The Budget

[rec]

https://www.ft.com/content/cf416e3a-cf9 ... 1a884dd8c6
Reasons for optimism

[ArmChairCivvy]

RIP UK defense. The def sec must be preparing his wood chipper for our assets as we speak.

That's Brexit for you though, isn't it? Entirely predictable. Before Brexit was allowed by Cameron to rear its head the economy was doing OK and hence there would have been more tax income for defence. But now the inevitable is all too visibly happening. Sterling down to $1.30ish and probably further to go, EMA off to Amsterdam (hence our pharmaceutical industry - one of the few really world-class sectors of UK enterprise - will slowly fade away), ditto the European banking regulators to Paris with real implications for the London financial sector. UK car industry starting to look very worried judging from their Select Committee appearance the other day. And that's just the start before anything has really changed re trade terms etc.

I honestly seriously think we'll be lucky to have half the defence budget that we currently have in a few years' time - there just won't be any money to spare. The average voter won't be prepared to see benefits or the NHS or education or eg policing cut any further. Where else is the money to come from?

For all his faults, it wasn't that "Cameron allowed it to rear its head"....a majority of the voting age public were unhappy with the UK's relationship with the EU, so much so that a majority of them voted to leave it altogether. It was festering and needed to be dealt with...the longer it was ignored the greater the risk of further disenfranchising voters, further loss of trust in the "establishment" and continuing to fuel the likes of UKIP. It couldn't be swept under the carpet much longer.....

Do you believe that? Was it not a cavalier risk-taking move, to pre-empt a palace coup within his own party?
- talk about betting the ranch!

[ArmChairCivvy]

https://www.ft.com/content/cf416e3a-cf9 ... 1a884dd8c6
Reasons for optimism

What does it say (pay wall wasn't v informative)?

[Caribbean]

I think the relevant part of the article is
"The UK Budget set out total defence spending of £49bn, up 6.5 per cent year on year, as well as adding £1bn increase to next year’s capital budget, according to Jefferies analysis."

[ArmChairCivvy]

adding £1bn increase to next year’s capital budget

Thanks, that is significant (or call it "bridging").
- £9.2 committed to F-35 (to 2023/25?)
- say £ 5 bn 2015-2023; $ 1.50 down to 1.35 (so $ up)... plugs that gap... sure not all going out in one year, but a lot of other stuff (20% of the total Capex) coming in with $ price tags

[SKB]

[dmereifield]

RIP UK defense. The def sec must be preparing his wood chipper for our assets as we speak.

That's Brexit for you though, isn't it? Entirely predictable. Before Brexit was allowed by Cameron to rear its head the economy was doing OK and hence there would have been more tax income for defence. But now the inevitable is all too visibly happening. Sterling down to $1.30ish and probably further to go, EMA off to Amsterdam (hence our pharmaceutical industry - one of the few really world-class sectors of UK enterprise - will slowly fade away), ditto the European banking regulators to Paris with real implications for the London financial sector. UK car industry starting to look very worried judging from their Select Committee appearance the other day. And that's just the start before anything has really changed re trade terms etc.

I honestly seriously think we'll be lucky to have half the defence budget that we currently have in a few years' time - there just won't be any money to spare. The average voter won't be prepared to see benefits or the NHS or education or eg policing cut any further. Where else is the money to come from?

For all his faults, it wasn't that "Cameron allowed it to rear its head"....a majority of the voting age public were unhappy with the UK's relationship with the EU, so much so that a majority of them voted to leave it altogether. It was festering and needed to be dealt with...the longer it was ignored the greater the risk of further disenfranchising voters, further loss of trust in the "establishment" and continuing to fuel the likes of UKIP. It couldn't be swept under the carpet much longer.....

Do you believe that? Was it not a cavalier risk-taking move, to pre-empt a palace coup within his own party?
- talk about betting the ranch!

Yes, it was coming to a head and he thought he could win it, and nearly did. He thought it was best to try to lence the boil and was aware that it would have been even more challenging to win the referendum had he delayed it. Lots of things in the pipeline which the UK public wouldn't approve of - increased (absolute) budget contributions, continuing high levels of immigration, increased EU coordination on defence (aka the EU "army") etc etc....

[ArmChairCivvy]

True, but as a consequence it is not only Defence that is crumbling.

[dmereifield]

True, but as a consequence it is not only Defence that is crumbling.

That's a political decision, again. The economy continues to grow and unemployment continues to decrease. Things will improve once we have agreed a new trading relationship. I expect it will be a 2 year transition and will end with a CETA style FTA with a few minor add ons. Until the negotiations have concluded economic growth will be subdued, but will continue to expand at a moderate pace nonetheless

[ArmChairCivvy]

The economy continues to grow and unemployment continues to decrease

The economy continues to grow at a rate that is a quarter slower than otherwise. Unemployment increases, but the economic gurus say that productivity will improve (in the more competitive sectors people will stay in jobs, and hence the output divided by days put in will be of more value... Russian Revolution produced 2- and 3 digit growth rates by getting everything close to zero, first, as a base from which to calculate.
- it is that kind of goodness that will provide less £££/ $$$ towards defence, because %-calculations do not help to pay the way

[dmereifield]

Yes, admittedly growth is slower than it would have been. But, that is distinctly different than the recession we were promised, the 500k job losses, the crash to the stock market and housing prices, drying up of foreign investment, an exodus of EU workers, the "punishment" budget etc etc predicted by Remainers and the so-called independent organisations and international statesmen(women)....the only major thing they got right was the drop in the value of the £.
On the whole, most people will not be feeling any material effect of reduced rate of growth...

