1 December 2019 – the weekend’s press releases (part 2)

  • Jo Swinson: Boris Johnson is running scared of scrutiny
  • Lib Dems: Tory no deal Brexit would increase national debt by £220 billion
  • Lib Dems: Johnson’s comments show that he despises the poor and vulnerable in our society
  • Swinson outperforms Johnson cheerleaders
  • Farage, Trump and Johnson singing from same misogynistic hymn sheet

Jo Swinson: Boris Johnson is running scared of scrutiny

Responding to Boris Johnson’s interview with Andrew Marr, Leader of the Liberal Democrats, Jo Swinson, said:

Given Boris Johnson’s dismal performance this morning on Marr it is no wonder he is running scared of Andrew Neil and refusing to be held to account in debates.

Today Boris Johnson showed he had no plan for our NHS, no plan for social care and no plan on Brexit.

Boris Johnson cannot be trusted as Prime Minister. His bad Brexit deal would leave us poorer and with less influence in the world.

Only the Liberal Democrats will Stop Brexit and build a brighter future.

Lib Dems: Tory no deal Brexit would increase national debt by £220 billion

Crashing out of the EU would cause the national debt to rise by over £220 billion over the next five years, analysis of figures published by the Institute for Fiscal Studies have revealed.

The Brexit black hole would be equivalent to an extra £8,000 of debt per household and would be equivalent to this year’s government budget for Health, Social Care, Schools and Local Government combined. It would be also larger than the entire annual GDP of Finland.

Despite claiming on Andrew Marr that a Conservative Government wouldn’t rack up national debt, the analysis shows that that if Boris Johnson goes through with his Brexit plan and ends up crashing the UK out of the EU in December 2020, the resulting economic hit would make national debt £221 billion larger than under Liberal Democrat economic plans. Managing the extra burden would risk yet more public services being cut to get debt under control.

Boris Johnson has said that if he wins a majority, he will seek a Free Trade Agreement with the EU but will not extend the deadline for securing a deal past December 2020. The Institute for Government has described the certainty around securing a deal within this time-frame as “zero”.

The Liberal Democrats, on the other hand, would stop Brexit and keep debt falling. The IFS has said of the Liberal Democrats that “they are now the only major party committed to reducing the national debt as a fraction of national income, a goal now abandoned by both Labour and the Conservatives.”

Commenting, Liberal Democrat Deputy Leader and Shadow Chancellor Ed Davey said:

If Boris Johnson gets his way and crashes us out of the EU without a deal at the end of 2020, he will create a tidal wave of debt that would jeopardise funding for our schools, hospitals and vital public services. The £221 billion Brexit black hole in the budget would be equivalent to £8,000 of debt for every household in the UK.

It was already clear that Boris Johnson’s Brexit deal was yet another con, but these figures show what is ultimately at stake. Only a vote for the Liberal Democrats can stop Boris Johnson, stop Brexit and allow us to invest the £50 billion Remain Bonus in our public services.

Lib Dems: Johnson’s comments show that he despises the poor and vulnerable in our society

Commenting on Boris Johnson’s 2005 comments about the poorest and most vulnerable in our society, Liberal Democrat Shadow Equalities Spokesperson, Christine Jardine, said:

The mask has slipped once again, showing that Boris Johnson despises the poor and vulnerable in our society.

Time and again Johnson has made prejudiced and offensive remarks about those less privileged than him to further his own political career.

These comments show he is simpy not fit to be the Prime Minister of our great country.

Only the Liberal Democrats have a plan to support the most vulnerable in our society by stopping Brexit and building a brighter future.

Swinson outperforms Johnson cheerleaders

Reacting after tonights ITV debate Deputy Leader Liberal Democrats Ed Davey said:

Tonight Jo Swinson clearly outperformed all the other candidates, especially Boris Johnson’s personal cheerleader Nigel Farage.

While the usual stand-ins turned up and parroted tired old lines, she made the positive case for why the Liberal Democrats will build a brighter future in the EU.

It’s clear now that the only way to take seats off the Tories, deny Johnson a majority and stop Brexit is to vote Liberal Democrat.

Farage, Trump and Johnson singing from same misogynistic hymn sheet

Responding to Nigel Farage’s comments defending Donald Trump on tonight’s ITV Debate, Liberal Democrat Shadow Home Secretary Christine Jardine said:

Nigel Farage’s attempt to justify Trump’s disgusting comments was as shocking as Rishi Sunak’s failure to condemn them. It’s clear that Farage, Johnson, Trump are not only allies, they are all singing from the same misogynistic hymn sheet.

The only way to stand up for liberal values, stop Boris and stop Brexit at this election is to vote Liberal Democrat.

