The papers and the 'usual' commentators are in agreement that now is not the time to worry about debt. They're also agree that there will be a time to repay that debt. But why? Just 1.7p in every £1 borrowed since WW2 has been repaid. Why start doing so when there's no need?
Rishi Sunak's budget assumes that the UK is going to power out of the coronavirus crisis. It won't.
First, there is no guarantee that the crisis in question is over.
Second, the assumption he's made that business will borrow heavily to invest looks to be utterly unrealistic.
And, third, the chance that people will spend, spend, spend, to the point that they do not save at all looks to be remote: it took them seven years to really spend again after the 2008 crisis.
This budget is built on false foundations. It's as unrealistic as the average fairytale. Sunak's chances of looking glorious for long seem to me to be very slim indeed.
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Well done Richard, I really think your message is getting people thinking. This piece from politics.co.uk for instance https://www.politics.co.uk/comment/2021/03/02/bullsht-and-the-budget/
Thanks
25? It’s the new 42.
‘However, the zones can stretch as far as 25 miles (40km) and link other areas in new designated “tax sites”.’
Says the Guardian, as do the rest of the MSM, blowing a lot of smoke up our collective fundaments, about all the supposed great things about the illicit Freeport’s for these poor regions who can ‘fabricate and export’ raw materials tax free !
I just did a ‘as the crow flies’ distance between London Gateway and the City of London, overflying all the manufacturing populations and factories.
It is exactly 25 Miles.
🙂
On the BBC news, at lunchtime, the newsreader asked the economics correspondent (sorry don’t know who ) across the table, about the debt. I was a bit surprised to hear him say about 92% of money used for the pandemic was the result of QE and that it is, in a sense or similar qualifying phrase, “money owed by the govt. to itself”.
He didn’t look at the reader at this point as he did otherwise.
He didn’t develop this point and a question was asked about debt and he gave the answer about a 1% rise costing £25 billion, which you have already demolished.
I got the impression he was dropping in something ‘not approved’ and moving swiftly on. Could there be a few trying to move the debate without risking their position or even career? Or am I too optimistic?
But at least some will notice and want to know more.
I suspect that was Andy Verity, who has been persuaded of the argument
The clip is here : https://www.youtube.com/watch?v=G6EWcZvLivY
I almost fell of my chair when I saw it!
I thought it’d be of interest to showcase just what exactly middle-england think about all this; the more affluent part, who have been totally unaffected by the crisis – Ladies and gentleman, i introduce you, to a popular BMW owners forum:
me:
this is a common misunderstanding, but no, taxes are not required to pay for any of it. Most of the government debt was borrowed from the bank of england…it’s own bank. That debt is effectively private-sector surplus, required to pick up the slack for the dramatic fall in aggregate demand due to the pandemic. Most government deficits actually create new money, or offered as bond instruments; which is again, in the publics interest.
most people unfortunately don’t understand how any of this works though, and as in 2010 after the financial crisis, it’ll be used to justify all kinds of nonsense policies.
though i’m sure you will here Sunak and his bros cry about the need to ‘pay for covid’. It’s already been paid for.
He recently came out with a video talking about how there is ‘only taxpayer money’, a line thatcher used to good effect in the 80’s. Astute? He is utterly clueless about how government finances work.
More like, trying to protect his mates, whilst inequality continues to thrive, exacerbated even further by covid.
RESPONSE 1: I don’t think you understand how government debt, issued by the BoE, works.
RESPONSE 2: Sorry….WHAT?
It’s already been paid for? Are you a complete moron or are you pretending?
Please explain to me how, as a tax payer, I won’t be paying for what the government has borrowed since March last year in the next, oh, I don’t know, 25 years maybe?
RESPONSE 3: So let’s see, most people, except you don’t understand how government borrowing works.
Including the Chancellor.
We can close the competition for funniest post of 2021 now, you win hands down.
RESPONSE 4: I don’t know how old you are but, whatever the number is, I’m amazed you’ve made it this far.
RESPONSE 5: You do just come on here trolling don’t you? At least one person you have insulted works in the banking sector. Now explain to me what your qualifications and experience are so that I can determine who I believe.
RESPONSE 6: Have worked in and around banking, on all continents, for decades. And i suspect that I’ve spent rather more time in Threadneedle Street and in meetings with HM Treasury than you have.
But you just carry on spouting rubbish and patronising, if that’s what floats your boat. One day you’ll reach adulthood, maybe.
RESPONSE 7: This is the same crap spouted by independence warriors up here in Scotland (Gippy’s nonsense, not yours!). I work in finance but luckily not in the actual financial side, that shit just makes my head hurt (I have a practical problem solving head, not a coding or accountancy one). However, my understanding of the current situation we find ourselves in is that at least all these other countries are doing the same QE measures which means that our currency, while devalued against the reserves, is devalued alongside all the other main global currencies and thus the relative devaluation is moot, or negligible. Happy to be educated though.
On a different budget related note, I just discovered today that your higher tax threshold down south is £50k, not £40k as it is up here. I’d love to know where this extra money they’re taking from me is going because it sure as hell ain’t in education, healthcare, council services or roads! Well I do, it’s a slush fund for independence campaigning, but still it does rather annoy me that we get surplus from Westminster over and above what we pay in and the country still manages to crumble.
—————————————–
It was an interesting experience, i was fully aware of the kind of response i’d get.
But that gives you a good idea of just what middle-class britain thinks about Covid, Debt, and the rest.
If anyone thinks progress has been made on this issue, think again.
You really should not talk to the Clarksonites….
@ moschum
A tale of lots of arrogant snark bearing no relation to any fact-checking which just about sums up the state of many British voters! In other words a nation heading for a dreadful fall.
It’s Timothy Snyder’s ‘inevitability politics’ writ large isn’t it?
There is no way out – it’s inevitable – TINA – you’ll have to pay.
I turned of R4 this morning when they started talking to ‘business people’ rehashing the debt bullshit ‘ Everyone knows’ this and ‘Everyone knows that’ nonsense.
Everyone knows nothing is my view.
And you are right
Thank you, Richard. It would be helpful if you could say a bit more about that ‘only 1.7p in every £1 borrowed since WW2 has been repaid’. That sounds like a nice line to drop into the dinner-table discussion (should we ever get back to having guests round!) particularly with the BMW owning, Clarkson types!
Simply used OBR data on deficits surpluses per year for 1946 to 2021 and sorted them into surpluses and deficits and then added them up. £2,174bn borrowed. £38bn repaid. Opening debt was £42bn. So either we have still not paid for WW2, or 1.7p of each pound borrowed was repaid, with none post 2001.