Tag Archives: economic

Record annual slump for UK economy in 2020 – but should Johnson be slammed for it?

Johnson’s blunders: he made promise after promise – and mistake after mistake. And the UK’s economy suffered.

Yes he should, although it may have seemed a tricky one to call.

The simple fact is that the UK’s economy was bound to suffer in the year of Covid-19.

Business – and school – closures were inevitable. Even though Johnson didn’t want to do it, eventually he had to.

And that’s part of the reason he should be blamed: he had to be dragged into every correct decision he made – and usually too late to prevent some harm from being done.

His lockdowns were only ever partial (so not really lockdowns at all), and he pulled out of them too early.

We recently learned that he ignored scientific advice to do so.

He diverted commercial contracts connected with tackling the virus away from experts in order to hand billions of pounds to friends of the Conservative Party who knew little or nothing about the work they were being asked to do.

Test and trace work, to quote a much-criticised example, suffered badly because he put an ex-jockey in charge, who didn’t realise that a virus can mutate – something that seven-year-old children read in school textbooks.

As a result of all this, the pandemic affected the UK far more than it might otherwise have, and the economic effect was worse, as we can see:

The UK economy shrank by a record 9.9% last year as coronavirus restrictions hit output, official figures show.

The contraction in 2020 “was more than twice as much as the previous largest annual fall on record”, the Office for National Statistics (ONS) said.

Muddying the issue is the fact that previous governments had dismantled the UK’s ability to cope with a pandemic infection over many years. But Boris Johnson was part of some of those governments, so he still can’t dodge some of the responsibility.

And, because it is a deadly infection, we don’t know how many people were likely to have been infected – or died – if Johnson had acted more responsibly… or indeed if he hadn’t bothered to do anything at all.

So we don’t know what would have happened in either a worst- or best-case scenario.

So we are left with the knowledge that the economy was going to suffer in 2020, no matter what.

But Johnson did not act fast enough to minimise the damage – and his choices were either wrong or, on the rare occasions they were right, delayed.

We don’t know how badly the economy would have been affected in different circumstances.

But it’s a fair bet that it would have fared better if Johnson’s choices had been wiser.

Source: UK economy suffered record annual slump in 2020 – BBC News

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Labour backs away from credible opposition by copying Tories on economics

Annaliese Dodds: do you really think you could trust this woman with the economy?

Keir Starmer’s Labour has announced that its new economic policy is to copy the Conservatives. Why not? Starmer’s copying the Tories in everything else!

Starmer, now well on his way to infamy as the worst leader in the more-than-100-year history of the Labour Party, may have turned the announcement over to his shadow chancellor, Anneliese Dodds, but it has his naive pawprints all over it.

Because it’s yet another example of an inexperienced politician, who doesn’t stand for anything apart from grabbing power for himself, blowing in the wind.

The Financial Times gave the game away.

Shadow chancellor Anneliese Dodds will signal on Wednesday that the Labour party is backing away from the hard-left economic policies of former leader Jeremy Corbyn

Sorry, what? “Hard-left” policies?

Corbyn was never hard-left and the author of the FT piece – Chris Giles, whose criticism of the Tories over the number of people dying due to Covid-19 has been exemplary – should know better. Perhaps he is being led by his ideological nose.

If Corbyn had been hard-left, he would have been demanding the nationalisation of everything and the end of individual property ownership. Hard-left policies require everything to be owned by the state and he never advocated that.

Corbyn’s policies were most similar to those of the Scandinavian countries – and anybody with an eye on international affairs will know that, economically, those nations are much more stable than the UK; their people far more prosperous. The UK would have been better-off under Corbyn’s economic policies.

But Starmer wants to turn his back on them because he is a Conservative at heart.

The trouble is, we already have a Conservative Party in the UK. Returning to the policies that lost Labour two elections (in 2010 and 2015 respectively) will not help a Labour leader who has failed to win a single victory against Boris Johnson’s inept and imbecilic Conservatives.

But that is exactly what Dodd’s is announcing.

