UK Chancellor Rachel Reeves returned yesterday from a trip to China aimed at strengthening economic ties between the two nations. She claimed that her efforts would boost economic growth, at a time when the British economy feels increasingly anaemic.
At a press conference with Chinese Vice Premier He Lifeng, Reeves announced: âI believe that increasing trade and investment with an economically important partner like China is crucial for achieving my number one mission in Government â economic growth.â
Reeves might as well have been reading from George Osborneâs speech to the Shanghai Stock Exchange in 2015. In that address, Osborne also argued that closer ties between the UK and China would spur growth. âThe mutual benefits of connecting our markets are clear,â he said. âIncreased access to international capital for Chinese firmsâ will help foster âsustainable economic growthâ.
That Osborneâs 2015 comments are almost interchangeable with the current Chancellorâs a decade later is symptomatic of an alarming lack of fresh political vision in the current government. Despite winning a once-in-a-generation landslide in July, the Labour-led Treasury seems to be offering little better than reheated Cameroonism.
The Chancellorâs own excessively rigid fiscal rules mean that deep public sector spending cuts are seriously being considered. Is this really what the British public voted for? Is there anyone in the Labour team who thinks this economic approach carries any political benefits? Does such abject economic timidity come anywhere close to addressing the many crises facing British society, from housing to living standards to social care?
Obviously not. And yet there is a ready alternative to this malaise, one available to a Labour government for the first time in two generations. This would be a nationally coordinated programme of economic renewal consisting of intensive state aid projects, the expansion of public ownership, selective tariffs, a comprehensive immigration policy, joined-up agricultural policy, high labour standards, and strategic public procurement.
The mechanism that has provided this alternative is Brexit. When Britain was in the European Union, all of these economic policy levers were either removed from Number 10 entirely or conditional on EU rules. The UK could not pursue economic policies which âdistortedâ the free movement of goods, services, capital, and people across the EU. The single market reigned supreme, codified in European treaties which sat above any domestic law passed by Parliament. The superstructure of European law has now been removed from British policymakers. Yet they are still acting as if the same old rules apply.
Last year, an important figure in British politics astutely observed that the âold certainties about economic management have been found wanting.â They went on: âThe economic mainstream is adapting, but a new political consensus has yet to cohere.â That was the Shadow Chancellor Rachel Reeves in her Mais Lecture. It seems that she didnât really know what the new political consensus was, and certainly hasnât so far been able to shape it.
Whatever benefits EU membership provided in terms of easy flow of trade, migration, and investment across European countries, it seriously inhibited the power of nationally elected governments, particularly those of the Left, to pursue policies of national democratic control, investment, and planning over their domestic economies. Brexit was always a policy better suited to a Left-wing government than a Right-wing one. But very few political commentators were willing to explore this point and even fewer politicians seemed to understand it.
In Opposition, Labour failed to take seriously the benefits of Brexit. Shamefully, the British labour movement, for the most part, squandered the years after the referendum trying to overturn a democratic election. Still, Keir Starmer yesterday gave signs that he at least enjoys some of the new-found freedom on AI regulation.
Now in government, Labour has a chance to redeem itself. Labour councils for years have talked about the benefits of the âPreston modelâ, the idea that councils should use their procurement budgets to support socially useful economic activity.
We need a âPreston modelâ for the United Kingdom. This would mean Westminster using its fiscal heft to support economic activity across the country that delivers social benefits to wider communities, not just improves the bottom line for City firms. Donât just leave this to cash-strapped councils and hapless devolution projects. Seize the initiative and drive growth out of Whitehall. Itâs not fashionable to say, but it can be done.
Instead, the Government is desperately casting about for quick fixes to Britainâs problems. Itâs time to do the hard work of creating and implementing an active domestic industrial strategy. A Labour Treasury should be focused on strengthening the British economy from within, not looking to China for salvation.
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SubscribeOh dear! Such a confused and vacuous article. All the policy objectives the writer seeks are already being pursued and resulting in economic stagnation and possibly recession. How does the writer expect to borrow ÂŁ300Bn without lining the pockets of bankers? And what are these magic policies our writer alludes too? Not even a hint of what they may be.
+1. Richard Johnson “Senior Lecturer in Politics at Queen Mary University of London” does not seem to realise that the current problems are because the Government wants to borrow billions to follow his wooly agenda. And those with money to lend aren’t keen…
The article is a perfect illustration of why academics should be kept well away from policy.
If you want to âsupport economic activity across the countryâ you need to get Whitehall (and Councils) out of the way – not encourage it. Maybe stop âtaxing the hellâ out of anything that is showing signs of success while you are at it.
I thought Labour was vigorously pursuing investment in renewables to become a green energy super power. Isnât this the type of economic interventionism the author talks about?
The remedy for the problems caused by governments is not more government.
The UK economy is driven by small businesses because small businesses employ more than 60% of the working population. Governments have piled more and more taxation and regulation into these enterprises whilst artificially inflating house prices and public sector stipends and benefits in order to buy the votes of a largely unproductive suburban middle class. When these policies failed to generate growth governments have fallen back on mass immigration which creates growth by making working people poorer.
The solution is pretty obvious: relieve the burden on productive people by taxing the unearned property wealth whilst cutting taxes on small business and removing the ludicrous regulation left over from the EU.
Labour won’t do any of this because a) no-one in the current cabinet has any experience of life outside the state b)they’d lose votes in the suburbs by taxing unearned wealth and c) de-regulation of any kind goes against their busybodying instincts.
Factor in the impact of cheap energy, AI and de-regulation in the US and it becomes clear that things are inevitably going to get worse before they get better.
