What caught my eye this week.
Like many people, my immediate reaction to this week’s budget was a sense of relief.
Not just on a personal level. Rather, given the litany of potential clangers leaked beforehand – and Rachel Reeves’ form with her hike in employer NICs last year – I was pleased to see nothing too destabilising for the economy.
I don’t even mind that the revenue-raising piece of the budget was backloaded, with the extended freeze on income tax thresholds.
Yes, as I wrote on Wednesday there is a case for being bolder upfront. This might have brought gilt yields – and hence borrowing costs – down faster.
And personally I’d have preferred to see a small rise in basic rate income tax than endless fiddling with pensions, salaries, allowances, ISAs, and all the rest – with the triple-underlined proviso that this should have meant none of the animal spirit-suffocating speculation we saw beforehand, too.
But I can see the other side.
Economic growth is already feeble. Upfront tax hikes could have made things worse, even if gilt yields did dip.
At least by freezing income tax thresholds we just boil the frog some more – meanwhile hoping things can heat up in the rest of the kitchen.
Making ISAs grate again
As the week moved on though, my relief has given way to frustration.
Reading various pundits’ takes on the Budget, it all seemed a lot of fuss about nothing in terms of most of the measures.
Just compare what we saw announced on Wednesday with the cacophony of briefings, counter-briefings, and speculation we endured since summer.
Was it worth coshing the economy back into its box – by delaying investments, hiring, home moving, or just splashing out – for this?
Then there is the measure that’s caused the most fuss about these parts: the move to restrict the annual cash ISA allowance to £12,000.
A pointless priority
On the positive side of the ledger, the one thing that economists, businesses, the media, and even the IMF agreed before the Budget was that we needed to jolt Britain out of its doom loop by faffing about with a popular savings product that people actually understand and use.
Only kidding. Nobody said that. Everyone called for capital investments, or growth initiatives, or spending cuts. Ho hum.
When I wrote back in summer that instead of grasping the enormity of the challenge facing aging, entitled post-Brexit Britain, we’d been reduced to squabbling over what we’ve got, this is exactly what I meant.
Big picture, restricting cash ISA savings will achieve nothing.
For individuals it will mean confusion. Platforms will have to spend millions implementing extra checks on what you’re investing where. And the authorities will need to spend millions to make sure you follow the rules.
Many people thought they’d never touch cash ISAs. Alas I thought they might, which was why I kept running the rumours over the past 18 months.
That’s because I’ve realised we’re watching more a theatre of governance than its reality in Western politics today.
And Britain’s equivalent of, say, extrajudicially blowing up boats in the Caribbean is messing around with the tax shelters of Little England.
Do this, do that, and hope the electorate is distracted. (To be clear I blame the voters for most of this, in part driven by the ills of social media.)
Kerching!
Some savvy Monevator readers laughed in the face of a cash ISA cap.
“I’ll just hold money market funds or gilts,” they said.
But I warned in my piece that there would likely be rules against that sort of thing. And sure enough, we’ve had official word there will be measures to stop you sneakily rigging up your shares ISA as a cash ISA proxy.
My best guess is the platforms will not enable you to buy anything cash-like in a shares ISA unless it has more than five years (or similar) to run. You’ll probably be allowed to hold what you’ve already got. That’s how it worked last time, from memory.
But the HMRC note talks about a ‘charge’. So maybe they’ll even apply some kind of levy to existing or ongoing cash-like holdings?
If you’re thinking “surely not, what a faff” then you’ve missed out the extra word “pointless”.
I’ve been writing about ISAs for 20 years and I guarantee this change is just going to confuse people.
It might make a handful more people invest a few more quid at the margin, but there must be better ways to achieve the same result.
It’s worse than they’re saying
Of course the right-wing press is up in arms about the Budget. They would have been whatever it contained.
The attack vector du jour is that Reeves lied beforehand about the state of the UK economy, when she hinted earlier of potential income tax rises.
The truth is Reeves and other politicians are if anything not gloomy enough.
Let me remind you of this recent graph:
Britain is in a state. Whether Reeves muddled around the edges of her self-imposed ‘headroom’ is neither here nor there.
Of course I’m inclined to give this government more slack than, say, The Telegraph does because I’m able to admit that 90% of this problem is not of Labour’s making. It inherited a crock.
To be clear, that blame percentage is going down as they add their blunders (the NIC hike) or dithering (pre-Budget speculation) to the mix.
But as it is, I’m prepared, say, to actually read and digest the swathes of research that shows the hit to the UK economy from Brexit is costing the UK state at least £60bn a year in lost tax revenues.
That sum that dwarfs the tax rises that Labour has forced onto a weak economy that you’d rather we were investing in to stimulate.
But I know… (half a dozen of) you don’t want to hear me rant about Brexit again.
Luckily I don’t have to.
A Brexiteer recants
This week saw Ryan Bourne – one of the so-called ‘Economists for Brexit’, a crew plentiful enough to squeeze into an Uber to the Leave victory party – concede that Brexit has been an economic disaster.
In a piece entitled – pinch me, I’m dreaming – We Brexiteers Must Acknowledge The Costs of Leaving Europe in The Times [paywalled], Bourne admits:
The microeconomic, firm-level data is crystal clear that Brexit has had a significant, depressive impact.
The authors [of recent research] use the Bank of England’s decision-maker panel — about 7,000 firms surveyed — to show that the more EU-exposed a company was, the more likely it cut investment and slowed hiring after the referendum.
By 2023, average business investment was 12 per cent lower than otherwise. Productivity within firms was 3 to 4 per cent weaker.
