The FT had a report yesterday that suggested that:
Jeremy Hunt is considering slashing billions of pounds from public spending plans to fund pre-election tax cuts if he is penned in by tight finances in his March 6 Budget.
Treasury insiders say the UK chancellor is looking at “further spending restraint” after 2025, if official forecasts suggest he does not have enough fiscal headroom to pay for “smart tax cuts”.
They added:
Much depends on how big a “fiscal headroom” the Office for Budget Responsibility gives Hunt; the independent body handed its latest forecasts to the chancellor on Wednesday.
This made me want to scream, and not that quietly at that.
The suggestion being made is that a lot of supposed grown ups are spending vast amounts of time manipulating rules that they know have only been created for political reasons, and which they know will be abandoned as soon as they no longer serve those goals, whilst others (the journalists) comment as if this really matters when in reality it is all just a game of smoke and mirrors in which those providing supposedly intelligent commentary are themselves knowing (I hope) facilitators of the deception.
Lydia Prieg at the New Economics Foundation has written:
This is why the UK has had nine sets of fiscal rules since 1997. Our fiscal rules are not immovable laws of nature – they are invented and decided by our politicians. Chancellors simply change their fiscal rules when they become too difficult to meet – they are a political tennis ball, not a tool of effective policy. Even Jim O'Neill, the former chairman of Goldman Sachs Asset Management, and the Treasury's commercial secretary under then-chancellor George Osborne, has since urged this government to “drop such petty and arbitrary fiscal rules that magically claim the deficit in five years' time will be lower.” While Rachel Reeves appointed O'Neill as an advisor, she doesn't appear to have taken this advice to heart.
She is right: Reeves has most definitely ignored his advice. Hunt did, long ago.
So too have those at the FT who have not called out this nonsense for what it is.
There is, for the record, no such thing as ‘fiscal headroom'. And, ‘fiscal rules' are just mechanisms created by governments who use them as an excuse to constrain government spending so that sufficient economic resources might instead be sub-optimally used within the margins of the private sector, mainly in formerly state run activity from which excessive economic rents might be extracted by those who have done nothing to earn them.
Meanwhile, the media who do not call this out reveal themselves as either willing participants in this process of deception or as fools: they can nominate themselves for whichever description they think fits best.
I yearn for grown-up debate on the economic issues that we face. We hardly ever get it in our media. No wonder we're in a mess when they won't call out the drivel talked about fiscal rules for what it is. It does not even require great expertise to do so. All they have to say is that the Emperor very clearly has no clothes on and cannot disguise the fact by taking nonsense about fiscal rules. Then we might move on to some serious debate.
What is the chance of that? Close to zero, I fear.
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I’m reminded of that periodic (similar) nonsense / charade in America where they fall out and government has to stop.
The Tories know they will be savaged at the next election. So they are indulging in a scorched earth policy, leaving a fiscal wasteland for their successors.
I fully expect a major, regressive, tax cutting budget, with massive, and unsustainable, public spending cuts “planned” for 2025. The planned cuts will allow them to claim compliance with their idiotic, arbitrary, fiscal rules.
This will be done with two political objectives. First, they hope to reduce the scale of their electoral losses by bribing the electorate. Sadly, that will probably work. Secondly it will make their successors task more difficult, and they hope that will make it easier to return the power when their successors mess up (they hope).
Optimist by nature, I hope I am wrong; pessimist by policy, I fear I am right.
To me it’s quite simple as to what is happening.
The British voter is expected to suffer austerity and cuts just so that the Tories can bribe them with tax cuts later.
This alone should be obvious to everyone – the Tories have been saving money in order to give it away for an election. Anyone who falls for this has missed out on the apparent ascent of man.
All based on the lie that tax funds stuff of course. And totally ignoring how low wages, low investment and austerity also destroys tax revenues – if you should need them – which you don’t (but not forgetting the cooling effect on inflation).
I’m heartily sick of all this to be honest.
It’s a Gordian knot of a problem that needs an Alexandrian remedy from a courageous opposition.
Well – that’s that fucked then isn’t it?
PSR
And “oven ready”
The economist academics who could point out the nonsense of the politician’s interpretations of “fiscal rules” of course largely missing in action! What a society when this is obviously a big research area!
Hopefully the papers won’t be around for much longer. Going from the size of the losses they make, they seem to exist largely now not for the purpose of informing but for spreading misinformation of one sort or another. That given, their loss would arguably be no bad thing. What would the UK be like with almost no national papers? Perhaps we’ll soon be finding out.
Bill Kruse.
Recently I read someone suggesting that that the important role the newspapers fulfil is to supply the broadcast media with its news agenda. If this is to some extent the case the survival of the print media will be determined by its perceived value to the media owners.
