Investment

Rachel the Deluded

philmullan Debt, Economic policy, Investment, Politics, State intervention

Playing on the title of an Australian TV series, some critics of chancellor Rachel Reeves have taken to calling her ‘Rachel from Accounts’. That’s unfair to people who work in accounts departments. Most of them can interpret a balance sheet – a skill that seems to be beyond the capabilities of Britain’s chancellor.

Presenting today’s spending review, Reeves once again told the public that she can make everything add up, in defiance of common sense. ‘Rachel the Deluded’ is a more apt nickname

She insisted that the government can stick to its public-spending commitments, while not raising taxes on ‘working people’. And it can do all this while fulfilling her self-imposed fiscal rules.

In her fantastical spending-review statement, she claimed that Brits are starting to ‘see the results’ from her having ‘fixed the foundations’ and delivered ‘economic stability’.

Worse still, the spending review shows that the chancellor is continuing to ignore mounting public debt. Indeed, this clueless government has doubled down on the fantasy that the UK can borrow its way to growth, even though the national debt is already the equivalent of annual economic output.

Read the full article here.

The problem with Hunt’s ‘back to work’ budget

philmullan Economic growth, Economic policy, Employment, Investment, Productivity

In January, prime minister Rishi Sunak announced his five key priorities for 2023. Conveniently for him, his first priority was something that is very likely to happen regardless of what his government does. Sunak’s top pledge to ‘halve inflation’ came a few days after just about every new-year economic prediction said that inflation would fall by at least half during 2023. Chancellor Jeremy Hunt adopted a similar hollow ploy in his budget statement yesterday, setting himself up to take credit for something that is already happening anyway.

Alongside all the familiar, disingenuous boasts about promoting growth and business investment, Hunt also placed a distinct emphasis on this being a ‘back to work’ budget. He highlighted the importance of ‘tackling labour shortages that stop [businesses] recruiting… by breaking down barriers that stop people working’. Yet ever since the threat of further pandemic shutdowns lifted last year, people have already been returning to work, pretty much as normal. So why the focus on getting people back to work now?

Read the full article here.

Fiddling with taxes won’t fix the economy

philmullan capitalism, Economic growth, Economic policy, Investment, Politics

Britain’s grim combination of record indebtedness and anaemic economic growth is desperately calling out for a vigorous government response to shake up and restructure the economy. Unfortunately, the two lightweight contenders for Britain’s next Conservative Party leader and prime minister have not heeded this call.

Instead, all Rishi Sunak or Liz Truss have been able to offer is a choice between tax cuts now versus tax cuts a bit later. The media may claim that this shows an ‘enormous’ gap between the candidates’ economic policies, but that is just empty hype. Both Sunak and Truss share the same illusions about taxation’s ability to revive or depress the economy.

But recent economic history confirms that tax reductions have no determinate effect on business investment and therefore do not contribute to improved productivity performance and economic growth. If the government is serious about tackling our dismal economic situation, it needs to drop its fixation on taxation. And it needs to lead with a genuine plan for economic transformation to drive productivity growth and lift living standards. Anything else is just fiddling while the economic crisis deepens.

Read the full article here.

Who will save Britain from its never-ending slump?

philmullan Creative destruction, Economic growth, Economic policy, Investment, Productivity

The huge hole at the centre of the Autumn Budget goes beyond any of the fiscal measures announced. The substance of the statement made clear that this government’s bold talk about economic renewal does not translate into a serious pro-growth plan that might address the fundamental challenges of low investment and poor productivity.

Read the full article here.

A roadmap for economic renewal

philmullan Covid-19, Creative destruction, Innovation, Investment, State intervention, The longest depression

There is much talk from inside and outside government about a state-administered ‘reset’ or ‘reboot’ in order to begin Britain’s economic recovery. But the economy needs something much more far-reaching – namely, a bold and comprehensive reconstruction. Ordinary people must take the lead in our post-Covid recovery. Read the full article here.