Roughly half of firms listed Brexit as a top source of uncertainty for years after the vote. Yes, remainer foot-dragging in parliament exacerbated this uncertainty. But wherever you ascribe blame, managers devoted hours each week to planning for new post-Brexit customs arrangements, regulation and precautionary stockpiles. This displacement activity weakened innovation, delayed investment and distracted managers from core business.
Such evidence cannot be dismissed as Project Fear. It is data.
Hallelujah.
Some have scorned Bourne’s nine-year overdue revelation. They suggest that if he wants to remain a respected chap at the Cato Institute and widely-quoted in the media, he must, you know, show a grasp of economics.
Hence they see a desperate recantation to save his credibility and career.
I’m less harsh. It’s true I’m just a humble blogger who said this would happen with Brexit and it’s happened, yet I still await my fellowship or chairman role at any leading economic bodies.
But as for Bourne, I say let people change their minds.
Who among us didn’t do something silly in their youth? The first album I ever bought was The Return of Bruno by Bruce Willis. You won’t see that on my musical C.V.
If every Leaver admitted Brexit was economic folly then we’d be down to the minority of sovereignty diehards (a respectable position), nativists (not my bag but fine), or worse (you decide).
Farage would not be electable, and we could accelerate the inevitable rejoining of the EU. That would by no means solve all or even most of our problems, but it would be good for tens of billions of economic “Hooya!” upfront.
Most leading Brexiteers won’t recant though, let alone everyday Leave voters who can wave their hands and talk about how Remainers (who were literally ejected from the Tory party) ruined Brexit (which was actually implemented by Boris Johnson, the leading figure of the Leave campaign).
Fantasy footballs
But this is the make believe world we’re in today. Too many people don’t think about what they believe. And they often don’t believe what they say.
(And of course if you believe you see someone saying something, you have to check that it wasn’t AI…)
To return to Reeves and Labour, does anything underline this phoney state more than their definition of ‘working people’ that doesn’t include the workers who generate the bulk of the income tax receipts, let alone GDP?
My taxes are going up again – not least with the dividend hike – so I guess I was deluding myself that I’ve been working. I suppose it’s all just been some neoliberal play acting on my part, and my computer is made of cheese.
The resurgent blogger 3652 Days went big on this in a great post this week.
Check out his glossary of political terms, which begins:
- Balanced Approach – More tax. Balanced chiefly on your wallet.
- Brexit’s Impact on the Economy – See: “global factors”, “challenging headwinds”, and “please stop asking”.
- Broad Shoulders – Anyone who has ever received a tax bill that induces mild nausea.
- Challenging Headwinds – Meteorological phenomenon occurring whenever GDP numbers flatline. Typically used in place of the more accurate “we did something extremely stupid and would quite like you to stop bringing it up”.
- Civic Duty – Paying more tax with a serene facial expression.
There’s much more. Enjoy, and have a great weekend.
From Monevator
First take on the big bits of the 2025 Budget – Monevator
Bear market recovery: how long does it really take? – Monevator
From the archive-ator: Watching financial TV stresses you out – Monevator
News
No 10 denies Reeves misled public in run up to Budget – BBC
No tax for state pensioners who have no other income [quadruple lock!] – BBC
House prices fall in South-East for first time in 18 months – This Is Money
Revolut now valued at £57bn ($75bn) after secondary share sale – Standard
Nearly $1 trillion of fine art could change hands during the ‘Great Wealth Transfer’ – Fortune
A ‘UK premium’ baked into markets – Mohammed El-Erian via Facebook / FT
Budget 2025 mini-special
HMRC confirms ‘test’ and ‘charge’ to head-off cash-like investments in share ISAs – GOV.UK
Business left asking: what happened to growth? – BBC
Mansion tax valuation appeals will flood the government’s agency [Paywall] – FT
Dividend tax hiked in blow to investors – Which
VCT relief cut to 20% – Trustnet
More on those income tax hikes for landlords – This Is Money
Freeze on student loan repayment threshold will hurt, warns NUS – Guardian
How the chancellor just took a chunk of your future pay… – BBC
…see how much with the budget tax threshold freeze calculator – Sky News
Budget winners and losers – Be Clever With Your Cash
Another run through the Budget, with Dan Neidle – Tax Policy Associates
“There is no reason to start a business in Britain” – This Is Money
Britons response to the budget: polls – YouGov
Products and services
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Lifetime ISA rates hiked as high as 4.69% – This Is Money
PayPal’s new debit and credit cards offer up to 1.5% cashback – Which
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley
How to check the price history of online wares – Be Clever With Your Cash
Kraken launches a debit card that enables you to spend crypto – This Is Money
Get up to £200 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link. – Interactive Investor
Santander switch: £200 + £25 Amazon voucher – Be Clever With Your Cash
Homes for down-sizers, in pictures – Guardian
Comment and opinion
How can investors ‘follow the evidence’? – Behavioural Investment
Avoiding money worries in your relationship – Guardian
Get rich and die giving – The Root of All
No one is above getting scammed – Abnormal Returns
How to have a happy retirement – Barking Up the Wrong Tree
Do we need a long bear market? – A Wealth of Common Sense
The joy of doing nothing in retirement – Wall Street Journal [via A.R.]