In the annual Mais Lecture, she will cloak Labour’s strategy to become the UK’s next government in the latest thinking from international organisations such as the IMF, which recommends waiting until unemployment falls and the recovery is complete before thinking about the sustainability of public finances.

So, it’s back to austerity for Labour. That will be a long wait.

The best way to increase employment is to invest in it – not to leave everything to the market. That is hard-right neoliberalism and Labour should not have anything to do with it. Sadly, Labour members elected a Conservative as their party leader and he is imposing hard-right Conservative policies on them whether they want them or not.

The fact that he lied, lied, and lied again to get himself elected only partially excuses them (as it was clear that he was lying).

Strangely, in her speech, Dodds will distance herself from the economic programme Labour put forward in the run-up to the 2019 general election, that offered spending increases of £83 billion – a modest amount in comparison with the hundreds of billions splurged by Boris Johnson in the last year.

Instead, she will align Labour’s economic policy with that of the Tories, while referring to “responsible” policies no fewer than 23 times. There is nothing “responsible” about Conservative economic policy, or about aligning with them.

There’s an easy test for this. Conservative neoliberalism has been the dominant economic policy in the UK since 1979, when Margaret Thatcher was first elected into office.

At that time, a family of four could afford to pay the mortgage on their house together with all household bills including groceries and vehicle running costs, from the wages of just one parent – and still had enough left over for a holiday away from home during the summer.

Is that possible now?

No, it isn’t. Most of us are much worse-off after 41 years of this nonsense – apart from people in positions of extreme power, including MPs like Starmer and Dodds.

So perhaps there is an intention to help in this policy change. Starmer and Dodds are planning to help themselves.

Their predictable lapse into neoliberalism has been greeted with a chorus of derision from everybody who understands what it means:

Who would? The voting public certainly won’t.

Source: Labour signals end of Corbyn era in setting out economic vision | Financial Times

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Should anyone be surprised that Brexit will cost more than Covid – in the long term?

This Writer’s initial reaction to Bank of England governor Andrew Bailey’s claim that a no-deal Brexit will cost more than Covid was:

Is that because most of the cost of Covid was due to short-term profiteering by Tory crony companies?

The cost to the UK of this nonsense is short-term, though; when the pandemic is finally under control, the profiteers won’t have an opportunity to screw any more cash out of the Treasury.

But the loss of the free trade deals the UK enjoyed as a member of the European Union will have long-term effects that may last many years:

LSE modelling estimates a reduction in GDP worth 8% over a decade compared with remaining in the EU.

Asked about the research, Bailey said economic models suggested there would be long-term consequences, as it could take a long time for the UK to adjust to a new trading relationship. “It takes a much longer period of time for the real side of the economy to adjust to the change in openness and change in the profile of trade,” he said.

Bailey was talking about the effects of a “no-deal” Brexit but be warned that even a deal will place the UK at a disadvantage.

Source: No-deal Brexit to cost more than Covid, Bank of England governor says | Politics | The Guardian

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Labour challenges Johnson government to ‘Build it in Britain’ creating 400,000 new jobs

 

How pleasant to be able to report on something positive the Labour Party is doing.

The ‘green economic recovery’ was a Corbyn initiative, of course.

Ahead of this month’s Comprehensive Spending Review, Labour is calling for an economic recovery that will deliver high-skilled jobs in every part of the UK as part of the drive towards a clean economy. It is also calling for the low-carbon infrastructure of the future to be built in Britain.

Labour’s calls follow an extensive consultation with businesses, trade unions and other stakeholders around what a credible green recovery should look like, which received almost 2,000 responses. The consultation indicated that the Government must:

  • Recover Jobs
    By bringing forward planned capital investment and dedicating it to low-carbon sectors – at least £30billion in the next 18 months – as part of a rapid stimulus package to support up to an estimated 400,000 additional jobs.
  • Retrain Workers
    By putting in place an emergency training programme to equip people affected by the unemployment crisis with the skills they need for the future greener economy.
  • Rebuild business
    By creating a National Investment Bank similar to those operating in other countries, focused on green investment, and by ensuring that public investment always aids the drive to net-zero rather than hindering it.

