The UK Autumn Budget Statement – More Neoliberal Nonsense!

The Autumn statement would not be so bad if it was economically coherent, with the spending and taxing plans agreeable, or otherwise, according to one’s political opinion. However, it does not make any sense. Not only does it not “add up”, it is inconsistent with all the principles of arithmetic.

The right wing Tory MP John Redwood makes the point :

“In total the new estimates show us paying an extra £105 billion in tax over the five years”

George Osborne says:

” we will reach a surplus of £10.1 billion in 2019/20″

Note: it’s not just “about £10 billion” its  “£10.1 billion”. We’ve all got to admire just how precise George and his Treasury economists can be about these five year forecasts! As if !

There’s no chance of this happening with the UK running a ~ £90 billion deficit in its external deficit due to trade and other international payments.  It would mean that the UK economy would have to find ~ £100 billion every year to pay the import bill and also provide the government with its £10 billion surplus.

This, presumably, is close enough to John Redwood’s ” extra £105 billion in tax”?

George Osborne says that  “Britain will be out of the red and into the black” which is completely untrue. These figures mean the British economy will be in the red to the extent of ~£100 billion to pay for the Govt being ~£10 billion in the black,  and Britain’s overseas trading partners being ~£90 billion in the black.

It can’t possibly happen that way,  unless somehow the trade deficit can be turned into a trade surplus, and that aspect is totally ignored in George Osborne’s grand plan. The UK economy could not sustain a net loss of £100 billion even for one year – never mind on an annual basis. George Osborne will only send the economy into a downward spiral trying to achieve the impossible. An economy in a depressed state will also deliver depressed levels of taxation revenue.

In a couple of years time, the excuse for the plan failing , as it inevitably will , is likely to be that even though the Government has kept spending under control, taxation revenues will have not come in as expected. This will be attributed to: Problems in the eurozone, problems with world trade, problems with loss of revenue from North Sea oil, a new war in the Middle East maybe?

In other words, the same kind of ‘excuses’ as were put forward after the last similar plan failed, in the years following the Tory win in 2010, except the Govt could blame the Lib Dems then! If the Government cared to look for a reason, rather than an excuse, they would explain that their deficit has to be the sum of what everyone else saves. They don’t have direct control of that.

There’s a saying , usually incorrectly attributed to Einstein, about doing the same thing over and over but expecting different results, being a sign of madness.  Are the Tories mad, though, or just plain bad?

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8 responses to “The UK Autumn Budget Statement – More Neoliberal Nonsense!

  1. Yes, the Tories are bad for sure (and so are the Labour party people), but a more accurate description is that they’re just plain ignorant!

    As Mark Twain so famously observed: It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so!

  2. They’re just bad (and the OBR must be in on the scam too).

  3. Arise, Sir Robert! 🙂

  4. “Problems with world trade”
    See my comment over at 3spoken….More than just problems, it’s cratering.

  5. Thanks for this post. In your consideration of sectoral balances, surely you leave out the possibility of growth being sustained (once again) by a rise in the rate of growth of private sector debt. If the current account stays in deficit to the tune of 4-5%, then the only way for the government’s deficit to move into surplus and for growth to continue at a reasonable pace is for the private sector to borrow at a higher rate. This will reverse at some point, leading to a new crisis and recession. So the planned austerity could mean that growth slows either in the next few years, or after that, in the absence of a dramatic improvement in the current account. Sluggish global growth would seem to make the latter difficult at the moment.

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