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UK Economy: Signs of Hope or Doom?
Like many Western nations, the UK economy remained resilient through the worst of COVID when many workers were ill or otherwise sequestered in their homes, unable to work due to various lockdowns. The lockdowns seemed a wise precaution for the times — even though Britons disliked being forced to stay in their homes for weeks or months.
But just as COVID has relaxed it’s hold on our lives, it suddenly occurs that Western economies begin to underperform…
Some days you just can’t win.
New UK Prime Minister Liz Truss and New Chancellor Kwasi Kwarteng Ordered Tax Cuts for Wealthy Britons
Which, if you know British politics, is standard operating procedure for Conservative-led governments. No matter the economic ailment, it seems that the de rigueur prescription is tax cuts for the rich.
On balance, that prescription boasts a decent success rate. Over the past 122-years, various UK governments have imposed tax cuts to stimulate the economy and it’s worked more than not. However, there’ve been times when it hasn’t worked, and this is one of those times.
“Always worth a try?”
I guess. But when tax rates for the wealthy are already low, further tax cuts don’t impress the wealthy, nor increase government tax revenue, nor stimulate the UK economy.
And this is the problem… politicians don’t understand economics well (nor do they understand military matters, but that’s a story for another day) but by taking some sage advice to heart, new Prime Minister Liz Truss could still salvage an economic win out of a (forgivable) misstep early in her premiership.
It’s early days, and no doubt, they’re feeling the pressure to act. The PM and Chancellor tried to improve the economy and their first attempt failed.
No worries, there’s a window of time to get it right. But not too much time, or any remedy they apply will arrive too late to have a meaningful effect. And that could cost the Conservatives at the next election.
Their Second Attempt to Help the Economy: Printing More Money and Government Buy-back of UK Bonds
Better. But not perfect.
Which necessitates a larger government deficit, morphing into more government debt. Just what the UK economy doesn’t need is a larger deficit and even more debt. Neither helps the market, nor the government’s credit rating, nor the UK’s long-term economic picture.
It’s too soon to see if this plan will work. But it works in other countries, and it should work in the UK, with the caveat that the privilege isn’t abused by future Chancellors as a sort of ‘silver bullet’ that will solve every economic problem. It’s not a magic bullet.
Printing money and buying back bonds will have a small, but positive influence on the overall economy. Likely, both the PM and the Chancellor now realize that it should’ve been the first step in a 6-step programme to address problems and provide solutions to the UK’s present economic challenges.
Five More Ways to Lift the UK Economy and Prevent (or limit) a UK Recession
ONE: Working people pay more tax than unemployed people. It’s a fact. Ask any economist.
Therefore, the government should spend serious stimulus money (even though it’s borrowed money) on ‘shovel-ready’ infrastructure projects. But it shouldn’t spend on projects that can’t begin construction within the next 8-months, because that’s too far in the future to fix what’s broken now. ‘Shovel-ready’ means ready to begin digging within weeks. Not years.
TWO: Companies that export goods or services, bring ‘new’ money into the economy, thereby stimulating the overall UK economy.
The domestic economy in the UK is pretty sophisticated so there’s little room for improvement — but there’s plenty of room for improvement in regards to exports. The UK’s track record on facilitating an export-driven economy is dismal when measured against such exporting superstars as Germany and Japan. To correct this, the UK government must provide a tax advantage to companies or individuals that export goods or services. I politely suggest an 8% tax break on exported items. Five per cent won’t incentivize companies enough to make exporting a priority, and ten per cent would make it difficult for the government to recover the lost tax revenue over a number of years, no matter the increase in exports over the short-term. This 8% tax advantage could be raised or lowered annually, thereby providing the government with yet another lever with which to control (adjust) the UK economy as necessary. Priceless!
THREE: Citizens earning less than £25,000. per year contribute little to overall UK government revenue, so there’s little loss for the government to forego taxing them.
However, changing the income tax threshold so that workers who earn under £25,000. per year don’t pay any income tax whatsoever, can make a huge difference in the lives of those workers! It’s the difference between a presently unemployed person being able to afford to take the train to a job every day, or not. It’s the difference between a presently unemployed tradesperson being able to insure his work van, or not. It’s the difference between a presently unemployed worker being able to afford daycare for her children so she can apply for a job, or not. It’s the difference between a presently unemployed person moving to another city for a job, or not. In so many ways, this change represents a small change in government tax policy and revenue — which results in a large change in the employment situation for presently unemployed workers. The UK workforce needs to be firing on all eight cylinders, not the present five-out-of-eight cylinders.