The gap between living and living well – The Retirement Manifesto
Retired investors trade more and have worse returns [Research] – via SSRN
Another AI bubble mini-special
Boom, bubble, bust, boom – Crazy Stupid Tech
Rational Exuberance – The Big Picture
Bull markets don’t last forever – Morningstar
Firms are the smart money – Arcadian
Conduit debt financing: is this how the bubble pops? – Of Dollars and Data
The railway bubble remembered – A Wealth of Common Sense
Naughty corner: Active antics
Why it’s harder to tell gambling from investing nowadays – Bloomberg
Investors struggle to stick with trend and other oddball funds – Morningstar
Thinking about 2026 in the markets – Carlson Group
Digital asset treasury companies are running out of steam – Citation Needed
Academics underline the case for the momentum factor [Research] – Alpha Architect
Kindle book bargains
Nudge by Richard Thaler – £0.99 on Kindle
I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle
Oil: A Beginner’s Guide by Vaclav Smil – £0.99 on Kindle
Meltdown: The Collapse of Credit Suisse by Duncan Mavin – £0.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
The facts on the climate crisis speak for themselves – Guardian
The government is seeking input on its Feed-in-Tariff indexing changes. Worth reading up on if you’ve an older solar panel deal linked to RPI-inflation – GOV.UK
UK species at risk of extinction named in new report – BBC
Octopus one-stop solar panels review, with costs – Independent
The countries that gained the most forest: 2015-2025 [Infographic] – Visual Capitalist
How a 30-foot sea cow was hunted to extinction – National Geographic
Robot overlord roundup
Kicking robots – Harpers
OpenAI founder says scaling is not enough to advance AI – Business Insider
Benedict Evan’s latest ‘AI is eating the world’ deck [Slideshow] – Ben Evans
Autonomous driving: who has the wheel? – Sherwood
How ASML got EUV [Tangentially related!] – Construction Physics
Not at the dinner table
Has the UK become an economic colony thanks to the tech giants? – Guardian
How Silicon Valley enabled China’s digital police state – A.P. News
T.S. Eliot’s The Hollow Men: poetry and populism – The Conversation
American democracy is alive, if not entirely well – Marginal Revolution
The Reith lectures: A time of monsters [Podcast] – BBC
X’s new feature exposes social media’s bad actors, in all senses – Tech Dirt
The life and limbo of a UK asylum seeker – Guardian
Off our beat
Saying goodbye to the things that made us who we are – The Art of Wandering
Brain has five ‘eras’, scientists say. Adult mode doesn’t start until 30s – Guardian
The future of war is the future of society – Noahpinion
How a giant glass pyramid saved UK cinema – BBC
The realities of being a pop star – Charli XCX
Boy with rare symptom amazes doctors after gene therapy in Manchester – BBC
A requiem for early blogging – Elizabeth Spiers
Having more friends make you happier than having kids – Klement on Investing
Why are screen villains always drinking milk? – The Conversation
And finally…
“Focus on being productive instead of busy.”
– Tim Ferris, The 4-Hour Work Week
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Thanks TI for pointing out truth to power and another great set of links this weekend.
Kudos to Ryan Bourne for admitting his shocking errors of judgment and acknowledging that Brexit has torpedoed the UK economy. And to The Times for publishing. It is no use complaining about the plight of the ‘left behind’ if you have helped them commit economic suicide. Would be nice if a few more Brexitter fantasists woke up with Bourne’s degree of self-awareness and rationality but I won’t be holding my breath….
Re: Cash ISA limit – I feel like I can practically see the U-turn sign on the horizon. Maybe I’m wrong, but I can’t help but feel once the platforms scream about the bureaucratic red tape they have to reimplement in support of this pointless measure, it will be quietly (or not so quietly) abandoned.
It is, after all, still 16 months away.
Interesting (and very nice) but troubling graph from the FT there. The separation away from the average wouldn’t be so worrying (given that the range of values has also expanded) were it not for the fact that we have moved from consistently being in about the 50th centile to close to the 100th in only a few years. I had no idea things were quite that bad.
The 3652 Days glossary is laugh out loud funny, thank you.
RE: “No tax for state pensioners who have no other income [quadruple lock!]”
I see the argument for the quadruple lock, but isn’t it more like another form of means testing the SP? That is: whilst contributing the more you earn the more you pay in and, once drawing the SP, the more other income you have the less SP you get out.
The more the newsletters are about The Investor’s political beliefs, the less interesting they are.
Regarding the worrying FT graph, particularly the right hand one, I can’t believe that young people have the temerity to get older. Don’t they realise how much worse they are making things, eventually they will become Boomers. They need to cut that out right now.
@Baron — The more you make this point (because my views don’t agree with yours) the less I care.
You’ve said as much several times. Yet here I am. It’s a big internet. Maybe this isn’t the blog for you.
Finally, the political point I’m making is entirely on topic and relevant to the budget and our finances. As explained in the article. I’m not talking about gender identity issues or whatnot.
So, again, I’m very happy with my editorial stance. Readers are welcome to pick and choose.
@Monevator
Name spellcheck: Another run through the Budget, with Dan Neidle
>>> Farage would not be electable, and we could accelerate the inevitable rejoining of the EU. <<<
I was/am a Remain voter, but I do not believe the UK should rejoin the EU. There is no going back into the EU structure we left and we must forge a new path forwards…
I could envisage evolving the UK/EU relationship towards something that should probably have occurred in the first place had everyone negotiated like adults – that is, the UK sitting in one of the outer-EU rings, alongside other non-Eurozone, or non-EU EEA, economies. But this would require a pragmatic rearchitecting of/by EU members and dropping of the dogma, of which there is no sign.
