George Osborne would fail his economics GCSE – he can’t even get the basics
This is fun, isn’t it? That accusation. Followed by this:
Three fundamental errors underpin his worldview. The first is that he conflates country and government and defines living within our means wholly in terms of the government’s finances. Yet Britain’s international trading position is ominously in the red, running a current account deficit of 5% of GDP and set to rise. Exports stagnate, imports boom. This really is living beyond our means, but about which the chancellor says zilch.
Instead, he makes matters worse, selling government assets such as the Green Investment Bank or, last year, Eurostar to foreigners, so that more interest and dividends flow overseas.
Admittedly, I’ve not checked a syllabus, but I would imagine that economics GCSE includes the thought that the balance of payments does indeed balance. Meaning that if there’s a current account deficit (something similar to but not exactly the same as a trade deficit) then there must be a capital account surplus. Or, in not quite right terms but good enough for most people, if we keep buying all those foreign goods and services then foreigners must also be buying land, buildings, companies and so on. Because, erm, the balance of payments does balance.
So, err, Well Done Willy, well done there.
We might have to coin a subsidiary of Muphry’s Law perhaps, Hutton’s Law. Any Willy Hutton critique of economic policy, theory or practice will contain a greater economic error than the one Willy is complaining about.
All because of a stubborn refusal to countenance all but closet tax increases. The government will receive £47bn in excise duty on alcohol, fuel and cigarettes this year. Forty years ago, it raised nearly the equivalent of £80bn. Some of the shortfall is because, thankfully, we smoke less, but most of it is because taxation on alcohol and fuel has been scaled back.
Dear God I’d love to see someone trying to defend that calculation. Fuel tax revenue is lower now after two decades of the fuel duty escalator? Srsly?