Osborne Is Back : To What?

Once again Osborne is in evidence and gave an assured performance at the Treasury before the market opened this morning. The point that the financial system was robust enough, with support measures in place and in action, to withstand the Brexit shock is valid and a lot of midnight oil has been burned behind the scenes to assure jittery markets. This is potentially worse, if things run out of control, than the crash of 2008, but not as instantly cataclysmic. Osborne’s statement that Banks are ten times stronger than at the start of the crash is hardly reassuring since at the start of the crash some were bust several times over. Ten times stronger than mega bust is quite weak, hence the midnight oil.

His statement that Britain’s economy is strong is open to interpretation, and one with which this blog profoundly disagrees. An economy based on house price inflation and shopping funded by borrowing is socially destructive, because it sucks resources from the industrial heartlands and pumps them into capital to buy more assets, which inflate. The result is a widening gap between those who do well on the merry-go-round and those who either cannot get on or fall off, leading to pockets of deprivation and exclusion which the lucky ignore. Eventually there is a political explosion. In our case it was the vote for Brexit.