An email from the FT summarised the whole of the UK's news agenda as follows this morning:
Full marks to Labour in that case for setting the agenda. It's just that I think they would rather two things.
The first is that Rachel Reeves would prefer not to be digging herself out of an austerity hole that is entirely of her own making. There was no need for her to have made so much play of quite how bad things are now, but she has done so.
She has also entirely voluntarily committed to Jeremy Hunt's fiscal rule, which will require that she deliver austerity when there is no need to do so. Precisely for that reason, no one will actually believe her suggestion that this is not what she is going to deliver. She can try to put as much spin as she likes on whatever she might say, but the reality is that demanding cuts from ministers necessarily means that austerity will be delivered, and no denial will change that.
The second issue is just as much of her own making. Nothing required her to take on pensioners via the abolition of the winter fuel allowance when, rumour has, Andrew Bailey at the Bank of England demanded a fiscal show of strength from her, or he would increase interest rates to supposedly support the value of the pound that was claimed to be at risk as a result of the return of a Labour government. That's partly because there was no such risk and also because I don't think even Andrew Bailey was that stupid (which is saying something). So this move, like that on the two-child benefit cap, was entirely of her creation, with Keir Starmer playing a supporting role.
Will the unions win this vote? I obviously hope so, as, no doubt will large numbers of Labour members.
Will that make any difference to Rachel Reeves and Keir Starmer? No, not at all. The Single Transferable Party will continue on its only known path, which inevitably leads to the economic destruction of the well-being of most in the country, all to enhance the wealth of a few, whatever the unions say at the Labour Party conference. That is what Reeves and Starmer have guaranteed in their Faustian pact with the neoliberal devils, and they will not break their word.
But the country will take note. And whilst Reeves will declare her optimistic belief that all is well with her in charge, I will maintain my alternative belief that her time in charge will be much shorter than she expects.
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It sounds to me – using snooker parlance – that she will go for a safety shot.
Which means nothing really – just an effort to stabilise, a slowing down and then moving forward again with austerity perhaps at a slower pace.
I say this because I can’t see where any new money is. It does not seem to be there.
But the two child limit is still there as is the bedroom tax, right to buy and any number of foul Tory policies in other policy areas.
What is the theory behind the “the two child limit”.
It is meant to force people back to work
The vast majority of past claimants were in work
This makes no sense as a theory behind imposing the “two child limit”. Is it not more expensive to work if you have more than two children due to childcare costs?
I could be wrong on this but I thought Westminster wanted more “stay-at-home moms” so these moms would be available to provide elderly social care for family members if and when the need arises. Again, I may be wrong but cutting the child benefit is not the way to achieve this or nor will it achieve getting more women back-to-work..
No, Westminster is only interested in ‘economic units’. Stay at home mums are not that.
it’s still quite interesting that Mazzucato (R4 Today programme) is in and around the conference talking about ‘rules are OK, but they have to be the right rules – enabling investment in health, education etc. and also getting the private sector to invest’
As Reeves has no choice but to get out of her self imposed Hunt fiscal rule … she may still have to do what Mazzucato – and those economists who signed last weeks letter to the FT – are saying, and allow public spending as ‘investment’ and also adopt some of the pension subsidy changes that Richard has pointed to etc etc.
In other words she may well be u-turning while contining to say she isnt.
IF Andrew Bailey did demand a fiscal show of strength or he would raise interest rates he should be dismissed from his position immediately and charged with treason.
Do you think there is truth in the rumour?
I don’t know
But the rumour is circulating in Westminster
Stupid question from a stupid Yank: How can this Mr. Andrew Bailey person raise UK interest rates when the rest of the Western Countries are lowering, or are in the process of lowering, interest rates? Is not money traded on a global scale?
In the USA a second .50% cut in interest rates is expected very early next year after the election.
His arrogance knows no such limits
The truth of the rumour is less interesting than the circumstances that would make the rumour plausible. The reason it is plausible is that Labour is sufficiently weak and easily intimidated on monetary policy that we know intuitively they would bend like a soft reed to such demands. The British people elected the wrong people to power, full of bluster but not fibre; but of course they invariably do elect the wrong people.
Mr Warren- “The truth of the rumour is less interesting than the circumstances that would make the rumour plausible. The reason it is plausible is that Labour is sufficiently weak and easily intimidated on monetary policy that we know intuitively they would bend like a soft reed to such demands” – I think you have pinpointed the grim truth with this.
Who else could the British people have elected to power? The Tories? Reform? I’d go for the Greens, but that’s not likely. The electorate cannot be blamed, since voting excludes us from power and influence, hence we are routinely ignored and, it seems, insulted from all directions. I’d prefer it if Westminster and electoral politics along with it were consigned to the dustbin of bad ideas in history. What do you think?
And the alternative is? Without parties how can people know who to vote for? PR is the answer.
Bailey should have been the first dismissal of this government on the day it took office!
Bank of England ” independence” has been a con matched only by the creation of the Office of Budget Responsibility, both of which were intended to remove the real oversight of the economy, which is the proper role of politicians.
All part and parcel of the neoliberal dream and plan of taking power from the people by putting it in the hands of technocrats who serve the purposes of the wealthy elite.
The problem is there are too few Labour politicians or advisors with and real experience of finance and financial markets. (Rachel Reeves has none despite a spell at the BoE).
Anyone paying attention would have known the “threat” was nonsense, called his bluff, made it public and fired him.
Most City folk would have delivered a standing ovation.
“Rachel Reeves has none [real experience of finance and financial markets] despite a spell at the BoE”.
