Thursday 4th March 2021

[refitman]

Morning all.

[gilsey]

Good morning.


Good thread on Johnson/Frost's latest wheeze.

https://twitter.com/mdouganlpool/status ... 2592681985" onclick="window.open(this.href);return false;

likely explanation (since it fits into clear & established pattern)? Johnson only ever signed Protocol to “get Brexit done” with no real grasp of its implications / sincere intention of implementing it in good faith, so HMG simply places little value on own compliance

UK conduct is unsustainable. We know: Protocol is result of choices made by Johnson & approved by Parliament; there is no credible alternative; it requires trust & cooperation to work; such trust requires honesty, not least about price NI must pay for Johnson’s Hard Brexit

[PorFavor]

Good morfternoon.

The Irish foreign minister, Simon Coveney, has launched a scathing attack on the British government, saying it cannot be trusted to stick to a deal.

Coveney said Downing Street’s move yesterday to unilaterally change the administration of the Northern Ireland protocol broke that part of the Brexit deal and broke the UK government’s commitments. He told RTE’s Morning Ireland programme:

The EU are negotiating with a partner they simply can’t trust.

That is why the EU is now looking at legal options and legal action which means a much more formalised and rigid negotiation process as opposed to a process of partnership where you try to solve the problems together.

The comments indicated Dublin’s support for a strongly worded EU Commission statement that accused the British government of breaking international law for a second time. (Politics Live, Guardan)

[AnatolyKasparov]

Meanwhile yesterday's budget is being scrutinised in more depth and - as is often the case - the things they didn't want you to know are being uncovered.

[gilsey]

I was thinking about it this morning, how the 'highest tax burden' since whenever could have happened when public spending is so constrained. Blair and Brown used to be accused of splashing the cash, public spending was a higher proportion of GDP than now, but taxes weren't. The inevitable conclusion is that it's the denominator, GDP, that's the problem, not the level of spending which isn't high enough. Austerity chickens coming home to roost.

Paul Johnson
@PJTheEconomist
It is a sad truth that current budget balance in Mr Sunak plans will require the highest sustained tax burden in UK history and yet more cuts to spending on "unprotected" departments. A problem created by a decade of paltry growth followed by the deepest recession in history

[gilsey]

After the rebound from the pandemic, there's another x years of paltry growth in the budget figures, and no ambition to change that.

[AnatolyKasparov]

It really does look like a classic of the "looks good on the day, not so much so later" variety.

[gilsey]

It didn't look good to me on the day.

Most of the media wouldn't be critical whatever it looked like.

[gilsey]

I was hoping to hear from Lewis Goodall on Newsnight last night but they'd sent him to Scotland to cover Sturgeon/Salmond and Watt was doing the budget.

[PorFavor]

EU postpones setting date for ratifying Brexit trade deal

Move follows Boris Johnson being accused of breaking international law for second time over Northern Ireland

The European parliament has postponed setting a date for ratifying the trade and security deal with Britain after Boris Johnson was accused of breaking international law for a second time over Northern Ireland.(Guardian)

https://www.theguardian.com/politics/20 ... -officials

[AnatolyKasparov]

I was hoping to hear from Lewis Goodall on Newsnight last night but they'd sent him to Scotland to cover Sturgeon/Salmond and Watt was doing the budget.

Certainly strong "B team" vibes there

[PorFavor]

Priti Patel - she's worth every penny.

This is what the Home Office is saying about the settlement with Sir Philip Rutnam. (See 3.48pm.) A spokesperson said:

The government and Sir Philip’s representatives have jointly concluded that it is in both parties’ best interests to reach a settlement at this stage rather than continuing to prepare for an employment tribunal. The government does not accept liability in this matter and it was right that the government defended the case.

But the BBC is reporting that Rutnam’s settlement was “substantial”. (Politics Live, Guardian)

[RogerOThornhill]

re the above

The Secret Barrister
@BarristerSecret
Priti Patel is spared the embarrassment of a public trial thanks to her activist lawyers using public funds for political ends.

Or is this ok? It’s so hard to keep up

Quite.

Like it's hard to keep up with how the rise in the CT rate is enthusiastically leapt upon by Tories as a masterstroke. Anyone else suggesting it would have been a communist.

[RogerOThornhill]

Worth watching the video for both Andrew Neil and Kate Andrews chuntering on about things they clearly don't understand.

https://twitter.com/t0nyyates/status/13 ... 9666188300" onclick="window.open(this.href);return false;

[tinyclanger2]

FAO: SGO vis a vis Russian Doll - You're welcome.

[gilsey]

Wren-Lewis has added to his blog anticipating the budget.

Postscript (04/03/21)

In the post above I suggested the Chancellor could have produced a balanced recovery, but as expected his main focus was raising taxes (by freezing all allowances and raising corporation tax) in order to get public net debt falling in 5 years time. It is true that he has delayed tax increases until after the forecast recovery is over, but it seems unlikely that consumers and firms are going to ignore what he plans. As a result the recovery in consumption will not be as strong as it might have been, and the recovery in medium term investment will probably be lower than it could have been.

The rabbit out of the hat in the budget were the 130% investment allowances against corporation tax for the next two years. The danger of this measure is that it just brings forward investment, with little increase in investment over the next decade (see Chart 2.11 of OBR forecast, p63). In that case the main beneficiary is the balance sheet of large companies at the public's expense. With the recovery already forecast to be pretty rapid over the next two years, it isn't obvious why this bringing forward will be of much benefit.

What I was hoping for was a budget that created a balanced recovery, rather than a recovery driven mainly by better off consumers. There was absolutely nothing in the budget in this respect. We have public spending cuts (see page 8, some already announced but added to in this budget). Nothing to stop councils increasing council tax by 5% and repairing local services. The apparent cap of 3% public investment to GDP remains, despite the urgent need to help green the economy at a time of low interest rates. And nothing to help those from the lowest income quintile that have lost out in the pandemic. The increase in wealth inequality produced by the pandemic is not going to be reversed.

In the post above I say that fiscal consolidation should not start until both short interest rates and expected inflation are both above 2%. Neither is true in the OBR forecast. We have the crazy situation that fiscal retrenchment is happening while interest rates are forecast to remain at or below 0.5%. This makes no sense in economic terms. Macroeconomic policy is meant to stimulate a recovery, not to promise lots of higher taxes.

So we have an austerity budget. It may not be on the scale of George Osborne in 2010, but it remains about fiscal consolidation before we have begun to recover from a deep recession. The Conservatives have never come to terms with the gravity of their error from 2010 onwards, and remain attracted to playing on the media's false understanding of what responsible policy is. Next to what is happening in the United States, Sunak's policy seems totally perverse. What will suffer, just as under George Osborne, will be average prosperity in the UK.

https://mainlymacro.blogspot.com/2021/0 ... anced.html" onclick="window.open(this.href);return false;

[gilsey]

Priti Patel - she's worth every penny.

This is what the Home Office is saying about the settlement with Sir Philip Rutnam. (See 3.48pm.) A spokesperson said:

The government and Sir Philip’s representatives have jointly concluded that it is in both parties’ best interests to reach a settlement at this stage rather than continuing to prepare for an employment tribunal. The government does not accept liability in this matter and it was right that the government defended the case.

But the BBC is reporting that Rutnam’s settlement was “substantial”. (Politics Live, Guardian)

Substantial alright, £340k!

Patel must be even viler than we thought.

[AnatolyKasparov]

And that must be bad.