As The Independent has reported of comment in the current edition of The Spectator:
Continuing to borrow billions of pounds for extra public spending is wrong “morally, economically and politically”, Rishi Sunak has said in his clearest hint yet that a fresh bout of austerity is on the way in 2021.
The Chancellor promised to eliminate the “structural deficit” in an interview with The Spectatormagazine — claiming that otherwise the UK will be poorly prepared for future economic crises similar to Covid-19 and the global financial crash a decade ago.
He also warned that Conservative attacks on Labour's spending promises will be less effective at the next general election, due in 2024, if the Tory Government does not rein in its own spending in the intervening years.
So, austerity here we come again.
And none of this is necessary, as my thread last weekend demonstrated.
The only thing that prepares us better for the next crisis is addressing the issues that need attention ion the real economy. Sunak is not doing that. Austerity will seriously undermine any prospect of success with that objective. And yet he is contemplating it again. It's extremely difficult to fathom this degree of economic stupidity.
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Yes. Tory chancellors always make the same mistake then they have to desperately try to get the economy back to where it needs to be to give themselves a chance to win an election.
Inflation is down to 0.3% in Nov, that’s 1.7% below target, so there’s no need to try to cut the deficit right now.
Fiscal adjustment is the only way to keep the economy going at the moment. Monetary policy is a dead duck with ultra low interest rates. If he’s not careful he’ll crash the housing market and then he’ll be in big trouble with a crashed economy too.
I don’t think that the housing market is the issue – it won’t crash unless interest rates go up and such a rate hike would kill the economy even more since there is so little real cash in it at the moment and also increase pressure on households – we could see re-possessions on a huge scale. Even the Tories know that that would risk the 2024 election.
Even now as a developer I get around 20 or so letters offering me credit funding from small groups of investors whenever I get planning permission. What drives the housing bubble these days it seems is the under-taxed wealth of the rich. Housing is sort of de-coupled from the rest of the economy as a result.
On a very simple level as the specie money of yesteryear showed the issue of keeping the domestic economy healthy is having an optimum of UK sovereign currency (medium of exchange) in circulation why else the government’s Covid stimulus money. To then think for the pure sake of balance sheet balancing the risk has to be run of under-providing medium of exchange is just nonsensical. Do these politicians never study the history of currency evolution? Probably not and are arrogant enough to believe it has no bearing. If the UK is falling apart the strongest candidate for it has to be the cultivation of arrogance that appears to have been going on for centuries!
Hmmm…
This is beyond stupidity and I fear we are now entering the realm nonchalance.
There’s a better interpretation. It’s not nonchalance, stupidity or unfathomable. It’s calculated, naked, right-wing politics. Excessive spending is used to (falsely) justify austerity; austerity is used to justify cuts to social spending (right-wing ideology) and as a bonus preserves the most powerful election weapon against Labour – ‘they will bankrupt the country’. If MMT can be used to explode that myth, attention can be turned removing that other pernicious obstacle to democracy – FPTP.
‘Excessive spending’?
Where Andrew?
We still haven’t ‘spent’ the same amount of money on helping ordinary people out in this Covid crisis as we did bailing out the banks from their immorally created crash in 2008.
The nonchalance is in the assumption that having spent money, ‘a Government’ has to then take it back – like a bank would as if its a loan – and that is all that matters – not the suffering or disruption to society – in fact there is NO consideration on the impact of such faulty thinking at all. It’s just taken as a fact – without question.
And remember – this nonchalance already existed in the shape of pre-existing austerity that rendered us incapable of dealing with Covid in the first place.
If this is not an age of political nonchalance, I don’t want it is!
Hello Richard.
Do you actually think Sunnak believes any of the stuff he himself says? I think it’s simply politics, knowing that the public generally think the government has no money of its own.
Sunnak is wealthy, so austerity shall not harm him. If the country does well from his policies, then jolly good, if not then who cares, as he’s insulated from it.
The same goes for other MP’s, from all parties, and their backers. MSP’s too. These people have well paid jobs with great pensions. I’m certain some of them deeply care about the well being of society in general but for too many, it’s just a career.
I can’t see another explanation for the silence from the left on how government finances really work, QE, the ownership of the BOE, gilts as savings, …and so on.
Yes I do believe he believes it
It is the religion of Oxford PPE
It may indeed be economic stupidity, but it won’t stop the Tories applying the Peter principle to Sunak, and elevating him to No 10, when Johnson does a runner very soon after after the solid stuff hits the fan on January 1st, so copying his erstwhile boss, Cameron, who cut and run shortly after the BREXIT Referendum.
Will Johnson make it to January 31st? I doubt it.
Will Sunak replace him? Highly likely, as a propaganda move against Labour – you know, the first Asian PM, and the first woman PM, and both Tories, (and even a 2nd Tory woman PM) while Labour is led by a charisma-free London-centric male establishment lawyer, leading a Party that doesn’t now seem much inclined towards either women, or minorities.
That characterisation may be highly flawed and unfair, but I can see it going down well with the electorate (who after all voted for the pig in a poke that BREXIT is undoubtedly proving to be).
The even worse scenario – which I’ve posted here before, is that the Tories opt for Priti Patel, to tick both boxes on gender and ethnicity.
Having gone for Johnson, over the far more solid choice, in terms of experience and ability, of Hunt, I wouldn’t put anything past the Tory membership.
Nor me
And that was your 1,000th comment
Thank you!
Given UNICEF’s involvement I’ve been saddened not to hear anything yet from Gordon Brown or even Blair to repudiate Mogg’s lies and cod outrage.
Nothing.
Are we living in a time of orthodox economic cruelty?
@ Andrew Dickie
Rishi Sunak needs to be asked why he believes money (currency) isn’t a product of law and therefore a governance product. If he denies it is he owes the country an explanation how it magically appears and holds its value over the short term. The problem is there doesn’t appear to be any journalists or politicians with the historical currency development knowledge for the country and therefore insight to ask these two questions. This if you think about it is a very sad state of affairs for a country to be in!
True!
Persistently voting for disfunctional right-wing governments appears to the UK’s “hopelessoid” addiction!
Sadly, aided and abetted by the ludicrous first-past-the-post voting system, we have a nation divided along tribal lines, more so than just about any other country in the world apart possibly from the USA. It is more so even than the “sectarian” divide in Northern Ireland. There is a large core of Tory support that would never dream of voting for any other party and what a Tory government does or does not do is irrelevant. If you try to talk to them about economic policy, homelessness or any other obvious failings, they just turn off. Pressed they will say any suffering must be the victim’s own fault. The number of “floating voters” is relatively small and the “party of the rich” armed with one of the most efficient propaganda machines the world has ever seen has no difficulty keeping them on side. The only variation allowed is an occasional foray into a slightly more cuddly version of Tory once in a while to let the fuss about corruption die down.
It is pointless trying to fiddle with piecemeal changes to policies. The only way we can get anything different is to learn a lesson from Naomi Klein’s “The Shock Doctrine” and take advantage of a crisis to rebuild a completely new system. This, unfortunately, requires a degree of cooperation between the various disparate opposition groups that has never yet been achieved. I suppose we have to live in hope, but it is increasingly difficult to find any.
Perfectly put, Mike, especially about FPTP.
If i understand it MMT says that printing money is not borrowing because its impossible to borrow from yourself. Am correct in this. Why does mr Sunak keep saying it is?
MMT does not talk about money printing
It does talk about money creation
It does say the government can create money
It has, and is still doing so as a matter of fact
I gave a thread coming in this whole issue
Sunak does gave it all wrong