The problem is Keir Starmer and the Labour Party have already decided Rachel Reeves is a World Authority on finance and money markets (not least because they know nothing at all about either, and possess even less experience). The problem with political parties is that they are keen to hand over responsibility for difficult issues to ‘the professionals’, instead of ensuring that the essential, required expertise to govern is in-house. The fact that this ignorance and stupidity is interminable is merely an illustration of the inherent flaw in a democratic system dependent on the foolish, self-serving corruption of “Party”.
Ms Reeves is in some difficulty. The mess is entirely her own. Preaching prudence, no money, got to make cuts to spending ( government departments have been told to make big cuts), the need for new fiscal rules. By adopting the Hunt/Osborne ” trap” budget, for example cuts to local government for the next financial year are 14/15%.
What magical new rules will be dragged from the fiscal hat to explain ” there will be no cuts”?
There are no plans for positive change, just the same old/same old.
Same old, same old, dismal Neoliberal economics failure to understand how the UK’s monetary system works will continue to hold back UK economic growth not promote it!
https://billmitchell.org/blog/?p=62019
Effectively the UK is adrift and without a rudder since not a single political party in the country has a clear understanding how its monetary system works. The noisy arguments now taking place in the Labour Party are simply the outcome of this puerile ignorance!
Rachel Reeves is going to follow George Osborne. His initial harsh 2010 austerity was so severe, by 2012 even he took fright. he didn’t change from a catastrophic commitment to austerity, but he manipulated the rules so he could access money without abandoning the austerity principle. Reeves is about to manipulate the fiscal rules. One way to do this is to massage the rule that debt falls as a share of the economy by the fifth year of the forecast; or adjust the definition of public debt. The purpose would be to increase borrowing headroom (see FT, 4th September). Reeves is going to choose fiscal rule manipulation; U-turn without the optics of a U-turn (we are living through a long-running Whitehall farce). You can be sure that Reeves, like Osborne will leave office with the National Debt (at least the quantum, and probably the Debt/GDP ratio), higher than it was when they arrived.
The Labour government can simply legislate to rescind the Bank of England independence given that it believes it should be on the side of the many and not the few. The grifting strongly suggests it isn’t but assuming it is a prompter is badly needed to explain how the UK’s monetary system really works. This could be called, for example, “The JPV Money Book” JPV standing for Journalists, Politicians, and Voters. It can be available online and in print. The online version will allow weblinks to allow drilling down for extra explanations from an outline simple explanation.
Who is going to write it?
Who will write it? Someone who enjoys reinventing the wheel, presumably.
https://gimms.org.uk/tools-and-resources/
@Schofield should note the old saying about a horse and water.
2007/8. Financial Boardrooms and rating agencies lost control of their balance sheets and demonstrated that they had no idea of the scale of liabilities that were compounding on a daily basis. LIBOR was set by a straw poll of selected employees apparently operating independently of their managers, and the inter-bank circuitry failed due to systemic distrust. The response – 16 years of austerity.
Why was this policy pursued, why did people believe that the reduction of aggregate demand would result in healing and growth?
And why now does a Labour (repeat Labour) Chancellor believe that the last 16 years have demonstrated that austerity economics work. And the ultimate absurdity – Starmers promise that more austerity will bring about the end of – you guessed it – austerity.
Why can’t we be presented with a reasoned argument instead of “black hole”
cliches. We are simply being asked to have faith in a belief system that we do not understand.
Thank you, Keith.
You are on the money more than you think.
With regard to liebor, there’s even a photo of the administrator with his feet on the desk and a glass of a brown spirit with the caption calculating libor.
A friend / former colleague and former regulator reckons that a former employee of where we worked, later chancellor, was involved. The, ahem, gentleman is back in the City and leads his US employer’s efforts in healthcare and other government creeping privatisation.
From July 2007 to June 2016, I worked on such matters and have done so since November 2022, hence the use of a pseudonym.
Now Starmer and Reeves are doing their best to avoid a debate on the WFA at the Labour Party Conference. Pure evil!
https://www.independent.co.uk/news/uk/politics/starmer-labour-conference-live-reeves-lammy-liverpool-live-b2617231.html
@Schofield
Actually it is “pure CONCENTRATED evil” in the large economy size.
Rachel Reeves is about to pivot from gloom, to optimism about the future. The fact that she thinks she can pull off this insult to the public’s intelligence is the grimmest of the news she has supplied; because she is offering no credible analytical basis for optimism whatsoever, given the economic path of discreditable dogma to which she has committed the Government . Reeves is delivering a policy of austerity, even as she blatantly denies she is doing it. But then, this is the fixed theme of politics today. We already know that politics for Reeves and Starmer is a game of specious ‘optics’, where reality remains hidden, for the distribution of a false narrative; but such is their basic inadequacy, they cannot even deliver the false narrative without tripping themselves up, by revealing how cynically unscrupulous they are in massaging their values in the pursuit of power and office. They promise change, but only in the optics, and never in the status-quo ante, whether monetary or moral. And there is the problem.
The designer clothes (and even the frames of spectacles – think of the trivialising of personal public standards that requires), contrasted with the withdrawal of the WFA to pensioners at the outset of winter, with renewed inflation in energy prices will not, however be forgotten. What sign is there of haste in settling the Post Office compensation? The Grenfell-building regulation crisis? The Blood Scandal? No, these can’t be settled in decent haste without breaching the inviolable Fiscal Rules, designed only to ensure austerity as long as Labour are in power, looking for growth that austerity will never deliver; and that the private sector has failed to deliver over fourteen years, even given lower bound interest rates, for years.
If my memory serves me correctly after UK’s version of the GFC the BoE Governor made a number of speeches/interviews almost goading the weakened Labour govt into plans for fiscal restraint. Of course with change of govt in 2010 the coalition were even more amenable to fiscal changes. Maybe there is something in the rumour. It would fit with BoE’s view of govt needing to support their monetary policy!