Now that the commentators have had time to read all the details it is nether as clever nor as good as the performance of its author delivering it yesterday. There are contradictions in forecasts and gaps in provision. What about social care? There is the inability to grasp what inequality actually is. Why do the poorest in society have to lose most of their additional funding through universal credit, rent support on so on in September of this year, when the wealthiest corporations, have their the tax hype, modest by G7 standards, deferred to 2023?
But let me offer you these thoughts. Much is made of government debt. I am not sure whether this is to make political points or news headlines, but a sovereign government with its own currency cannot be in debt as one without a currency, ie Greece in the Euro. The UK government owns the B of E and the B of E has printed money to buy in 47% of all UK government debt. Basically the government is printing about half what it borrows and will have to go on doing so.
If you want to stay awake at night, worry about interest rates. I have for years argued that holding these at close to zero for year after year so that they cease to be a factor in consumer financial planning as well as disincentive for saving, has created a misshapen economy, over borrowed and under saved. Assets have inflated way ahead of basic inflation, which is mostly lower than the target 2.5%.
Now lurking in the shadows are three types of inflation, any of which could suddenly break cover, as the economy begins to grow again, many predict quite strongly. Velocity inflation, wage price inflation and demand inflation. All three together and you have hyper inflation. But what if it is just 6% or 8% and interest rates have to go up to say 5%? Quite suddenly? That means mortgages at 7% or more. You can work out the rest.