Rachel Reeves’s disastrous mishandling of the thriving economy she inherited from the Tories means the UK is heading for a full-blown financial crash – and nothing can stop it now, says Matthew Lynn in the Telegraph. Here’s an excerpt.
In total, we borrowed a shocking £151.9 billion over the last 12 months, £20 billion more than the previous year, and much more than the Office for Budget Responsibility had forecast. Last month alone, we racked up another £16.4 billion in debt, the third highest March figure since records began.
In reality, the turmoil triggered earlier this month by Trump’s tariffs had obscured how precarious the UK’s financial position had become – and how rapidly the position is now deteriorating. The borrowing figures are getting relentlessly worse month-by-month.
It is not hard to work out why. The huge pay settlements for the public sector agreed by the Government over its first few weeks in office have driven up wage bills and added billions to the public sector payroll. Departments, led by Ed Miliband’s deranged green energy empire, have been spending far more than they were meant to. Local authorities have been left to pick up the welfare bills for the surge in asylum seekers.
Meanwhile, in a stagnant economy, corporation tax revenues have proved disappointing as companies struggle to make any money. VAT is no longer raising the amount expected as struggling households rein back their spending. Even worse, these are only the ‘provisional’ figures. If anyone feels like a bet, here is a certain winner. When the final numbers are tallied up, they will be far worse.
The borrowing numbers are only going to go higher over the course of the summer. The huge rise in National Insurance charges will hit the public sector as hard as any private sector employer; it will add hundreds of millions to the cost of employing the 6.1 million people who work for the Government.
Businesses are already laying off staff and closing units – look at the decision by Morrisons to close 52 cafes and 17 convenience stores as a typical example of what is happening right across the country – to save on costs, and this will hit income tax and VAT revenues.
In reality, this can’t continue for much longer. As the ONS made clear today, the UK last year borrowed 5.3% of GDP, an unprecedented figure at a time when the economy was performing perfectly well (at least until Reeves took over), and there was no immediate crisis to contend with.
The real figure may well be 6% already, and it will certainly hit that level before the autumn. So far Reeves has only announced welfare cuts that will prove mostly fictitious, and “savings’” that won’t be delivered.
“The blunt truth is this,” he concludes: “Reeves has completely lost control.”
Worth reading in full.
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Very few people ‘work for the government’. But around 6 million are employed by the government. There is a far from subtle difference.
‘The government’ includes everyone who works for an organisation with a .gov.uk website or e-mail address – many work for the government.
I had a run in with the leader of our unitary authority council over this. He blamed ‘the government’ for something – maybe the number of potholes in the roads, I’m not sure. I pointed out he is part of the government. If he has to spend more on repairing potholes (or whatever the issue was) he has to raise more in local government tax or reduce spending on stuff that is optional to balance the books.
I also wish I’d pointed out that the frequency of potholes developing has not really changed. What’s changed is the willingness to repair them in good time.
How much does his authority waste on DEI? How much is wasted on global warming bullshit? How much on propaganda to gloss over their failure? And how many are paid out of taxpayers money to be full time union employees?
1) Way too much.
2) Far too much.
3) Even more too much.
4) Far too many.
In fact – if you add in all the fake charities and fake businesses also used by ‘the government’ it is about 8.0 to 8.5 million people ‘working’ for the government, aka they are all tax consumers. Out of those, maybe 2.5m are doing something vaguely productive – like teachers and medic, but we all know that both education and medical services need to be de-nationalised then we could see who was actually productive and the rest could find something else to do.
Terrible as she has no doubt been for our economy, decades of policies by Tories and Labour have surely contributed – mass immigration of low quality human capital (economically speaking), an overgrown welfare state, high government spending, high taxes, over-regulation, high energy prices, “covid” lockdowns, tolerance and encouragement of wokeness leading to inefficient hiring, DEI and CSR timewasting, laziness, a less motivated workforce and inappropriate education, encouraging useless degrees over apprenticeships.
“Tories”
Tories disappeared with Thatcher. Sadly.
The gang currently calling themselves “Tories” have been more left wing than a Corbyn Wet Dream. And the Socialists think the answer to problems caused by the “Tories” is more Socialism. You couldn’t make it up.
