Tag Archives: fiscal policy

In my last piece, I outlined the expected consequences of a depreciating pound and that a looser fiscal response was the only feasible short-term policy response that would be available to deal with the massive macroeconomic shocks that are likely to ensue (an uncoordinated) NO DEAL Brexit.

Three and a half questions follow:

• What is the Boris math for the litany of fiscal promises issuing since his “inauguration”?
• Are these spending promises feasible & credible in terms of the macro-fiscal context the UK will face in a NO DEAL scenario?
• What should our response as LibDems be to unpick if not defenestrate the Tory Wafflenomics in the run-up to October 31^st? The half-question I leave for another occasion, what should be our policy response to deal with the after-effects from November 1 should a No Deal actually take place.

Math on Boris’ Fiscal Promises and projected values

(…mind you we’re just a few weeks in..)

• 20,000 new police officers: £1bn (one-off)
• Rise in 40% tax threshold from £50k to £80k: £10bn
• National Insurance contributions at higher trigger: £11bn
• Schools: reversing cuts in Education envelope: £5bn
• Health: Unclear but: 20 New hospitals £1.8bn + wooing female voters £2bn + ??promised £350m per week: £3.8bn – £20bn
• social care: £10bn
• new railway Manchester – Leeds: £2.1 – £3.6bn depending on sources, assume £3bn
• Help to farmers: £0.5bn (but is this just for the Welsh lamb?)
• No-Deal Planning: £2.1bn (let’s assume £100m no-deal advertising part of this budget line)
• Unbudgeted thus far: other sectors e.g. Fisheries, medicines, food shortages, …you get the picture…cost of increased policing…

Totting these figures gives £42bn excluding the £350m/week which alone would imply a further £18bn…and per year if the red bus promise is to be kept strictly. Large numbers in absolute terms (a billion has nine zeros) but not in relative terms as the UK economy is £2 trn in value (a trillion has 12 zeros), meaning that £42bn equates to around 2% of GDP or 5% of the current budget and therefore chunky but not a huge fiscal expansion…of itself..