It was a good budget. A budget for jobs and housing. Primarily it was about Hammond's job as Chancellor and housing in Downing Street. But let's not be too cynical. It was an appeal to the youth vote and the Tory back benches. Abolition of stamp duty for first time buyers and the extension of the rail card discount to first time voters of the Labor Party. How the young will swing to the rhythm of the Red Box. Or so it is hoped.
The Tory back benches are more easily bought off. The provision of £3 billion to prepare for Brexit, was enough to convince the EU sceptics that Hammond is truly "One of Us". Yes Brexit means Brexit and the Treasury provision is proof of commitment. No mention in the budget of the £50 billion provision required just to move to the next stage on trade negotiations. [Just ten days left, the Prime Minister was warned this week.]
No mention either of the £18 billion commitment to the Health Service, outlined on the side of the Brexit bus. The NHS will have to make do with £2.8 billion to be spent on bringing down waiting times for A&E and routine surgery, especially in marginal constituencies. It was all too much for Simon Stevens, head of NHS England. The NHS has called for a minimum £4 billion each year to avoid cuts to cancer care and mental health. "Don't fight Treasury now" the NHS boss has been told. No time to ask for more money! "Join the waiting list like everyone else" he was advised ... just wait on a trolley in the corridors of power.
Strange how now, we measure budget success. No gaffes, no arithmetic errors, no policy recantation within days of release. The Chancellor was relaxed and in control at the Despatch Box. Time for jokes with props delivered by the Prime Minister. Cough sweets on hand, jibes at the opposition. It was a good performance. Sound without fury, signifying little. The overall fiscal impact was broadly neutral. The £40 billion for housing turned out to be just £1.5 billion of new money measures. The abolition of stamp duty would merely push up prices as Robert Chote, chair of the OBR explained the following morning.
The OBR had set the tone with a dismal outlook for growth in the years ahead. Why do we pay so much attention to the "Forecasts"? They represent a "Scenario Outlook" with little credibility beyond the immediate forecast horizon. The Treasury wants gloom as the guideline for the Brexit zealots. Yes and it could get worse, the downside of a no trade deal.
Why the obsession with "productivity"? It neatly draws attention away from the failures of government in transport, infrastructure, telecommunications, education, skills, training, apprenticeships and so much more ...
The focus turns away from government to the slothful indolence of the British workers. Too much gin in the 1880s, too many tea breaks in the 1960s, too many strikes in the 1970s. Did you know, a German can do more in four days than a Brit can do in five". That's why the close the Bierkellers on a Thursday night. Job done in the Deutsche service sector. What nonsense this all is. But what of business?
If it isn't the worker it is the failure of industry to invest. Newsnight appears to think we are still using fax machines and typewriters. Well at least the Russians can't hack carbon paper. Back to searching the dustbins, now that would be a real hit to the productivity of labour.
Productivity is not some magic fairy dust. It is an arithmetic outcome of output divided by labour. Complaints about the lack of productivity date back to the waning of the Spinning Jenny, as the driving force in the workshop of the world.
The move to a service sector economy will move to unitary growth in productivity. Comparisons on investment trends fail to capture the hedonic cost reductions in hi tech equipment. It is not the fault of the workforce or business. It is time to confront the problem of a chronic lack of investment in TiT. Transport, Infrastructure and Telecommunications. Don't blame business ... but ...
Economics news this week ... save the puppies ...
"Business is making my job harder" explains Liam Fox. "Fat, lazy and playing too much golf", now the trade secretary claims businesses just do not want to export.
"I can agree as many trade agreements as I like, but if British business doesn’t want to export, then that doesn't do us any good," Fox told House Magazine this week.
You do have to wonder about the suitability of the man for the rôle. "First let them do no harm" is the mantra for Chancellors and should be for the President of the Board of Trade. What are the deals being done and for whom, is the real question. Once again it is not the fault of government. The failure is with business, failing to invest, failing to export, failing to meet the £1 trillion pound export target. For the moment, no point Fox hunting for deals that can't be delivered. No deals can be done until we leave the EU at 11:00pm on the 29th March 2019.
Michael Gove is hot to trot. Tipped to be the next incumbent of Number eleven. it is not to happen. He bounced back in the face of Hammond's budget "success". Gove had been practicising his "economicky" words. All to no avail. Gove focused on the good news from leaving the EU ...
Brexit will help save puppies. Yes animals and minsters are sentient beings, despite obvious evidence to the contrary. Michael Gove has promised to take action over puppy smuggling once Britain leaves the EU. Did you know, EU rules restrict us from cracking down on puppy smuggling? Shocking. Gove is now the champion of the young pups. Puppies are for life not just for Christmas. Just like Red Box promises on budget day ..
The Saturday Economist
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