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| UK public sector spend - Source: OBR |
Now to put some of the arguments within cabinet into perspective, 1% of GDP is about £22bn a year. So before rebates and tax-collection adjustments,this is what we will save by leaving the EU*. If we wanted to, say, increase total government expenditure from 39.3% of GDP to 42.5% of GDP (a fairly modest increase) this would give us an additional £70bn a year (plus £10bn EU leaving bonus) for investment. So even £100bn over 20 years - £5bn a year - for HS2 isn't such a big thing.
Of course this additional borrowing means we have to pay interest - but rates at the moment are close to zero. And investment borrowing - to up the nation's game, increase capacity, productivity and so on - also produces additional tax income and lower current expenditure on welfare. This is why it's particularly vital to invest in those parts of the UK that have been so long deprived of it, ever since the Callaghan Labour government started closing the pits and running down British industry in the 1970s.
Number 10 knows this. The Treasury doesn't. And Sajid Javid went native. He had to go.
* Yes it is. This is from the EU's own website from 2015 - I just had it on file - when the 1% figure was £20bn. After rebates and tax-offsets of course it comes down to £12/£13bn.
24 comments:
"Making a virtue of necessity" I think that it's called.
Javid was George Osborne's man; having claimed to be an EU-sceptic and expected to choose Leave, he unexpectedly backed Remain. So he either put career before principles or he was lying about his EU-scepticism (like Hammond). Either way, having chosen Remain, he was at the very least complicit in the Treasury's Project Fear campaign. I'm glad he's gone.
All Boris (Cummings) has done is reactivated the Prime Minister's role as First Lord of the Treasury and made it clear that the Chancellor and his Treasury SpAds were not going to operate separately policy from the Government's. Javid obviously didn't accept that, Sunak has.
Mind you, squandering £106 billion+ of the savings we will make from our EU membership on HS2 is STILL beyond idiotic.
Had to go?
Is that why the whip spent quite some time trying to pressure him to stay? Followed by a one-on-one with Al pleading with him the same?
Come on.
He saw it for what it is.
As I said of Javid a few posts back "His smile never quite reaches his eyes, does it?"
Remember?
Nothing worthwhile is achieved easily and there is nothing more worthwhile than untangling ourselves from the nightmare of the EU.
I think of it as the ending (hopefully!) of another 100 years war. This began on August 4th 1914 and we have sacrificed millions of lives, trillions of pounds and Cliff knows what else by being entangled in Europe's mess.
(Please troll, don't even waste your breath with "dreams of empire". That's almost as tedious as "waycism").
Had we stayed out, Germany would very likely have won. Would that be worse than the world we actually have?
The political class very likely are feeling scared and isolated. They live in a different world, a world of clubs and cliques and globohomo oversight.
They might come round but they can be replaced (not easily or quickly).
I'm still in two minds about Boris. I think he's a lot smarter and more astute than his public persona and he might realise that there is a large body of pro-British opinion that would genuinely follow a truly pro-British government.
The EU political cracks are getting wider by the day as the economic straightjacket of the Euro gets tighter and tighter.
It's going to be truly horrendous.
Mr CrEUsote springs to mind!
Just a small point Mark.
If the Germans had spoken English, then which side do you think this country would have taken?
Javid's mates at BoE told us last year that the global economy will be down in 2020 (rather more so now) and that the UK will be propped up by consumer spending and government spending. So keep buying facials, haircuts and new wallpaper and train sets.
Forbes has a good article on our change of chancellor, a telling quote from Dominic last week:- 'see half of you next week'. And so it came to pass.
Any fool can prop up the economy with spending, what counts is investment. But in what, that is the big question and the EU and everyone else has the same problem. Many are called but few are chosen, let us hope Boris gets lucky and not bankrupt. Still, young Sunak has no need to worry, he's minted.
Yes, minted and a PPE graduate.
"but rates at the moment are close to zero"
Good luck with that kind of approach.
CoV looks likely to be severely detrimental to manufacturing output before too long and what happens to interest rates after that is anyone's guess..
"As I said of Javid a few posts back "His smile never quite reaches his eyes, does it?"
Difficult decision when there's two faces to chose from.
Actually our EU contribution after the rebate is eur 21.4bn. The EU present this data in an intentionally misleading way so you need to add the eur 3199.9bn “traditional own resources” figure to the headline eur 18,209.4, which is the sum of all the other items. It does not come down to gbp 12/13 bn. after rebates and tax offsets as you state.
Just my own opinion but when trade replaced war as a way of doing business political blocs like the one we've just left should have gone the way of the dodo. They go against the grain, pushing people in directions they don't necessarily want to go and that's the true of message of centralising power. As Gorbachev observed some years ago Brussels is slowly Sovietising Europe. The EU is a flock flightless birds living on an island with no natural predator. What could possibly go wrong?