FOUR: The UK should harmonize it’s Corporate Tax Rates and policies with Canada, which has an attractive and simplified corporate tax structure.
And it works. Throughout the entire subprime market crisis and subsequent recession, Canada’s economy was the strongest of all G7 economies and Canadians only knew about the recession playing out in the United States and Europe by watching American news channels. The reason Canada sailed through the recession is precisely because of their low-ish and simplified corporate tax rate structure. Many Western companies moved to Canada in the 2008 to 2011 timeframe in order to take advantage of those low corporate tax rates — and in so doing — saved their companies from insolvency. Some returned to the United States following the economic recovery, while some remained in Canada. You can’t buy advertising like that! Recessions occur approximately every 25-years in the Western world, and the next one is almost upon us. Now is the time to make the UK’s corporate tax rate as favourable as Canada’s, and reap the benefits thereof. Doing it after the looming recession hits, means that the UK must wait for the next recession 25-years hence, in order to reap the benefits and bragging rights of lower and simpler corporate tax rates.
FIVE: The UK government should finance 10 Solar Panels on every UK rooftop (via loan guarantees to banks) to add capacity to the national grid, to provide significant energy cost savings to energy users, and to allow for increased energy exports to the continent.
Almost every UK rooftop could host 10 solar panels and thereby add plenty of electricity to the grid during the daylight hours — which, happily, is when the grid faces it’s peak demand. Because rooftops are everywhere in the country, it won’t matter if some northern panels are covered with snow, or if London happens to be covered with a layer of fog — because the rest of the country will still receive sunlight and contribute huge amounts of electricity to the grid. Ten panels per rooftop means that homeowners can (automatically) sell their surplus electricity to the grid via a net-metering connection. Whether private homes, farms with several outbuildings, schools, retail businesses or industrial buildings, placing 10 solar panels on each rooftop in the country could save energy consumers astonishing amounts of money annually, and add significant capacity and stability to the national grid, and allow MANY GIGAWATT HOURS worth of surplus energy to be exported to the continent.
So there’s the low-hanging fruit. There ARE WAYS to improve the UK economy, not by giving tax breaks to the wealthy — who, it turns out, don’t want them because they’ve all the tax breaks they need — but by strengthening the parts of the UK economy that are presently weak, and could be made robust via simple changes to existing policy.
I’m proud of the new Prime Minister and her Chancellor, because, facing a looming crisis, they decided to actually DO SOMETHING! as opposed to just hiding until the storm passes.
Full marks on that, Liz and Kwasi! It’s easy to see that you both care about the country and about how its citizens and businesses are faring.
If you continue to be responsive to the peoples’ needs, I’m confident they’ll respond favourably to you, and your poll numbers will prove that statement true as time rolls forward.
Wishing you every success as you craft policy appropriate to the times in which we live and seek to pass it in the UK House of Commons in a timely manner for best effect.
Written by John Brian Shannon
There Oughta Be a Law!
When a majority of Britons voted to leave the European Union on June 23, 2016, AND a majority of UK MP’s voted to leave the European Union on February 1, 2017 when they voted 498-114 to approve the European Union Bill allowing the UK to leave the EU, AND when a majority of Britons voted for political parties that supported Brexit in the June 8, 2017 General Election (that would be all UK political parties in that election) it follows that the UK Parliament is obligated to deliver Brexit for the British people.
It doesn’t mean that the UK government should allow themselves 10-years or more to deliver on the twice-expressed ‘Will of the People’. Because at the rate the UK Parliament is proceeding on Brexit that’s about how long it will take to get it done. If ever!
Which is why the UK needs a new law that requires Parliament to be responsive and legally accountable to voters, especially in cases where Britons have voted in a referendum, or where a major election promise has been made by the winning party. And that law should require Parliament to deliver within 2-years of the referendum date or General Election win, with severe legal penalties for non-compliance.
