Hunt's Autumn Statement - open thread

So - what do we think?   Does Hunt's Statement change anything?   Is the Tory goose so truly cooked, nothing can save it?   Has he succeeded in laying a trap for Labour?   Is he scorching the earth ahead of 2025, Gordon-Brown style?

Answers on a postcard ...

ND

Will anything happen with Hammond as Chancellor?

I am hearing that the new Chancellor is not planning to do much with the Autumn statement. Really as a new Government in fact, one would have expected quite chance of doing something radical to show a difference to Osborne's non-austerity austerity.


Instead, there is a huge problem with Heathrow where Theresa May is very exposed in her own constituency of Maidenhead, who are deeply anti-expansion. Yet Gatwick seems to be off the menu as BAA have been so successful with their lobbying for Heathrow or bust.


In terms of the economy, it desperately needs some change of tack from the low-rates, low-savings, low growth model created by the Cameroons.


The chance is to boost growth by raising infrastructure spend and relaxing planning laws further. Also to end the pensions triple lock which is denuding many areas of Government of any cash.


However we are likely to get further tax cuts for business, which have so little impact on business investment when personal taxes are so high (most business are privately owned, the personal tax always ends up being key for 99% of people).


Then there is the long overdue review of both public sector pensions provision and the personal tax code including NI. If not now, when?

Autumn Statement - not much to see - so...

Well the Chancellor made an Autumn statement and the gist of it is the economy is turning, but a bit late and not enough to really make up all the lost ground. A littel something was given on business rates which will no doubt ne welcomed by Quango Industries.

Of more insight for me is that Michael Sherwood, ACO (Arrogance Chief Office) of Vampie Squid International (Goldman Sachs) has delared that if the UK left the EU then Goldman's would re-locate its London Head Office to Paris or Frankfurt.

There is only one thing to know, Goldmans are ALWAYS talking their own book. If they are threatening to leave the UK if we do this, then clearly they have bet on the opposite outcome. Any one even vaguely familiar with the recent Goldmans' history - screwing Greece's public finances in cahoots with corrupt politicians, creating and shorting sub-prime mortgages, screwing Lehmans - can see that they are both ruthless and bold in their execution.

When the people in charge of the Squid have an idea to flog then they do so with calculated efficiency. So it is no accident that they say they 'fear' a UK referendum and potential exit. Also, as we all know, few people are going to leave London for Frankfurt or 75% tax rate Paris - its every unthinking Brusselphiles wet dream, but it did not happen with the creation of the Euro and won't happen again.

UK Infrastructure - Admission of failure by Omission

So with the Autumn statement now being heavily trailed in the media by the Government, we can see the shape of the current Government thinking. Little in the way of tax incentives to people and instead some more promises of tax cuts to business; and today a huge fanfare about increasing infrastructure spend.

Now call me a cynic, but Government are elected for 5 years so any claims about billions in spending 17 years from now are to be taken with a large pinch of salt. However, a real failure of the UK political system is the inability of Labour and Tories to agree on long-term infrastructure policies on the basis that they should also oppose one another.

Even today the marks can be seen in these announcements. What is missing is more telling than what is discussed. For example there is a small upgrade to Gatwick Airport railway station, but no runway for Gatwick; in fact no extra airport capacity at all.

Even on the railways there is limited support in the sens that HS2 will suck investment to it. Then there are a myriad of promises surrounding the single new nuclear plant - where are the other 6 we need?

Where are the gas fired plants we need to balance the base load against unreliable offshore wind and the closing of old coal stations?

Where are the new motorways we need to connect the fast growing population of the Country?

The Government has managed to persuade Insurance companies to put up £25 billion and this is to be welcomed. But the really big decisions, HS2 apart, are still being ducked, as they have political impacts which are unfavourable and will be exploited by the opposition. It's a great shame they can't ever seem to work together for the good of the Country.

Autumn Statement failure

Yes, the hallowed speech has not even been uttered yet and already things are a foot. Mr Osborne has a poor hand to play and as those of you who indulge in card games know, you can't bluff forever with a pair of 3's.

The markets are about to show the UK what reality looks like.

Today's statement is along the right lines, some minor cuts, some attempt to increase demand, but nothing too tricky as there is still no money left. However, this won't really do for the long-term. We are in a crisis; this should be an emergency budget with radical solutions, not tinkering. Not many chances left now before the IMF come and do it for us.

However, it is the lack of demand that is the big issue. There is no demand in the UK economy because nobody, no even rich people, feel they have any to spend. Corporates don't want to take the risk either. The fantasy of credit easing is just that, businesses that can make it can borrow, those whining are poor risks.

There is only one way to address the lack of demand and that is to give people back some money. So that means NO cuts to social welfare, much as this is needed in the medium term. Welfare money gets spent. It also means there is a need for big tax cuts of people and businesses to give them more money to spend. These tax cuts have to be paid for by some Government cutbacks that have the least effect on demand - so subsidies can go, foreign aid can go, the defence budget can take another hit and most importantly, the NHS can take a hit - notably pay for GP's which averages close to £140,000 a year, up from £70,000 in 2004. Thank you Mr Blair - I recall him saying ' it is right we make our doctors and nurses the highest paid in Europe.'

Of the taxes to cut, VAT is an easy one, but not very well targeted, capital allowances for business and R&D credits are better because you can only get them if you spend money. For personal taxes, reducing NI is surely a way to go when you cut NHS spending.

However, as stated at the beginning, none of this is going to happen. Airy fairy promises about infrastructure spend are going to be made and sadly, the markets are going sooner or later to wake up to the fact that the UK is in a worse financial hole than Italy or Spain. Our Gilts will collapse in value (massive shorting opportunity here, the price of Gilts is not going any higher) and yields close on 5% at least, maybe worse. The only way to avoid this will be the Bank of England buying up the market with more QE - but at what point does the world notice that we have bought all our own debt with printed money - where does the value of the pound go then. Way below parity with the dollar, and probably parity with a real hard currency like the Aussie dollar.