The ONS has published GDP data for June. This summarises the situation:
June was bad if GDP growth is the objective (and our political parties, the Greens excepted, still say it is). The decline was o.6% and May's upturn (largely due to not having bank holidays in the month) was reduced as well.
More importantly, just look at the data from January on: the trend is very clearly strongly downward, as Danny Blanchflower and I have been saying it would be for some time.
Three thoughts. First, we are clearly heading for a recession.
Second, no tax cut from any Tory leadership contender can stop this, and they are crazy if they think that they can.
Third, this is going to get very, very much worse as the autumn progresses and fuel charges come into play.
Troublingly, there are no exceptions this month: every sector contributed to the decline. The economy is sliding and so far there is no one with a plan to help people, which is what really matters.
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Richard, I think you are right to say that the Tories do not have a plan to help people, but they certainly have a plan to help themselves at the expense of everybody else.
Firstly, they are climate change deniers. This means that they see no problem supporting the Fossil fuel industry in every way possible as it continues to gouge huge profits by destroying the planet.
Secondly, they support privatisation in every way possible. No matter that privatised businesses have shown themselves to be hopelessly incompetent and provide such a low level of service that they are positively dangerous. The important thing is that they provide a steady stream of monopoly profits and they keep as much power as possible in unaccountable Tory hands.
Thirdly, in the words of a popular quote, continue on the path to make Britain a place where “The law protects the rich but does not constrain them, while the law constrains everybody else but does not protect them”.
Lastly, continue to make Britain a less Democratic country in every way possible. In this way despite their lack of popularity and the opposition of the majority of the British public they can stay in power and continue to develop 1, 2 and 3 above.
I have been thinking that the governing party should be renamed the Fiddling Party, as they perform a Nero tribute act and fiddle while the country burns (and in the current weather that seems to be likely in the literal sense, rather then the more generic ‘heading for destruction’ meaning). Quite apart from their fiddling the books…
Well, for what it’s worth, Gordon Brown has a “plan”. I have just received an email from 38 degrees. Asking for my opinion on the plan, It contains the words:
“ Yesterday, former Prime Minister Gordon Brown published his plan to fix this cost of living crisis. It’s specific, well-thought out, and ambitious – covering everything from stopping October’s energy bill hikes, bringing in a tough windfall tax on companies profiting from the crisis and giving workers a pay rise and emergency support for those most in need.
“This is a blueprint that could help end this cost of living catastrophe and, together, we could fight for the proposals we support. But to do that, we need to share our views on what we think of them!
“So Bernard, will you take this short survey and share your thoughts on the plan? We may agree with some elements and disagree with others – that’s ok! But if we know where we stand as a community, we can campaign for an ambitious package to finally end this crisis. ”
It seems clear from that the 38 degrees thinks the Brown plan is the greatest thing since the talking orange. They also have a link to a questionnaire on the scheme. The first question, which asks the following question, which has to be answered before you can see the rest of the questionnaire.
“Here’s the first proposal – what do you think?
“Introduce a watertight windfall tax on energy companies and on bankers bonuses, to help bring bills down and fund support for those who need it.”
The question is reasonable in itself. I could write a paragraph or two on what I think but the only options seem to be “Agree” or “Disagree”.
But what am I supposed to be agreeing or disagreeing with:
1) That there should be the proposed windfall taxes? Yes, but not for the reasons given.
2) That these taxes will help bring down bills? I see no reason why they should but if anyone has evidence to the contrary I am prepared to look at it.
3) That these taxes will fund support for those who need it? No, the government does not fund spending from taxation.
There does not seem to be space for an actual discussion of the plan, so I don’t know if it is worth continuing with.
That was my problem with 38 Degrees
And like m nay NGOs, it is staffed by people who know ow little about the issue they are seeking support for
Sorry, but I have worked with too many
I just received this too, and have used the comment section at the end of the survey to put a link to Richard’s critique of GBs ideas.
It drives me nuts. The questions are always fishing for an answer they want. NEVER are they truly interested in debate.
That is the joy of this blog. Of course, Richard and I agree about a lot…. but not everything. I have changed my views on some things and I suspect that Richard has modified his thoughts in some areas where I have specific knowledge.
…. and it’s not just Richard. So many contributors have helped my understanding.
Thank you one and all!
I acknowledge you have convinced me on occasion
And thanks
Great article as always. I’ve retweeted it.
I was wondering if I could ask a tangential question of the knowledgeable commenters on this blog – I’m no expert on any of this.
I was listening to the most recent Intercepted podcast [1], with Jon Schwarz. In it he mentions an article with a rather trolly headline that he wrote towards the end of last year: “inflation is good for you”[2]. Asked if he stood by it now that inflation was reaching double digits, he basically said yes.
The argument in the article as I understood it is that inflation is inherently redistributive – it causes a fundamental transfer of wealth from rich to poor. This is because the poor are in debt to the rich, and as a single dollar becomes less valuable through inflation, the amount of those debts is inevitably reduced relative to other things. He also argues that it inherently tightens the Labour market, empowering workers.
Of course, bear in mind that all this is from a US perspective, but I don’t suppose the fundamentals are significantly different are they? Schwarz does mention that wages have not risen quite as fast as inflation in the US. The wage suppression in the UK is probably worse, but I don’t think it would change his core argument.
Richard explains very clearly how this inflation does not have the causes that the BoE thinks it does, and that there are much more effective and just ways to tackle inflation than raising the interested rate. But I’ve never heard this argument that inflation is actually progressive before.
I assume it has fairly significant implications, in terms of what sort of limits we might want to place on government spending in an inflationary environment (even though I’m sure we all agree government should be spending way more than it is).
Is there any merit to this argument?
1: https://12ft.io/proxy?q=https://theintercept.com/2022/08/10/intercepted-inflation-bank-of-america-worker-power
2: https://12ft.io/proxy?q=https://theintercept.com/2021/11/10/inflation-economy-debt-milk-prices
In the long run his claim is right subject to one massive caveat – which is that you have enough income to be alive in the long run
That happened in the 70s
It may well not do so now
The only way to bring energy prices down is by the mass nonpayment of energy bills until the energy monopolies return to just cost of production and only a small profit margin. “Windfall Tax” is an indirect and useless policy.
This may happen
But no one should choose it, as Martin Lewis has advised
How much longer are we going to chase GDP growth as the cure for all ills? Assuming we get back to 2% – compound – where will we be in 2030, say? Where will we get all the extra resources from, and more importantly, where will we get all the extra energy from without totally destroying any hope of net zero 2050? We’re on a finite planet. We need a fundamental rethink. With all the advances in technology and automation it’s surely time to work a lot less and have a lot more leisure time. Of course that would threaten the increasing wealth of the rich and hyper-rich, but I’m prepared for them to make that sacrifice. Trouble is, they’re not. And they have the power.