Failing to deliver Brexit within 2-years (we’re now at 3.5-years and counting!) has cost the UK economy approximately £69.5 billion so far due to the unceasing overpayments to the EU budget (the UK contributed £12.205 billion more to the EU budget than it got back in fiscal year 2019 alone) and additionally, the economic uncertainty costs caused by the overly-long House of Commons debates and overly-long UK government negotiating period with the EU during this Parliamentary session.
Perhaps being found in Contempt of Parliament with a fine of £10,000 per month, per MP, for each month beyond 2-years where the government hasn’t delivered within that 2-years what voters have ordered, might work to sharpen MP’s resolve.
Of course, there are MP’s working diligently to deliver on the 2016 referendum result who’ve been thwarted by their turncoat colleagues. Such diligent MP’s should obviously be rewarded — not punished.
However, the 2nd category of MP’s who were informed about the results of the June 2016 referendum, and who were members of a political party whose platform at the time included delivering Brexit, and whose party later voted to approve the European Union Bill to take the UK out of the EU, and whose party platform in the June 2017 General Election included a pro-Brexit policy and/or a pro-Brexit party manifesto, now seem to be trying to frustrate Brexit.
Which to my mind is almost a treasonable offence.
Unlike direct democracies like Switzerland, when Britons vote in a referendum it’s considered an advisory only for MP’s. I get that.
But shouldn’t UK MP’s be held accountable in any way whatsoever for their promises? Can they just promise any old thing without ever having to make good on their promises? Shouldn’t they be required to deliver the thing they’ve promised voters hundreds of times?
As an aside, it’s great fun to see certain MP’s who talked themselves and others into Brexit many months ago, now trying to talk themselves and others out of Brexit on the TV talkshow circuit… because they suddenly realize they might need to show some actual resolve and do some actual work to make Brexit happen.
Meanwhile, the average Briton does actual work for their pay every day.
If you bought a new car and you paid in full for the car, and the salesperson subsequently promised to deliver the car within a reasonable time… but then didn’t deliver the car; Would you seek legal redress or remedy from the salesperson/automotive dealership? Or would you just ‘let it go’?
How many of you would really ‘let it go’ and just move-on with your life?
Not many, I suspect.
Then why for the love of God would voters allow their MP’s to promise to deliver Brexit, and then ‘let it go’ with nary a comment, fine, nor Contempt of Parliament charge?
And the answer is; They won’t! ‘See you at the next election!’ say British voters.
It is unthinkable in a modern democracy that a Parliament would promise (hundreds of times) to honour the wishes of the people, and then after £69.5 billion has been squandered, that certain MP’s would then try to frustrate the government’s attempts to deliver on the promises made by UK Parliamentarians.
And to add insult to injury, that some MP’s would refuse to approve a General Election (the truest ‘People’s Vote’ of them all!) so that voters can decide for themselves which MP’s are true to the Will of The People.
I thought certain MP’s and their ‘rent-a-crowd’ followers wanted a ‘People’s Vote’!
It is quite without merit, it is dishonourable of individuals in the House of Commons, and it is a slap in the face of democracy that some MP’s who approved Brexit now won’t allow the government to deliver Brexit and also won’t allow the government to hold a General Election to determine the Will of The People on a pressing matter of national interest.
Parliament has Resumed Sitting… To What End?
For more chuntering-on about the Brexit they promised but won’t allow the government to deliver, for more banging-on about how the government isn’t doing its job but those same MP’s won’t allow an election to deliver on the ‘People’s Vote’ they’ve promoted in recent months?
Because, really, for £69.5 billion (and counting) Britons deserve better.
For shame, for shame, for shame, on this UK Parliament for not delivering on the Will of the People! And as for the so-called and overmuch ballyhooed ‘Will of Parliament’… it pales in importance when compared to the Will of the People!
Power to The People! And Parliament be Damned if it Won’t Do its Job!
To Prorogue or Not To Prorogue… That is The Question!
Since the dawn of Parliamentary Democracy, Prime Ministers have had the discretionary power available to them known as ‘proroguing power’ and as a traditional power it’s held without any restriction whatsoever; The ability to prorogue or suspend Parliament for any reasonable length of time and for any purpose — whether for ‘evil’ or for ‘good’ is via the prerogative of the Prime Minister.
Of course, it depends upon your view of ‘evil’ or ‘good’.
