What Does the UK Budget Tell Us?
The British government has just announced its budget for the coming year, though there will be some further announcements in the autumn. I think we can see some general indicators. Firstly, this is a cautious budget, reflecting an uncertain future. The government has a little extra money above what it was expecting and has decided to save rather than spend it. "Save" really means reduce the amount by which it is in debt. Britain spends more on debt interest than on defense. It is an aim of the government to bring the debt level down, but these are not easy times in which to achieve this. With the pound falling, exporting becomes easier which bring a bit more money into the kitty, but this is depreciating money and, at the same time, the low pound means that imports are more expensive which is starting to feed into the cost of living so that ordinary people are starting to experience inflation. Inflation might stimulate consumer spending (get it now before the price goes up), but in uncertain times it might not and, in any case, people start to feel worse off. The government is, therefore, caught between spending money to cheer people up and hoarding it against difficult times ahead. It is the classic folly of democratic governments that they save when times are hard and spend when times are good when, in fact, they should do the exact opposite (this truth was not invented by JMKeynes - it is in Joseph's dream told to the pharaoh).
So I think that this budget tell us both that the prime minister and her chancellor are trying to build up a fund that may be needed both to cope with the consequences of Brexit and to bribe the electorate into re-electing them soon after. In any case, things are just about to get choppy as the negotiations on leaving the EU are due to start very soon. It is looking increasingly as though Mrs May does not expect to get much of a deal with Europe and is making her calculations on the assumption of a clean break. So what do I have to do to become a French citizen? Or should I move to Scotland?
Replies
Brexit and the Price of Chocolate
BBC report - never mind... when Brexit comes you can come to France for your chocolate... if you can get a visa :-) and if I'm still allowed to be here.
Immigration Likely Not to Change Much
It is thought that the main reason for many people voting for Brexit was to do with immigration. However, in the economic forecasts associated with the budget, it seems to be assumed by the government that there will be just as many immigrants after Brexit as before. One of the biggest factors in economic calculations is how many people you have got to do the work that needs doing to generate the money and taxes. Immigrants, in general, work for less, contribute just as much and use less services, so losing them is not in the economic interest. Consequently virtually every government is two-faced. I sat in the gallery of the House of Commons a few years ago while a stormy debate went on between Labour and Conservatives with each vying to say that they were tougher on immigrants than the other party. However, in practice, they can't do without them and achieve their economic targets, so we end up with a lot of unofficial ("illegal") immigrants, who, of course, can be exploited even more ruthlessly.
On the other side of the Atlantic President Trump is trying to get rid of them, but if he were successful the effect upon the American economy would also be pretty dire. This is one of those areas where what people say and what they do are often not aligned and a huge amount of rhetoric is wasted on things that (like them or hate them) are never going to happen.
The presence of large number of people who are not officially there also enables governments to pretend to have national minimum wages because there is plenty of "slave labour" to do what cannot be paid for at that rate.
All of this means that discussion of these issues rarely deals with the real situation, but involves a lot of posing.