This probably borders on conspiracy theory, but……. people who own and work in the media do so because they crave influence – think their opinion is valid and ought to be heard and valued. I don’t expect print media to disappear anytime soon, but if it does we’ll get the same would-be influencers on different media channels.
But, and this applies to what Pilgrim says below too, they wouldn’t have the same reach there, the same influence. Too many people appear to blindly accept what they read in the papers as Gospel. Without them, they’d have to develop their own beliefs and they’d be subject to many conflicting POVs. No one view would automatically hold sway over so many to the extent it does now. From such a crucible a new world could arise, one hopefully better informed than this one.
Well, the BBC would have to employ someone to formulate a news agenda. Currently, they just work on a “what the papers say” basis. Another reason I think that the press barons are prepared to take losses – this way they control the national agenda.
I hate the gfact that they let the Mail set the agenda
The losses are small for the returns in persuading the readership to destroy their own lives by voting for the Party the press owner wants in power. The point of it is, the Press set the News Agenda; for the licensed broadcasters (ITV, BBC – they can’t set their own) and the politicians, who need them because the Press set the Agenda.
Big losses? Cheap at the price.
But they’ll just go to a new Klondike Bill, a newly minted lawless frontier called the internet and in my view, say and do even more outrageous things.
That’s the problem.
I totally share your need to scream: Hunt & the Tories disgusting; Rachel Reeves & Labour despairing.
Good article by Yanis Varoufakis in today’s Guardian : https://www.theguardian.com/commentisfree/2024/feb/15/labour-credit-card-analogy-mendacious-tory
But why why why – doesnt the BBC simply point all this out – and keep pointing it out whenever they interview Reeves, Hunt etc ?
We know why – but they should be continually challenged to do it and complaints to offcom issued
Although the term “fiscal rules” seems to have been used since Labour introduced them in 1997, I recall a similar obsession with “measures” and “targets” for economic performance in the early years of the Thatcher government (and no doubt there were others before that), when the deficit and money supply (Sterling M3 — and successively narrower measures) were the basis of arbitrary and damaging targets.
Apart from a lot of tweaking, has anything really changed very much since those similarly dark days?
As a young physicist then, reasonably numerate and well aware of the development of hypotheses into robust theory through testable prediction and experiment, I was curious about what those highly-confident political economics experts were trying to do.
Needless to say, in the intervening 40-plus years I’ve come to regard them as no more than practitioners of theology, prophecy and voodoo —albeit with less credibility and success than many of the original and genuine practitioners of those subjects. Their successors, running the show now, look even worse, given that they’ve learned nothing while having the benefit of hindsight.
I knew a senior Church of England clergyman at one time who reckoned that believing in the virgin birth was a lot easier than believing in neoclassical economics.
“… no more than practitioners of theology, prophecy and voodoo….”
Mr Shone, you speak my language! The economists, however will absolutely hate your remark; a physicist ‘sees through’ neoliberal economics; the humiliation is comprehensive. The “development of hypotheses into robust theory through testable prediction and experiment”? Trust me, you are now speaking a foreign language they do not understand; test and experiment, in economics? They have never heard of it, don’t go near it, and wouldn’t know what to do, or how to do it, if they did. All they want is a nice, simple equation; no proof required, outside the internal consistency of the equation. They all just mark each others’ homework. It is very cosy.
I confess it; I have given in to schadenfreude with this comment; worse, I don’t care.
This is a recession at the end of a flatlining economy, for years. The Telegraph is trying to blame it on people who left the workforce after Covid. It seems you are obliged to work; I think I have the solution that will please the Telegraph.
Set the ten year olds to work. They are wasting time and money in education. The only downside is there are not so many chimneys to sweep nowadays. For the rest? There is always slavery, and forced labor. Britain used it very successfully in the Caribbean, before 1833; and in America before they, very ungratefully decided not to work for us any more (but we left them with the slavery we had introduced there).
Good to see you on Novara Media this evening, Richard, debunking fiscal rules and the rest of it. Looking forward to it being put out as a separate video.
Not my best interview, to be honest. I was not on form.
Richard
I’ve just heard Wednesday’s edition of ‘More or Less’ whose presenter, Tim Hartford is supposed to be the man at the BBC that asks all the awkward questions about statistics and economics. The section on the national debt repeated all the usual misinformation about how national debt works.
It would appear that either Tim Hartford (previously of the Financial Times) is profoundly ignorant about macroeconomics or he he is being heavily lent on by the BBC Editorial staff.
In any event, given that this programme pretends to be the place to go for bias free information, I think it’s worth careful scrutiny
Martin
He is useless on macroeconomics. Absolutely beyond hope and very angry with anyone who says so.