The Office for National Statistics has posted this tweet this morning, which says all that needs to be known about the new GDP data, out this morning:
GDP is stagnant, again.
No wonder we have opinion polls like this, published yesterday:
Nor is it a surprise that we get a prediction for seats won like this:
If you are a neoliberal party - and the Tories are - then growth is your goal. That, and upward redistribution of wealth, is all there is to their politics at the end of the day. And they have failed to deliver.
And that is not just now. As the FT notes this morning:
Brexit has destroyed growth in the UK. If that is the aim, it has proved impossible to deliver post 2016.
The consequences are socially clear. As the same FT article notes, associated penal policies are having a big, negative, impact:
So, we face a crisis.
And we have a Labour Party that says that not changing anything is good (because what else does 'stability is change' mean?). And they have said all progress in public services is dependent on growth in which it is very obvious they will be refusing to invest.
The possibility that neoliberalism has run its course is not being discussed, but I think this election might be its last laugh. Next time, the alternative of another party offering yet more failure is not going to be viable or tenable. And there is no way that Labour can succeed based on its plans. The neoliberal show is out of road.
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“The possibility that neoliberalism has run its course is not being discussed,”
Possibility? It ran out of road in the 1990s – when the imbecilic nationalisation by the tories was already failing (Michael Grubb, chief economist Ofgem “power companies are sweating assets & not investing” – said to my face by the way). Or: catch a train… and die. Or PFI – aka Enron by government (the Japanese government were so amazed they commissioned my company to undertake a study – they could not understand what was going on).
Neo-libism has been failing for more than 30 years. It could never have suceeded since its basic premises were always utopian (markets etc). The UK has been living in a dream world for more than 45 years, time it woke up. Neo-libism could never suceed, give its basic premise – leaving the open question: when would people wake up to this reality – and reject the neo-lib zombies & their apologists.
Agreed
It is just taking the world a long time to catch up.
Excellent, trenchant summary of forty plus years of gross Government incompetence.
Let’s hope neoliberalism has run it’s course.
A few days ago to there was discussion about interest on reserve accounts. What I don’t recall seeing was how this indicates the transfer of wealth from poor to rich.
Reserves are (part of) people’s savings, they are what is deposited in banks. They were vastly increased by QE. Clearly they ended up in savings and have not been taxed away. Obviously they ended up in the accounts of people who didn’t need the money and didn’t need to borrow. That is, the “rich”.
That’s neoliberalism. In a crisis create money in a way that it ends up in rich people’s savings.
Tim, you are wrong.
Reserves are central bank created money.
They are not people’s savings.
If the money in the Central Bank Reserve Accounts was created by the Central Bank, how did NatWest acquire £73bn of it, Lloyds £72bn and differing amounts for other banks.
It must be a regulatory requirement and it must be linked to deposits made by customers of those banks.
See the comments just posted in reply to Tim Kent
No doubt you’re right. 🙂
Undoubtedly they are central bank created money.
Perhaps, when you get a free moment ( 😉 ) you might provide more explanation.
My thinking is that, whilst reserves cannot circulate in the economy (other than through conversation to cash), they must belong to someone, even if that is only the banks, and therefore the bank’s shareholders. Normally money created by the central bank circulates, is taxed, and therefore destroyed over time. The central reserves do not seem to be decreasing. From this I conclude they are savings.
If that logic is faulty please do correct me.
https://www.taxresearch.org.uk/Blog/2022/06/17/how-are-the-central-bank-reserve-accounts-created/
https://www.taxresearch.org.uk/Blog/2022/06/21/the-double-entry-behind-the-money-creation-in-the-central-bank-reserve-accounts/
“Central Bank Reserves Balances belong to banks; I (a saver) can’t have one. ……. the moment the Government spends it will sit in some bank’s CBRA… but will have bounced around between lots of peoples bank accounts as they spend it before it eventually ends up in a savers account who doesn’t. It’s a bit like pinball – the government spends money into the economy (ball comes in at the top); eventually it will end up in the hands of a saver who just keeps it ”
The central question is, when the Government spends, who exercises direction over where the ball first goes, how it begins to bounce around; who has first crack at how it is spent, and where it goes – and to whom?
May I ask for workings? A list of those doing the double entries?
https://www.taxresearch.org.uk/Blog/2022/06/21/the-double-entry-behind-the-money-creation-in-the-central-bank-reserve-accounts/
Central Bank Reserves Balances belong to banks; I (a saver) can’t have one. However, when I do make a deposit in my savings account at my bank, all other things being equal, the bank’s CBRA Balance will rise.
