2029 Is A Very Long Way Off
The Wheel's Are coming Off The Government's Policy Wagon... What Can We do About It?
When Tony Blair’s campaign song in 1997 was “Things can only get better.” It turned out that was a lie. This government wasn’t charismatic enough for a song. Had they picked an honest one (ha!) Burt Bacharach’s Three Wheels On My Wagon.
The Soviet Union was run under a series of five year plans. These were created by GOSPLAN (the central economic planning ministry), implemented by the various ministries and managed by the local communist party, supported by the KGB if necessary should there be strikes, “sabotage” or dissent. Generally the plans had targets that were seldom met. Wise apparatchiks negotiated changes to the plans or used exceptionally creative accounting methods to demonstrate achieving their part of the plan. They had a shot of joining the Nomenklatura and possibly even reaching the Politburo.
Foolish apparatchiks attempted to implement the changes needed to deliver the targets, almost inevitably exposing corruption and the failure of other apparatchiks. They risked ending up on management training courses in Siberian Gulags. Eventually the Soviet Union collapsed, largely as a result of the wholesale revelations of Gosplan's inadequacies under Gorbachev's Glasnost and Perestroika.
Those who don't learn history are destined to repeat it. Unfortunately the current leadership of the UK are demonstrating that a good Marxist prefers dogma over reality, thereby delivering failure. The current crew of Starmer, Reeves and McFadden had an economic plan for growth – the Reeves budget. It failed almost immediately and they've doubled down in the hope that the same policy produces a different outcome – Einstein’s definition of madness. Downing Street is becoming a lunatic asylum.
Rachel from customer service had a budget that destroyed the weak growth of the UK. (0.1% is not growth – I strongly suspect that the accuracy of the GDP calculation is somewhat less than that). Employment is down, inflation is up and so is the cost of government borrowing (bond yields, not the Bank of England's base rate). Today she has summoned investment bankers to exhort them to invest in the UK. Clearly the much feted investment summit in September (no surprise to readers of this blog) didn’t deliver. (The £600M sop she got from her trip to China won't cover the costs of giving the Chagos Islands to their client, Mauritius.)
The investment bankers will be saying that the UK is a far from an attractive place for them to invest in. I suspect they're only going for a bit of schadenfreude and a photo opportunity with the worst Chancellor in living memory. Of course, Rachel might threaten them with more legislation or tax penalties on non-UK investments. She'll then learn that money can leave the UK even faster than a non-dom millionaire. She may now have some plan to compel the UK’s private pension funds to invest more in the UK.
Wannabe-Chancellor and uber-brown-noser Torsten Bell has been tasked with pension “rationalisation.” That means appropriation, in a similar way that the Soviet Union's “liberation” of Hungary meant invasion and suppression with tanks. See also Hitler's ”joining” (Anschluss) the Sudetenland, which was done with Panzers, not diplomacy.
As Downing Steet’s inmates will find, free market capitalism relies heavily upon strong laws of property. Investors and trustees won't put their client's money where there is a risk of a 100% loss to government, or where they are compelled to invest in things they would not otherwise have done. (Remember, their fiduciary duty is to seek the best possible return for the funds they manage within acceptable risk constraints. If the risk/reward ratio is wrong they can't invest. Rachel from customer service should understand this, it's Banking 101.)
While Rachel gets briefed today, her master Two-Tier had a bruising encounter with military reality last week. The Army’s top brass explained some of their deficiencies and outlined what they need to even get close to credible or deployable. (£6 billion was the rumoured figure they sought). He got a second reality check when the European bit of NATO said that it was “premature” to be talking about putting troops on the ground. Of course, they were still reeling from President Trump ignoring them and JD Vance's reality check at Munich.
“Premature” is a wonderful euphemism. As I've pointed out before, NATO has nothing like enough troops at anything like the readiness required. If and when Presidents Trump and Putin agree the ceasefire line, which will take some time, NATO will still lack the troop numbers. The theoretical 30,000 Anglo-French force announced by Starmer is inadequate to achieve anything more than a headline. Starmer’s plan has already been rejected by President Putin and I very much doubt President Trump has bothered to read it. Surely our Prime Minister has better things to do (like finding a numerate and credible Chancellor).
To Marxist ex-human rights lawyer like our Prime Minister, reality is merely an inconvenient argument, so Two Tier grabbed some headlines this week by saying that the Brits would deploy anyway. The last two Labour wars ended badly and I'm not sanguine about the wannabe Stalin’s chances of doing better in Ukraine, whoever is running it. Well done Peacekeeping saves lives. If rules of engagement are unclear or peacekeeping troops are too weak you get Srebrenica massacres.
To compound its economic lunacy and military follies this government has resolved to antagonise the United States. They started this when they sought to assist the Democrat campaign and have continued in the same vein, presumably driven by ideology not logic. The United States is our major trading partner (no matter what the EU may pretend). It is the world's only superpower and, although we have forsaken our top tier military status, we still have string military connections. For example, BAe Systems is a significant partner in the F35 fighter programme, we share an arsenal of Trident missiles and are partners in the AUUKUS submarine programme.
We used to share values like free speech, capitalism and a belief in democracy. It's not just JD Vance who has noticed that parts of the EU and this benighted government have a problem with them. As he said, if you’re frightened of your electorate the US can't help you.
And why would they? In place of a professional diplomat (the usual choice) Two-Tier sent the mendacious, Trump hater Lord Mandelson as our man in Washington. Worse, on very sketchy and rather tainted legal advice, Lamy and Two-Tier intend to give the vital Islands to a Chinese client state, Mauritius. Astonishingly, they propose to pay them billions for that too. Where will that money come from – the defence budget?
I wish that was all, but of course most of the measures of the disastrous tax raising budget have yet to be adopted. Among other measures, the savage increases to National Insurance will only start in April. They're unlikely to boost employment. They will add to the public service payroll, thereby squeezing public services and the government’s already stressed budget.
The NI increases will put up costs, adding further to inflation, already increasing. Increased inflation means increased interest rates, which further supresses growth. Unsurprisingly, the Chancellor is out of money so more taxation is expected in April. That's even less likely to generate growth than the disastrous October budget.
A diminishing economy with an increasing tax burden and accelerating capital (financial and human) flight is simply not sustainable if it runs a deficit, as the UK does. Bond investors might cut an incoming government some slack, not least because it takes time for fiscal measures to make a difference. However the direction of travel of the UK's economy is now clear and it's not good.
Worse, the crew at the helm are bound to Marxist dogma that has never, ever delivered growth, peace or prosperity in the entire history of human society. To misquote Churchill, never before in the field of economics has a government of such limited ability had such a large majority and achieved such destruction of the country it supposedly leads in so little time.
It's a very long time until the next general election is due. Whether the UK will survive until 2029 under the current management is questionable. What happens if it doesn't is the stuff of nightmares.
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