Monday, November 21, 2022
Facing reality on the economy
There was a very telling article by Will Hutton in yesterday's Observer that nailed the dishonesty and self-denial that is prevalent in what little debate we are currently having about the UK economy. The article is worth reading in full, but these are some of the key conclusions:
Government is a pantomime horse. Immigration is to come down, says the Home Office, but it is running at the same level as when we were in the EU single market and is welcomed by the chancellor as essential. Council tax is climbing to its highest levels for 20 years, based on property values last valued in 1991. Eight weeks ago, a Tory chancellor promised the biggest tax cuts for 40 years; now, facing reality, there is a proper reversal on the same scale. Even Ruritania could not do worse.
It is true that inventing a new growth model is challenging, but the foundation must be honesty. Today’s Conservative party is incapable of that. It has collapsed into a confederation of incompatible cults united only in mutual loathing, with a significant element living in a fantasy of what Britain can be and how the economy works. Not even its better leaders dare speak the truth for fear of provoking civil war. Around 40 Tory MPs, members of the Bring Back Boris WhatsApp group, gathered at London’s L’Escargot restaurant last Wednesday to discuss how to restore their hero. Small wonder that Hunt, the nearest the Tories have to an honest politician, cannot acknowledge the damage of Brexit. He has to genuflect to the nonsense that trade deals with the rest of world will over time compensate for what has been lost, as he did on Radio 4’s Today programme. His budget speech pretended that capital spending was protected when in fact it was reduced, with the levelling up department suffering the biggest real cut, and built on impossible assumptions about public sector wages.
Britain needs a serious national conversation for which the precondition is truth telling. There is no growth without an upsurge in investment, for which there have to be ideas to back, finance and markets to enter. Elements of what might make things better are scattered around like Lego, but few are picked up and joined together. Major figures in the City of London float the idea of a national wealth fund. The chief scientific officer, Sir Patrick Vallance, has advocated a sovereign fund to support science and tech scale-ups. Business is beginning to urge the necessity of full access to EU markets.
But there is no cut-through until the wider political conversation is truthful – impossible in the current political climate. No viable tax base is possible with a property tax regime based on 30-year-old residential values; no viable growth plan works with exclusion from the EU single market; first-rate public services cannot be built on third-rate wages. The best on both frontbenches know these truths. Time to acknowledge them and more. Let’s leave Ruritania behind.
Brexit has left the UK economy weaker and isolated, it has severely impacted on our ability to fill key jobs and is destroying our trading base, vital public services are on the verge of collapse because of underfunding, understaffing and underpaid workers, and we are in denial about shrinking private investment levels, and as a result, and because we have cut ourselves off from the EU, we cannot sustain any realistic levels of growth. Is there any good news?
Government is a pantomime horse. Immigration is to come down, says the Home Office, but it is running at the same level as when we were in the EU single market and is welcomed by the chancellor as essential. Council tax is climbing to its highest levels for 20 years, based on property values last valued in 1991. Eight weeks ago, a Tory chancellor promised the biggest tax cuts for 40 years; now, facing reality, there is a proper reversal on the same scale. Even Ruritania could not do worse.
It is true that inventing a new growth model is challenging, but the foundation must be honesty. Today’s Conservative party is incapable of that. It has collapsed into a confederation of incompatible cults united only in mutual loathing, with a significant element living in a fantasy of what Britain can be and how the economy works. Not even its better leaders dare speak the truth for fear of provoking civil war. Around 40 Tory MPs, members of the Bring Back Boris WhatsApp group, gathered at London’s L’Escargot restaurant last Wednesday to discuss how to restore their hero. Small wonder that Hunt, the nearest the Tories have to an honest politician, cannot acknowledge the damage of Brexit. He has to genuflect to the nonsense that trade deals with the rest of world will over time compensate for what has been lost, as he did on Radio 4’s Today programme. His budget speech pretended that capital spending was protected when in fact it was reduced, with the levelling up department suffering the biggest real cut, and built on impossible assumptions about public sector wages.
Britain needs a serious national conversation for which the precondition is truth telling. There is no growth without an upsurge in investment, for which there have to be ideas to back, finance and markets to enter. Elements of what might make things better are scattered around like Lego, but few are picked up and joined together. Major figures in the City of London float the idea of a national wealth fund. The chief scientific officer, Sir Patrick Vallance, has advocated a sovereign fund to support science and tech scale-ups. Business is beginning to urge the necessity of full access to EU markets.
But there is no cut-through until the wider political conversation is truthful – impossible in the current political climate. No viable tax base is possible with a property tax regime based on 30-year-old residential values; no viable growth plan works with exclusion from the EU single market; first-rate public services cannot be built on third-rate wages. The best on both frontbenches know these truths. Time to acknowledge them and more. Let’s leave Ruritania behind.
Brexit has left the UK economy weaker and isolated, it has severely impacted on our ability to fill key jobs and is destroying our trading base, vital public services are on the verge of collapse because of underfunding, understaffing and underpaid workers, and we are in denial about shrinking private investment levels, and as a result, and because we have cut ourselves off from the EU, we cannot sustain any realistic levels of growth. Is there any good news?
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No good news anywhere, anytime soon. Indeed not until these dreadful Tories are out and not even then as Labour won't be much better
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