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  • Peter Martin 2nd Dec '19 - 6:42pm

    “…..no deal Brexit would increase national debt by £220 billion”

    So what?

    The National Debt is the amount of money that everyone has deposited in the UK bank. Anyone buying gilts is simply making a bank deposit.

    Whenever has a bank been worried that its customers were wanting to lend it too much money?

  • Joseph Bourke 3rd Dec '19 - 12:18am

    The Niesr has published a number of authoritative election briefings https://www.niesr.ac.uk/sites/default/files/publications/NIESR%20Election%20Briefing%20-%20Where%20is%20the%20money%20coming%20from.pdf

    The fiscal outlook under different parties’ plans
    • The additional spending measures in the Conservative Party manifesto are limited, amounting to an extra £2.9 billion in day-to-day spending and £8.1 billion in capital spending in 2023-24. This would be sufficient to raise Total Managed Expenditure to 39.9 per cent of GDP in 2023-24, almost exactly equal to its post-war average of 39.7 per cent.
    • The additional spending measures in the Labour Party manifesto are substantial, amounting to an extra £82.9 billion in day-to-day spending and £55 billion in capital spending in 2023-24. This would be sufficient to raise Total Managed Expenditure to 44.9 per cent of GDP in 2023-24, around 5 percentage points above its post-war average of 39.7 per cent.
    • The additional spending measures in the Liberal Democrat manifesto are also substantial, amounting to an extra £62.9 billion in day-to-day spending and £26 billion in capital spending in 2023-24.
    This would be sufficient to raise Total Managed Expenditure to 43.0 per cent of GDP in
    2023-24, over 3 percentage points above its post-war average of 39.7 per cent.
    “The Conservative plans involve a continued tight grip on public spending, with spending as a share of GDP continuing at a lower level than throughout the past ten years. Given the ageing of the population, we doubt that these plans ease austerity sufficiently to meet demands for public service provision. At the other end of the
    scale, Labour Party plans for spending are unusually high but not unprecedented. TME as a share of GDP was higher in 1975-77 and 2009-12. However, on both previous occasions, emergency action was taken to reduce public spending from what was deemed as an undesirably high level.
    “While the main political parties have sharply different plans for public spending, they all agree that additional day-to-day spending should be financed by additional taxes and other revenue, while additional capital investment can be financed by borrowing.”

  • nvelope2003 3rd Dec '19 - 11:31am

    Peter Martin: You have to pay interest on debt. It might not always be very low in the future. People were driven out of business when interest rates rose to very high levels in the past. Some people keep their savings earning very low interest on which they pay tax and borrow money at very high rates. I am always surprised at how supposedly intelligent people with well paid jobs do this but having read your postings I guess I should have known better.

  • Peter Martin 3rd Dec '19 - 12:52pm

    @ Ian Sanderson,

    The problem most of us have with the so called National Debt is to think of it as a debt to be repaid. Anyone, including our overseas trading partners, can choose what they want to do with their ££. They can spend them on goods and services or they can save them. Either in a piggy bank or safe or they can buy some gilts or whatever to collect some interest. These are essentially the only two options. You might say they can change them into gold or a different currency but this is just transferring the decision to another party.

    If they save them, and the big net exporters are also the big savers, they are adding to the National Debt but at the same time they are deflating the economy. The Govt has to spend the same money instead to keep it going. That’s why there is nearly always a deficit.

    @ nvelope2003,

    I agree that there’s no point in saving at 1% and borrowing at 5%. But that’s not the issue. Look, interest rates are low because the Govt wants them to be low. Short term rates are set by the a decision of the monetary committee of the BoE. Long term rates are set by the activities of the BoE as a player in the bond markets. The Govt is in complete control.

    One piece of economic orthodoxy I do agree with is that floating currencies should be allowed to float freely. So Govts no longer worry overmuch about the exchange rate. Mrs Thatcher let the pound fall to $1.05 (I think) in 1985. Previously the Labour Govt had struggled to keep it at $2.00 That was a big mistake! Thatcher was right! That’s not a sentence I use very often 🙂

  • Joseph Bourke 3rd Dec '19 - 2:30pm

    The Niesr has also published its views on fiscal rules https://www.niesr.ac.uk/sites/default/files/publications/NIESR%20Election%20Briefing%20-%20The%20Fiscal%20Rules.pdf
    • The level of public debt needs to be managed in such a way as to allow the government to deal with any anticipated expenditure needs as they arise, such as those following the Great Financial Crisis in 2007-8, but also to leave the government with sufficient, what is called, fiscal space to deal with future shocks.
    • There are a number of key considerations when assessing whether the level of debt is
    problematic: its size relative to national income, the maturity of the debt and whether it is pays a fixed interest rate (conventional) or one linked to inflation (index-linked).
    • A good debt management strategy would involve retaining space to issue more debt if
    required, having a long term maturity structure so that not too much debt has to be refinanced in any one year, and issuing a mix of conventional and index-linked debt so that the fiscal position neither encourages inflationary finance nor imposes too much of a burden on the Exchequer from an inflation shock. Those entities holding the debt will wish to receive interest payment in order to match their liabilities and so public debt can help offset private sector payment risk.
    • There is no widely accepted definition of an appropriate level of national debt and if it was agreed it would change in response to fundamentals such as requirements for public infrastructure, state-funded education, demographic considerations, the state’s revenue raising capability and the current and prospect costs of public debt finance.

