The prime minister seems to be trying to smother Keynes's 'animal spirits'
Starmer’s negativity is all the more puzzling because, viewed objectively, the state of both the UK economy and our public finances is not too bad If you want an economy to grow faster you loosen fiscal and monetary policies. That means lower taxes and/or higher public spending, and lower interest rates.Keir Starmer seems to be trying to do the opposite.
With the consumer price index at 2.2 per cent, the UK’s inflation figure is actually the lowest in the G7 at the moment, though that may not last. Earlier this month the Office for National Statistics revised its estimate But for what it is worth, the latest estimate of the UK deficit by the Economist Intelligence Unit is 4.1 per cent of GDP. That’s higher than Germany and Canada, but lower than the US, Japan, France and Italy.In short, the UK position isn’t brilliant and we do very much need faster growth, but we are in no worse a state than other advanced nations. Though Germany has a stronger fiscal position, it is stuck with zero growth.
And it will be paid by the wealthy and the relatively old. Leave aside the politics there – that these are two groups that tended not to vote Labour – and think about what these groups of people might do. If, for instance, someone has a gain – say, some stock they own has risen, or they have increased the value of their property – and they don’t want to see it taxed more heavily, they may simply sit on the asset in the hope that a different government will come along in five years’ time and reduce capital gains tax again before they sell it. And some will simply grumble, pay up, and run down their savings.
(Incidentally, during some negotiations with the union, the management disclosed that the number of editorial staff who had company cars was greater than the number of journalists onOther devices included charging the company for parties held at home for contacts – a couple of my colleagues on the paper were notorious for that – and of course using the taxi account to fund other spending.
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