If for example, you’re a Conservative MP and a Conservative Prime Minister prorogues Parliament you’re likely to see his or her prorogation in favourable terms. But a Labour backbencher may see that same prorogation in different terms.
Although there have been times through history when both the sitting government and the opposition party have agreed on the need for the Prime Minister to suspend Parliament. So much better when it occurs that way!
Also relevant to this discussion is; ‘What constitutes a reasonable length of time?’
The ‘Use-it or Lose-it powers’ of a Prime Minister
Some powers held by a Prime Minister are clearly identified and strictly enforced by both Parliament and the courts, and that’s as it should be.
Prime Ministers shouldn’t be able to make-off with billions of pounds of ‘The People’s’ tax revenue, for instance.
But other powers such as the power to suspend Parliament fall under the scope of discretionary, or ‘use-it or lose-it’ powers, therefore, if several PM’s in a row decline to use their discretionary powers it becomes increasingly difficult for future PM’s to use them. Eventually, PM’s would lose the power to prorogue Parliament for one example, if it isn’t used judiciously and relatively frequently in the here and now.
I suggest that as long as British PM’s aren’t abusing their discretionary power, why remove it from them? Why punish them for having done no wrong? And why remove that power from future PM’s when they’ve never yet abused such discretionary power?
We can’t just go around removing discretionary power from people just because ‘it could become a problem in the future’ or because ‘one PM out of twenty has abused their discretionary power’, or because we hail from a different political party and prorogation could affect our chances of re-election at the next General Election.
How would you like it if some of your discretionary powers were removed because a fellow citizen abused their discretionary powers? Of course you wouldn’t like it if it happened to you.
You might like to eat a McDonald’s Big Mac once per month, as I do. But because a fellow Briton trashed a McDonald’s last week, is that good enough reason to ban all Britons from eating at McDonald’s restaurants forever? Of course not.
Therefore, courts, Parliaments, and citizens must recognize the right of PM’s to their discretionary powers until the day arrives that every Prime Minister is abusing those privileges and a permanent change must be made to protect the country from its political leaders.
And that means every prorogation should be made public, and be heard and read by Parliament, by the media, and examined (even a cursory examination, in the case of a short prorogation) by the UK Supreme Court.
That doesn’t mean opposition parties should turn it into a political circus to embarrass the government (remember; one day the opposition party might form the government and might need to prorogue Parliament too, so they should examine such prorogations with a fair demeanour and a gentle spirit) rather, HM Loyal Opposition Party should examine the prorogation and satisfy itself that such use of discretionary power hasn’t inflicted any harm on the normal operation of government, and if it does interfere with the normal operation of Parliament, was it warranted?
Prorogation of Parliament in the Case of Declared War
I’ll give you some examples to consider, some of which have actually occurred in the past and some not;
Example: The government declares war on another country and immediately prorogues Parliament.
So, if the government is concerned that enemy snipers may kill Parliamentarians, it’s the right decision to suspend Parliament because MP’s entering and leaving the House of Commons every day would be easy targets for enemy snipers.
In the absence of a sniper threat however, there could still be good reason to suspend Parliament after declaring war on another country;
Such as the public and media may need time to acclimatize to the new (war) reality and it could be that the government could ‘get too far ahead of the people’ by (seemingly) rushing a number of legislative bills through the House — which could make it look like the government was ‘pulling a fast one on the people’ by not giving them enough time to find out the full (either ‘evil’ or ‘good’) reasoning behind the government’s decision to declare war. That’s touchy ground for governments. Civil wars have started on less fog and fuel than that.
Much better for everyone if the government were to declare war, prorogue Parliament, give everyone a week or two to get up-to-speed on recent events, and then resume sitting in the House of Commons.
But what if the government really were ‘pulling a fast one’ on the people?
That too, could happen in the declaration of war scenario;
If the public were generally unfavourable to declaring war on another country, and the opposition parties were temporarily disorganized, the government could declare war, quickly suspend Parliament, and then get the military heavily involved in the war (“It’s too late to back-out now, we’re in with both feet!”) and without proper oversight by Parliament, we could find the UK in an ill-advised war, based on a wrong-headed ideology, neck-deep in so-called ‘war fever’, or other lapse of cogent thinking.
