8 October 2019 – today’s press releases

  • Davey: Brexit would mortgage our children’s future
  • Jane Dodds Calls for Pledge to Maintain Last-in-Town Banks
  • Blame for the Brexit mess sits with the Tory Govt

Davey: Brexit would mortgage our children’s future

Following reports from the IFS that a no-deal Brexit will push UK debt to the highest levels since the 1960s, Lib Dem Shadow Chancellor Ed Davey said:

This new analysis is a body blow to Boris Johnson’s election spending plans – as it shows the cost of Brexit is much higher than thought.

Brexit would mortgage our children’s future, plunging Britain into the red and threatening years of new austerity.

There is simply no Brexit that is good for the economy. Any deal stitched together by Johnson would condemn the UK to economic slowdown.

Whilst Labour’s Brexit confusion presents no hope, the Liberal Democrats will stop Brexit and give Britain a Remain boost.

Jane Dodds Calls for Pledge to Maintain Last-in-Town Banks

Following Barclays Bank’s new announcement that they will keep all remote or ‘last-in-town’ branches open for at least the next two years, Jane Dodds MP is calling for other banks to pledge to do the same.

Barclays commitment applies to branches in Brecon and Builth Wells and is part of a wider measure of moves being taken by the bank to try to ensure people in rural or isolated areas can continue to access banking facilities.

Other parts of the announcement include a commitment to exploring shared bank branches to restore services to communities, a scheme to allow customers to get cashback from local retailers without having to make a purchase and continued access to services through Post Office facilities.

Commenting on this announcement Jane Dodds, Member of Parliament for Brecon and Radnorshire, said:

I welcome Barclays latest announcement, which represents a big win for our area. I hope this marks a turning point in the fight to save our local banking services.

We know how vital access to banking is, especially in rural areas, so I am glad that facilities in Brecon and Builth are now protected for the next few years. But the fight is not yet won, and we cannot be complacent.

I will be writing to other banks to ask them to pledge to maintain their last branches in our communities, as well as explore ways to work together to restore services to places which have lost their local bank branches.

Blame for the Brexit mess sits with the Tory Govt

Responding to reports of Angela Merkel’s reaction to the PM’s proposed Brexit deal, Liberal Democrat Shadow Foreign Secretary, Chuka Umunna said:

It is obvious that Boris Johnson’s Conservatives are trying to shift the blame for their own arrogant refusal to negotiate or suggest workable options.

It is clear for all to see that the Conservatives have made a total mess of Brexit and Boris Johnson is intent on pushing the UK closer to a catastrophic no-deal Brexit.

The blame for this mess does not lie with Merkel. It lies on the shoulders of the Conservatives.

Liberal Democrats are clear that the best deal for the UK is the one we have now, inside the EU. That is why we will keep fighting to stop Brexit.

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  • Never fear when it comes to keeping Tories in power there isn’t a magic money tree their is a magic money tree forest. Of cause after gaining power the magic forest will disappear and grinding austerity will start again. This time I doubt the OAP’s will be exempted. The Tories know however that the magic money tree forest will reappear just before the next election and some voters are O so gullible as they are offered more free sweets of the magic trees or at least the prospect of sweets.

  • The Lib Dem’s can exploit this by arguing for a cash windfall if we stay in the EU. Pensions up, NHS spending up, tax cuts, more spending on police and education, etc. We can have our own magic money tree and it will be hard for the Tories and Labour to counter it.

  • Peter Martin 9th Oct '19 - 9:20am

    “Brexit would mortgage our children’s future, plunging Britain into the red and threatening years of new austerity…..”

    This is more nonsense economics. It’s possible that Brexit could make us worse off, we don’t know for sure just yet. But let’s suppose the GDP did indeed fall by 10% taking us back to where we were 20 or so years ago. Did we suffer from more or less austerity then we do now? I think we’d all agree it was less. If the economy is doing well, and possibly overheating, then that’s when we need a measure of austerity to cool it down and prevent inflation – not when we are in a slump.

