Phillip Inman's column in the Guardian on Saturday made a familiar argument. "Don't be fooled by recent good news", he said. "The UK economy is still in a precarious state."
His claim was that although tax receipts and retail sales are rising and inflation is falling, the UK economy remains fragile. He suggests as a result that calls for more spending are “unaffordable” and that fiscal caution is still required.
I am not persuaded. This is the usual neoliberal nonsense that economic hacks always roll out, and Phillip Inman has long been one. And it matters what people like him say, because arguments like this shape public understanding of what governments can and cannot do.
The flaws should be obvious.
First, the analysis assumes that government finances are like household finances. They are not, as I explain in this morning's video. The UK government is the monopoly issuer of sterling. It does not need to "find” money before it spends. It spends first, taxes later, and issues bonds to provide savings facilities and control interest rates. The claim that spending is “unaffordable” is therefore a political choice, not an economic fact.
Second, the Phillip (to whom, I should say, I have spoken many times and met) treats borrowing as inherently dangerous. That misunderstands the purpose of government borrowing. Public borrowing is simply the mirror image of private sector saving. That is what the sectoral balances make clear, as I also explain in this morning's video. If the government cuts spending when households and businesses are cautious, demand collapses. The result is stagnation, exactly what Britain has endured for 15 years.
Third, the column misreads the source of recent tax receipts. The Guardian itself notes that January's strong revenues were at least in part driven by capital gains, which are often one-off events. But the real question is not whether receipts are temporary. It is why the UK tax base is so narrow that windfalls matter at all. The answer lies in decades of tax cuts for wealth, tolerance of tax avoidance, and the growth of rentier income that escapes normal rates of taxation.
Fourth, the argument ignores the real constraint on government spending. It is not money. It is resources, whether they be labour, skills, energy, raw materials, land, or technology. Britain's problem is not that it spends too much. It is that it invests too little. We have underfunded housing, energy infrastructure, education, health care, and local government for years.
And fifth, the column repeats the neoliberal framing that has failed Britain since 2010. We were told austerity would restore growth. Instead, we got stagnation, crumbling infrastructure, declining public services, and rising inequality.
Those are not abstract issues. They have consequences.
First, underinvestment reduces productivity. If you do not build railways, insulate homes, train workers, or fund research, growth will not appear by magic.
Second, austerity erodes social security. When local councils cut services and benefits fail to keep pace with prices, insecurity spreads. People become angry, and that anger fuels the far right, a theme I have discussed often on this blog.
Third, inequality widens. Wealth accumulates in property and financial assets, while wages stagnate. Tax systems that favour capital gains over earned income reinforce this trend.
Fourth, democratic trust collapses. If governments claim they cannot afford decent public services while billions appear for banks, defence contracts, or tax cuts, people conclude — rightly — that politics serves the powerful.
And fifth, climate transition stalls. Britain cannot decarbonise without massive public investment in energy, housing, transport, and industry. Fiscal timidity is ecological irresponsibility.
So what should we conclude?
First, we need honesty about money. Government spending is constrained by resources, not by arbitrary fiscal rules. We must abandon the household analogy and the myth of the “taxpayer's money” funding spending.
Second, we need a programme of public investment. Housing, green energy, transport, health care, education, and social care all require sustained funding. That spending will create jobs, raise productivity, and improve well-being.
Third, we must reform taxation. Wealth, land, and excess corporate profits must be taxed properly. Tax havens and secrecy jurisdictions must be tackled. Banks should report corporate account data to HMRC to ensure that the estimated 40% of all small companies not paying their corporation tax at present do so simply because they can be identified as trading. Directors should be liable when companies disappear with unpaid tax. Those are proposals I have already set out.
Fourth, fiscal policy must support a politics of care. No one should be cold, homeless, untreated, or without education because of an accounting convention. Social security is not a luxury. It is a foundation of a civilised society.
And finally, we need a new narrative about the economy. Britain is not poor. It is mismanaged. We have enough resources, skills, and technology to provide well-being for all. What we lack is the political will to deliver that.