Indeed, the moment the Government spends it will sit in some bank’s CBRA… but will have bounced around between lots of peoples bank accounts as they spend it before it eventually ends up in a savers account who doesn’t. It’s a bit like pinball – the government spends money into the economy (ball comes in at the top); eventually it will end up in the hands of a saver who just keeps it (ball gets to the bottom). The trick is to have the ball bang around lots (transactions that promote economic activity) before it hits the bottom.
Pension tax relief cuts versus higher pay for low paid workers would virtually guarantee growth….. but is not on the agenda.
I love that bouncing ball analagy!
Not every central bank deals with this in exactly the same way; nor need they. The problem in Britain is, we too easily assume the BoE or government have the best (or only viable working) central bank reserves methodology; and direct the debate to fit that narrative. they don’t; and the BoE has a long, long history of bad decisions and bad ideas (for centuries smoothly disguised by Britain’s overarching economic success and monetary leadership).
This intellectual can of worms requires to be opened to more fresh air.
Agreed 🙂
If “the ball bang around lots (transactions that promote economic activity), then tax will be paid on many of the transactions, and the money that was created will be destroyed.
If the money is not being destroyed, then it
can be not banging around. Ergo it is savings.
So, as far as I can see, lots of the money that was created via QE, has ended up as savings, and is not banging around the economy as would be desired.
But what has that to do with the CBRAs?
Unless the saving is with the government the6 are unaffected.
I would have thought that the Global Financial Crash (GFC) in 2008 would have meant the end of neoliberalism.
But of the $5-trillion that went “missing”, the amount that was recovered was $0.
The number of people that went to prison: 1.
The outcome was another 14 years of Tory economics whatever caused the GFC, we weren’t doing hard enough.
And now we can expect the Labour version, which looks founded on Thatcher economics, and a public whose understanding of government economics is no better than that the politicians.
The only motive: the utter collapse of government services, and the complete privatisation of them.
Say goodbye to the free NHS, say hello to £5000 ambulance trips, £10,000 hospital treatments, £2,000 health insurance, and rivers continually being used for sewage.
Thank you and well said, Ian.
I was a bank lobbyist during the crisis, having started at the banking trade body in the spring of 2008, but already working on regulatory policy since 2007.
From 2009 onwards, Big Finance began to push for austerity, “fiscal consolidation” in their language, and blame government profligacy. 2008 was a crisis not be wasted. The next phase in neo-liberalism’s long running series of crises will provide further opportunity.
This morning’s Today programme featured some Labour politician, whose name I did not catch and Justin Webb egging him on, saying there’s no money for the NHS, so change will have to be structural, cultural and technological. Webb said how Streeting and Reform share views on the NHS.
Worrying
I missed that
Was it Darren Jones?
Mr Tresman: “and a public whose understanding of government economics”………is based on 45 years of grooming by the media telling them that:
a) gov economics is like a corner shop (hat tip corner shop owners daughter).
b) tax & spend.
I look at the people commenting on the blog expressing happiness at finally understanding how things really work. The are not even 0.000000001% of the population.
But the rest of the pop are not even bothered – Orwells 1984, Tressels Ragged Trousered etc profiles them well. This is not accidental – it is a function/feature of the system. It is designed to be that way.
Britain has a serious demographic crisis. With a fertility rate of around 1.5 births per woman, and a replacement rate of 2.1; we have a Conservative government operating a 2-child welfare cap; and both Brexit and a hostile anti-immigration policy.
This is not just bad policy, it is frankly half-witted. I would be grateful if some Conservative defender of both the 2-child welfare cap and the anti-immigration policy would explain how these policies could conceivably fix the problem.
It is noticeable that the Conservatives, who know only too well that these policies are plain daft (but fit the crackpot ideology) are also facing a population that, since covid are forsaking employment; and therefore Government has been reduced to trying to bully the unwilling to return to work, or National Service to produce a biddable collection of drones from the pool of young.
The Conservatives have sunk so low in pursuing self-interest, greed and profit to the exclusion of anything; it is a mystery to me how they can expect that after forty years of this grand national scam; they seem to believe they can just assume that large numbers of people will wish to serve, at personal sacrifice, a country that has treated them so badly.
Enormous weight is placed on whether GDP ticks up or down by 0.1 percentage point.
So what are the error bars in these economic measurements? There is no meter that they can be read off, so they have to estimated from observations or financial flows and prices and behaviour.
So what systematic and random errors might there be?
Does the ONS claim to be able to measure GDP every month to an accuracy of one part in a thousand, ie 0.1%?
And then growth compares two such measures so even if the error in one is only 0.1%, comparing two gives an error of approximately 0.2%
Anything less than that is likely to be statistical noise. Adding to political noise.