Which is why I suggest that… proroguing Parliament should be at the discretion of the Prime Minister in conjunction with his or her Privy Council AND require Royal Assent by the Sovereign as an additional ‘check and balance’ on the government AND should be examined and (hopefully) approved by the Supreme Court in the normal course of court business as a ‘check and balance’ on the entire government including on the Head of Government (the PM) and the Head of State (the Sovereign) — where the prorogation is expected to last longer than 14-days.
Therefore, if all three parties agree (the PM/Privy Council + the Sovereign + the Supreme Court) on a longer-than-14-day-prorogation, then the PM has acted well within his or her authority, and that should be the end of it.
But for prorogations less than 14-days, the same process that’s in use today and has been in use for centuries wouldn’t change — meaning no Supreme Court involvement would be required — as short-term prorogation simply happens at the discretion of a Prime Minister, nothing more and nothing less.
Still, out of courtesy, and only after receiving Royal Assent, the government should always inform the Supreme Court of any prorogation of Parliament, no matter how many days it must be, whether fewer than 14-days or longer than 14-days, because circumstances can change and a government may later need to extend the prorogation for unforeseen reasons.
Note: Almost every Commonwealth country follows the same prorogation procedure in the case of prorogations lasting less than 14-days.
Proroguing Parliament to Prevent Filibuster of Government Business (The People’s Business!)
Governments have also prorogued Parliament because opposition parties were filibustering the government, a situation where opposition speaker after opposition speaker rises and speaks for many hours, thereby preventing the House of Commons from passing any legislation whatsoever, especially the piece of legislation the opposition find so offensive.
In that case, proroguing Parliament serves to punish the filibustering MP’s and their party, and returns the House to normal operation so that the people’s business may continue to be administered by the government.
It’s one thing to teach the government a lesson about acting in a high-handed way — in that case, a bit of filibuster can be a good thing! — but it’s quite a different thing if it goes beyond bounds and becomes a circus that takes on its own life and prevents other important legislation from consideration, debate, and passage in the House of Commons.
Such abuses and other abuses by opposition parties throughout history are exactly the reason why today’s Prime Ministers have such discretionary powers.
Again, it occurs in every generation that legitimate uses of discretionary power are advisable when the PM, acting in concert with his or her Privy Council, must suspend Parliament in order to assure the continued operation of the government.
And in the case of filibuster (which sometimes unduly prevents the people’s business from being conducted) the above-noted rules should likewise, in the exact same way, also apply to a Prime Minister considering a prorogation of Parliament.
On the Prorogation of Parliament (2019)
UK Prime Minister Boris Johnson was handed a mess from the previous government — although much of it wasn’t the fault of former Prime Minister Theresa May and her MP’s — as half the blame was the fault of the sometimes intransigent but always on-message EU.
After Britons voted to leave the EU in the June 2016 referendum, a vote in the House of Commons confirmed that the UK would be leaving the EU (via the European Union Bill) that passed with a healthy margin of 498-114, and subsequently, a UK General Election was held in June 2017 where all parties ran on a platform of delivering Brexit and Theresa May’s Conservatives won that election.
At that point, there was no talk of overturning the 2016 People’s Vote to leave the EU, nor of overturning the European Union Bill of February 2017, nor of overturning the results of the June 2017 General Election.
Then, the Withdrawal Bill happened.
From the day the EU announced that a ‘backstop’ would be required for Northern Ireland, relations between the UK and the EU plummeted and some British MP’s seemed intimidated by the EU’s insistence on a backstop, while some Britons seemed even more determined to get Brexit done — even former Remainers!
If it was a ‘divide and conquer’ tactic that the EU planned to destroy UK unity of purpose it worked — but only by a half measure.
But the other group of (non-MP) Remainers became convinced of the necessity to fulfil the result of the democratic referendum, the European Union bill vote, and the 2017 General Election result.
Three missed Brexit deadlines came and went in the spring of 2019, and the EU decided that October 31, 2019 would become the new Brexit date.
Now, after £69.5 billion in costs due to economic uncertainty — including the annual payments to the EU that amount to £12.2 billion (net) for 2019 alone — and a gestation period that would impress a brontosaurus, many Britons just want out of the EU. Even former Remainers are for turning… these days.
