax, NICs and VAT raise almost two-thirds of revenues. (ifs.org.uk âTax revenues: Where does the money come from and what are the next Governmentâs challenges?â
Do you actually understand how it works P2? are you just making it up without ever checking beforehand anything you write?
October 17, 2021
We all pay.
The rest is borrowed.
It sums up our economic problems heffy.
Yet you want even more tax and borrowing.
Hilarious lefty economics from you as usual.
October 19, 2021
P2, did I say I âwant even more tax and borrowingâ. Are you the new Joan of Arc, hearing voices from above?
You originally said âWhich is what the private sector pay forâ. Then âwe all payâ and âthe rest is borrowedâ. What part of a red herring is it? Tail, fins, head?
Or do you accept that your first comment was not correct, that the private sector is far from paying for the whole of the public services?
October 16, 2021
Has this Treasury made the connection between borrowings and spending at all – and between spending and squandering huge sums wastefully on HS2 and pointlessly on foreign aid? Perhaps economic management is not its strong suit?
October 16, 2021
I am worried about state debt because it is me and my children who will be paying your bills.
Having stuffed up the economy for younger people the elderly Brexitists have become remarkably good at spending everybody elseâs money to try to cover up the epic failure of their project.
Pre-war Germany, Venezuela, Zimbabwe are good examples of countries which went badly wrong due to bad governance. Now Brexit Britain can be added to that sorry list of failed states.
October 16, 2021
I donât think that China is going to attend that stupid, no doubt uber expensive COP26 bunfight!
October 16, 2021
Its just another undemocratic pissing contest for world elites
October 16, 2021
+1
October 16, 2021
At least China has banned cryptocurrencies and the environmentally egregious bitcoin mining.
But no worries – they’ve relocated to… … … Texas.
October 17, 2021
Incidentally, the capitalisation of cryptocurrencies is about twice the value of the US sub prime market pre 2008.
They are intensely volatile, and we have ever less insight into institutional exposure to them.
Very irresponsible statements are being made by prominent houses, notably in the US again, let alone by people like Elon Musk.
October 16, 2021
Good for China.
October 16, 2021
I doubt the Treasury has the slightest feel for the creation of personal or national wealth, I am not therefore optimistic that they or the Chancellor will put in place the building bricks to allow it. In their defence I would add that those in the treasury, never having gone through the process, the very antithesis of their life experience, can hardly be expected to know. If the message changes at the end of this month I will show some optimism, but to date I am not holding my breath.
October 16, 2021
Turboterrier is absolutely right, to get out of this pandemic hole is to work harder and longer and if you can’t afforded something now, save up and get it later.
There are more people on a company payroll today than there were before the pandemic which is a very positive sign that our economy is coming back, no doubt quicker than anticipated. We don’t need the ”lefties in the bowels of the Treasury” driving us towards inflation so that the State gains even more control.
Demand has shot up far more than forecast which is why the world supply chains are struggling but this will be resolved and whilst this might take a year, every month will be an improvement.
This means more tax is being paid and the debt will come down and we DON’T need higher rates or new taxes to screw up the recovery.
October 16, 2021
So why is the Treasury getting it all so badly wrong?
Is this a deliberate move to make the country poorer and unable to produce its way to prosperity? The unnecessary taxes are certainly an attack on the average family, which will make life harder in every direction.
It is so easy to see comparisons with what the Biden administration is doing to fritter away money while destroying the economy with excessive debt, mandating people out of work and disrupting normal life.
Is this where the UK is headed as well?
The Treasury, THIS government cannot be that incompetent – something else is going on here, and it doesn’t look at all unplanned or in any way beneficial.
iit is so easy to see comparisons with the USA
October 16, 2021
Sounds like something from Catch 22.
October 16, 2021
Perhaps it’s the chap who, having received a pointed letter from his bank complaining about his unarranged overdraft, replies with a letter of apology and enclosing a cheque
October 16, 2021
A great shame this government chooses to waste most of the money that they tax and borrow on HS2, duff degrees, net zero, bloated government, road blocking, duff schools, an insane energy agenda, restrictive planning, subsidies for green crap, paying the feckless to remain so, rest and trace, the dire dysfunctional NHS and many other insanities.
