As the Guardian notes this morning:
The UK's economic outlook has worsened this year as high interest rates and the lingering effects of last year's surge in inflation take a bigger toll on growth than previously expected, according to the Organisation for Economic Cooperation and Development (OECD).
It added:
In a downbeat assessment of the potential for the economy to expand in 2024, the Paris-based thinktank downgraded its forecast for UK growth this year from last November's forecast of 0.7% to 0.4%.
It predicts a modest bounce back in 2025 with growth of 1% – a rate of growth half that projected by the Treasury's independent forecaster, the Office for Budget Responsibility (OBR).
Three things. First, the OECD economics department is currently headed by a profoundly neoliberal ex-UK Treasury person who is headed soon to be a deputy governor at the Bank of England. If they could find a downside now, especially on the impact of UK wage rises, they could - and claim they have. Apparently giving people the power to spend more reduces growth according to this analysis, which is a very weird claim.
Second, if this is true, the whole basis for Labour's plans is shot through. There will be no growth of any significance, it is claimed. In that case Labour will claim there can be no additional government spending if its iron-clad fiscal rules are to be followed.
Third, we are locked in a downward economic death spiral in that case.
And all of that is because the people in charge are dedicated to an outdated economic mantra that demands that the world must be adapted to behave in accordance with their thinking, rather than believing that economic thinking should be adapted so that it can work out real world solutions for the people of this country and planet.
As definitions of intellectual failure go, that is unambiguous.
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Thank you. This https://consciousnessofsheep.co.uk/2024/04/30/a-world-without-growth/
Bit off topic, but interesting article on non-doms leaving the UK too:
https://www.theguardian.com/news/2024/may/02/i-am-moving-tycoon-bassim-haidar-non-dom-tax-status-super-rich-exodus
Are they trying to inadvertently link the two ideas?
So a non-dom, with ten houses in London is leaving
The houses won’t go away
And what value does he actually add here? That is unspecified. All he does is contribute to the Tories, apparently
Gosh, I just read that article and now I’m searching for my tiniest violin.
If that guy was a stick of rock it would say “Entitlement” all the way through…
“Apparently giving people the power to spend more reduces growth according to this analysis, which is a very weird claim.”
Indeed very weird when the USA is experiencing much higher growth rates than the UK thanks to MMT inspired government spending yet the last 2023 quarter’s unemployment rates are almost identical!
https://commonslibrary.parliament.uk/research-briefings/sn02800/
https://www.youtube.com/watch?v=LGlqnHTBP3I
Very clearly the OECD is controlled by Neoliberal dunces! Probably at the root of their moronic thinking is the failure to understand the very basic concept that because governments have the power to tax this also means they have power to create spending money and this means very simply the power to boost investment because as Keynes made clear and MMT repeatedly attempts to drive home spending has to come first before people can have incomes.
‘Labour’s plan is shot through’ – indeed.
As many on here have said , Labour will certainly not engage with any ideas other than their ‘ iron clad fiscal rule’ before the election.
But after the election when the sh**t hits the fan on public spending they wont be able to hold to the stupid fiscal rule as the NHS enters final collapse
They will just have to engage with the huge body of economic thought out there – starting with ‘Taxing Wealth’ which shows them that ‘there is money’ to invest in public services and to boost economic growth.
It would be against everything they have trumpeted over the last few years – but surely public sector workers – and the public – just wont stand for any more cuts.
Sadly such is the level of economic and monetary literacy amongst voters that Starmer and Reeves can get away with the nonsense they promulgate. It will be a long haul to change this but one that cannot be abandoned simply because of slow progress.
And still nobody mentions the economic self-harm that is Brexit.
I am struggling to remember coverage and discussion of any other major economic problem that has been so successfully silenced.
Cancel Culture from the Far-right experts.
Thank you, Paul.
You’re not wrong about Brexit, but let’s not pretend things were rosy before.
The factories where I live in Buckinghamshire closed in the 1980s and 1990s. The infrastructure neglect goes back decades.
I work in the City and experience Brexit daily. I also work on regulatory policy and deal with EU officials. The UK should sort itself out. I detect little appetite to have the UK back. Even if Brexit was to be reversed in any form, investors won’t rush back.
“the people in charge are dedicated to an outdated economic mantra ”
Was it ever “in-dated”. The entire neo-liberal shtick has been shown to be be nonsense from start (Hayek) to finish – Thames Water.
It was based on fantasy economics (the rational person – hilarious), “markets” and a small state. None of it works, it had no chance of “working” in the world we live in.
One could regard the spate of zombie films/series as metaphores for neo-liberals – they stagger around make funny noises and look horrible – whilst trying to eat people. This applies as much to neo-lib apparatchiks such as the OECD twit as it does to the zombie clueless/brainless politicos.
Sadly, neo-lib zombies pervade the world we live in. Listening to a webcast on elec network planning – at no point did any of the participants question the generation mix that is in the pipeline for the UK (Off-shore wind 120GW, PV 140GW and storage 120GW). All the projects driven by the neo-lib/gov belief that markets know best. On-shore wind – almost zero, but if you wanted bangs/bucks wind produces 2.5x to 3.5x as much elec as PV – & produces in winter (when you need elec for heating) – PV? – mostly summer/absent in winter. But everybody goes through the motions. There is no questioning. Zombies.
You fail to mention the OECD cite that taxes are too high in the U.K. and that is a reason for the sluggish growth yet you want to increase them!
I explained tbe bias about why they did that
They are wrong
Isn’t focusing on growth or no growth pretty pointless if the machine itself is making ominous graunching and grinding noises? Just because it’s the only indicator that the public has learnt to understand doesn’t mean we should carry on using it.
I agree
But I am pointing out that Labour has built its policies on stupid assumptions
“the whole basis for Labour’s plans is shot through“
Fair point, obviously. But I think there’s another truth behind this, one that presumably very, very few in the Labour Party understand. For some I’m sure the express plan is to suppress Government spending to open the field for further private, limited liability, profits from privatised public services. And in that regard it has been one hell of a successful plan so far.
Of course the truth is always messier. I suspect Rachel Reeves convinces herself that fiscal rules are necessary for the long term benefit of the country, but content in the suppressed knowledge that her mates are waiting in the background to help the poor old public sector as things fall apart..