So sadly, the UK and the EU will both continue to lose – the UK losing more, for sure, but all are worse off, economically and militarily, due to the inability of allies to actually act rationally in both their individual and collective interests.
But rejoining the EU as before? Not a chance this will ever occur.
“We Brexiteers must acknowledge the costs of leaving Europe” – surely this had to be made up. I kept waiting for the punchline, Haha in a parallel universe. Article without paywall: https://archive.is/wdhs5
The budget is unambitious and kicks the can down the road, which is what voters wanted. The mood is one of resentment and petty squabbling. Despite all the flag-shagging, no one wants to make any sacrifices.
The biggest chunk comes from the frozen thresholds which affects low and middle incomes most. Same for the second-biggest chunk, NI on pension salary sacrifice. Basic rate relief from 28% to 20%, higher rate from 42% to 40%. I don’t care about the 2% NI, but only 20% relief may not be worth it. Who knows what will happen to income tax and pension rules in the next couple of decades.
The cash ISA cap is as inconsequential as the rest of the budget. Few have a spare 12k per year, let alone 20k. If they do, they sure shouldn’t be over 60% in cash. If they really must hold more cash, buy short gilts in a GIA or money market funds in the SIPP.
Puzzled that you seem inclined to let the Chancellor off the hook for misleading the public about the public finances in the run up to Budget day. As I understand the evidence, she went out of her way to misrepresent the public finance data she had from the OBR. Paul Johnson (previously head of the IFS) has said as much if you don’t like to hear it from the right wing press.
Evidently she – and the rest of the political class – aren’t grappling with the long term fiscal issues arising from an ageing population. But that does not excuse misleading the public about the very short term fiscal situation.
Banning / penalising cash-like instruments in stocks and shares ISAs is ridiculous. What are you supposed to do in the middle of an enormous stock market crash and you want to sell out of shares into a money market fund?
@CGT101 – the current head of the IFS did not accuse the chancellor of misleading the public in the IFS budget explainer: https://ifs.org.uk/articles/autumn-budget-2025-explained-0
@ch – give it another 10 years 🙂
@Sparschwein – “Despite all the flag-shagging, no one wants to make any sacrifices.” Spot on!
@Baron – It’s not about political beliefs, is it? It’s economic reality.
@TA totally agree on ISAs.
Also am funding kids Uni through their ISAs and am derisking to money market funds ahead of payments being due. Absolutely idiotic proposal.
The cash ISA change is stupid and just adds horrible frictional costs. It’s also not about making people save less and invest more. If you wanted that, you would not increase the FSCS deposit limit from £85k to £120k.
Most of the heavy lifting in Reeve’s budget is done via fiscal drag. The cornucopia of other policies really only generate a few hundred million or the odd billion. The annual tax lost due to ISAs was minimal a decade ago, it’s now in the single digit billions. So cutting the cash ISA allowance will scrape back a few hundred million. I suspect, they would have slashed general ISA allowances but it doesn’t really gel with all the crap about investing in the UK and “growth, growth, growth”.
If you want to encourage investing in shares, increase the ISA limit to say £30k and require the incremental £10k go into a stocks and shares ISA.
Of course Brexit economically screwed the country. You don’t need to be able to split the atom to figure that out!
The mooted restriction on holding cash-like investments in S&S ISAs is infuriating. It will make it harder for people to de-risk their portfolio when it is appropriate for their circumstances.
Fingers crossed HMRC uses a narrow definition of cash-like and allows bonds of a few years maturity or greater. That’d be near enough to cash for most purposes.
If HMRC allow only rather long duration bonds in S&S ISAs then the one get out I can still see is to use a flexible S&S ISA and shift money to low-coupon short duration gilts (which are nearly tax free) held in a GIA for most of the year, switching them back into the ISA just for a few days across 6 April to keep the ISA wrapper.
@TA Haven’t listened to the whole IFS analysis, but the current director of the IFS is clear that “in the event there was no big fiscal repair job” and that the Chancellor knew this (she had the relevant OBR forecast) before giving her very unusual breakfast TV doom-and-gloom speech. This was a budget in which taxes were raised to fund increased public spending.
I wouldn’t expect the current head of the IFS to say outright that the Chancellor misled the public (that’s not how you get and keep that job, whereas ex heads can speak more freely). If she somewhere specifically exonerates the Chancellor of doing so then I’d change my mind on the matter.
Don’t think this is a left/right issue, it’s about public standards.
Re: S&S ISA containing Money Market funds
“You’ll probably be allowed to hold what you’ve already got. That’s how it worked last time, from memory.”
If it turns out this isn’t the case, then in the next 16 months how many billions from S&S ISA holders will be forced to to be sold and the proceeds put into non-cash like investments to irrespective of market conditions? Only other option would be to move out of the ISA wrapper and lose that forever.
@Eadweard – wrote my post before seeing yours…you suggest a decent potential mitigation to losing the ISA wrapper
@Sparschwein (#10):
The 15% NI hit for some employers could be rather costly. AFAICT, the Red Book lumps employee & employer NI together in row 52 of the costings spreadsheet* in Section 4.
*which, as Robert Peston opined, contains a good few “tooth fairy” entries, some of which are pretty hefty too, such as 37 and 59; a fully costed plan indeed!
Reducing the Cash ISA limit is fine, it might provide a nudge that influences some people to at least look at S&S. What they’ve failed to do is work out how to undo 20 odd years of ‘you could get back less than you put in’ terror warnings that has meant the average person thinks the stock market is akin to gambling.