The consultation report details a number of areas where progress has so far been limited in the UK, but where action now would support the creation of new jobs and tackle the climate and environmental crisis. They include:

  • Investing in upgrading ports and shipyards for offshore wind supply chains.
  • Expanding investment in Carbon Capture and Storage and hydrogen to help establish new opportunities for highly-skilled workers.
  • Accelerating planned investment in electric vehicle charging infrastructure and ensuring the planning system better supports electric vehicle charging.
  • Bringing forward orders for electric buses to help struggling manufacturers fill their order books.
  • Introducing a National Nature Service, an employment programme to focus on nature conservation projects.
  • Expanding energy efficiency and retrofit programmes, including in social housing.
  • Ensuring that updated Sector Deals for sectors like automotive, steel and aerospace protect jobs and promote the shift to net zero.
  • Bringing forward flooding protection investment, prioritising areas of need across the North West, Yorkshire and the East Midlands.

These should be delivered within a wider strategy that also meets the UK’s overall infrastructure needs at the upcoming Spending Review.

Ed Miliband MP, Shadow Secretary of State for Business, Energy and Industrial Strategy, said:

“We face a jobs emergency and a climate emergency. It’s time for a bold and ambitious plan to deliver hundreds of thousands of jobs which can also tackle the climate crisis.

“This is the right thing to do for so many people who are facing unemployment, the right thing to do for our economy to get a lead in the industries of the future and the right thing to do to build a better quality of life for people in our country.

“As other countries lead the way with a green recovery, Britain is hesitating. It’s time to end the dither and inaction, and start delivering now.  It is what the British people deserve and what the crises we face demand.”

Anneliese Dodds MP, Shadow Chancellor of the Exchequer, said:

“Labour is ambitious for Britain. We can harness the opportunities for green growth if the Government takes the right decisions now.

“In recent years, and particularly during this crisis, our country has fallen behind in the drive to a cleaner, greener economy.  We’ve seen far more rhetoric than action – and that has cost our country jobs.

“Future generations will judge us by the choices we make today to tackle the unemployment crisis and face up to the realities of the climate emergency.

“That’s why we need coordinated action to support 400,000 jobs of the future today, not tomorrow. Now’s the time to build it in Britain.”

Source: Labour challenges government to ‘Build it in Britain’ and support 400,000 new jobs with green economic recovery – The Labour Party

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Leaked report warns of Covid-Brexit “horror show” – remember THIS IS WHAT BORIS JOHNSON WANTS

Two-fingered salute: the UK might fall into lawlessness and chaos because of Boris Johnson but he doesn’t care, as long as he gets what he wants.

A Cabinet Office “reasonable worst-case” report on the effects of a ‘no-deal’ Brexit combining with another wave of Covid-19 has laid out exactly what Boris Johnson wanted for the UK when he became PM.

Johnson, you’ll remember, did not want any trade deals with the European Union after the UK leaves that bloc.

It was widely believed that this is because the hedge fund managers who supported his bid to be Tory leader have bet heavily on the UK going into recession, with many big-name firms going out of business. The claim was that they could make £8 billion out of it.

Of course, none of these multi-billionaires care a fig about the rest of us. If the country falls into chaos they’ll be off to their holiday homes in the sun, with their cash safely stowed in a tax haven.

Meanwhile, back in Blighty, you will be left to deal with food, fuel and power shortages, illness and deaths caused by flood, flu and Covid-19, and incursions into the country from outside such as EU boats coming into our fishing waters.

And, as may reasonably be expected from his government’s failures so far on Covid-19 – the school reopening furore, school meals, exam results, care home deaths, PPE procurement, face mask procurement, test and trace, contract nepotism… the list goes on and on – on flooding (remember that?) and on any other subject you care to mention, the Johnson government has not planned any response to this at all.