[albedo]

But, that is distinctly different than the recession we were promised, the 500k job losses, the crash to the stock market and housing prices, drying up of foreign investment, an exodus of EU workers, the "punishment" budget etc etc predicted by Remainers and the so-called independent organisations and international statesmen(women)....

Why do people keep spinning this line? To the best of my recollection, the sky was only ever going to fall in (in a big way that is) post-Brexit and not simply post-referendum. Tell me if I've got this wrong, but I thought that Brexit was not going to happen for another 18 months. That's when things will start to go seriously downhill, not right now when there's still something of a phoney war feel to everything. (Of course if there's a transition period of 2-3 years which largely maintains the status quo then the decline may continue to get strung out over a longer period.)

[dmereifield]

But, that is distinctly different than the recession we were promised, the 500k job losses, the crash to the stock market and housing prices, drying up of foreign investment, an exodus of EU workers, the "punishment" budget etc etc predicted by Remainers and the so-called independent organisations and international statesmen(women)....

Why do people keep spinning this line? To the best of my recollection, the sky was only ever going to fall in (in a big way that is) post-Brexit and not simply post-referendum. Tell me if I've got this wrong, but I thought that Brexit was not going to happen for another 18 months. That's when things will start to go seriously downhill, not right now when there's still something of a phoney war feel to everything. (Of course if there's a transition period of 2-3 years which largely maintains the status quo then the decline may continue to get strung out over a longer period.)

These were predictions/forecasts of outcomes that would materialise as a result of actually voting to leave. When they failed to materialise we were told it would happen when we executed article 50, now we are told it will happen when we actually leave...
All very reminiscent of the warnings if what would happen if we didn't join the Euro

[S M H]

I'm becoming very cynical of the Metropolitan elite and there subservience to the masters of the universe located in the city of London along with there political acrylates. The public voted to leave much aganced the whishes of our political masters the city and E U. The electorate in this country has very little input to change things because of our disregard of none winning constituency votes. So when every vote counts the parliamentary voting presumptions predictions go out the window. Much of the deprecation of the Pound is due to the over reliance of the economy on the City of London There is in fact two separate economy's in this country or three if you include the higher government spending subsidy formula applied to the devolved Scottish government . A vibrant south east round London, with a higher subsidised Scotland. With the rest beaning allowed to become a managed decline economy. With major government infrastructure spending favoring southern England - London area. This possibly explains the strong remain vote in some areas. Our budget is overshadowed by the sovereign debt increased massively by the transfer of Banking debts from the city companies to the tax payer. In part caused by lax political oversight by indulgent governments of all parties. Servicing this debt takes away from spending. It along with the growing share of the tax pie required by the none scrutinised political untouchable protected departmental budgets. The real effect of this is two decades of falling living standards for the majority of the working population. Unfortunately our political master will not be honest with the electorate. They conveniently forgot Kane's rules on spending the good times of running a budget surplus repaying debt so during a depression you can spend to recover. Spread sheet Phil has probably taken the worst predictions of treasury office of responsibility have gave in there forecast of growth. This then allows him to budget for the lower tax income. Then if the economy dose better he can use the extra income to bribe the part of the electorate with targeted spending to keep him in present government in there jobs. All government do it. When he should use the money to reduce the national debt instead of saddling it on our grand children.

[albedo]

<big long paragraph snipped>

I'd debate two aspects of this:

First, that the 'public' voted in a certain way re Brexit (or as it's often put - expressed 'the will of the people'). Actually, just 37% - little more than 1 in 3 - of the electorate voted to leave. The most thorough analysis I've seen of the likely views of those who didn't vote (see http://ukandeu.ac.uk/what-if-everyone-h ... referendum suggests that if all the people had voted then there's a 66% probability that Remain would have won. And that's without factoring in that at least some Leavers did so as a short-term protest vote and/or without fully realising the ultimate impact that Brexit will have and would not vote the same way in a second referendum. (I fully accept that some Leavers have much stronger beliefs and would still vote Leave, but this view would become the minority view.)

What this illustrates more than anything is that the country really is split pretty much down the middle and it's dangerous (and I use that word advisedly) to take irreversible steps that could eventually result in the destruction of the UK without there being much more of a solid majority in favour of that course of action.

Second, these are all good points about the need to eradicate the deficit, to minimise the cost of debt servicing etc. But they don't cut much ice in the real world of UK politics. The UK electorate are never ever going to vote in a government on a promise of cutting social spending, NHS, education etc. Whatever else can be cut has been cut almost to the bone.

So to my mind in the real world there's nowhere else to go but to proceed along the path of the current Hammond budget. The one area offered up time and again is the 0.7% foreign aid. Personally I'm in favour of keeping this; if the 6th largest economy in the world can't afford just 70p in every £100 of GDP for genuinely charitable purposes to help relieve suffering and misery for those less fortunate, well. By all means make as sure as possible that the money is well-spent and if there was a move to divert eg 0.1 or 0.2% more of this to HADR resources then I could probably live with that But short of reducing aid to zero it's not going to make any significant difference to the defence budget. Increasing taxes generally is the only solution I can see. I'm not naturally a (political) party person, but the Tories are not going to do that; Korbynite Labour will do so but will screw up the country in many other ways. There's no credible third party. So looks like we're stuffed.