This is Spring Statement day - or a Budget day by any other name - and rarely has so much ridden on what a Chancellor is going to say.
As Politico puts it this morning:
Chancellor Rishi Sunak will deliver his spring statement this lunchtime knowing it will not just decide whether millions of Britons can stay afloat during the cost of living crisis, but that his actions over the next few months may also determine the Conservative Party's fate at the next election.
That understates the issue. Partly because it is not just millions, but maybe half of UK households we're talking about staying afloat, in my opinion, with the rest being tightly squeezed - right up to near the top.
And partly because politics does not get bigger than this because I think all the parties are missing the scale of the issue that we are facing - which is the worst recession of a lifetime.
This, unlike previous recessions and inflationary periods, has sprung out of nowhere, leaving only those aged over 60 with any recall of anything like it and experience of how to manage it almost non-existent. No wonder so many are getting their estimates of the potential impact so wrong.
I will be broadcasting twice today, that I know about. I will be on the Jeremy Vine show on BBC Radio 2 from 1.30 until 2. Then I am on the Andrew Marr show on LBC from about 6.30 this evening.
I will also be tweeting and blogging all day - as time permits.
I will try to give some flavour of the issues that we face in some further blogs this morning - mainly as reference points to explain what Sunak does, or does not, do. But I have a bad feeling about today. All the signs are that Sunak is going to be a cowardly politician and stand back to fill his coffers and let the markets have their way on people's fortunes. If that is what he does this is a disaster in the making.
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‘and let the markets have their way on people’s fortunes’.
This was always THE central Neo-liberal objective in my view – it’s their way of re-distributing money and gaining money-power. We’re all fair game to them – nothing more.
I think you are right about Sunak, sadly. Were it not so. But we are where we are. He is an intellectual pygmy when it comes to matters macroeconomic and reverts to mainstream dogma where he doesn’t have to think very hard when things get rough. Even during the pandemic, when he acted a bit out of type, it was too little too late.
Recession Rishi does have a certain ring to it. Reci Rishi?
How many times is he going to need to come out and try again this year?
Many
The older I get the more I worry about the assumptions made to justify economic decisions.
This morning for instance I heard the IFS on the Today programme airily pronouncing that the average wage was £35,000 per annum.
At a time when It is estimated that over 50% of graduates and post graduates will never repay their student loans, despite ex-students being reckoned to be the country’s highest earners, £35,000 sounds plain wrong.
The last time I looked graduates started repaying their loans at approximately either £20,000 or £27,000, depending on when they took out their loans, and post-graduates start repayment at £21,000.
I accept that all of this is not definitive, but if 50% of our highest earners never earn enough to pay off their student loans how do they come up with a figure of £35,000 as the average wage?
Median wags are now around £30,000 and the average (mean) somewhat higher
I think they were right
But that does not help those who will never get near earning those sums, graduates included.
Sky News quotes the Chancellor as saying he is going to build “a stronger, more secure economy”. To understand that statement you have to deconstruct the parts and re-assemble. Sunak is in fact confessing that we have a weak and insecure economy; an economy that he and his bungling colleagues in the Cabinet have fallen asleep at the wheel, driving.
I have also listened to an extremely ill-informed lady on Nikki Campbell, BBC Radio breathlessly insisting the suffering is because the Government is right; it has no money, it is all our money that Government relies on. No doubt it is some time since she used a BofE banknote: “I promise to pay the bearer on demand”. We still have no proper public understanding that people do not own money; because nobody learns anything about money at school – because the political parties are frightened what people would soon enough discover. The lady holds a promissary note (as in ‘holds’, not owns ‘money’) , paid by a bank on behalf of a Government (representing the essence of sovereign power) that owns the money. we know the Government owns the money, because it can tax it (and take as much as it dictates) at its sole, absolute discretion; and the money is solely produced by the Government bank (BofE), or another bank only under goverment licence. What the lady can own is whatever assets support whatever credit she can raise. Her money is only taken by others because of the Government promise. She doesn’t own the promise. The Government is even willing to pay interest (variable) for the money she holds, but that doesn’t make it her money. She holds interest-bearing Government promissary notes.