The article goes on to state:

  • One in 20 Town Halls could go bust in a second Covid wave, sparking social care chaos.
  • The economic impact of the virus and Brexit could cause public disorder, shortages and price hikes.
  • Troops may have to be drafted on to the streets to help the police in the worst-case scenario — 1,500 are already on stand by.
  • Social distancing measures and masks will have to continue until 2021 regardless.
  • Supplies of food and fuel are all under threat this Christmas if Dover becomes blocked.

The planners warned that “pandemic influenza, severe flooding, a Covid second wave and an unruly exit from the EU transition period could cause a systemic economic crisis with major impact on ­disposable incomes, unemployment, business activity, international trade and market stability.”

It could be combined with likely “coordinated industrial action” as well as shortages risking public disorder and a mental health crisis that will hit the poorest hardest.

Nobody in a Tory government is going to worry about a mental health crisis that harms poor people, of course.

And the attitude by leading Tories to this frankly terrifying report seems to be that if they ignore it, it will go away.

Michael Gove is quoted as babbling: “We got Brexit done with a great deal in January.

“A brighter future awaits as we forge our own path.”

A government spokesperson did add that this was a “reasonable worst case” scenario.

But on the Johnson ministry’s record so far, it is stretching the facts to breaking point to suggest that the government is “ensuring we are ready for all eventualities”.

That simply is not going to happen. On the evidence of the last 12 months, it would be irresponsible to believe anything Johnson, his ministers or his spokespeople say about it.

But there’s one more matter to remember:

If this disaster happens, then there is absolutely nothing you can do about it, other than to prepare as well as you can (because the Tories simply won’t).

I anticipate another stockpiling splurge, worse than the rush for toilet roll in March, at the very least.

Obviously the worst-case will be social unrest and violence – and I’m not ruling that out, either.

Whatever happens, if we end up with no deal and any of the feared outcomes are triggered, you must remember (because he’ll lie about it):

It is what Boris Johnson wanted all along.

Source: Leaked document reveals Cabinet’s emergency plans for perfect storm of No Deal Brexit and coronavirus second wave

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Johnson caught lying about economic growth in Prime Minister’s Questions

Boris Johnson: He’s all ‘blood and thunder’ in Parliament but analyse what he says and it turns out to be ‘bull**** and bluster’ instead.

I was going to ask why Boris Johnson keeps making false claims like this in Parliament.

But I can already answer that question:

Because he knows he will always get away with it.

That’s what happens when you have compliant – indeed, supine – Tory-loving mass media reporting your behaviour; the lies are ignored.

Did I say lies? Yes, I think they were.

His claim was that the UK economy has grown by 73 per cent under the Conservative government, and this was a lie.

I’m sure he knew that the date from which 73 per cent growth can be claimed is 1990, and that it was achieved under both Conservative and (New) Labour governments. But he didn’t say that.

The current Tory government – in office since 2010 – has achieved economic growth of just 20 per cent.

Worse than the lie is the fact that, due to Tory policies enacted since 2010 (with the help of the Liberal Democrats and the Democratic Unionists at different times, let’s not forget), the benefits of economic growth since that year have been restricted to the very rich.

Wage and benefit increases for the very poor have been frozen or cut, plunging millions of people – including and especially children – into poverty.

So-called ‘Victorian’ diseases linked with lack of money have also returned.

And the death toll among people who have seen their benefits restricted or cut off – most probably because the Department for Work and Pensions has altered their claim and lied about it – has been enormous.

But very few people know about that because the Tories don’t monitor the deaths properly and never provide reports.

And then there’s the matter of public debt:

Yes indeed, Mr Johnson – if you’re going to crow about economic growth, what have you done with the money? You’ll be pleading poverty, the instant anybody says it is needed to shore up a service you have cut.

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Labour spending plans are backed by leading economists

Yes, that’s right – it is Labour that has won endorsement for its economic plan.

You wouldn’t believe that if you were reading This Writer’s Twitter feed, though.

After neoliberal mouthpiece Kate Andrews appeared on the BBC’s Politics Live, spouting drivel in opposition to Labour, I tweeted in support – and received what seemed like hundreds of indignant responses from armchair economists across the UK.