If government intervention of this sort could help a country grow, all of Europe would be growing like gangbusters. This has been tried again and again and again…and it DOES NOT WORK
We closed the blast furnaces in Port Talbot to allow China and India to take a tighter control of the steel market. We said we would add electric arc furnaces to the Port Talbot site to focus on steel again. Electric arc furnaces demand huge amounts of energy. Whatâs the betting that no new furnaces ever appear? I suspect that Millipede is eyeing Scunthorpe in a hungry way.
Millipede is also planning to shut down Toyota and Nissan if they donât focus 100% on EVs – thereby giving even more business to China. Another big energy user is the manufacture of cement, and we apparently will need a lot of cement; more business to China. Almost all electrical goods come from China. This visit will have achieved a great deal – they havenât stopped laughing yet.
Here’s a dose of reality for you to ponder
1. Reeves brought back a deal from
China worth ÂŁ 600 million over 5 yrs to the UK economy
2. This equates to the UK being able to pay 2 point 23 hrs of the Interest
It has to pay on its debt mountain
YES only enough to fund 2.23 Hours of that ticking time bomb clock of interest that must be paid to avoid UNTHINKABLE default
3 .The President of Grenada ( tiny little Grenada ) is currently on a 7 day visit to China and already met President Xi
That’s very very important ( note Reeves was NOT allowed anywhere near him )
4. Xi, s meet critical because from such meet then decides everything else that all other meetings shall agree
5.Xi stated China most willing to expand China / Grenada relationships in a friendly cooperative manner in a Win/ Win
Situation so consequently China will greatly work with Grenada in developing Grenada’s in AI . computing , Advanced manufacturing, Agriculture , Health and Pharmaceutical matters
6. Grenada’s President upon meeting Xi expressed on behalf of Grenada their profound thanks for the rapid aid and assistance freely given to Grenada immediately after and ongoing help with the recent devastating Hurricane Grenada expierenced
Think long and hard as to what Grenada achieved and compare with what UK did
Got it
Reeves arrived with Governor of BOE and Chief of HSBC and leaders of many other major UK financial institutions
Waste of time as they left with Zero despite seeking
Mutual benefits for City of London ( vital for UK Economy also tax receipts) and Chinese financial institutions
Every story paints a picture
And that’s one of that to China the UK is irrelevant
Why because no matter what the UK is none other than a protectorate of the USA Hegomonic Empire who now Actively and futilely so attempt to Thwart the Rise of China
“China worth ÂŁ 600 million over 5 yrs to the UK economy. This equates to the UK being able to pay 2 . 23 hrs of the Interest”.
Maths is not your strong suit, is it.
I think itâs 2.25 days.
But if you take the annualised return of 600 over 5 years itâs about 10 hours of debt.
So whilst incorrect, I think the point still holds, itâs next to nothing and not worth the time spent.
It’s hours not days
Before the 5 yrs up
UK debt will be in interest alone
ÂŁ 120 billion / year and at interest yield of at least 5 %
You go do the maths
As it appears you either lack the skills or use data that’s false
I think any leader of any democratic nation that values free speech should be breaking what ties with China they have, not making new ones. There are some things worth more than money. I don’t know about you, but I’ll pay quite a bit and sacrifice quite a lot for the ability to criticize my government or any other in any non-violent way. The price of freedom is high. It always has been, but the US will pay it even if we have to drag the billionaires and the political establishment kicking and screaming behind us. If you don’t care about that and just want to grow your economy, then by all means take your chances with Chairman Xi. It’s really a question of priorities I suppose.
Oh yes Western Demographic Freedom
Like Labour win a super majority on 22 % of those eligible to vote
Like the fact that you are not a citizen but a subject to HM and with a stroke of the pen all your
So called rights can be removed
Like the unelected house of Lords
Like the Sub Post Masters who used their free speech 26 yes ago and now being offered 10% of their claims by their Peers who cross their fingers in the hope they accept or refuse then die
Like Grenfell and still no one brought to justice
And on and on and on and on
Read the 5000 yr History of China
Whether Emporer or President
If you Govern immorally then it’s certain one way or a another
You will be disposed off and replaced by one who shall excersise good governance
If you reside in England and upon a flood plain sooner or later Ye shall find out what poor governance really involves
“..the Labour-led Treasury seems to be offering little better than reheated Cameroonism.”
With Reeves at the helm, our economy is well on the way to being on a par with Cameroon.
Reeves and Osborne: equally under the thumb of the blob.
“the idea that councils should use their procurement budgets to support socially useful economic activity.”
The author is quite clearly an imbecile.
I canât see any rationalisation for spending taxpayers money on anything further. We need a massive axing of all but the essential public sector jobs, not a problem because most of the essential job are done by âworking peopleâ Removal of all quangos and the necessary job roles returned to the government on government salaries not private sector salaries at the taxpayers expense. The rest can go done the drain. No more consultants. Democracy and accountability needs to be fully restored. The complete end of funding for overreaching lobby groups and charities. The end of sending money to foreign countries who donât need it and/or have nothing to trade for it.
Borders closed to all but high skilled workers and tourists. No family visas, if you want to be with your family stay where they are. A muscular policy toward the removal of illegal entrants. Whatever the cost. They get nothing more than a hot meal and a military cargo plane back whence they came. Itâs the ONLY deterrent that will work. No cash, no cards, no housing, no âempathyâ nothing. Itâs not personal. We canât afford it.
No free healthcare to none citizens. Visitors and tourists need healthcare and itâs charged at US comparable rates if they need it.
Then the reduction of business rates, business taxation, bureaucratic meddling and employment red tape weighted in favour of second rate halfwit individuals who donât want to work and think theyâre owed something more than their salary in exchange for the job they agreed to do. Business and Economic growth is the only way out of this hole weâre in and the state needs to get out of the way and stop choking the economy (and our personal lives) with it idiotic and wasteful crusades.