I meant, of course if the holder of the money (promissary note) converts the Government promissary notes at par, into interest earning bonds; at which point the capital may vary.
Agreed
Oh – so apparently it’s all ‘our money’ is it?
Well if it is, it is pretty badly distributed amongst us then – did she mention that at all?
Because there is a mass re-distribution of it going on right now.
I bet she didn’t mention that!?
I am nearly 60 but I do remember the ‘shocks’ of the 70’s. The ‘monetarism’ of the 80’s too when interest rates more than doubled to 15% and wrecked my business overnight. And of course the negative equity which destroyed many a young buyer on the housing ladder – which turned into a feeding frenzy for Buy to Let ownership through insane lending criteria …
Now it IS going to be even harder on the young.
Students are loaded with personal debt and no easy salaried career jobs at the end of their studies through ‘Milk Rounds’ ; Many are living hand to mouth and back in their parents homes with partners sometimes.
We have agreed that the BoE insists on increasing interest rates as have the other linked central bankers. That they have been insisting that inflation is coming and needs ‘controlling’ and we have seen that process started through monopolies and cartels putting up prices since last year.
Which finally allowed interest rates to double which will cause more inflation, and increase interest rates again etc.
What can possibly be the desire to reduce not just us grown ups buying power now but to punish the young into penury?
It can only be to ‘train’ them and us into a return to servility, accept that we are not to expect the basics and ‘luxuries’ that our generation grew up with, inter alia, affordable housing, free-ish education, guaranteed employment, decent medical service free at the point of need AND most of all MOBILITY, which saw the depopulation of industrial wasteland towns of the young and bright , but also great economic leaps by some of us. The easy holidays to the Costa’s and back packing across the globe with our relative ‘richness’.
Yes indeed from Austerity to BrexShit sovereignty illusions to Covid and vaccination mania to a last ditch attempt at a unipolar western world supremacy proxy war in Ukraine – The World , OUR world , fifteen percent of the human population, has changed never to return.
There are major issues which I have obviously not mentioned.
Sunak and co are merely following their scripts they wouldn’t last long if they did anything but.
Amid the noise around fuel duty and NICs and the basic rate – £2 billion here and £5 billion there – and the peanuts for business rates and zero rating energy saving materials, but rather more on increased HMRC and DWP compliance – the policy decision with the largest numbers in the Spring Statement were on student loans.
They are booking over £11 billion next year for “upfront accrual of impacts (not cash) over the lifetime of loans” form changing the terms of student loans, plus large sums in each of the following years.
Staggering….
Listened to Jeremy Vine. The chap from the IEA just seemed to be to ‘provide balance’. You actually explained things -as far as time permitted-and caused me to reflect that the average listener or viewer gets little opportunity to hear the reasoning behind other views than the one repeated by politicians.
I tried….
It is a pretty high pressure gig where I did, for example, break the fourth wall by addressing the listener, quite deliberately.
As Jimmy Greaves used to say , you ‘done good’.
Thanks
An even simpler way of looking at money is that the government made it out of paper and ink so it must be government money originally.
Originally coinage not notes, and the serious intellectual muddle over money in mediaeval and Renaissance Europe arose, I supect largely because coinage became associated with high-value commodities (gold or silver), which in turn happened as a consequence of international trade between soverign coin-issuing European states, groping for a common standard between contesting powers, within a common European cultural and intellectual heritage. China, (Zhongguo – the Central Kingdom) on the other hand; long, long before the barbarian states of the west rose to prominence, did not use either gold or silver; but effectively recognised the principle of fiat money with coins of almost nil value; a remarkable, prescient achievement, although easier to effect because China (as the name in Mandarin itself reveals), did not trade widely outside China and was self-sufficient in every aspect of life.
So wise…..