Phillip Inman is right about one thing. The UK economy is precarious. But he is not right about why. There, he is a long way from the mark. We are not in a precarious position because we spend too much. We are precarious because we refuse to spend where it matters.
Until that changes, we will keep mistaking accounting rules for economic reality and so condemn ourselves to decline.
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Do we not also need to shift the narrative from there’s always money for pensioners, but nothing for our young people? In the search for the so called grey vote our policies have become far to focused on older people whilst our 18-25s find rising costs for their education, limited access to benefits and rising housing costs forcing them to live at home without the opportunities that had previously been available for our young adults. I am increasingly concerned that our policies are becoming so hostile that many are emmigrating taking their skills with them. I don’t blame them. If I was a young doctor with a massive student loan I’d think about a country paying more and providing better opportunities. But this is not good for our country or our economy. Younger Greens like Zack get this and are able to mobilise this demographic, but this is a problem for our older demographic too. Who is going to pay our pensions and care for us? As we become an increasingly old society we can’t afford to alienate our brightest and best.
Much to agree with
The Guardian went down the pan after the Tortoise media takeover. They sacked most of their decent journalists, including Carole Cadwallerd, and have been betraying their roots ever since.
I don’t buy it anymore.
Point of Order: Agree entirely that The Guardian has gone down the pan since they “gave away” The Observer to Tortoise Media but they (Guardian Media Group) still own The Guardian not Tortoise Media.
I still subscribe to their UK digital version of The Guardian but as you say, since they offloaded The Observer they’ve lost a large number of great journalists including Carole Cadwalladr and Andrew Rawnsley which has diminished their overall quality of output. Most of the UK version is now filled with articles that seem to have been written by journos from their outlets in the US and Australia, most of it just clickbait. Sadly it’s not been the same since Alan Rusbridger edited it.
And as Richard has pointed out here, Philip Inman is steeped in spouting neoliberal bollocks.
Andrew Rawnsley? Great? When? Not for decades, if ever.
I notice some refreshingly anti neolib attitude seeped into the Guardian this morning (evidently the sub editors were busy elsewhere). The report on the end of the Winter Olympics (which I succeeded in avoiding for the past few weeks) reflected on the success of Norway. Now that I had noted, for obvious reasons. Always ready to cheer on a small country to which I have personal ties, once dedicated to peace (not so much nowadays, sadly: et tu, Norway?). The article concluded:
“Unlike countries such as the US, Norwegians put less emphasis on competition and specialisation in their youth sports – scores are not recorded in team sports matches featuring children under 12 – and more importance on fun. Norwegians believe this leads to fewer children becoming discouraged and quitting sports before they have time to develop their potential…
“We don’t do skeleton or bobsleigh because that costs too much money. We are a very rich country, but we believe in the socialist way of doing things. That success should be from working hard and being together,” Morten Aasen, a former Norwegian Olympian, said in 2018.
“Geir Jordet, a professor at the Norwegian School of Sports Sciences in Oslo, told CNN Sports his country’s athletic success comes down to a simple formula: “Collaboration, communication and care.”
Much to agree with.
Very good
Without wishing to digress from your original post, I think Rawnsley as a political hack has been consistently:
critical of Brexit’s political and economic consequences.
Identifying austerity measures (especially those pursued by Conservative and Labour governments post-2010) as having damaged public services and living standards — contributing to long-term economic and political dissatisfaction.
openly critical of Nigel Farage, especially in the context of his influence on British politics, seeing him as a disruptive political figure whose role in Brexit and current UK politics does more harm than good to serious governance.
I’m sure that chimes with what’s being discussed here?
I think I’m right in saying that Tortoise Media bought The Observer from the Guardian Media Group which, I believe, is owned by the Scott Trust. The Guardian isn’t owned by Tortoise Media, therefore.
A brilliant summary of where we are and what we need to do. I shall share widely.
All that you say is both reasonable and correct. It follows that what Inman says is unreasonable and incorrect. Why?
Why does he he reach the conclusions that he does? Or perhaps he just has an inflexibility of mind/too old/too set in his ways?
Pity the Guardian only offers space for the neo-libs (I am sure he would deny this – whilst continuing to sit in the neo-lib envelope).
