Tag Archives: UK economy

Without Boris – some clarity, but more questions

Well, who saw that one coming? The rise and fall of Boris in just over a couple days. Boris must have an awful lot of enemies, both within and without the party for this to happen so quickly. From the words of Michael Gove and his wife, it seems that Boris was not reliably Brexit enough. After all Boris was always a bit of a reluctant Leaver, and his vision of a post Brexit UK sounded too close to the current position for many. Too many as it turned out.

The key divide, post Brexit, it seems to me, is between those who will reluctantly accept the result of the referendum, provided the UK stays in the Single Market, and those who want completely out. Without Boris it looks like the outers have won. All the four remaining candidates for the Tory leadership are committed to taking the UK out of the EU. Even Theresa May seems to have come down on the side of leaving the EU completely. The sticking point for her appears to have been the need to control immigration from the EU. Something that is incompatible with the Single Market.

This is potentially momentous. It does clear this aspect up quite considerably. The negotiations with the EU should be simpler, if not easier, and over sooner rather than later. Some arrangement will be needed to ensure access to the Single Market for goods, but it will be almost impossible to get more, access for services for example, without accepting the free movement of people. Which all the candidates have more or less ruled out.

This has made life a whole lot trickier for lots of people, including Scotland’s attempts to remain in the Single Market, let alone the EU. But not just Scotland, the two Irelands and even tiny Gibraltar will feel the impact of the UK leaving the Single Market.

In the case of Scotland this will both clarify and complicate matters. Staying in the Single Market, but leaving the EU, while not optimum, would nevertheless be an acceptable outcome for many. You get most of the benefits, trade and the free movement of people, which most Remainers value highly. It also and most importantly means that there will be no land border between Scotland and England in terms of trade. The downside for those in favour of independence is that this option might well make independence less appealing to some of those No voters who are reconsidering their position.

If, on the other hand, as now seems likely, the UK leaves the Single Market, this makes the choice very binary. The only way for Scotland to remain, not just in the EU, but in the Single Market, would be to become independent. However, with the rest of UK no longer in the Single Market, the trade and other links with rUK would become crucial. England will almost certainly remain Scotland’s most important trading partner. Can we ensure open access to England if Scotland remains in the EU? The question of a hard land border rears its ugly head again. Even those most in favour of remaining in the EU might baulk at independence if it meant restricted access to England.

However these questions are just as important for the republic of Ireland, perhaps even more so. Ireland has always been closely tied to the UK. Ireland has effectively been part of the British Single Market for decades. The Common Travel area ensures hassle free travel across the British Isles. Ireland only joined the UK when the UK did, and may never have done so, if the UK had not. Now of course as an established member of the EU, Ireland will face some very difficult choices if the UK does leave the Single Market. Can the Common Travel Area survive? Will there have to be a hard land border between Northern Ireland and the republic?

Paradoxically, this could help Scotland. If Ireland manages to successfully adapt to the UK leaving the Single Market, while remaining in the EU, then there is no reason why Scotland could not also do so.

The withdrawal of Boris will also impact on the Tory party itself. It is most strange that the Tory party does not have even the option of electing a leader who is in favour of remaining in the Single Market. Remember, most of the cabinet were in favour of at the very least remaining in the Single Market. While some have clearly changed their mind on this, can the same be said for all Tory MPs? This must be dreadful for the likes of Ken Clarke, John Major et al. While they are the old guard, presumably some of the current crop of Tory MPs share their view that leaving the Single Market will be disastrous for the UK. After all around 40% of Tory voters voted Remain. if, even 30% of Tory MPs are opposed to leaving the Single Market, it may prove impossible for the new PM to get this through Parliament. Whilst most people, at least in England and Wales, accept that the UK has to leave the EU, it is less clear how many people will be prepared to accept leaving the Single Market. As the Chinese saying has it, we live in interesting times, and they only look like getting even more interesting!


Filed under European Union, Politics, Scotland, UK

More lies from the Tory/LibDem coalition?

We are shortly to be treated to another fairy tale from the Chancellor. Alas the Autumn Statement is unlikely to presage any happy ending. Apart from the NHS, it seem that even further cuts are in store for the rest of public spending. All of this will be accompanied by the usual tale that “we” or more often “the country” cannot afford so much public spending.  This is a kind of ghost story designed solely to frighten the public. A very successful story, backed up by the Labour party and just about all of our media. Nevertheless it is all one big porky.

It’s really about taxation and not spending

The mantra that “the country” cannot afford to continue spending on whatever item is under threat is most obviously a lie in that virtually no-one who makes this claim actually wants the spending to stop. Which is rather strange, since this is what is usually meant when someone says he or she cannot afford something. I cannot afford to buy a Rolls Royce car, so I do not buy a Rolls Royce car. But when it comes to prescription charges for example, when Labour, the Tories and the LibDems all say “we” cannot afford this public expenditure, they are not advocating that people stop buying prescriptions. The money will still get spent.  But instead of coming out of general taxation, the same spending will come out of individual pockets. So it is pretty clear that “we” or whoever these people mean, can in fact afford this spending. The same applies to just about all public spending, such as tuition fees. The money will continue to be spent, so it is a bit of a lie to claim that “we” or “the country” cannot afford this spending.