    The threat to all our economic wellbeing is much more related to misguided neoliberal notions that somehow exist in the minds of our politicians than membership, or otherwise, of the EU

  • John Marriott 9th Oct '19 - 9:35am

    No, the blame for Brexit rests with ALL of us, on the remain side from a mixture of hubris and neglect of those of our citizens who have been the worst casualties of globalisation and on the leave side for allowing their optimism to blind them to the difficulty of the task. And then we have those two excellent products of Eton College, Messrs Cameron and Johnson, the former who thought up the wheeze of a referendum to save his party and the latter who played the system for the sake of personal ambition.

  • @Peter Martin – This is more nonsense economics. It’s possible that Brexit could make us worse off, we don’t know for sure just yet. But let’s suppose the GDP did indeed fall by 10% taking us back to where we were 20 or so years ago. Did we suffer from more or less austerity then we do now?

    Clearly not thinking again Peter…
    20+ years back we had a much smaller population, so per captia GDP was very similar, if not higher to what it is today…
    Also today government expenditure on welfare and pensions is much higher (per capita) today.
    Remember there is no need for other countries to use the GBP – they don’t need it for to buy oil, minerals etc. etc. so in today’s world the government is going to have a much harder time financing the imports the country needs (eg. 51% of our food supply, the majority of our energy/fuel…), as for exports – well we can expect countries to use the UK’s total lack of trade agreements and WTO tariff card to their advantage…

    I think Peter you need to explore the implications of your statement: “It’s possible that Brexit could make us worse off, we don’t know for sure just yet.” Currently it seems you don’t wish to explore just what it will mean if Brexit does make us worse off.

    Remember these last three years have demonstrated just how cr*p the UK have been at negotiating “the easiest deal in history”; those trade deals won’t be so easy, especially the one with the EU if the UK leaves without a deal…

  • Shaun Young 9th Oct '19 - 11:35am

    @Peter Martin 20 years ago, the countries finanances were somewhat different:

    In 1999/00 National Debt stood at around £339.5bn 31.5% of GDP, there was an £11.4bn surplus approx 1.1% of GDP, the following year 2000/01 debt was £307.6bn 27.5% of GDP, there was also another £15.7bn surplus approx 1.4% of GDP Source: HoC Library Briefing Paper Number 05745 25 September 2019 by Matthew Keep – So my maths suggest a fall of 10% of GDP on the current defict currently running at £1.8tn 85% of GDP with current borrowing at £42bn 2% of GDP IS significant. We would also see our current debt interest patment of approx £50bn p.a. increase as a proportion of GDP.

    Also, given the debate around Social Care the increase in those who were in work back then, who would now be retired and requiring additional help is also a significant factor. Something which @Roland picked up on.

    Even a ‘hit’ of 5% to GDP would I believe see a need for further freezes or cuts to Public Expenditure, not billions in additional spending that this current Govt. appears to have suddenly found! :-/

  • William Fowler 9th Oct '19 - 12:04pm

    George Osborne warned of the need for an emergency budget to cut spending to match falling revenue resultant from Brexit (then Cameron was talking about an immediate Art 50), so none of this is new news… yet people still voted to leave the EU! Boris is neutering Labour’s attack points with his targeted increased spending but if they get a decent majority in the next GE and there is a no deal exit then you can expect some serious spending restructuring (the increases will still happen but be clawed back from other areas). A leaned out UK with Singapore levels of tax (especially no tax on income earned abroad to get those exports humming) will work quite nicely for the majority, at the cost of sixty hour weeks for the unskilled.

  • @ Shaun Young “Even a ‘hit’ of 5% to GDP would I believe see a need for further freezes or cuts to Public Expenditure”.

    @ Shaun Young ” Even a ‘hit’ of 5% to GDP would I believe see a need for further freezes or cuts to Public Expenditure”. A need ?

    Here we go again. Another proposed dose of Orange Book austerity. Don’t you think we need to concentrate more on the inequality and exploitation in our society (which played a powerful part in the alienation fuelling the Brexit referendum result) instead of succumbing to more pre-Keynesian Tory economics ?

    It’s time Lib Dems took their blinkers off about inequality in 2019 Britain. I stand with Beveridge who in his 1942 report,said, “The object of government in peace and war is not the rulers or of races, but of the happiness of the common man”.