I suggested that Richard looked at Inman’s article and I’m pleased he did but like you I am baffled that in 2026 the Guardian’s senior economics correspondent can get things so fundamentally wrong. I expect this in the Telegraph etc. because they have vested interest in propagating inequality but surely the supposedly flagship liberal outlet can do better than this.
Two bits of news that depressed me profoundly in the last week.
1. That the government cheerfully announced that £30bn had been withdrawn from our economy (what it calls a surplus) and seemed to think that was a “good thing”.
https://www.theguardian.com/politics/2026/feb/19/uk-reports-record-breaking-surplus-rachel-reeves
2. Local news that the current UK economic climate, as manifested in Bristol, whose citizens are desperate for housing, means that the highest offer for an industrial estate near Temple Meads station came, not from a housing developer (they seem to be sitting on their hands at present) but a commercial developer, wanting to improve the industrial units.
https://www.bristolpost.co.uk/news/bristol-news/bristols-housing-crisis-explained-one-10825486
In neither story do I see any evidence of good government, of initiative of deliberate policy, of any attempt to actually MAKE change – merely the wringing of well greased palms in helpless passive surrender to “market forces”, because “we can’t afford it”.
This is why so many people don’t vote. Because voting doesn’t result in a “government”, merely another set of “His Majesty’s managers”.
The 31 January deadline for income tax tax returns – and balancing payments and the first payments on account for the next year, and also capital gains tax payments – means that January is always a big month for tax receipts. This year the surplus was about £30 billion. Receipts of £133 billion and spending of around £100 billion. Last year the surplus was £15 billion.
First, total government spending is over £1,200 billion. This “surplus” is less than 3% of the spending over the whole year. Nice to have but a one-off. It does not reflect substantial changes in the economy as a whole.
Second, apparently the “analysts” expected a surplus of about £24 billion. So their models were wrong by around 25%. The mathematical models, and the people who create and use them, are poor at predicting human behaviour.
Third, the tax collected reflects income received and capital gained realised in the 2024/25 tax year, between 9 and 21 months earlier. It is a very slow trailing indicator of where we were a year or two ago. And by “we” I mean people who pay income tax by six monthly instalments – not most employees on PAYE – and people who own and sell enough capital assets pay capital gains tax. About 12 million people in a country of approaching 70 million. About one in six.
And fourth, capital gains tax receipts were £17 billion, up £7 billion from last year. So about half of the additional surplus was CGT. Income tax receipts were up a bit but by a much smaller percentage. In part this may reflect the CGT annual exemption being halved again to £3,000 from 2024/25. It also may reflect CGT rates increasing in October 2024. Although the top rate of 24% is still much less than the top rates of income tax. But capital gains tax is often a choice of when to sell. I expect many people were realising gains before the October 2024 budget at the old CGT rates, and perhaps also before the spring budget in case rates rose again. But once assets are sold, those gains are not realised again. I expect CGT receipts in January 2027 for the 2025/26 tax year might be down again.
CGT is a small tax, less than a tenth of income tax, not a firm basis for drawing conclusions about the economy.
Thanks
Agreed
The Guardian, with the exceptions of Aditya Chakrabortty, Larry Elliott and John Harris is hopeless these days (although sometimes I wonder about Larry). I suspect they won’t publish the letter I sent to the editor on Saturday as it challenges the Guardian’s neo-liberal narrative
Uncharacteristically Richard you seem to indulge Inman more than one might expect. The tone of the piece seems revolting, with its. ‘Leftists’ and Green ‘extremists’ ‘wishing for things they cant afford’ – as if it goes without saying that ‘there is no money’ ‘
He has not the slightest interest in how on earth we got here – (15 years of austerity ‘we cant afford it’.
The nearest he gets to any analysis is to talk about £bns spent – on SEND or defence – no interest in real resources, that we may have or real things that we want to produce – whether its drones or hip operations. Keynes ‘anything we can actually do we can afford’ must be turning in his grave.
Someone should ask the ignorant bastard – where he thinks the money goes if we spend to employ all our unemployed doctors.