The proposed restrictions on what you might be able to hold in a S&S isa are cripplingly bad. As people have pointed out using cash like funds (money market etc) are fundamental to managing risk for loads of valid reasons. I wonder if the intention is to steer people with into equities or government bonds (rather than mm funds) perhaps with the idea that it brings the interest rates on government debt down?
I think the outcome will be a resurgence of flogging ‘low risk’ onshore/offshore investment bonds in all their high cost overly complex brilliance.
On short dated Gilts, and trying hard to find some sort of meagre silver lining to the dark gray cloud (and, mixing my metaphors, the possible thin edge of the wedge) that is HMG now getting stuck into what we can and can’t hold in our ISAs and how we ‘should’ and ‘shouldn’t’ invest our own hard earned (and already fully taxed) money: don’t forget that historically longer dated, high quality government bonds have offered better crash hedging (negative correlation) to equities than shorter durations (albeit with obviously higher interest rate risk).
It’s not much, but it’s something to hold onto.
It’s amazing how few ideas this government has got and how inward looking and short sighted they are. No vision. No solutions. No different in kind, only in degree, to the intellectually (and ethically) bankrupt Tory years (at least post-2016). I’m coming to hate them all now TBH. I don’t think I can give Labour my vote yet again. Buyer’s remorse here.
The world’s facing a demographic disaster (TFR in Bogota is now below 1, lower than Japan. China is probably around 1 (given the official figures are massaged). In Seoul it’s just 0.55). And we’ve got a job quake on the horizon for the PMC worldwide, including here in Blighty, due to LLMs (e g. cost per task down 300x in one year): https://x.com/sama/status/1990617084661743811?s=20
And our government is focussing instead on reducing the cash ISA limit from £20k to £12k????
We’ve never done cash ISAs but we did use TESSAs during their brief existence, and I can’t actually remember why. Instead we used PEPs from about ’88 and S&S ISAs from when they came in around just in time for the dot com crash.
I also think a back-pedal on cash ISA limits is likely for the simple reason that people who use them have good reasons (short investment horizon, ignorance, fear, it doesn’t matter) for not using S&S ISAs and are vanishingly unlikely to change their position on this.
I have often wondered how many people could stuff £20k into an ISA every year or £60k into pension. Why not scrap cash ISA’S and just increase the savings tax allowance and limit pension contributions to say £30k and scrap all the complications. If NHS surgeons kick off well revise their pension/remuneration packages. Who do they think they are anyway, train drivers?
This really is a hopeless government and, what’s worse, a competent alternative isn’t in sight.
That JP graph is astonishing. Eventually government will fall to whichever party stands up and says they will slash spending and give us whatever flavour of policies – no matter how unpalatable they are to centrists.
Bringing up Brexit is excellent indeed. We lost that argument by calling the other side names and hoping there were more of us. We were wrong. Unless the main left of centrists cut deep and soon, we will end up with an extreme government that will.
The demographic chart I find more terrifying if you capitalise the unfunded pensions liabilities (ie combined state sector pension and old age pension) and look at how big the liability is. We are rearranging deckchairs because our politicians are not brave enough to move the debate to the iceberg which they know exists.
Rachel deserves everything she gets for misleading the public and the media about the state of the economy. But the wolf that she has cried out for is coming to eat us all.
As a remain voter who wholly accepted the result of the referendum i don’t know why you can’t do the same. I selfishly voted remain to keep the economic status quo. However there are more important things in life like sovereignty. Once Farage gets in and we exit echr (did tories also float this) and whatever else needs leaving atleast we will get the sovereignty benefits of the vote. I really don’t see re joining as inevitable, its more likely to me Reform wins next election. Id prefer Rupert Lowe (no party at pres) but hey ho.
I’m not too fussed on the isa changes, I use the whole lot in s&s. As you say though its a load of administrative burden for basically nothing. Cash isa savers will just move to normal cash accounts.
Can we celebrate the koshing of luxury car brands from the motobility scheme. I predicted a while ago here the send school taxis will be next on the hit list. The Overton window is shifting fast on all this stuff.
@Mr Optimistic #22
‘Why not scrap cash ISA’S and just increase the savings tax allowance and limit pension contributions to say £30k and scrap all the complications. If NHS surgeons kick off well revise their pension/remuneration packages.’
Are you implying that State employees should get a better deal than the private sector?
(maybe I’ve misunderstood)
@Mathmo. As well as the entrenched interests blocking significant change, the Labour and Conservative parties are each really two opposing parties under one wrapper. Perhaps a reduction in the number of mp’s might help..an electoral landslide causes issues for the winning party owing to the one term runts in the litter.
On ISA’S, it occurs to me that the over 65 exemption might feed across to any proposed restrictions for the share ISA’S, which would make me very happy . Like others, I can’t see this stupidity surviving. Since the papers reckon the UK is shifting to issuing shorter duration debt, why restrict ISA investors from buying it ?
The whole budget seemed incoherent and hurried. The Labour Party must be fed up with RR’s inability to project a steady hand.
Salary Sacrifice is and all was an ill thought out fudge. Raising taxes on one side then int4oducing SS as a way of getting around those taxes. The same objective could be achieved by scrapping SS and lowering NI or IT. Why complicate more an already very complicated tax system. I believe a better way forward is to get rid of all the exemptions / allowances and tax all income equally.
I agree with Bally0012 (#28) It seems fatuous to me for governments to have introduced the complications of Salary Sacrifice as a way of letting NI-payers avoiding the consequences of other government taxation decisions.
