Blog 2023 Malcolm Blair-Robinson

What is so deplorable about the endless economic sniping between Remain and Leave, is that each is using various figures and statistics to mean the opposite of what is actually the fact. So this post will set out some key economic pointers and leave you to decide which campaign would be most likely to deliver on these issues. I would remind you that I am voting Remain for political and historic reasons, which I believe over-ride everything else. Although there will be an economic impact either way, neither economics nor immigration will affect or influence my vote. So the following can be trusted as impartial.

There can be no long term recovery in this country with the current economic model based on consumption driven mainly by borrowing against ever inflating assets, mainly house prices, and fed almost entirely by imports. This sucks money from the base to the top, makes the rich richer and the poor poorer and the middle squeezed by low productivity and excessive living costs. It does not deliver sufficient growth in GDP to provide a taxation base large enough to fund the demand for services at the optimum cost/efficiency ratio. The future is one of bumping along the bottom of a low growth track, punctuated with slow downs or recessions like the one now gripping the manufacturing sector.

The economy needs about a decade of sustained and significant growth in the order of 5% annually in order leave austerity behind and offer the rising generation a future on a level to that enjoyed by their parents and grandparents, especially the latter. That can only be achieved if we import less, make more for home consumption and for export, reduce borrowing as an economic driver, and halt the headlong inflation of assets ahead of inflation of incomes. This has been promised by all the political parties but delivered by none.

That is because not one of them dare come clean about what has to be done to achieve the illusive rebalancing, because they know that the public will take fright at the prospect. Yet without attending to the root causes, there will be no positive outcome. The root causes are first sterling is historically much too high and needs to come down to much closer to parity with the US dollar. The second is priority of capital over labour has to be redressed so that labour once again becomes an engine of growth. Third imports have to fall off a cliff and exports climb one. Home production must make up for the lost imports and the surplus over must lead the export drive. Fourth housing costs have to be cut so that rents and mortgages take a much smaller proportion of income. Finally a huge economic stimulus must be pumped into the base of the economy to reboot it, without borrowing any money.

This can only be done by boosting the money supply at the base while restricting it at the top, so that asset investment becomes risky and less profitable and saving and investment in new wealth creation becomes more rewarding. That will mean house prices falling to a ratio of an average house costing not more than three times the average annual income and that the Treasury, not the Bank of England will have to print a great deal of money. There is not a single politician of any party who seems to understand any of this and if there is, either cannot articulate it, or has the courage to come clean.

If you look at that economic fact sheet you will see it makes no difference whatsoever whether we are in or out of Europe. Our economic problems are fundamental. Sort them and GB can prosper anywhere and with anybody. Europe is about a lot more than money and it is time the conversation moved on to more uplifting visions from both Remain and Leave.

This entry was posted on Wednesday, May 25th, 2016 at 5:20 pm and is filed under Malcolm Blair Robinson. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.