I listened to the excellent lecture by Prof. Vernan Bogdanor on Bevan yestersday. The blame for the dire state monopoly healthcare system we suffer from surely lies with him and the idiotic system he created. Also all the dire health secretaries and PMs since who failed to change this system over the many years since. He however called the Tories âverminâ rather than Tory âscumâ.
https://www.gresham.ac.uk/lectures-and-events/aneurin-bevan-and-the-socialist-ideal
October 16, 2021
The balance of payments and trade are indeed the most important elements needing attention. They need urgent and priority policy. Just look around to see how we have become totally dependent on foreign produced goods of just about every kind. It is a tragedy that our big brands and industries were sold years ago – it lined the pockets of many City spivs though.
There must be action from government now to protect what we have left because each time we sell someone thinks it is fair and reasonable all we are doing is persisting with the practice which has brought us to our present desperate position. We need sacrifice and determination to protect ourselves and restore our economy. Without it our nation will continue as a slave under foreign domination.
October 16, 2021
No doubt the Grim Reaper, current office holder Rishi Sunak, will not abandon his time dishonoured habit of piling on yet more taxes. Numerous leaks to the daily papers suggest we are being conditioned to expect this. I agree with you it is not the solution. No country can tax itself out of a hole. It will only get out of the hole through hard work and enterprise. Taxes discourage that at the punitive levels we have and are warned to expect. An essential ingredient is a flourishing business sector in which people can participate as savers. Unfortunately the large number of businesses sold to foreign investors over the years is reducing the pool of investable opportunities that are available either directly or via investment trusts, OEICS, VCTs in their ISAs. Once a fast growing business gets to a certain market valuation, say ÂŁ1 billion, it becomes a potential foreign takeover target and easy meat for a predator who can short sell the business to drive its price down before making an offer. This is happening now before our eyes. I can think of one business about to be removed from the market this way after months of organised short selling. It looks as though another is being set up for a similar operation by a group of nine US financial institutions who have pooled their nominee services to buy a 1% stake and control another borrowed 4% stake. The practice of allowing shares to be borrowed for short selling operations has pernicious and damaging consequences for UK savers. It should be stopped. If levelling up is to have any meaning it should include an increasing, not reducing, range of investment opportunities for investors.
October 16, 2021
“Unfortunately the large number of businesses sold to foreign investors over the years is reducing the pool of investable opportunities that are available either directly or via investment trusts, OEICS, VCTs in their ISAs”
Why ?
October 17, 2021
Good question. My belief is that, over many years, the tax system has been inimical to enterprise and wealth creation. Profit, in some quarters, is a dirty word. The tax system has been skewed in an attempt to correct the situation, with some success at the margins via tax rates that apply to EIS, VCT and to AIM investments. But this is tiny in the broader context and for successful business founders the temptation to stay private or cash out is strong compared with the hassle of becoming a plc.
October 16, 2021
The fact that Boris Johnson does not make you chancellor is proof of the fact that he is not fit to be PM. The only possible reason he can have for not wanting you in the cabinet is that he does not want you to protest against his determination to continue to betray Brexit.
October 16, 2021
The Queen is overheard saying âit is really irritating when they talk but do not doâ – I assumed she was talking about Prince Charles and Harry/Megan types over global warming and their do as I say not as I do agenda. But perhaps it was Priti Patel & illegal immigration and lack of any deportation or Boris/Sunak and their shattered manifesto tax promises?
October 16, 2021
We have extensively discussed here the huge cost of the Green Crap agenda being followed by all politic parties. The cost is simply unsustainable as there are not enough wealthy people to tax more to stop, maybe, up to 75% of people having their lifestyles severely effected by the increasing costs that are sure to come along. Increased gas and electriciy costs are just the start .
Today the Times is reporting that this government has decided to introduce road pricing to cover the cost of their loss of tax from IC-engined cars. For decades, successive governments have milked motorists, (ie almost all of us ), by charging through road tax and fuel duty, many times the true cost of what is spent on the roads.
They now see this revenue disappearing through their own generosity to buyers of electric cars.
The question is, if they make up the loss by introducing a price per mile for all vehicle users, will they at the same time reduce road tax and fuel duty on IC-engined cars ?
We can be sure that they won’t ! The vast majority who cannot afford an electric car, or like me, find those currently on offer have inadequate range for their needs, face the near-certainty of paying twice. Those in major cities like London will pay even more with Khan’s ill-thought out congestion zones.
The need to bring government spending back under firm control is more important than ever given the lengths that even this so-called Conservative government will go to to increase taxes.