But here are the hard facts, courtesy of The Independent:

Labour has received the firm backing of 163 prominent economists who say the party understands the nation’s deep-seated problems and has devised a “serious programme” for dealing with them.

The group said Labour’s plans to invest in homes, schools and infrastructure make “basic economic sense”, partly because borrowing costs are at a historic low.

The government must step in to invest where the private sector has failed to, directing capital towards the rapid decarbonisation of energy, transport, housing, industry and farming, they said.

“As the IMF has acknowledged, when interest payments are low and investment raises economic growth, public debt is sustainable.”

The 163 economists who signed the letter pointed out that a number of Labour’s proposals are considered orthodox in other wealthy social democratic countries.

Germany has a successful national investment bank, for example, and most European countries – unlike the UK – give workers some form of representation on boards and a stake in their employer.

“It seems clear to us that the Labour party has not only understood the deep problems we face, but has devised serious proposals for dealing with them.

“We believe it deserves to form the next government.”

I don’t know if Simon Wren-Lewis, author of the Mainly Macro blog, is among those 163 economists, but it seems he supports Labour too – and has attacked what he calls the “standard excuse” for opposing its plans, which is how to pay for them:

The figure for the increase in current spending and taxes is large. I personally would not call it colossal but it is large. I would argue that reflects the extent of the squeeze we have seen on the public sector since 2010.

But what about the argument that it makes the share of government current spending in GDP the highest since the 1970s? A much better comparison is to look at other countries.

What Labour’s plans do is to move the UK from the bottom of the league table in terms of the size of the state to somewhere around the middle.

Who is going to pay for getting us to the average of European countries. Under Labour’s plans it is the rich and corporations.

There is no ‘black hole’ in Labour’s costings.

Most analysis misses the elephant in the room, and that is Brexit.

I think it is highly likely Brexit will not happen under Labour, and even if it did it would be far less costly than either the Tories plans, or the effects embodied in the OBR base numbers that many people use. For this reason the LibDems have talked about a ‘Remain bonus’ (in the incredible event they could form a majority government). Labour will also get this bonus.

As to the investment part of the programme, the key issue is once again whether the investment is needed and well spent.

We should not be talking about whether it is safe to borrow it.

There is virtually no chance that this money will not be available at low long term real interest rates.

No one should be scared of investing in the future of our economy and the planet, whether its by adding 2% or more to the deficit.

If you read some people there will be an immediate run on sterling as capital takes its money out of the UK. Of course if enough people believe this nonsense it might happen, for a day or two.

But the one area where Labour are not radical is macroeconomic policy design. We will have Bank of England independence and a solid state of the art fiscal rule. As soon as that becomes clear any depreciation will be more than reversed, and I suspect there will be an appreciation from day 1. Sterling will appreciate on the expectations of an end to a hard Brexit and rising interest rates.

We should ignore the tired old discourse about whether we can pay for it, and focus on the benefits each individual spending increase or investment project might bring, and on the revitalisation of the economy that this manifesto will generate.

My critics were certainly thinking in ways outlined – and dismissed – by the 163 economists and Professor Wren-Lewis.

Do they have any arguments that can survive the analysis above? I doubt it.

Until they provide some, the economic opinion is clear: Vote Labour.

Source: General election: Labour’s spending plans backed by more than 160 economists and academics | The Independent

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Terrible Liberal Democrat policy blunders: they’d impose permanent austerity

Evolve Politics has called this one right, I’d say.

Starting from the terrible position into which the Tories have plunged us – huge and increasing national debt, with profitable public services privatised – it would be impossible for them to provide the investment we need and meet their “budget surplus” rule.

It’s playground economics – and may be worse even than the Tory economic plan revealed by Sajid Javid a few days ago.

The Liberal Democrats have slammed Labour’s plans to invest in public services and promised to put Britain into a state of permanent austerity if they win power in the upcoming General Election on December 12th.