What Labour and their cronies mean is that they want to reduce the level of taxes or to hold them at the current level. They advocate a switch from publicly funded spending to the same spending,  but by by individuals. Which is perfectly understandably from Tories and LibDems, as at bottom they both represent the well-off, the rich, the very rich and the obscenely rich. People who can afford to buy whatever they want and who would benefit most from reduced taxation. But it still feels a bit strange from Labour, which at least pretended to represent the poor and the less well-off. But then again just about everything from Labour is a bit strange these days.

The country can afford more and better public services

It is quite remarkable that we have reached this stage in our public debate where the starting point is can the country afford good public services. An incredible achievement for the Tories, ably abetted by their fellow travellers in Labour and the LibDems. It should not need emphasising, but the UK is a very, very rich state. One of the richest in the world. A state with a very large and growing number of millionaires and billionaires. Starting with a significant number of members of the cabinet. The cabinet as a whole is probably wealthy enough to pay off the national debt among themselves. Yet these people and the big companies, both British and multinational that dominate the UK economy seem to pay relatively little in taxes. Some in fact like to boast about how little they contribute to the welfare of their fellow citizens.

There should never have been a debate about the affordability of good quality public services. That this has become the dominant frame of reference is just another example of the monumental failure of the left in the UK. How this came about is not for this post, but it is worth noting that Labour may have once upon a time merited inclusion in the left, but that time has long since gone. Labour remains part of the problem and in no sense part of the solution. We just need to keep reminding people that Labour is part of the big lie.

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UK – Not OK!

The recent announcement that the UK economy has grown by 0.8% and has now reached its pre-recession level of output has been greeted with wild enthusiasm by the government and its supporters in the media. But this achievement, welcome though it is, simply confirms the incompetence of Westminster governments. Remember it was Labour under the dismal leadership of Gordon Brown and Alistair Darling which got us into this financial and economic mess in the first place. A crisis which George Osborne and Danny Alexander have mysteriously contrived to make even worse. Hailing 0.8% growth and six wasted years of lost output as some kind of economic master plan is to indulge in the Alice in Wonderland school of economics.

A brief look at the figures shows how poor this so-called achievement really is. First of all, this recovery is two years later than the Chancellor had originally expected. So on this measure this recovery is a failure. A failure by a whopping two years! Secondly, in previous recessions the economy did manage to recover after only two, three or four years. This is the longest period for a recovery since records began. Yet another Westminster failure! Thirdly most of the other large economies managed to come out of this recession earlier than the UK. Only Italy of our major competitors is still lagging behind. Coming second last is not much of a success. Sounds more like another failure to me.

The headline figure that the UK economy is finally back to where it was in 2008 is also very misleading. After all the population of the UK has grown substantially in this period. So, while overall GDP is slightly up on what it was when the recession hit, GDP per capita is not. GDP per capita is still in fact lower than its pre-recession peak. All this population growth has not translated into better economic performance. Another failure?

The per-capita measure of economic output and growth is of course the crucial one for understanding why even this watered down recovery has not meant much for living standards for most of the workforce. In short productivity growth in the UK is conspicuous by its absence. This has been another of the mysteries of this particular long running recession. Employment has recovered and more and more people of working age are gaining employment. But without a corresponding growth in productivity, there is no scope for a boost in earnings. Producing the same level of output with more people can only result in a decline in real wages. During the recession this can be a, relatively, good thing. The costs of the recession are more widely spread. However if this lack of productivity growth continues post-recession, we are in deep trouble. The average UK citizen will be 15-20% poorer forever. And this seems to be the case. Even the Office for Budget Responsibility, which is much lauded by the No campaign, is forecasting this permanent drop in living standards. For a fuller analysis of this problem of lost productivity growth, see this article by Simon Wren-Lewis on his blog, mainly macro. He sums up the issue thus;- “The absence of labour productivity growth is good in the short term, but is potentially disastrous in the long term. The problem is that the absence of growth in labour productivity since the recession is unprecedented: nothing like this has happened in living memory. The reason to be concerned is that the rapid growth in productivity required to catch up the ground already lost is also unprecedented for the UK, which is why most economists assume it will not happen. Which brings me to another puzzle.”

The other puzzle to which Wren-Lewis refers is the apparent lack of interest by the UK government in trying to find out why there has been such a long term absence of productivity growth in the economy. If the UK government has no idea of what has caused this absence, it equally has no idea of how to remedy it. The most disturbing aspect to all this is that it would appear that the UK government has no real interest in the long term prosperity of the UK economy. It is not as if Labour has any alternative vision. Low wages and insecurity for working people while at the same time allow the super rich to get even richer. This is the future that awaits us if we vote to stay in the UK. The UK is not OK and only a Yes vote in September will allow us in Scotland to work towards an alternative – a People’s Scotland.

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UK = Waste and Incompetence

More and more evidence is piling up on just how wasteful and economically incompetent the UK continues to be. Despite the almost frantic efforts of the No campaign to portray the UK as some safe haven, the facts continually contradict this rosy picture. I have posted before about one aspect of this incompetence, here, – the financial crisis that seem to strike the UK on an unerringly regular basis. But the incompetence and waste of our Westminster governments fare transcends the dismal science.

