Wednesday, 25 May 2016

Is Project Fear really going too far ?

Here is Vote Remain's daily warning about the dangers of a UK exit of the European Union.
The Treasury would like to stress that only some of these predictions 'may' happen. And only some of them 'could' occur. 

Though if any were to materialise they would take place within 24 hours of a Brexit vote.

Tuesday, 24 May 2016

Deficit not coming down when the sun is shining - no wonder Brexit is off the menu for Osborne

A long time ago, a phrase was used by the Leader of the Opposition, it went along the lines of

"You did not fix the roof when the sun was shining."

And it rang true, because at the time the Labour Government was busy increasing state spending. In 2000, having followed Tory budgets for the first term in office, total UK Government spending was £341 billion.

United Kingdom Government Spending to GDP

By 2005 and the second Labour General Election win, Spending had reached £492 billion. A massive 31% increase in state spending in just a five year period. No wonder the Government won the election easily even with the unpopular Iraq war as a key issue.

At the 2010 election, £693 billion was being spent by the Government. More than double what has been spent 10 years earlier in a time of relatively low inflation. However, with GDP growth quite high as a result of the bubble Government spend had only gone up by 4% of GDP so not great but not terrible...except....

United Kingdom GDP

The real issue had come in 2007, with all new fangled benefits galore to hand out, social spending in the Financial Crisis combined with a horrific loss of tax income saw Government spending saw to 50% of GDP. An the deficit and national debt soared with no money to pay for the 'automatic stabilisers.'

So to 2016, the Tory Government has seen a return to GDP growth and cut Government spending back down to 43% of GDP. The real damage though is in the tax base. There has been no recovery of the fake boom Banking tax take. Nor are there any signs it is coming back.

In April 2016 corporate tax receipts are lower than a year ago despite a growing economy. The tax won't come back. And because of that the deficit remains very high by historical standards at 4.4% of GDP.

With little appetite for tax cuts the roof is not fixed, the next recession is pretty close being at most 3 years away and possibly sooner with Brexit, there is no chance of the deficit being fixed in time. The sun has been shining but he damage was too great is what Osborne will argue.

But this alone makes me wonder about a Corbyn Government. By 2019 plenty of people will have forgotten the 2007 mess and who was at fault or not. When the Tories look vulnerable on the economy they generally lose the election. I wonder if it will come to pass. 

Monday, 23 May 2016

Leadership Bid, or What?

I think we know what to make of this ...

I know you guys don't agree with me that Corbo is a resigner: but Mr M seems to be hedging his position on that, wouldn't you say?