Remoaners Willing Tax Cut Budget To Fail Will Be Disappointed

Ben Habib writes for Heaver News.

I tweeted this yesterday as mainstream media and the Twitter world got into a frenzy over last week’s seismic mini-budget and Sterling’s ‘collapse’:

“The desire to see £ fall is almost palpable from those who wish the UK to fail. It must be annoying for them to see £ recover this morning.”

“The point of an independent currency is for it to act as a shock absorber.

“Growth in the economy with a weaker £ will boost exports and FDI (foreign direct investment).”

Predictably the #FBPE lot went ballistic. In the joy they derive by bashing the country, they pointed to Sterling’s apparent inexorable march south against the US Dollar. I was in fact only referring to Sterling’s morning weakness and subsequent recovery.  

Here is a fuller exposition on the subject:

The reason Sterling and the Euro have fallen so much against the US Dollar in recent months is because the US is aggressively increasing interest rates AND its economy is not exposed like we are to the shock of rising fuel costs. The US is energy independent. The UK and the EU cannot keep up. As ever, the US is performing ahead of us on this side of the pond.

The biggest spending commitment announced last week was the cap on fuel prices. Its cost is potentially £150 billion. The markets did not bat an eyelid when that was announced earlier in the week. Why? It chimed with Treasury orthodoxy of borrow and spend.

On the other hand, the cost to the Exchequer of the tax cuts announced last week is modest by comparison. Moreover, these mostly do not come into effect until next April. There is very little immediate impact. The markets have overreacted to the mini-budget. Tax cuts, of course, are loathed by the intellectual elite. They do not trust the people to manage their own money.

The real mistake HMG made was locking us down in 2020. The second mistake it made was not borrowing more than required while the magic money tree of Quantitative Easing was bearing fruit and being harvested by the USA, EU, Japan and ourselves in 2020/21. You can only print and borrow money when all major economies are doing so. The cost of lockdowns was £500 billion, all of it was borrowed and all of it financed by a Bank of England that is anything but independent.

The question they did not contemplate back then was: if it cost £500 billion to lock up the economy, why would it cost any less to open it up again?

Our national debt is just over £2.1 trillion or just about 100% of GDP - eye watering. BUT £900 billion of that is owned by the Bank of England. The UK’s real net debt is around £1.3 trillion or 60/65% of GDP. Not unhealthy. Even now we have the fiscal headroom to cut taxes.

The budget last week included things the government needs to do to get growth back into the economy.

The ONLY way out of debt and collectively to improve our lot is to grow the economy. Austerity has never and will never work. Those who call for funded tax cuts are basically suggesting the beneficial effects to the economy of reduced taxes should be neutered by austerity.

That may have delighted the #FBPE lot but these policies were thankfully not for their doomster enjoyment.