    This earlier publication https://www.niesr.ac.uk/blog/three-facts-about-debt-and-deficits shows that investment in public infrastructure was, on average, equal to 4.3% of GDP in the period from 1948 through 1983. It has since fallen to 1.6% of GDP. There is a strong case to be made for increasing investment in public infrastructure. First, the public capital that was constructed in the post WWII period must be maintained in order to allow the private sector to function effectively. Second, there is a strong case for the construction of new public infrastructure to promote and facilitate future private sector growth.

  • There are problems with increasing day to day spending and capital investment. Gordon Brown based his spending on ever increasing govn revenue, proudly proclaiming that he had stopped the boom-bust cycle just before it all went pop! Increasing govn spending at a time when a business cycle downturn is ever increasingly likely and the country already has a massive national debt is a very silly thing to do, IMO. And a rapid increase in capital spending will cause massive inefficiencies in the system, including wage inflation as skilled trades rush into more lucrative govn jobs. And another million “government” jobs from Corbyn will massively increase fixed costs down the line when the next crash comes.

    Much better to have capital spending taken out of day to day govn spending rather than it later being taken out of tax payer’s pockets via, for instance, increased rail prices to pay for HS2 et al. This also reflects the total contempt that users of govn and council money apply to their jobs, working with dismal efficiency and often deliberately doing a poor job.

  • Peter is a believer in the magic money tree, where you can make as much money as you like. The one problem is he can’t answer the question “what happens when the world no longer believe’s the money you make has any value”, because he can’t answer that question he runs away from it, but if we tried his solution we would soon be faced with the question and running away isn’t an option. Reality gets delusionist at every turn, tis sad but true.

  • nvelope2003 3rd Dec '19 - 5:56pm

    The problem with an ever growing economy, rather than a redistribution of wealth, is that we are using up the world’s resources and possibly creating climate changes which could make life unbearable in parts of the world and create the conditions for mass migrations and terrible wars.
    Government interventions in the economy are motivated by the wish for electoral success rather than a real need for some projects, whilst things that people need like a decent education, improved public transport or a good Health Service are normally side lined in favour of eye catching things like HS2 which might put money in the pockets of the contractors but do little to provide jobs as they require the skilled labour we are so short of which will have to come from elsewhere.
    I had to go to London on the day of the SW Railway strike and was afraid the roads would be very busy but only the express bus was full, the roads were quiet and the journey time was better than normal.

  • Peter Martin 4th Dec '19 - 12:00pm

    Anyone who uses the phrase “magic money tree”, with any degree of sincerity, doesn’t understand the workings of the monetary system.

    It’s an observable fact that nearly all money is created in a computer these days. There’s no need for orchards or even printing presses.

  • Peter Martin 4th Dec '19 - 12:22pm

    @ Joe,

    You say:

    “A good debt management strategy would involve retaining space to issue more debt if required, having a long term maturity structure so that not too much debt……….”

    OK, but then you go on to say:

    “There is no widely accepted definition of an appropriate level of national debt ”

    So how can you know what “not too much debt” actually means? You can’t.

    This is where conventional economists fail to make any sense. There is also no sense in their view that if the BoE simply creates ££, these ££ don’t count as debt. BUT if the Treasury issues gilts it does. So, according to the conventional theory, if the BoE indulged in enough QE to buy it all back there wouldn’t be any National Debt! Go figure that one.

    It really doesn’t matter that much whether the government issues ££ which carry no interest of gilts which carry some tiny amount of interest. They are both just different forms of government IOU. If, at some time in the future, interest rates were to rise, which they can only do if government wants them to, then it may matter. But at the moment, with ultra low rates, it doesn’t.

    The sensible, logical and easy to understand, view is that increased government spending which may or may not involve the issuing of more debt , will both stimulate the economy and add to the inflation risk. The is no “widely accepted definition of an appropriate level” because there can’t be. It all depends on what is happening generally in the economy. In theory, even a balanced budget can be inflationary. Equally, a govt deficit can, if it isn’t large enough, be contractionary.

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