Indeed. Fake Conservatives.
TINOs
True but the idiot Sushi – running scared of The Messiah of Farage Limited – dashed to defeat in the polls just as things were actually making a tiny improvement due to nothing his government had actually done. And then along came Rachel from Accounts and her endless droning on about how bad things were and so things got worse. And then we had her budget which finished everything off. Inflation has to rise this month as all her additional charges on doing business come into effect as well as a third hike in the cost of energy when last April it went down.
What went round, comes round…
https://www.youtube.com/watch?v=RpKz54bxXu
…Chancellor Dennis Healey booed at the 1976 Labour Party Conference for advocating spending cuts.
Three months later, enter the IMF whom Healey could then conveniently blame for being forced to bring in the spending cuts he’d known were inevitable all along.
All theatre – Stand by for the next Act, although I somehow doubt this time round Theeves and Sir Two-Tier have nous to know what their globalist overseers’ script dictates next.
The intention is to sell off this country bit by bit via the major players – IMF, BIS, and of course Blackrock, Vanguard, State Street etc.
The aim… “You will own nothing and like it.”
Trump and Brexit will be blamed.
Always the plan. The globalists need to satisfy two main objectives in order to usher in a new economic and societal model – 1) destroy society – destroy the family, dilute nationalism, damage supply chains, and engage in the age old tactic of divide and conquer 2) collapse the economy – basically, spend, spend, spend.
None of this is incompetence, quite the opposite.
Exactly. As I have been commenting.
I have been commenting on here for the best part of five years and virtually from the off I have declared that the government of the day, Tories included, intended to destroy the country economically. Sadly this is rapidly coming true.
It is with sadness that I read about Morrisons closing their cafes. The one two minutes’ walk down the road from where I used to live in Bramley (Leeds Swinnow Road) until August last year was always busy and although almost certainly operating as a loss leader, it was a hub for many. Many of whom were poor families and depended, in a sense, on the free meals for kids.
Reeves was “my” MP, Leeds West. May she hang her head in shame. Ha, pigs might fly.
“her head in shame” is superfluous.
True.
You beat me to it!
It is the people who own the Labour party and, as a result, got the obscene pay rises that really grate for me. The public whine continuously that our railways are so expensive to use without questioning that we pay our train drivers twice as much as continental Europe does. No other rail network comes close to the pay rate of the UK and then they have the gall to blame privatisation. And who were amongst the first for Labour’s largesse, yes the already overpaid train drivers.
I am more than ever convinced that Rachel from complaints handed out the largesse to cement in a solid 20% Labour vote, recognising that their voter basis is nearly nonexistent. With that 20% in the bag – and it is – their strategy is to dice for another 10% which, with 3 or 4 parties in play will see them returned, if successful. We need to get rid of at least half the Whitehall bureaucrats and automate the trains and tube. Technologically, it wouldn’t be difficult and would save a fortune. But Labour won’t do it.
In Brighton, bus drivers are paid around £36,000 pa, roughly half as much as train drivers although driving a bus is far more arduous.
A bus driver 1) has to stop and start every minute or two, 2) has to deal with the public, 3) takes money and gives change, 4) has to steer the bus and avoid other cars. In common with a train driver they both start and stop the vehicle at stations. But what does a train driver do that a bus driver doesn’t?
In summary, train drivers get double the pay for far less work. They’re VERY overpaid.
I Don’t know where you live but it’s been a long time since bus drivers took money and gave change in London. I always assumed that train drivers were paid so well because they have responsibility for hundreds of passengers
Not just any incompetence, Labour class war incompetence.
Student Union level incompetence.
“… the thriving economy she inherited from the Tories means…”
Thriving compared to what? Thriving like a drowning man coming up the last time for air!
The economy was anything but thriving prior to the Marxist-Socialist Government the idiot population inflicted on itself – Rachel from accounts is just delivering the coup de grâce.
It’s the 1970s re-run. Only those not paying attention – the majority – dudit see it coming… bin-men’s strikes, greedy public sector workers getting overpaid and striking anyway, the rich fleeing, businesses shutting down. All we need is power cuts… being arranged it seems.