You could say that ISAs do the same thing but at least they do it in a way that is (for the time being) reasonably clear and simple. And they do it for everyone who wants to take part: it doesn’t depend on your having an employer who is prepared to play ball.
@Jim (24). Even if the true financial damage of Brexit was shared beforehand there is no knowing if it would have changed the result. I have my Article 50 status so I can continue to work in Europe as I did before Brexit but I don’t plan to retire there or give up my nationality so care about the UK’s future.
What has just happened is a bunch of incompetent and self-interested politicians looking out for their own futures and no further forward than 24 months, hoping that something will turn up. They didn’t wreck anything but have shown that they don’t have the answer any more than the last lot did.
Amazingly it could be worse – the 5th Republic in France looks vulnerable right now after 50 years of left wing policies. Its saving grace might be a genuine industrial strategy built since the 1960s rather than three slogans and a photo of a warehouse plus a minister in a hi viz jacket that seems to do for us these days.
I’m all for anyone who steps up to TI’s simplification manifesto in the last comments section. It is step 1 of admitting you have a problem and you are going to tackle it.
I’ve come to think of uninspiring leaders and fiddle-round-the-edges policy as a feature not a bug. Grand political projects usually end in a mess. Brexit, say, or Truss, or the BoE’s enormous QE programme that was rarely even discussed. More generally, communism, nationalism and other -isms. Beware the charismatic leader with simple solutions.
When governments muddle through, they at least do no major harm and let people get on with whatever they can do to turn things around. And eventually things *will* turn around.
What a topsy-turvy world we live in, if you are a client of the state, have some more, if you contribute to gdp then you must give more via taxes. If you are an illegal, please, have free food, accomodation, benefits, healthcare and taxis.
The Treasury is looking to replace Sam Beckett, I hope they appoint a disciple of Arthur Laffer.
@Jim — I accepted the result of the Referendum. You will search in vain for my demanding a recount or a re-run. But that doesn’t mean I think it was a good idea. Day one of undoing the imminent damage was the day after the vote.
I really struggle with why people don’t understand this distinction. (I don’t struggle with people being bored of talking about it. That is human and understandable).
My main issue as I said when we discussed this (too) recently was that it’s not accounted for in the wider discussion, particular in the right-wing media which is where most of the pensioner/voting class gets their information from these days.
Find me the Telegraph article from the past week that said “of course, Reeves starts in a hole with Brexit leaving the UK state at least £60bn short every year compared to the natural pre-Brexit run-rate”. I’ll wait.
Agreed Reform is going to get a lot of votes and maybe a lot of MPs. I don’t think we’ll rejoin the EU anytime soon. By ‘accelerate’ I mean within the next 10-20 years, say, versus 20+ years.
I think it’s extremely likely we’ll rejoin if the world otherwise stays basically as is. It’s a super-easy win to boost economic growth because Europe is just sitting on our borders as by far our largest trading partner. Who knows, maybe even a democratic Russia will someday be clamouring for entry…
Of course if the world takes a lurch for the sci-fi/dystopian, who knows. In some sovereign individual world where I sign up to the International Brotherhood of Self-Interested Investors and stop paying my taxes in Britain (or something far less radical, or something AI-driven) then anything goes.
But it’s otherwise senseless us not being in the EU economically.
As for sovereignty, I always say it’s a respectable reason to have voted Leave. Because it was, it’s completely coherent intellectually.
But as for the advantages of this pure technical sovereignty, well I see none. It disrupted our involvement with multiple bodies, which we’re slowly piecing back together in a lesser fashion. We now effectively take rules from the EU on multiple fronts. Maybe we ducked a future EU army but we’ll probably end up paying for a bunch of stuff for our military that could have been defrayed better across 600m people.
I’ve seen no advantages to us regaining our sovereignty over the past few years. Quite the opposite in several cases.
Surely this budget is a huge opportunity for monevator-style sites?-
the article “I was going to get another £20k cash isa, what S&S isa should
I have instead” ought to get a huge audience.
I fail to see why £12,000 a year cumulative is an issue to cash ISA savers, especially as other tax free savings accounts exist – NSI premium bonds etc. how much cash does anyone need? If your portfolio is at say 30% cash, that would imply that, say after 10 years of accruals at £12,000 and a full quota of premium bonds, your net worth would be over half a million before property and pension. The budget for me was a non event, until a few years out, it makes no difference to my finances. It brings half a million kids out of poverty. No bitching here. If Brexit was not a total clusterfuck, the evidence would be loud and proud… Still waiting…
Jimjim
On pension salary sacrifice I would point out that employer contributions to public sector pensions are not subject to the same employer and employee NIC rules. This seems an anomaly. Where is the logic in making public sector pensions even more attractive than they currently are compared to private sector ones?
The first album I ever bought was Metallica by Metallica. On a cassette. I think it still might be somewhere in my mother’s loft, though I’ve no idea where I’d even find a cassette player now. #hoardersanonymous
@TI #33
>>> Find me the Telegraph article from the past week that said “of course, Reeves starts in a hole with Brexit leaving the UK state at least £60bn short every year compared to the natural pre-Brexit run-rate”. I’ll wait. <<<
Your 3hr wait might be over:
"Time to admit the truth: Brexit has been an unmitigated economic failure"
https://www.telegraph.co.uk/business/2025/11/29/admit-truth-brexit-has-been-an-unmitigated-economic-failure/
"Leaving the EU has reduced Britain’s GDP by up to 8pc, according to a devastating US study"
Now that the “right wing press” is publishing candid articles about the economic consequences of Brexit, showing an exemplary respect for expert evidence, it would be nice to see the “left wing press” admitting that mistakes were made in pushing for a second referendum. in the spirit of truth and reconciliation and all that. I won’t hold my breath though.
