The 1970s are calling, and the UK is facing a sovereign debt crisis. Let's be clear, it has next to nothing to do with Brexit (as France and Germany s face similar crises, although some other European countries definitely do not). It has everything to do with economic malaise, a growing burden of welfare, pensions and the world's most centrally planned and provided health system (which is also the UK's biggest religion). A punitive tax system, a sclerotic planning environment , a vastly over-generous state pension system, energy prices that have skyrocketed because of a blinkered commitment to Net Zero (with a planning system that makes new supply too expensive to develop in manu locations) and a fraying of public trust in institutions particularly around criminal justice and immigration, is creating a crisis in confidence economically and socially.
Editor of the Sunday Telegraph, Allister Heath, believes that the Starmer Government will have to call an early election, because the Labour Party wont be able to reconcile demands to cut spending and/or increase taxes and not deliver on a sufficiently socialist agenda. The hard-left may splinter to Trotskyite tankie Jeremy Corbyn's party of Marxist/terrorist/Islamist sympathisers, and others will fear a loss to Nigel Farage's Reform, whilst the Conservatives are scrambling for relevance (given they governed for 14 years before).
From Allister Heath, in the Daily Telegraph (formerly the Editor of business paper - City AM):
Let us, for the sake of argument, first consider the “optimistic”, best-case scenario. Another wave of punitive tax increases, targeted at those who work, save and invest, would intensify our existing pathologies. We would be doomed to stagflation, rising joblessness, falling industrial and energy production and declining living standards. The best and brightest would flee, but there would be no sudden collapse....
The worst-case scenario feels more likely, and it would begin by an abrupt loss of confidence in the credit-worthiness of the British government. We need to borrow obscenely large amounts of money from the financial markets every month, thanks to Reeves’ lack of fiscal discipline, and yet our creditors are becoming increasingly jittery. They worry that our deficit is growing, not shrinking, that the economy is barely growing and that Labour backbenchers are vetoing all cuts. They are already charging us a “moron premium” to compensate for the growing risk that we default or inflate away our debt, and these higher borrowing costs automatically mean even greater deficits, and thus even more borrowing. It’s a vicious circle. The 30-year gilt yield recently hit 5.6 per cent, its highest since 1998; another substantial increase would surely topple the Chancellor....
Britain is facing a historic reckoning. The economic and social model constructed since 1997 has turned into an unsustainable Ponzi scheme, a farrago of lies, obfuscations and delusions.
The maths don’t add up. On one side of the ledger, growth and revenues are stuck thanks to oppressive taxation, poor incentives, net zero, the destruction of the entrepot economy, the throttling of the City, labour and product market regulations, low-productivity immigration and planning rules that make building anything difficult. On the other, spending is out of control: our ruling class is content to pay out of work benefits to 6.5 million UK adults and to serve as the world’s welfare state of first resort. Our free-to-use, taxpayer-financed NHS can’t cope with an ageing population.
An honest UK politician would have to give up promises to continually inflate state pensions higher than inflation, it would have to take a hardline on able-bodied adults not working and start to reform and ration the NHS. A scythe will be needed to cut through the detritus of decades of micro-economic regulation, and most of all the post 1940s failed consensus of planning control that kneecaps the construction of homes, business and infrastructure, inflating the cost of that which is approved far beyond the costs of comparable construction on the European mainland.
The UK needs another Thatcher. Conservative Leader, Kemi Badenoch, at another time, could perhaps have been that person. However, it is illegal migration and the provision of housing, welfare and health care at future taxpayers' expense (through debt), and the crimes committed by illegal migrants that is the focus of so much attention and concern. Britons, both locally born and legal migrants regard this to be at best unfair, and at worst an invasion of people seeking to take advantage of what the country has to offer.
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