Deluded Rachel

 

Well deluded Rachel is blaming the Tories for the state of the economy in her speech today at the Labour conference.  Come on Rachel you've been in power for well over 1 year....

Here's a reminder of where things were when Labour came to power.

OK the Tories didnt do a particular good job but when they handed over the keys to the economy to Rachel it wasnt as knackered as it is now.

Inflation was 2% now it struggles to be less than 4%

The pound was at a 2 year high against the Euro.  Now the pound is worth little more than a Euro and is at the lowest levels it's ever been.  OK our exports would will be cheaper - but we don't make anything nowadays.....

Unemployment was falling - now unemployment is rising due to Rachel's jobs tax.

Government spending was out of control - Rachel has simply put her foot on the accelerator.

Growth was pretty stagnant at about 1.6%. The OBR is predicting around 1% growth this year. 

So Rachel said

" A Labour government, she said, would stand for a British economy first. An economy that would put British workers above all else. That, the Chancellor proclaimed, was the key difference between a Labour government and a Tory one."

Then where is the growth? 

OK maybe the Tories weren't to blame and it was world events.

OK the UK growth numbers are better than Europe but our inflation is worse. We have the highest energy prices in the world. Unsurprisingly energy prices feeds into virtually all goods and services which is causing the UK's inflation.   With the pound getting weaker compared to the Euro, imports (which includes energy and food) are more expensive which adds to the inflation spiral.

Rachel can't keep blaming wholesale gas prices.  Germany imports way more gas than the UK since they made the decision to turn off all their nuclear - yet their energy prices are a fraction of ours. My gas price is 6.39p per kwh (which is significantly higher than the wholesale price) yet my electric is 27p per khw. Who's making the 21p profit?  Generation costs with gas are around £77/MWh and offshore wind cost is £271/MWh.  It looks like the real problem is not wholesale gas prices but paying over the odds for wind "green" energy.

Rachel needs to have a word with Red Miliband about this.

Although the headline growth number is better than Europe which 2TA has been bleating on about, the reality is our growth recovery to pre pandemic levels has been poor.  UK: 4.5%,  Europe: 6% and USA:13%

What growth there was in Q1/25 was a spike in anticipation of tarrifs.

The cost of servicing UK government debt is growing faster than inflation. Rachel meanwhile is hitting the credit card and making the debt pile bigger.  Higher borrowing costs.  Higher debt.  More and more tax payers money is being burnt just to stand still.

The UK has the highest debt service costs as a percentage of GDP in the world.

France is viewed having debt problems yet the cost to service the debt is nearly half the UK's. 

If you can borrow at lower interest rates (which France can) then you can borrow more money.  The UK is paying more interest as a percentage on income (tax) than any other country in the world.

The bond vigilantes have spotted the UK is in trouble so quite rightly think the UK should pay a higher interest rate for the additional risk.

USA has debt problems yet the world is paying for this as a result of the dollar being the global currency.  

France is part of the Euro so it's difficult for bond vigilantes to take on the Euro.  Sterling is weak so more vulnerable.

Japan clearly has issues with massive levels of debt yet the cost to service the debt relative to GDP is less than the UK (although their borrowing costs are rising). 

The UK is in serious financial trouble yet Rachel keeps spending.  

She has hinted that taxes will rise but the Laffer curve suggests tax income will fall as a result. 

She is deluded.  She is either totally out-of-touch with reality or she is anti-talent.

I think the YouGov survey shows the real picture

58% of respondents think she's doing a bad job and only 8% a good job. 

Stop blaming others Rachel.  Start doing the right things.  Cut public spending.  Maybe start with the £390 BILLION per year that Quangos are wasting. Or do they hold all the power so you are paralysed?

 In which case get Sir 2TK to call an election so we can get someone in who has the balls to make the changes which are needed.

Reflecting (looking back) is a useful skill in leadership in order to anticipate problems ahead.  Looking back to apportion blame is unproductive.  Labour are forever blaming their predecessors rather than expending productive energy on improving things.  

Taxation and regulation seems to be their answer.  "We'll add more red tape to regulate for more growth".  "We'll raise taxes which will stimulate growth".

Seriously this is delusional.

We are in a downturn yet it should be causing inflation to fall. The problem is businesses are passing these taxes and increased costs on which is driving up prices.  Conceptually minimum wages seems to be a good thing but it's crippling business. 

If I look back to the 80s, there was no minimum wage yet somehow the lowest paid had a better standard of living than today.  I would conclude that minimum wage is one of the key reasons why productivity has stagnated. 

Here's a graph of productivity for the UK taken from https://bankunderground.co.uk/2018/04/25/bitesize-the-past-decades-productivity-growth-in-historical-context/

Minimum wage was introduced in 1999. Productivity has pretty much fallen ever since.  Maybe that's the reason.