Boris’ Economics Plan scores an E-

Blain’s Morning Porridge – October 7^th 2031: Boris’ Economics Plan scores an E-

“Empty vessels make the loudest sounds….”

This morning – Boris whipped the Tory faithful into a frenzy with his “wizard” economic plans, but it was empty, hollow and doomed bluster full of soundbites and repeating policy mistakes like austerity and higher taxes. It’s time for Government to get radical and retro-build the economy from top to bottom – all of which is imminently possible if they learn the lessons of the pandemic.

6 years after Brexit and Boris finally revealed his brilliant wizard plan for the UK: “A high wage, high skill, high productivity” economy was announced to the thundering applause of the beaming fanboys/girls at the Tory Conference. Stunning. Where did he get that soundbite?

The Ladybird Book of Pre-school Economics?

If I asked a 3-year old to explain the UK’s economic crisis they could have done better: supply chain fractures, rising inflation, lack of opportunity, rising real and relative poverty, insufficient wages in unattractive jobs, decaying infrastructure, crushing bureaucratic drain, a broken housing market, high taxes paying for declining services, and an increasingly austere and irrelevant economic future in prospect.

I am very aware many of the readers of the Morning Porridge will be natural Conservative supporters… but if I wanted to sum up what I really think of Boris’ speech yesterday, then the rest of this article would just be the vulgar expression of the reproductive verb repeated 1000 times.

As a statement “High Wages, High Skills and High Productivity” all sound like laudable goals. What’s the road map? It’s just going to happen is it?

It’s not just me that is unimpressed. The frothing-at-the-mouth right-wingers in the Adam Smith Institute went even better: “bombastic, vacuous and economically illiterate.”  The CBI warned it’s a “fragile moment” and how empty ambitions and promises on wages and productivity could lead simply to higher prices. Even my buddy Jim, who has overly prominent Margaret Thatcher tats, (tats – tattoos) was unimpressed.

Boris even conjured the ghost of misery past, the blessed Margaret, to justify higher taxes to pay for recovery – but even she would have clocked him with her handbag; “No, No, No you silly, silly little man…” Maybe she could share some self-aware insights from the other side: the Tories have been in power since 2010, for over 65% of the post war era – and where has that got us in terms of growth, the fitness of the economy, national debt and tax-loads? (Yeah, but.. we got Brexit, right?)

At least Boris was able to explain why the UK is in trouble – it is nothing to do with Brexit chasing out cheap European labour… it was the fault of businesses employing them in the first place. FFS!

I’ve seen Kim Jong-Un receive less enthusiastic applause for his insight in suggesting the North Korean economy can be saved if people just ate less and worked harder than Boris got for his deflective economic blame game.

As for the plan.. well, is there a plan? Oh… the tried and tested orthodoxy of spending austerity and tax rises that have worked so well (US Readers: Screaming Sarcasm Alert) in the past. Time for the old trope about the definition of idiocy being doing the same stupid thing and expecting a different outcome….

The time for amusing banter – the top setting of Boris’ intellectual spectrum – is over.

It’s time the grown-ups take control before the UK really does tumble into the sea…. Sitting on the front bench of the Tories are some very smart politicians – listening to yesterday’s bluff and bluster through rictus grins and wondering… “How do we get rid of this Numpty” before he beggars the whole country.

Make no mistake… the UK is in serious trouble and requires a serious refit.. That won’t happen on jokes and banter at a conference while the rest of the economy burns. We need a revolution of common sense.

Boris does not understand why companies don’t invest in “people, skills, and in new equipment” as he asked for. To reinvigorate the animal spirits of capitalism should be a priority – getting rid of the dead hand of central bank distortions. There is nothing wrong with raising interest rates to levels where investors and businesses feel confident on returns to make new investments in real assets, rather than just spinning money through the sausage machine of financial assets.

If you don’t fix markets, then capitalism doesn’t work: In today’s repressed and distorted interest rate environment it makes much more sense for a manufacturing company to lever itself up with greater levels of cheap debt, to buy-back its own stock, to push up the share price, to justify paying the board executives bigger bonuses, while laying off superfluous workers.

And why austerity and tax hikes?

The success of governments around the globe in raising and distributing billions in pandemic support spending packages without causing government debt markets to implode should have been a light bulb moment. We just proved devasting austerity is not an answer while other solutions are available and practical. Wake up to the possibilities of fiscal boost and new monetary policy.

