The Chancellor delivered his budget speech yesterday. On these occasions it is normal to announce all the good stuff to loud cheers in the Commons, while hiding all the bad news somewhere in the accompanying red book for economists to try and find over the next few days. A sort of treasure hunt in reverse. Of course by the time the wild assumptions and hidden tax rises have been discovered everybody has moved on and the press are no longer interested.
All I can say is anybody who thinks the spending commitments will actually materialise in practice should prepare themselves for disappointment.
Joe Murphy, political editor at The Evening Standard, claims extra borrowing, over and above that previously planned, amounts to £155 billion between now and 2024-5. And even this is predicated on the economy continuing to grow, despite Covid-19 and Brexit. I think leave voters might be surprised by all of it. They expected borrowing to go DOWN after we leave the EU and saved our contributions. These 'saving' of £42 billion over five years are already built in to the borrowing figures and demonstrate the £350 million a week (or £95 billion over 5 years) was always a lie.
The price of Brexit is going to be paid by our children through the money being borrowed today. That old adage about borrowing being deferred taxation was never so true. Lewis Goodall at the BBC tweeted:
And this is only the amount added, not the total. The total national debt will rise to £2,031 TRILLION by 2024-5 or about £30K per person. Looked at this way I suppose another £1800 is a bargain.OBR says measures announced today will add £125 billion to the UK's net debt by 2024-25. That's roughly £1865 for every person in the country.— Lewis Goodall (@lewis_goodall) March 11, 2020
We have suffered ten years of austerity, trying to reduce the budget deficit by starving public services of funding. All this time, interest rates have been at historic lows but we ignored that. Now just as Covid-19 and Brexit are set to crucify the economy, we borrow as if tomorrow will never come. The government is gambling that interest rates will remain low for another ten years.
But as the OBR say in their report "financing conditions may not remain this favourable" and "the public finances are more vulnerable to adverse inflation and interest rate surprises than they were".
I suppose at least we have discovered the cost of Brexit Johnson's ego. The best that can be said is it's not quite as expensive as Trump's. In February alone, the US economy posted a budget deficit of $235 BILLION. This is how to bribe a nation with its children's own money to make yourself look good.
The Adam Smith Institute accused the PM of spending like a drunken sailor.
We are repeating Britain's age old problem. First you have a long period of living on starvation rations followed by largesse that makes the Aga Khan look impecunious. Later we revert back to enforced malnutrition. The sooner we get a PR voting system, the better.
Usually, an incoming government keeps spending down in order to keep something back to buy popularity when the next election comes around. Brexit Johnson is doing the reverse. If the public finances get out of control, as well they might after Brexit, he will begin the run in to his next appointment with the electorate by having to tighten the screws - assuming he can bring himself to do it.
We are repeating Britain's age old problem. First you have a long period of living on starvation rations followed by largesse that makes the Aga Khan look impecunious. Later we revert back to enforced malnutrition. The sooner we get a PR voting system, the better.
Usually, an incoming government keeps spending down in order to keep something back to buy popularity when the next election comes around. Brexit Johnson is doing the reverse. If the public finances get out of control, as well they might after Brexit, he will begin the run in to his next appointment with the electorate by having to tighten the screws - assuming he can bring himself to do it.
I suppose the big question for us all is: will Brexit Johnson ever voluntarily stop doubling down?
From the OBR: Public sector net borrowing is expected to hit a six-year high of £66.7 billion in 2021-22 and to remain at £57.9 billion (2.2 per cent of GDP) in 2024-25 and as I said earlier, all based on a steadily growing economy. The last time we had a PSBR of £70 billion 'ish was in 2015-16 when the government still believed we needed to get it down to zero, now they're driving it back up to the level thought unsustainable five years ago. Amazing.
The OBR have apparently described it as the "the largest sustained fiscal loosening since the pre-election Budget of March 1992 (which was reversed within months after the UK left the European exchange rate mechanism in September that year)." I wonder why they added the bracketed comment?
Taxation levels in this country are at an all time high (Total managed expenditure is 39.8% of GDP and set to go up to 40.8% in 2021-22) while we plan a massive sustained boost to borrowing as the economy is flat lining and storm clouds gather in the form of a world wide pandemic and we navigate the biggest change in our trading relationship for two generations. The government is piling up big problems for itself.
Dominic Cummings was supposed to be shaking up Whitehall and introducing a new way of government but in fact it looks like old fashioned pork barrel politics.
While Sunak was putting the finishing touches to his budget, Michael Gove was appearing before Hilary Benn's Future Relationship with the European Union Committee. He was asked why the government had published its 60 page impact assessment for a UK-US trade deal (benefit +0.16% of GDP in 15 years) but was refusing to publish a similar exercise for an EU-UK trade deal ('benefit: shrinking the economy by 5%). He said:
"I am personally sceptical of efforts to say that any given impact assessment by a government department is... er, er... an accurate prediction of the future" and told the committee it was an 'evolving picture'.
It was pure Goverian and so smoothly frictionless that scientists are now researching into how a human being can be that slippery.
Covid-19 continues to spread with Angela Merkel suggesting up to 70% of Germans could become infected and news that another cabinet minister is self-isolating - apart from Brexit Johnson I assume since he is permanently in self-isolation.
The news from Italy gets worse with their health care system increasingly overwhelmed. Many seem to think we are just a couple of weeks behind and with an NHS far less able to handle what the WHO is now officially labelling a pandemic.
I am sorry to say a lot of people are going to suffer. Keep yourself safe. Don't mix in crowds, keep journey's out to a minimum, wash your hands as soon as you get back inside. It's all a matter of chance and probability so reduce it whenever you can.
I am sorry to say a lot of people are going to suffer. Keep yourself safe. Don't mix in crowds, keep journey's out to a minimum, wash your hands as soon as you get back inside. It's all a matter of chance and probability so reduce it whenever you can.