    It’s time for Lib Dems to stop superior tinkering round the edges and to take a good hard look at what has happened to this country in the last forty years. It’s not just about ancient persons being nostalgic it’s about vast numbers of people in places like Stoke and Hartlepool who are pretty p..sed off with the state of things.

    We have a society where, “in 2020 18% of children live will live in absolute poverty, where two thirds of families living in poverty are in work and where nearly one million people work zero hours contracts”. (The Joseph Rowntree foundation).

    Yet it hardly ever gets mentioned on LDV and the then DWP spokesperson couldn’t even bother turn up for a Commons debate on Universal Credit. Get the blinkers off.

  • Peter Martin 9th Oct '19 - 12:32pm

    @ Shaun Young, @ Roland

    “Even a ‘hit’ of 5% to GDP would I believe see a need for further freezes or cuts to Public Expenditure”

    You’re both seem to have difficulty getting away from the idea that the Government is just like a household. Albeit much bigger. The household receives less income therefore it has to cut back to “live within its means”, “cut its clothes according to its cloth”, “not max out on its credit card ” etc. I’m sure I don’t need to give you other examples of neoliberal propaganda.

    The Government is in charge of the economy. It’s not infinite and you’re right to point out that the elderly, the young, carers, parents and the sick do need our support. The people available to provide that support are finite in number too. The trick is to fine tune the macroeconomic policies of the Govt to maximise the productive capability of the economy without their being too much inflation. That’s all there is to it.

    Whenever a there’s a war that’s what we do instinctively. There’s no real mystery to getting it right.

  • @Peter Martin – I see once again you avoid the issue of the UK being able to buy USD and EUR to pay for the essentials of life in the UK. Perhaps you are proposing that the UK adopts either the USD or EUR and starts printing…

    Peter, I prefer to inhabit the real-world and not the over simplified world of GCSE/O-level economic texts.

  • Peter Martin 9th Oct '19 - 3:58pm

    @ Roland,

    If we sell something into America we have to accept that we’ll get paid in US$. That’s what customers have there in their bank accounts. Similarly if an American company or individual sells into the UK they’ll accept they get paid in £. That’s what we have, if we’re lucky :-), in our bank accounts.

    In practice no-one really cares what the currency is. If they can use a calculator its easy enough to swap between one and the other. Paypal does it automatically whenever we make a transaction. Trade is sort of a barter. We can only buy from overseas if we sell overseas. And, conversely, we can only sell overseas if we also buy overseas. Buying from overseas will tend to push the pound down. When we sell overseas the pound will rise. The pound floats to bring exports and imports into closer balance. Having said that there are capital movements too which tend to ensure that the two don’t usually equal each other.

    We should worry about inflation but not the value of the pound. If the economy is well managed that will take care of itself.

    However there will be a rough balance. The current account deficit is usually less than 5% of GDP and was less than 4% last quarter. It works the same for everyone. We can only expect countries to buy our stuff if we buy theirs. And vice versa of course.

  • Nom de Plume 9th Oct '19 - 4:33pm

    Re-“new austerity”. There is another route which a highly indebted, or anti-business, country could go down: high inflation, devalued currency, economic contraction, unemployment, generally, increased poverty. Venezuela or Greece in a worst case. I would suggest it would be this second option which Ed would prefer to avoid. I am not a fan of either austerity or economic crises.

  • @Peter Martin – Still reciting from the school textbooks…

  • Peter Martin 10th Oct '19 - 8:47am

    @ Roland,

    It probably should be in school text books! It doesn’t seem to be in the text books that Ed Davey read.

    During the 30s the UK National Debt, as a ratio to GDP, was typically 170% or approx twice what it is now. Efforts at reducing it with increased austerity proved counter productive. It only fell as the economy improved due to increased Govt spending, in preparation for the war effort, in the late 30s -in part because increased revenue came back as a result and also in part because the GDP increased. As the effects of the war kicked in the “improvement” couldn’t be maintained but nevertheless the economy was naturally going at full capacity.

    It was the lessons learned from that experience that formed the basis of the post war Keynesian economy. Ed Davey needs to relearn them.