There is not Magical Monetary Tree of unlimited government spending – but the markets are open for smart, credible governments to not only sell more debt but create more money. The key word is credibility – not policy mistakes.

The UK spending itself out its current hole would be entirely feasible. Rather than hiking taxes, and cutting the modest £20 a week targeted helicopter money of universal credit to the poorest 10% of the economy, the Government could keep the economic wheels spinning through the current supply chain/recession/stagflation threat.

This is the kind of stuff Boris and his fellow Oxbridge PPE rejects don’t get. As a primer Boris needs to understand what is good and bad government spending – and divorce them from the political calculus. Creating economic growth through fiscal boost to companies to create jobs, growth, and build infrastructure is good. Solving skills shortages by paying doctors, nurses, engineers and HGV drivers to train, rather than charging them, would work. Spending money on fast, small Nuclear energy solutions and tidal power – tick. Helicopter money has been shown to work in crisis. Markets accept the QE money creation trick – it works. The Band of England already has £1 million pound notes for accounting purposes.. how about a £250billion note and some accounting abracadabra to finance this year’s spending….?

Bad government spending is continuing to play gesture politics and pumping more and more into the endless black hole of unreformed NHS, ill-considered educational policies and an ever expanding government pensions bill. Big questions requiring grown up political thinking – in other words… people with ideas and real world experience.

I reckon the only thing keeping this government in power is the appalling prospect of the opposition…

Meanwhile…

It’s been a long while, but I know many readers enjoy it when I “go off on one’ about British Rail, and just how crap the rail services in the UK are. On the basis my discomfort is balm to my readers…

Blain versus Southern Rail – Chapter 35

This morning I had a lovely chat with the train conductor. He is new to railways. He was friendly, enthusiastic and interesting. I told him my story – about moving out of London 13 years ago when the rail service was a comfortable and reliable 1 hour 5 mins to London. Today….

Today there is more chance of winning the lottery than an easy, simple, comfortable commute to the office. Each trip is like climbing Everest in a Deep Sea diver suit – with the lead boots. Yet the Price of Season ticket has tripled to £7000 per annum and in the last few months the price to daily rail chaos has risen by over 20%. It’s a complete rip. And nobody gives a flying ****. Apparently.

Boris is telling the UK to go back to work. Nothing would give me greater pleasure. Earlier this week it was a 35 minute delay on the early morning train caused by “couldn’t be arsed to get out of bed” staff shortages”. In the evening we were delayed for hours because of a tree on the line near somewhere in the depths of Devon. Tree on the track? In the Autumn? When the storms hit? How ******* difficult would that be to predict, prevent or sort….

An earnest young man from Southwestern Trains came round one delayed train “surveying” “clients” on their satisfaction levels. We all let rip with both guns. At £50 plus for a one-way daily ticket up from Southampton to London – it’s about the worst travel value in the Western World.

On Saturday I am flying business class to Spain for a regatta for £35 return! The cost of a rush hour ticket from Stuttgart to Frankfurt (about the same as Southampton London) this morning is £4.46! First class is £15! Per mile.. it would be cheaper to rebuild Concorde and pay the noise pollution fines.

Productivity??? If the Westminster geniuses think a one-way train price equivalent to more than 5 hours pre-tax minimum wage labour is an incentive for us to travel back to our offices…. Fetch me my carbon tipped bone saw, and invite the Transport Minister to my bespoke passport office…

£50 (one way peak) in the UK gets you an uncomfortable seat (with full heating in Summer and broken in Winter), a generally crap service, and a bona-fide idiot asking if you are satisfied. When we collectively told him… NO! he responded with… “what about the extras…” Like What? Apparently Air Conditioning, WiFi, heating and a Buffet Service (which was cancelled last March and will apparently never be restarted) count as “extras” that we “clients” should be grateful for.

What really, really worries me is the Selfservatives seem to think a rail service even Philip Green balks at paying for is going to green the country and fuel productivity gains…

C’mon….  Here endeth today’s rant….

Finally

The Morning Porridge is taking a week’s holiday. It’s been a tough year with Covid, redoing our house, a bereavement, and a family redundancy – so we are going to take a break and head off to Mallorca for a week.

Back soon… try not to break the markets while I am out…

Bill Blain

Strategist – Shard Capital

Journalists – please feel free to quote the Morning Porridge, but please mention I have a proper job as Strategist for Shard Capital in London!