The only reason the Cash ISA limit doesn’t apply to over 65s is because Labour are trying their hardest not to p*ss off the grey vote again. Likewise the Bingo tax exemption, so cynically political I laughed when RR announced it. It’s almost like they’re saying “We’re sorry about the Winter Fuel Allowance debacle, please forgive us.” I tend to see their unwillingness to talk about Brexit in the same light, it’s purely political. I could see the pain on RR’s face when Ed Davey pointed out the obvious solution to our economic malaise. They’re even now talking about the Triple Lock Plus that Rishi floated during the election campaign. It may or may not work for Labour, it’s hard to say, but that’s the calculation I think, that they’re more likely to win the next election with the grey vote on board than by doing something that might boost economic growth like joining a customs union with the EU.
@Wephway
>>> than by doing something that might boost economic growth like joining a customs union with the EU. <<<
I believe that joining the EU Customs Union is something of a red herring and isn't going to happen outside of the UK regaining full EU membership… which I'm confident also isn't going to happen, not just anytime soon, but anytime ever IMO (unless a "redesigned" EU emerged with more flexible membership options).
Custom Union membership, absent Single Market membership, doesn't really achieve that much – while it eliminates Rules of Origin admin, it does nothing to address regulatory barriers which remain, so you still have border checks and major friction. Also, if in a customs union with the EU, the UK can't do free trade deals with other countries, as the UK would have to apply the EU's external tariffs still. Worse, Customs Union membership does nothing for services: the UK remains a “third country” to the EU, with no passporting.
During the Brexit negotiations, some floated Customs Union membership almost s if it was Single Market Lite, but it's not really, and is a poor option.
If we'd wished to remain close to the EU and genuinely benefit from it, better to have gone for EEA membership – the option that pre-referendum many Brexit supporters would have jumped at (see Dan Hanan's "Absolutely no one is talking about leaving the Single Market), but sadly the baby got thrown out with the bathwater due to UK politicians – en-masse! – failing to really understand how many of the EU's mechanisms actually worked and which benefited us, hence the absurd maximalist deal they eventually went for.
Tragic, but that ship’s sailed, and I'm afraid it's now Full Ahead, and Slow Astern back to the EU is just not happening IMO. History now, innit, and we now need to make the best of the bed we’ve chosen to lie in…
OMG! The Point in MK’s being demolished (see Off Our Beat links).
Remember seeing Back to Future there 40 years ago.
So sad 🙁
Going to MK as a child used to be like time travelling to the future.
A gleaming glass shopping centre. The pyramid cinema. The crazy roundabouts. All very Thatcherite.
Now it’s full of vacant shops. Never recovered from 2008. Broken Britain.
@Fiscalist #36
For employees with DB pensions, national insurance is calculated based on gross salary, before the pension contribution is taken.
The employer contribution for DB pensions is irrelevant to value of the pension itself.
@JimJim #35
Some of us are using their cash ISA to save for a deposit on their next house, probably to be used in a couple of years’ time. Reducing that facility by £8000 is annoying, and has no bearing on my willingness to invest when that purchase is all sorted.
@ch — Wow, published today too. 🙂 Perhaps the dam has broken. Thanks for sharing!
@ch #41
Didn’t Theresa May manage to negotiate a deal that would prevent border friction on goods whilst allowing restrictions on immigration and not having to pay anything in? I think they did an economic analysis at the time and concluded it was worse than staying in the EU but only slightly worse. I guess that’s what I’m thinking of when suggesting a customs union of some kind.
In hindsight it was a pretty good deal, not as good as staying in the EU obviously, but would have avoided most of the economic harm we’re currently suffering. And I assume it is still an option available to Labour if they wanted it? I mean they’d have to rebrand it or something, but they could do it if they really wanted to I think.
Ryan Bourne – if he gained an economics PhD he would gain even more credibility.
@Algernond #26. No, well not intentionally :).
I think it’s a shame an excellent blog seems to be a more political blog than an finance blog. The times Brexit is mentioned is getting a bit boring.
On a UI point, when viewing the site on your phone, does it make sense having the search bar right at the bottom of a post? I think on the desktop it’s top right? So you can always see it’s there. My pickle brain keeps thinking there is no search facility when on my phone then, if I’m lucky, I remember I need to scroll all the way down. Should it not be at the top?
@Wephway #46
@Wephway,
I’ll have a go at that, then pipe down on Brexit as I understand (&agree!) with the idea it pollutes the blog somewhat…
Frictionless trade in goods (no border inspections) requires both Customs and Regulatory alignment, else you need rules of origin inspections (for tariffs and checking quotas), and regulatory inspections (to check product safety and biosecurity). Regulatory inspections are the “biggie”, because unlike customs stuff they can’t be automated through systems.
Theresa May’s deal was better for our economy (in at least the shorter and medium terms – if not the longer term… TBD), as it attempted to mimic both Customs Union and Single Market memberships to deliver frictionless borders for goods trade, but absent the free movement of people and other aspects of the Single Market.
While we wouldn’t have been in *the* EU Customs Unions, the “Backstop” to address the Irish border issue defined a single customs territory with the EU until they figured something else out long term. So no tariffs and no Rules of Origin checks at borders required.