Announcing the party’s economic vision at a speech in Leeds yesterday, the Lib Dem’s Deputy Leader, Ed Davey, hit out at Labour’s promise to pump investment into the NHS and other public services by labelling the plans as “fantasies” which would wreck the country’s finances.

Davey also promised that, if they attained power, the Lib Dems would implement a fiscal rule which would compel them to run a permanent 1% budget surplus at minimum.

Davey’s fiscal rule pledge would mean that, under the Lib Dems, spending on public services would remain permanently lower than the amount brought in through tax reciepts.

The Lib Dems’ plans would effectively prohibit the party from providing any extra investment into public services, such as the NHS or schools, unless the government were able to raise more money through tax rises or spending cuts elsewhere – even if the services were in desperate need of extra funds.

Source: Liberal Democrats pledge to implement PERMANENT AUSTERITY if they get into government | Evolve Politics

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‘A great deal’ for whom? The UK will haemorrhage money!

Thumb up: But Boris Johnson won’t lose money on his Brexit deal like the rest of us.

Read this, which refers to Boris Johnson’s new Brexit deal:

A “great deal”? Or a nightmare?

Some of you will no doubt be saying, “Don’t give us all that Project Fear talk, Mike! It’s all just scaremongering to keep us as vassals to the fascist EU superstate!” Or whatever.

But is it scaremongering? Is it really, when the economic figures come from Boris Johnson’s own official government analysis?

Isn’t it more accurate to say that the unelected prime minister is once again lying through his teeth in the knowledge that the kind of voter who would respond as I suggest above will lap it up?

Analysis published by the UK government last November suggested that a deal along the lines of that agreed by Johnson would have a major adverse economic impact on the UK, with British people hit by falling wages and declining growth.

Consider this:

Johnson’s own government’s analysis suggested that a deal along the lines of that agreed on Thursday will reduce annual economic growth by 6.7% compared to staying in the EU. That’s a major hit to the UK economy which will make average households thousands of pounds poorer than they would have been had we remained in the EU.

The UK government’s own analysis also suggested that a deal along the lines of Johnson’s would have a big impact on the average wages of people living in the UK. According to its central projection, average real terms wages would fall by 6.4% compared to staying in the EU.

The economic hit would inevitably lead to the UK government being forced to borrow more, or dramatically slash the services it provides to the public. According to the government’s own analysis, there would be a 3% increase in borrowing as a percentage of economic growth.

Admittedly, negotiations over the final shape of the UK’s future trading relationship with Europe – and the rest of the world – have not yet begun – Boris “Get Brexit Done” Johnson lied about that too.

But the broad direction is clear. The UK economy is going into a ditch.

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Anti-NHS think tank that funds the Tories – hugely – is itself funded by ‘Big Tobacco’

Kate Andrews: This woman – and the IEA think tank she represents – is bad for your health.

Think about the British Medical Journal‘s findings: Tobacco and food firms whose products are harmful to health have been secretly funding the Conservative Party, through the think tank known as the Institute for Economic Affairs.

So next time the odious Kate Andrews appears on Question Time, or Politics Live, or The Andrew Marr Show saying the NHS should be scrapped, bear in mind she’s speaking for British American Tobacco…

And she’s giving the Conservative government instructions.

A secretive think tank which called for the NHS to be scrapped while its heads pour millions into the Conservative Party – and its MPs’ – coffers is being funded by big tobacco, an investigation has found.

British American Tobacco is one of the groups funding the Institute of Economic Affairs (IEA), a free market think tank which is notoriously close-lipped about its donors.

The IEA has been an outspoken critic of public health measures for tackling smoking, obesity and harmful drinking, and past funders include organisations affiliated with gambling, alcohol, sugar and soft drinks industries.

Health experts said the findings, in the British Medical Journal (BMJ), raise the prospect of a future Conservative leader aligning with big business at the expense of the public’s health.

Source: Big tobacco secretly bankrolling anti-NHS think tank whose bosses donate thousands to Tory leadership contenders, an investigation reveals | The Independent

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