October 16, 2021
Indeed and Electric Vehicles do not even save any net CO2 as they and the battery have to be manufactured. This generally uses more energy than they use over their life. Plus they are charged from electricity that also produces loads of C02.
Not that CO2 is a serious or large problem anyway on balance a benefit.
October 17, 2021
and the rush to make the batteries means handing a wonderful export opportunity to a very few countries that own the uncommon or rare earth materials.
October 17, 2021
Agreed Lifelogic but we are governed by idiots whoâs only talent is talking- no commonsense or technical knowse!
October 16, 2021
And we read in The Daily Telegraph today the Mr Sunak will be basing his budget on data that is over a month out of date, according to the OBR: ‘earlier than usual in reasponse to a request from the Chancellor’. It seems that this is a deliberate ploy to make things seem better than the have subsequently become. If the Chancellor has become a dissembler what hope can we have of anyone in this Government? Or am I just naive?
October 16, 2021
And we read in The Daily Telegraph today the Mr Sunak will be basing his budget on data that is over a month out of date, according to the OBR: ‘earlier than usual in reasponse to a request from the Chancellor’. It seems that this is a deliberate ploy to make things seem better than they have subsequently become. If the Chancellor has become a dissembler what hope can we have of anyone in this Government? Or am I just naive?
October 16, 2021
The last time a âConservativeâ PM destroyed the parties reputation for economic competence (with the foolish and dire John (ERM) Major) the party was out of power for three terms and then only returning with a dire Libdim coalition. So why are Sunak/Boris/Carrie so keen to repeat these errors? Their over tax, borrow, regulate and piss down the drain agenda and idiotic expensive energy & net zero CO2 agenda is even more insane than Majorâs ERM fiasco.
October 16, 2021
The real concern is that successive Governments have been exporting the UK’s wealth creation. There the concern is it has fallen into the hands and absorbed by countries that ‘don’t’ at any level reciprocate. Then add in the element of what was UK wealth creation being nationalised in a foreign domain and controlled by the political will of those nations.
Today it is even more troubling, is that we now have an extreme socialist Government that is using the tax system to double down on the control of the people. The is an over zealous religious fever based on nothing more than ‘ego’ by this Government to stand behind the so-called ‘green terrorist’ whose only interest is to disrupt society. The out come of this to date and as anticipated going forward is to increase World pollution,(the opposite of the prophecy) compound the problem they want to solve by stroking and colluding with the polluting Nations that have no intention at any stage will dance to this Governments mantra – why should they?. The UK Government against all the odds and ‘virtue signalling’ is increasing World pollution, removing UK prosperity and weaponizing tax. The destruction of the countries safety and security, its wealth and prosperity are all embedded in this Government religious doctrine – there is no science or logic. Foreign competing powers are rubbing there hands in glee seeing a UK Government forcing its people to buy their goods, being removed from the stage as an industrial, enterprising competing nation.
October 16, 2021
Taxing the bejesus out of the population won’t solve the debt problem. You’d think the “brains” at The Treasury and the Bank would have heard of the Laffer Curve and also have a vague recollection of the consequences of The Brain Drain the last time “taxing ’til the pips squeak” was tried.
Richard Tice has an interesting suggestion: combine all the Covid-related debt to create a form of War Bond with low rates and a very long repayment date, which would effectively get it off the current Treasury Books for the running of the country. No tax rises …… and then go for growth.
I’d be interested to hear Mr Redwood’s comments on that proposal.
Reply There is scope to fund the debt a bit longer on average, though the U.K. does fund longer than most already. No need to worry about Cv debt as we created free public sector money to buy up that debt.
October 17, 2021
I wonder what Sir John would have said if a Labour government had done that?
October 16, 2021
So the Treasury want us to have another recession to compensate for excessive government borrowing? That borrowing was caused by a lockdown policy that the government thought was justified. I would just say: if last year the Treasury strongly objected to huge government borrowing to finance lockdowns, and they weren’t listened to, the government shouldn’t listen to them this time either. Or does the public always have to bear the brunt of the politicians’ bad ideas?
October 16, 2021
Sir John : âThey [the Treasury] need to help energise the rest of the government to promote more UK based activity. The deficits they should worry about more are the balance of payments and trade deficits.â
I agree.
We need as a country to start living within our means :
– Become energy independent by using our own energy that is reliable and cheap.
– Halt the massive immigration used at the low skills end to provide cheap labour and removing the need for investment and at the high skills end obviating the costs to train our own people. Itâs a Ponzi scheme which will end in tears.