  • @David Raw: I’m not proposing more austerity, I was just pointing out our ‘finances’ were in a better place 20 years ago. That, any downward revisions to our GDP growth will have serious implications. At times like these, it always falls on those at the bottom who can least afford it. So far we have heard ‘ideas’ mooted like raising the 20% IT threshold to £80,000. Borrowing for tax cuts when we are already wallowing in debt, and the basic cost of living increases are still nowhere near where we were before 2008/9 is not going to benefit anyone ‘just getting by’.

    I don’t profess to know the way forward, but there are millions who have heard the mantra ‘We are all in this together……’ then suddenly ‘Austerity is over….’ but if there is fall-out from any form of deal/no deal it won’t be those who are comfortably at the top of the pile who will suffer the consequences. In fact, their get out clause I can already hear; ‘We did what you asked, don’t blame us…..’

  • Peter Martin 10th Oct '19 - 12:01pm

    @ Shaun Young,

    You say you don’t want more austerity but then you obviously disagree with the idea of “borrowing for tax cuts when we are already wallowing in debt”. Maybe we could spend more instead but we’d still be “wallowing”. That’s a very strange word to use about a currency issuing government!

    Emotive terms like “wallowing in debt” are both nonsensical and are totally missing the point. If you, and everyone else (including our overseas trading partners), spends all of their income then it will inevitably end up back with the government in taxation as it is taxed and retaxed in one transaction after another. ie There will be no govt deficit. On the other hand if everyone saves a bit by, for example, buying some government bonds or savings certificates then the government does have a deficit and a debt to the holders of the bonds.

    So which is better for the economy? Lots of spending, no saving and no deficits; or less spending, more savings and some deficits?

  • Shaun Young 10th Oct '19 - 1:19pm

    @Peter Martin: As I said I don’t profess to know – As for saving/buying Govt. bonds, what is the point for most people who are living at their means? You have savings rates at 1 – 1.5% with inflation stripped out, the savings mean nothing. Yes the Govt. can at the moment ‘borrow’ at historical lows – 10yr Govt Gilt currently at 0.48%, but for a saver again with ‘inflation’ taken into account who wants to see their hard earned money stripped of any value?

    I’m not an economist, and I apologise for being ‘nonsensical’ I’ll just leave it here, it’s no surprise that I rarely post an opinion and try to expand my knowledge………

  • Malcolm Todd 10th Oct '19 - 4:45pm

    Peter Martin
    I’m afraid your constant references to the national debt as people “buying some government bonds or savings certificates” is almost as misleading as the old Osborne “maxed-out credit card” and other “household” analogies that you descry.
    Private households – which is what your homely description naturally refers to – own only 5% of government debt and can hardly be considered an important factor:

  • Peter Martin 10th Oct '19 - 6:11pm

    @ Malcolm Todd,

    It doesn’t matter whether it’s private households who are doing the saving or the German Bundesbank. Or anyone else for that matter.

    The Government’s net debt is equal to everyone else’s net assets. It has to be.

    Another way to look at it is to accept that all financial assets are balanced by financial liabilities. Everything sums to zero. So if I have financial assets of, say, £1000, then everyone else, in total, has a financial liability of -£1000.

  • Malcolm Todd 10th Oct '19 - 8:05pm

    It may not matter (though actually it sort of does); but you choose every time to present the national debt as a sort of mom & pop’s savings account, and that’s profoundly misleading. I’m well aware that it all sums to zero, thanks.

  • Peter Martin 10th Oct '19 - 8:17pm

    @ Malcolm Todd,

    There are probably quite a lot of Moms and Pops at the Bundesbank. And there certainly are if we consider that the Bundesbank holds the bonds on behalf of lots of other Moms and Pops in Germany.

    It really doesn’t matter to whom the bonds are sold. Not even ‘sort of’. They are put up for sale by public auction. The ‘misleading’ comes about when the neoliberals, for their own nefarious reasons, portray Govt borrowing in the same way as the borrowing you and I might undertake. We have to go off to the bank and ask nicely. The government very very rarely has to go to the IMF to borrow in the same way. But that’s what they want us to think.