Wars of Occupation

The penchant of UK governments for wars of aggression are triply wasteful and very costly.  There is obviously the completely unnecessary loss of lives, whether British, allied, Iraqi or Afghani. Then there is the cost to us as taxpayers.  All these billions that went to secure a bit of worldly prestige for Tony Blair & Co, turned out to be a monumental waste of scarce resources. Resources that could have been put to better and more productive use. Finally these wars of invasion and occupation in muslim countries have done nothing to quash or even contain the rise of violent groups. Instead the continuing occupation of these countries has served as the best recruiting officer these groups have ever dreamed off. The UK remains a target for extremist groups because our governments have decided to invade and occupy other countries. Waste and incompetence on the grandest of scales! Wings Over Scotland has a typically robust look at some of the figures produced for what military operations since the end of the cold war has cost the UK in wasted money. £65 billion is the figures that emerges from a study by the Royal United Services Institute. You can read Wing’s post here.

Military Procurement

It is not as if the UK has a track record of wise investment and management of military hardware, nor military software. The Ministry of Defence continues to operate as though the words budget and value for money did not exist in the English language. The waste of money spent on Trident and its replacement is of course pretty well known. Billions spent on weapons that have never been used and almost certainly will never be used. They have never even worked as a deterrent, which is supposed to be their main purpose. Didn’t deter General Galtieri in the 1980s, nor Saddam Hussein later on. But Trident is merely the best known of a series of wasteful scandals emanating from the Ministry of Defence.

The latest in a long line is probably the scandal surrounding the two new aircraft carriers being built for the Royal Navy. At current estimates these two monsters are going to cost us over £7 billion! Despite this vast outlay they will not be fully usable until 2022 at the earliest. Which leaves the UK without even one fully functioning aircraft carrier for a decade or more. Just as well we do not face any imminent threats. Which of course in turn raises the question of why the UK needs any carriers at all.


Lest we delude ourselves that it is only the military that can waste our money, let us consider the latest folly to come out of Westminster – HS2. This is the project to build a high speed rail link between London and the North. Though of course the North as far as HS2 is concerned means the north of England. Even then, HS2 may never manage to get that far, as it is only planned to go to Birmingham and then Manchester initially. Scotland, needless to say features nowhere in the HS2 prospectus. Many analysts strongly doubt that HS2 will bring any benefits to the North, however defined. Any economic benefits are likely to go, yet again to London. And what will HS2 cost us all? A massive £80 billion! All of it from our taxes. Rarely has so much been taken from so many for the benefit of so few.

Why does this matter?

All this waste matters to us in Scotland, because we help to pay for all these unnecessary projects. Whether we like it or not. With independence we will no longer have to unwillingly subsidise Westminster’s wasteful follies. These and other savings will become our independence dividend. Money that we, who live in Scotland, will in future get to spend on our priorities.

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UK = Economic Incompetence

Falling-Off-The-ChartThe NO campaign and their tame allies in the media continue to try and assert that independence for Scotland is a risky business. It’s an uncertain world out there and it is far better to stay with the UK. Think of all the financial strength and security that comes with the UK. Well, indeed, let us do just that. For one thing that is certain is that no matter how far back one goes, the UK is pretty much synonymous with economic mismanagement. To avoid a lesson in ancient history, let us just focus on the post war period. The 1940s were of course years of austerity, though the effort to win the war was a major contributory factor in this. However it is also the case that despite some impressive social achievements, the Labour government did little if anything to improve the British economy. By the late 1950s, now under Tory rule, government unwillingness to undertake effective reforms in the economy led to continuing balance of trade problems and the rise of our old friend, boom and bust. The Labour governments of the 1960s, though aware of the need for change proved equally incapable of fundamentally changing the economic performance of the UK. This of course led to the infamous devaluation in 1967. Things did not improve in the 1970s, whether under Tory or Labour rule and culminated in the humiliation of asking for help from the IMF. Labour’s failures then ushered back in the Tories, but this time a more vengeful kind of Tory – the disastrous Thatcher years of the 1980s, with the almost final destruction of British industry and the ever upwards rise of the financiers in the City of London. The 1990s saw more Tory rule under John Major and even greater economic mismanagement with soaring interest rates and the humiliating expulsion of sterling from the ERM. The first decade of this century gave us the dubious benefits of New Labour with Tony Blair and Gordon Brown at the helm. They too proved unable to provide long term stability and competence to the UK economy. Instead they presided over the biggest financial collapse in our recent history. Pandering to the financiers in the City of London did nothing for the rest of us. Now we have a Tory led coalition with the LibDems and for this privilege we have to suffer through a seemingly unending period of austerity, with drastic cuts to our public services. At the same time as the rich continue to get richer. This in a nutshell is the Union dividend. The next time the NO campaign assert that independence is a bit of risk, remind them that staying with the UK carries the greater risk – we have the certainty of economic failure every decade or more. What could be more riskier than that! Time for Scotland to break free from the dead and incompetent hand of London rule.

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