– Halt the selling off of our country.
– Cut our balance of payments deficit by producing more of our goods and food and reducing our imports by developing a culture of fix rather than fling.
October 16, 2021
Post 2008, ‘austerity’, so called , was a balanced approach to extraordinary conditions .John Redwood energetically supported the policies whilst, rightly rejecting ,the lefts mendacious nomenclature. It is faintly sad to see him pick up the same rhetorical weapon now at much cost to his own credibility .
National debt was some way below its current vertiginous levels when he did so and is entirely unconnected to the EU. Those notional guidelines can barely be seen from the summit of our debt mountain.
The money printing addiction did not start with Covid as he implies. ÂŁ375bn was racked up to cope with 2008 and not paid back .A further be ÂŁ60bn was required due to the recessionary consequences of the fear of Brexit , the rest of Covid related.
If , as John Redwood claims this ÂŁ875bn was free money why not write it off and print a lot more …I`d like a flying car please? This would be to drop any distinction between Monetary Policy ( of which QE is a part) and Fiscal Policy. This would undermine any residual confidence in the UK and heighten the already looming prospect of stagflation with the UK forced to increase interest rates in a recession. In a post that contradicts itself he tries to be on both sides of that argument- cake for tea again !
None of this means that the competing risks are best addressed now by tax increases ( I don`t think they are ) unfortunately Brexit lurks behind all of this . Brexit`s boosters are desperate to defer all costs until their complicity in ec0ncomic suffering can be removed form the narrative . Inflation may well arrive long after he is gone, why would he care ( honestly ..would you?)
Sir John is right that tax rises now probably do more harm than good , but Brexit`s supporters are best ignored whilst we pick our way through through a mess they partly caused .
Reply Usual muddled attempt to disagree with my view. I opposed austerity economics coming out of the Great banking crash recession as I do coming out of the COVID hit. In the last recovery I needed to point out public spending was not being cut in cash terms nor overall in real terms.In this recovery I have had to point out how wildly pessimistic the debt and deficit official forecasts have been.
October 16, 2021
I think most ordinary people would interpret a claim to have opposed austerity as a claim to have opposed the
policies so termed. You did not .
October 16, 2021
Newmania. Do you actually read and digest John’s posts?
October 16, 2021
For the second time in a decade we have a so-called Conservative government who think that the way out of a recession is to whack up taxes. The last time cost me my home and I was homeless for two years. Perhaps it’ll work this time, eh?
October 16, 2021
Same here Colin plus my husbands job.
October 16, 2021
Andy says you had it easy.
October 16, 2021
Inflation in Germany was caused by creating and spending its own currency to buy Dollars to pay off Dollar denominated reparation loans. The fastest way to devalue a currency in the FX market is to create a lot of it and sell it for other currencies. It is also the fastest way to import hyperinflation, South America style.
âThe UK state has bought up ÂŁ875bn of it, so that is no longer a debt.â When a Central Bank swaps government âdebtâ back into the âreservesâ (Treasury spending) that bought them originally; there is no change in the total amount of Sterling currency units, that exist outside of the Treasury money creation department, known as the National Loans Fund (NLF).
The size of the NLF’s outstanding currency units (known as the Monetary Base: coins, notes and reserves) is an indication of how slowly those units of account are circulating in the economy, the larger the slower. Non-government currency users are saving those units and too frightened to spend them. Hence the Treasury canât extinguish them via taxation. The Velocity of Circulation in the UK is currently very low at 2.2 times the monetary base. It was circa 24 times before the 2008 crash. The US is currently 3.6 versus 17 before the crash.
âI do not recommend the UK doing any more money creation from here.â The Treasury creates and spends new money every day and extinguishes that money when it comes back as taxes. Taxes are not recycled into spending. Likewise, selling tradeable savings accounts that pay interest; known as Gilts, also do not fund government spending. The Treasury has no operational need to issue them, they are basically risk-free benefit payments to Insurance and Pension Funds. It has no need to and can’t borrow its own created monopoly money from anywhere else.
October 16, 2021
Our entire benefits system needs to change, people should not be able to arrive and jump housing waiting lists into flats and houses. Governments are taking native Brits totally for granted now and if youâre not hearing unrest right now because of the circles you are mixing in I am. People are getting sick of the UK importing poverty levels unseen here since before the war and then weâre told weâve got pay more taxes to pay for it. To pay for people being given large homes in our main Cities (where other working people canât afford to live, with parking spaces even) with no contribution to Britains economy whatsoever.