Yet, some British MP’s seem increasingly afraid of delivering the Brexit the country voted for and the Brexit that they themselves approved when they voted en masse to approve the European Union Bill.
Some things defy explanation to put it mildly.
With all of that (disastrous) recent history, opposition parties in the UK House of Commons then voted to remove power from the Prime Minister to put paid to the Brexit that voters have been waiting for since 2016, and have voted-down the PM’s call for a General Election, and were increasingly working with the supposedly impartial Speaker of the House to nullify the government’s best efforts to deliver either a Negotiated Brexit or a Hard Brexit. (EU in the driver’s seat regarding those two choices)
What’s a Prime Minister to do?
And this, in the context of having to be in a constant state of readiness to dash off to the continent — perhaps being summoned to a meeting in Brussels at 5:00am with no advance notice of any such meeting as former PM Theresa May was — to negotiate some tiny particle of a new Withdrawal Agreement.
How can a new UK Prime Minister get himself up to speed on his new job, keep himself in that state of readiness for a sudden trip to the continent, work with government ministers and others to plan out a workable Withdrawal Agreement, keep ahead of his House of Commons commitments, deal with the media, stay on the right side of Brexit deadlines, get the country ready for perhaps a Negotiated or Hard Brexit depending on the whim of the EU negotiators that week, and deal with defections by his own MP’s and the shenanigans of Remainers and anti-Brexit types on both sides of the English Channel?
Really people, we need to cut this man some slack! You wouldn’t want to be him!
The poor man probably needed sleep due to exhaustion, needed to give his people some quality time to work on Brexit delivery plans, some time for him to visit EU leaders to ascertain their level of interest in agreeing a new Withdrawal Agreement and test the waters for a future trade agreement/future relationship, to conduct some media interviews, and talk to regular Britons on the High Street about their thoughts on Brexit.
And now, some want him in the stocks for proroguing Parliament? Give me a break!
Boris Johnson hasn’t had a good set of choices from which to choose since he became PM. In fact, his greatest gift so far, is that he’s been the master of choosing the least bad of the available choices.
I think these are extenuating circumstances occurring during uncommon days and he’s done well considering the mess he was handed, and is doing his best to make good on the government’s promises to citizens, to business, to Parliament, to our EU partners and is trying to meet all legal requirements on both sides of the Channel. Very admirable.
Where Do We Go From Here?
“Every day we teach others how to treat us.”
And if we’re teaching the new PM that he’s not allowed to deliver Brexit even after a majority of voters and after a majority of MP’s voted for it, and that he’s not allowed by his colleagues to hold an election to determine who’s in charge of the government, and that he’s not allowed to prorogue Parliament, and that he’s not allowed to succeed in reaching a satisfactory Withdrawal Agreement with the EU (because it is likely to get voted-down for no reason other than MP’s are suddenly afraid of their responsibility to deliver the Brexit their constituents and they themselves voted for) then what are we teaching this poor man?
We’re teaching him to fail, that’s what we’re teaching him. And that isn’t what we should be teaching British Prime Ministers.
Now, let’s resolve to become part of the solution and not part of the problem and help this man to deliver what the majority voted for, what Parliament voted for, what the country is crying out for (including many former Remainers) and help him obtain a withdrawal deal that the UK and the EU can both live with.
Parliament and all concerned parties; Give our man a way forward! Please!
And the only thing we should be asking of him — other than, “How can we help?” — is “Henceforth Mr. Prime Minister (and all future PM’s) could you please inform the Sovereign and the Supreme Court if you need to prorogue Parliament and we will do our utmost to facilitate your request?”
Anything other than that is on us, for (quite innocently and unaware) trying to turn this UK Prime Minister and every subsequent Prime Minister into quiet, paper-shuffling, do-nothing bureaucrats. “Nothing ventured, nothing gained,” will be their new mantra if we’re not careful.
In short, we’re teaching him to be the anti-success, the anti-hero, the least accomplished; And that, my friends, definitely ISN’T what built the great United Kingdom we see today!
Therefore, let’s get on with delivering the Brexit the people voted for on June 23, 2016 and that Parliament approved on February 1, 2017, and by extension voters re-approved via the General Election result on June 8, 2017.
And give our man a hand. He needs your help to get the country across the line.
Letter to Britain 