Tagged with Balance of Payments

It’s the country’s deficit not the government’s that matters – devalue to re-industrialise

Save our steelThe imminent crisis in what is still laughingly called the British steel industry is being greeted just as other similar developments have been for decades – with consternation and anger, with concern for the implications for social cohesion in general and for workers’ families in particular, but with no recognition that this is just the latest episode in what is now a depressingly long saga.

As one British industry after another has either passed into foreign ownership or closed down, or – as in the case of the steel industry – both, very few recognise that this is not just a one-off but is part of the long and not so slow de-industrialisation of Britain. Continue reading →

Memo to Jeremy & John: it’s the country’s deficit that matters, not the government’s

Corbynomics1A major factor in Jeremy Corbyn’s appeal to voters in the recent leadership election – and potentially to the wider electorate as well – was his brave assertion that austerity was the wrong response to recession and was doing absolutely avoidable damage to both economic performance and social cohesion.

That assertion not only gave fresh hope to millions dispirited at being told that “there is no alternative” but also opened up a long-overdue debate that brings the Labour party within touching distance of a newly emerging economic policy consensus and that could be of great value both to the party and to the country’s economic fortunes.

All the more surprising then that both Corbyn and his Shadow Chancellor, John McDonnell, are still apparently in thrall to a key element in neo-classical orthodoxy. They have found it necessary to commit to reducing “the deficit” and to producing a budget surplus by 2019. Continue reading →

Northern Powerhouse – The gap between reality and rhetoric

REDCAR NORTHERN POWWERCUTThere is no better illustration of the gap between the rhetoric and reality than the Government’s failure to support our steel industry.

The UK steel industry is in crisis. While George Osborne was in Shanghai this week selling the UK energy sector to the Chinese Government, steel production on Teesside could come to an end after 160 years. One of the main reasons cited for the steel crisis is the action of China dumping excess steel onto international markets. Eurofer – the organisation that represents European steel producers, stated

Chinese import pressure and unfair trade practices are certainly the root causes underlying the pressures that steel plants, such as Redcar, are facing. China now sells its excess steel to the EU at prices that do not even cover the costs for raw materials and material transformation.”

Continue reading →

Carney’s rose-spectacled survey of the economy as Parliament returns does not convince

Mark Carney, Governor of the Bank of EnglandThe UK economy’s ticking over fine: that’s the view of Carney, Osborne’s man. So that’s alright then. Or is it? With time-honoured spin we were treated to the most optimistic scenario on every count, with the flip-side downturn kept carefully out of sight. His central message was that “there is no clear evidence of deflationary mindset among UK households”, bankers’ jargon for households continue to borrow to buy what they can’t afford. That matters because the government’s entire economic strategy now hangs on consumer borrowing. That is very worrying if interest rates rise, which the City is constantly lobbying for, because the hundreds of thousands of households mortgaged to the hilt will be forced to cut their spending and the government’s reliance on consumer borrowing as the main driver of demand will collapse. That could be the start of the next crash. Continue reading →

Too left wing? Corbyn concedes too much on public spending – trade deficit matters more


Corbyn on redHow Left wing is Jeremy Corbyn? If anything, argues Bryan Gould, Corbyn’s economic platform concedes too much on the government deficit – it is the balance of payments deficit which should be our main focus

As the warnings about a Corbyn leadership become more and more hysterical, we need to ask – just how left-wing is Jeremy Corbyn? His critics may not like him much, and may doubt his appeal to the wider electorate, but there seems little in the policy stance he has adopted to warrant such extreme alarm.

The fears voiced by his critics seem to depend for substance entirely on the critics themselves. Their warnings are likely to become self-fulfilling prophecies if we do not pause for a moment to examine what Corbyn and his supporters are actually saying. Writing in the Guardian, his ally, John McDonnell – presumably speaking with the authority of his leader – quite reasonably set out the substance of a Corbyn economic policy. So, how irresponsible and terrifying is it? Continue reading →