I can understand the pull factor if you start allowing people to earn whilst waiting for asylum applications but you are taking too long to process people, Polly Toynbeeâs article the other day said seven years for one woman! What the heck, just wait until the next set of taxes bite, you are pushing up the minimum wage by 5% and taking back with other hand.
Your government want employers to employ more people but punish them for doing so with extra employerâs NI, the sick pay and sick holiday pay burden is onerous especially now when doctors arenât treating people and just give repeated sick notes without even seeing anyone 28 weeks for a sprained ankle – no problem, (people wonât want to employ people when they can use work arounds, Iâm not talking about zero hours contracts here Iâm talking about self-employment when 100% of the self-employment is for one company). Sunak is forcing up wage inflation when the customers donât want to pay more and then he gives advantages to foreign companies to use work arounds like cabotage where the drivers donât contribute to the UK economy but merely undercut people trying to improve pay and conditions for their British drivers and the company profits go out of the UK. Who even checks these foreign drivers have the correct cpc, adr, HGV licence for driving in the UK? This should be done on the boat and if they havenât they shouldnât be allowed to continue their journey on UK soil. This government just turns a blind eye as long as the task can be completed cheap, these companies have forced a reduction of service on the large contracts they have been awarded to get their own way.
October 16, 2021
Are Japan having to take their fair share of economic migrants from third world Countries or does the UN give Japan a pass? Are they told like the UK is told that once someone lands you canât remove them?
October 16, 2021
Good question, A-Tracy. From what I saw on my visits to Japan, the UN must know it’s not worth trying.
The NGOs don’t take migrants to Japan a) because it’s too far away from their collection points in North Africa and Turkey, and b) because the Japanese still value their social cohesion too much to allow their nation-state to be disrupted and split apart by mass migration.
October 16, 2021
Migrants from third world countries donât go to Asia, Africa, Middle East, Russia or South AmericaâŠ.they follow the social benefits of Europe and North America
October 16, 2021
and dare I say it – tolerance?
October 16, 2021
No country is “told” that it cannot remove people who have no right to be there.
The UK expels many such people, as do the US, and the rest of the European countries.
However, they have all agreed to hear claims fairly first.
October 16, 2021
With a court that has interpreted the existing law to mean the right to family life overrides our right to deport.
October 17, 2021
Do keep up.
ECHR settled that for Russia in 2014 or thereabouts.
A right to family life does not trump a country’s right to deport criminals. In any case, how could anyone who had just arrived claim that?
The few cases to which you refer would be pre that ruling.
October 17, 2021
A criminal over-stayer couldnât be deported from the UK because he had a cat !!!
October 17, 2021
Russia?
Hilarious NLH
You are completely wrong as usual.
The UK courts still refuse deportation of criminals on these grounds based on a strict interpretation of this external European court
October 17, 2021
As René Cassin writes in his thoroughgoing analysis:
“The analysis of the case-law of the European Court of Human Rights on Article 8 and the deportation of foreign criminals demonstrated that the Court has set out very strict criteria to determine whether or not the issuance of a deportation order against a foreign criminal violates Article 8. According to the application of these criteria, a great significance is given to the nature and seriousness of the offence committed by the foreigner. The Court had always supported the deportation of dangerous criminals, due to the violence or extreme gravity of their crimes. The case-law of the Strasbourg Court does support the deportation of foreign criminals and UK judges should know these criteria and case-law as they were summarised recently in the case of Balogun v. the United Kingdom.
If dangerous foreign criminals are allowed to walk freely in the streets of the UK, the right to a private and family life enshrined in the Article 8 as interpreted by the European Court of Human Rights cannot be blamed. The responsibility lies with the UK judges who are not applying the criteria and the case-law set out by the Strasbourg Court. The solution to the deportation of foreign criminals regarding does not reside in the withdrawing from the ECHR or the repealing of the Human Rights Act. In fact, the contrary applies: in order to solve the problem the UK judges in charge of applying the provision of the ECHR should follow scrupulously the case-law developed by the Strasbourg judges. In this sense, European Human Rights are more a protection for the UK citizens against foreign criminals than a threat. Article 8 of the ECHR exhibits a balance between the right of every individual to a private and family life and the right of States to protect public order and prevent crime.”
October 17, 2021
And then deport none.
October 16, 2021
Too much common sense there Sir John for Boris and Co. to take note.