Steve
DeeDee99 @ 08:12 :
“Mind you, squandering £106 billion+ of the savings we will make from our EU membership on HS2 is STILL beyond idiotic”
I agree completely but at least it is over 20 years and BJ’s/the Conservative Party’s election victory has saved us from Caroline Lucas (Green Party) who wants to spend £100bn each year over the next 10 years on the decarbonisation of the UK (BBC R4 “Week in Westminster” 08/02/2020.
Although I don’t know how Caroline Lucas can even attempt to calculate a figure when her party believes in open door immigration and consequently would have no idea of the size of the population.
What has that got to do with anything?
If we are going to invest heavily in anything, it should be reliable power stations. Replacing imported gas with nuclear would save a great deal of money.
I think that in 20 years, the most prosperous countries will be the ones with the most nuclear power stations.
Don Cox
Don, that would France then (over half the Europe total of nuclear power stations is in France.
I agree re HS@, despite the cost ove rtime we know that cost will probably double. Plus is is TOTALLY a non necessity.
JPM 10:09, many did support them anyway.
Mark 11:51 presumably answering JPM 10:22. "Yes, minted and a PPE graduate."
The PPE thing is that he is educated as a clone like far too many of our politicians. Sunak does handle himself well though and is very good against the bais MSM. I agree Javid went native.
@ Don Cox
Not sure about that. The cost of decommissioning those things is very high indeed and sorting the soil takes ages. Up front one in Germany is about 850 million Euro to clear the site. We're still working on Dounrae - and Fukushima, well the sky is the limit with that one - plus it desertified hundreds of sq Kms downwind, destroying towns with all the personal issues that entails.
Chernobyl ain't going to be sorted in our lifetime, though they've now discovered some organism that thrives on radiation
At around £1bn for a 1GW gas-powered station we could build a LOT of them where they are needed and fuel them with low-cost, low CO2, frcked gas for the £106bn HS2 is likely to cost (at an absolute minimum) which would also return a PROFIT to the end user and have 'zero' disposal costs.
Energy costs could be lowered benefiting all of us and boosting the economy.
But only if you get rid of the moronic idea that CO2 is a threat to the planet.
Why is this idea NOT promoted?
@Dave-G
What do you mean by "low CO2" gas ? Burning Methane releases less CO2 than burning coal, but it still releases a great deal.
Increasing the concentration of CO2 in the air will result in a slow increase in temperature, relative to what it would be without the extra CO2. That's basic physics. This could be a good thing if a little (or large) ice age is imminent, but there's no sign of this. Under present conditions, it's a problem.
The other problem is that an increase in CO2 makes the oceans more acid.
We don't need to panic or use the problem as an excuse for urging a world-wide revolution and dictatorship, but we do need to either cut back very sharply on our releases of CO2, or to build many big plants to extract CO2 from the air and lock it up in chalk or limestone.
Don Cox
Don,
"Increasing the concentration of CO2 in the air will result in a slow increase in temperature"
Historically on geological time scales CO2 increase has lagged behind temperature rise. Even if rise of CO2 concentration does increase global temperature the energy absorption at around 15nm is already at near saturation, even doubling to 800ppm is unlikely to cause a further degree Kelvin rise. In the mid 19th century CO2 level was 200ppm and declining. Had this trend not reversed a mass extinction would occur at around 150ppm when C3 photosynthesis (used by much plantlife including major crops) would cease. Most plant life evolved at ten times that level or more, which is why market gardeners pump large quantities of CO2 into glasshouses up to 4000ppm to increase growth.
" if a little (or large) ice age is imminent, but there's no sign of this" There is a growing body of scientific opinion that the current solar minimum together with Milankovitch cycles will cause us to enter a low temperature period. Cycling temperature through the Holocene has been periodic and regular, we are 10,000 years through the current warm period which is very near their maximum length. We are possibly teetering on the edge of a cold period, possibly a glaciation.
In a thousand years, if mankind is still around, they will be harnessing vast power plants (fusion?) to extract CO2 from minerals to maintain life as temperatures fall together with CO2 levels.
Looks like the new points based visa scheme is coming along just in time for hordes of Chinese railway men to build HS2 in 5 years. And cheap, cheap so no need to borrow so much!
Can't see Blue Wall workers competing on wages. Still, they can always set up restaurants to feed the hordes.
Project Fear
https://www.independent.co.uk/news/uk/home-news/brexit-eu-airport-queue-immigration-brexiteer-amsterdam-airport-schiphol-a9335281.html
nothing to do with Brexit Anon.
Good to see that Norton bikes is doing well thanks to Brexit
https://www.leicestermercury.co.uk/news/business/norton-motorcycles-boss-stuart-garner-1963413
So it's ok to discard the commitments (balanced budget etc.) in the Tory manifesto. What about the will of the people?
Just like those lies on the side of a red bus.
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