  • Malcolm Todd 10th Oct '19 - 10:17pm

    Peter Martin

    You don’t need to do your MMT 101 with me every time. I’m not disputing any of that. But economic life isn’t quite as simple as you like to portray it and you’re just as guilty of eliding differences to make your case seem stronger. Hence:
    10th Oct ’19 – 12:01pm: “if everyone saves a bit by, for example, buying some government bonds or savings certificates then the government does have a deficit and a debt” and repeated references to “savings” – which you know perfectly well people will interpret as “good thing, like when I have savings in my bank or indeed national savings certificates”.
    But in your last comment, that’s become simply “bonds [that] are put up for sale by public auction” – which is not how ordinary households save, and is not how national savings certificates are sold. (They’re sold at the post office, at pre-set rates of interest, to people who want to “save” their money in the boring old ordinary sense of the word.)
    Crucially, you like to suggest that if people want to save by buying national savings and premium bonds then there’s absolutely nothing the government can do about it without abolishing those saving mechanisms. This is true but utterly trivial, because those sorts of savings are a tiny fraction of government debt. The decision to sell bonds – to the Bundesbank or whoever – is absolutely in the hands of the government, as you well know.

  • @Peter Martin – Yes, whilst it is helpful at times to e reminded of the perfect world of the text books, it is important to understand where they differ from the real world. For example:

    If we sell something into America we have to accept that we’ll get paid in US$. That’s what customers have there in their bank accounts. Similarly if an American company or individual sells into the UK they’ll accept they get paid in £.
    Having been involved in imports and exports since the 1980’s, I can assure you that this is incorrect.
    Whilst I will happily accept payment in USD/Eur/Yen and do the currency conversion at my leisure, for others the price on the invoice is typically in GPB and they pay whatever the prevailing exchange rate is on the day payment is taken from their account.
    When purchasing stuff, I will be buying in USD/Eur/GBP etc. however where ever the price isn’t given in GBP, the price I pay (in GBP) will be whatever the prevailing rate is at the time of the currency transaction.
    So in that payment chain is a bank/agency who are prepared to carry the exchange risk and accept my GBP and payout USD for example. Given the UK buys oil predominantly in USD, it needs to find a way of getting hold of USD’s at a reasonable GBP price…

  • Peter Martin 11th Oct '19 - 4:00pm

    @ Malcolm Todd,

    I can’t quite see where the difficulty lies. If anyone, a Mom or a Pop, or any organsation like the Budesbank or the Central Bank of the PR China, has spare ££ then they can save them. If the Government doesn’t provide a means for them to save they’d just have to keep wodges of BoE notes in a safe. In theory, the Government could then create the same amount of new money and spend it without causing inflation. It would have the same net effect as borrowing it bank at ultra low interest rates as they do now.

    The are some in the MMT fraternity who would fix interest rates at zero as a matter of principle. I wouldn’t go that far. I can’t see any objection to paying 1% especially when the Govt has an inflation target of 2%. It helps keep track of where those ££ are. Its better that having lots of paper money in unknown locations.

    @ Roland,

    ” it needs to find a way of getting hold of USD’s at a reasonable GBP price”

    OK then just make sure the UK economy is running as well as it reasonably can and is being as productive as it can, without allowing inflation to get out of hand, then that’s what will happen naturally. Rightly or wrongly (I think rightly) the decision was made years ago to allow the £ to float. Even, so we, in the UK, always tend to look at any fall in the £s value as a failure of policy and any rise as a success.

    The Germans take a different view. They like having a currency which is cheaper than the markets would determine. That boosts their exports and restricts their imports.

  • @Peter Martin – “The Germans take a different view. They like having a currency which is cheaper than the markets would determine. That boosts their exports and restricts their imports.”
    And there in lies the problem!

    Reasoning: Whilst working on the Supervisory board of a French company and thus had to come to terms with the general thrust of French business law and practise, I came across practises that made admirable sense, but weren’t being used in the UK.
    I decided that the reason why the UK didn’t adopt them was because of the stupid English mindset that there was nothing the Europeans could teach us (the superior English) about business…
    So expect post-Brexit, Westminster to continue to do daft things, like another dose of austerity combined with no effective import or migration controls…

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