October 16, 2021
What causes inflation? Replace the word inflation with the word greed and you now understand inflation. Once inflation/greed gets a hold others also want a taste of greed hence price increases. đ
October 17, 2021
and what triggers greed? A suggested shortage true or not gets greed running…
October 16, 2021
Rather than more taxes for the general public, the government should seek to recovery the lost 27 billion to false covid claims. All those found guilty should have their assets siezed.
October 16, 2021
Well I hope you are correct about inflation. The present administration like to talk about Churchill then Thatcher, however on economics they are more like Mr Heath.
A bad error on inflation now will take decades to correct.
October 16, 2021
An economy that creates problems for itself with panic buying is not an economy that is being strangled by too high taxes.
October 16, 2021
Taxes are far too high. The country is temporarily in a position to fund “panic buying” only because of savings that have been accumulated during the pandemic when spending was greatly reduced. The over-generous furlough scheme meant most people were no worse off staying at home than if they had continued to go to work.
October 17, 2021
I don’t think the average Joe queing to put an early ÂŁ50 worth of fuel in their tank is an indicator of a problem economy.
October 16, 2021
Off topic, can we ask you to continue opposition to renewal of the Government’s dictatorial ‘Coronavirus Act’? The covid pandemic is over, to be increasingly replaced by flu, and there is no justification in a ‘democratic society’ for further retention of these powers.
October 16, 2021
+1
And the daily drum beat of infections on the BBC is unwarranted now.
October 17, 2021
+1
October 17, 2021
+1
October 17, 2021
Sir JR
“selling more and more of our companies to pay the bills”
In an open economy companies are bought and sold and most of the companies taken over in the UK are more successful after being taken over through more investments.
So your argument does not stick up and seems more like protectionism than the rubbish claim of a global Britain.
It is like your emotional and irrational claims about Brexit it does not stack up
October 17, 2021
European (and other non EU) nations restrict the external sale of companies.
As this stacks up, are you in favour of this or not hans?
October 18, 2021
Peter2
No I am not in favour of restictions except in the case of China, and lots of countries in nortehr Europe do not restrict teh sale of domestic companies. Check your facts before you write them, please. Peter 2
October 18, 2021
So you would allow the sale of all domestic European and UK companies to any other nation except China.
How does that work legally bill?
PS
I didn’t mention Northern European nations.
October 18, 2021
John Redwood,
Three important things need to happen to save Britain from a nasty bout of Stagflation and Government bankruptcy:
1) The Bank of England Stops Printing Money, slowly starts selling back its stock of Government bonds and using the proceeds to buy up Gold (to back up Sterling).
2) The Balance of Payments problem is cured by putting 50% Tariffs on Chinese imports (to make them pay for Covid-19), and 50% Tariffs on Russian Imports (because they are hostile to Britain). The Treasury gains a handy ÂŁ25 billion a year and (since we buy so much more from Russia and China than they from Britain) the UK Balance of Payments is improved by ÂŁ30 billion annually as “cheap” Chinese stuff becomes expensive and uncompetitive. The money raised by the Treasury can be used to invest more in the NHS, the Police and- importantly- the Armed Forces (in a dangerous world where the Chinese have developed a powerful supersonic missile and Iran is so very close to making a nuclear bomb!).
3) The British Government axes HS2, slashes the Quangocracy and halves the size of Whitehall- leading to savings of ÂŁ110 billion plus ÂŁ40 billion a year. This money can be used for Levelling Up rather than borrowing more. There may even be money for vital Income Tax cuts to help the economy.
These three measures together would help forestall Inflation whilst preventing an Economic Crisis with the Government going bankrupt. How many of the new Conservative MPs really understand Supply-side Economics and the need for sound money, I wonder?
October 19, 2021
The budget deficit = The private sector surplus
The national debt is just that surplus moved into sterling bonds in our saving portfolios.
https://www.businessinsider.com.au/goldmans-jan-hatzius-on-sectoral-balances-2012-12
Why do we keep attacking household and business savings ?
When capitalism is run on sales.
Why revert back to EU fiscal rules that says when you use the asset side of the balance sheet
a) The private sector can’t run a surplus greater than 3% of GDP
b) We can’t hold sterling bonds in our saving portfolios greater than 60% of GDP.
We are sovereign we don’t use the Euro. We have left the EU time to start acting like it and free ourselves of these gold standard, fixed exchange rate rules.