This distinction between Labour and Tory is part of the psy op. They are all what are called neocons when it comes to geopolitics and in the economic sphere they are neoliberals. Neoconservatism represents a distinct philosophy and neoliberalism has its own distinct nasty mechanisms. These strains of thought are as far away from the interests of the general population as it is possible to be. It is very naive to think that these parties are what they say they are on the tin. Just ignore anyone who even thinks in these terms.
There is no point worrying about money. If you aren’t a very big player or a very clever person then you are going to be screwed. Heaven’s sake it has been happening in slow motion for decades.In the end they cut your head off. If there is no way to affect that world from your perspective then why even bother mentioning it.
You can put it into precious metals.But I would recommend keeping about £3000 in cash for the period of the collapse. During that period cash will be king and banking won’t be working. Obviously at some point cash will cease to have meaning but you need to keep a bit active. That is why the banks don’t like you taking it out.
Entirely predictable. Reeves repeated 14 years of Tory Austerity. Spending cuts plus tex increases.
Austerity always produces the opposite effect of that the idiots who use it expect. It drives the economy deeper into recession which also increases borrowing because 1) tax revenue is less because people are making less money and 2) higher state benefits payment to all the people laid off and 3) less money circulating in the economy because of spending cuts – which also reduces tax revenues..
It is well and long known – except to the Germans and the G20 whom the Germans persuaded to adopt Austerity in 2010.
Cameron and Osborne and every PM and Chancellor since have repeated the same lunacy.
The end result is that instead of reducing the deficit by Austerity it increases every year so that the national debt increased from £900 Bn under Gordon Brown’s Labour government to over £2.7 trillion under the Tories – achieved in just 14 years.
We don’t deserve morons for politicians and for running the country but that is what we have.
The EU economy 17 years ago was worth 90% of the US economy. Now it is worth only 65%. All because of Austerity.
Morons, morons, morons.
All predictable and all known. So how is it our western politicians are so dumb?
Norway has been sensible. Better move there. They have no national debt and a 2 trillion fund saved up from their oil revenues saved up as a contingency to plan for when the oil runs out.
Erm – our politicians didn’t think of that one – they just kept spending money the country does not have.
We are back to the position we were in just after WWII but with no industry to rebuild the economy.
Basically screwed.
Last to leave the country please turn the lights out.
Oh, no need to bother. Ed Minibrain is making sure we can’t afford to turn them on.
Q. What is the difference between this set of comments and the equivalent on the Telegraph, Mail or Express websites?
A. There isn’t one.
– which is a bit of a sad comment on the readership attracted to the Daily Sceptic.
Have we all seen that clip of Reeves and her little red Budget case walking along from Dowing Street to a black car?—-It is straight out of the “Ministry of Silly Walks”. Take a look at a world growth graph somewhere and you will find that for the last 20 years silly countries like us that all indulge in this phony planet saving eco socialism that removes affordable energy DESTROY GROWTH. Many countries in Africa are growing faster than us and it as all down to this debt ridden huge government full of omnipotent busy bodies that cannot spend our money fast enough, and usually on total crap like carbon capture and breakfasts for children at school.
Small but important point. No public sector employer or employee ‘pays’ any tax or national insurance at all. All those deductions are an accounting fiction. It is (our) money going round in circles. All of it is incident on the real taxpayer in wealth creating private business. That is no public sector employee makes any net contribution to the national treasury. They are all overhead.
It was immediately obvious that Rachel-from-Accounts had created a Stagflation Budget. It was so obvious that it had to be deliberate.
They are deliberately crashing the economy. I suspect the “saviour” will be the IMF and it will come with an instruction that we must rejoin the EU and surrender Sterling in favour of the Euro.
It’s deliberate destruction ….. like everything else they’re doing.
And wars are always very expensive. How much money is promised to Ukraine under Starmer’s 100-year contract? £3 billion a year …
“Rachel Reeves’s disastrous mishandling of the thriving economy she inherited from the Tories”. What is Will Jones smoking?