And while we wouldn’t have been in the Single Market, the regulatory aspect of border checks was addressed with by the Common Rulebook whereby the UK agreed to indefinitely mirror all the EU’s regulations governing goods and food/agriculture – if they changed rules & regs for anything, we’d automatically follow. Always, no option to diverge ever.
Normally, the EU’s stance is that the four freedoms of its Single Market are “indivisible”, but in the proposed Theresa May deal they reluctantly compromised in order to deal with the Irish border issue. The problem for the UK with this deal was political, because it totally sacrificed UK sovereignty – we would have to remain indefinitely aligned with the EU on customs and regulations with no divergence possible and no say in defining the rules, and the customs alignment meant the UK couldn’t agree any trade deals with other countries.
So while the May deal was much better economically than what we ended up with, it did so by sacrificing sovereignty, trading all of our say, clout and control in return for an end to the freedom of movement of people.
Today, the EU would never compromise by offering us a deal like that, as the Irish border issue has been addressed from their perspective. If the UK now simply joined the EU’s Customs Union (like Turkey), we’d still have all the regulatory border checks still, so no frictionless trade and no trade deals with other nations. We could instead join the EEA (like Norway) but that means Single Market membership and its indivisible freedoms including freedom of movement of people, so politically probably a non-starter – perhaps for ever!
We’re now following the Swiss-model, whereby we sign various minor agreements with the EU for certain sectors of goods to help reduce friction. Meanwhile, we do have the full freedom to sign trade deals, for what it’s worth, with other nations and set our own rules and regulations (up to a point that most things tend to align Internationally anyway!).
I don’t think there’s any going back to a very close UK-EU relationship under the current structures that the EU offers, as these options aren’t really palatable to the UK. If the EU one day evolved into inner-outer membership levels, maybe there’d be scope there one day, but I do think, sadly, the ship has pretty much sailed.
Apologies for the long one! No more from me on this.
@CCT 101 #17 – I respect your position on this. I would guess that differences in our read come from different political starting points / inclinations / sympathies?
What you describe as misleading the public, I see as standard political positioning – everyone does it, essentially zero chance of any politician ever offering more than a partial view to justify why certain sections of society are losing out more than others.
“This was a budget in which taxes were raised to fund increased public spending.”
Maintaining public services in real terms means increasing public spending. This government wasn’t elected on an austerity platform. So yes, money for increased investment, defence spending, repairing the NHS, justice system, education = higher taxes if we don’t want to / can’t borrow it. I think we’d probably agree we don’t want to borrow more 🙂
I like you wish we were in a different position. If the economy was going gangbusters we would be. I do wish they’d put a greater emphasis on encouraging growth. I agree they lack a convincing plan.
@DH #21 – What do you think of @Sparschwein’s comment (#31) about the typical consequences of “grand political projects”?
You’re talking about challenges – demographic time bombs and AI – that no-one knows how to solve, or indeed the true scale of. It’s worth noting that most predictions about AI (and new tech more generally) are highly speculative and not so long ago we were all worried about global overpopulation.
Two of the last three grand plans I can think of – Brexit and Trussonomics – made us worse off. Levelling Up was little more than a slogan. Meanwhile, the hard right is fishing around for the next “Brexit” to catapult them to power: “Leave the ECHR”, blame everything on “Net Zero”, “Take Back Control”. FFS. I think there is a blatant intellectual and ethical dishonesty about those projects that isn’t mirrored on the centre-left. They’re not all the same.
Regardless, digging our way out is gonna be messy. Do this lot have the guts and fortitude? I don’t know. Their political survival depends on finding it.
Someone said the other day, that the problem with Britain’s current travails is it’s a slow-motion car crash. Whereas you need a full-blown crisis to properly ram through radical measures. There’s probably a lot of truth to that.
@Grouty – 100% agree with your point: “What they’ve failed to do is work out how to undo 20 odd years of ‘you could get back less than you put in’ terror warnings that has meant the average person thinks the stock market is akin to gambling.”
@JimJim – Well said re: two child benefit cap: “It brings half a million kids out of poverty.”
@Mathmo – “Unless the main left of centrists cut deep and soon, we will end up with an extreme government that will.” Reform are promising to spend like drunken sailors as I understand it. They’re not pro austerity.
Anyway, agree with your underlying point which I think is we should be prioritising investment, not things we can’t afford.
Unfortunately, the basics like a well-functioning health service, social care, military, justice system, police… all in urgent need of repair.
Dan Neidle has a good article “We are taxing all the wrong people” in The Times.
I underestimated how hollow the Labour backbenches have become. They only know how to protest where ideology has done the ‘thinking’ for them. Compare them to the 1997 Blair cohort (remember the Blair Babes?)
Reform’s manifesto (what they call a ‘contract’) promises £88bn of tax cuts supposedly funded through £50bn of spending cuts (5% reduction) and £35bn from stopping bank interest on QE reserves.
Whether they win or not, they will push the Overton window their way which is helpful. I suspect Farage sees this as Reform’s main role and he has no desire to actually win. His party apparatus is not set up to govern and it’s tiresome to be responsible for delivering on promises.
@Jim #25
>>> The Overton window is shifting fast on all this stuff. <<<
I agree. Talking to people from differing backgrounds I sense a major shift is occurring. As happened previously with immigration, the public is rapidly changing its views on welfare with most politicians now looking behind the curve. Interestingly, Reform is already looking a bit of out of touch on this, and Farage will have to decide whether he has political room to shapeshift without losing former Labour voters…
Whenever I listen to anyone who has well thought through prescriptions for growth it’s deep-in-the-weeds stuff like:
– Loosening planning regulations to allow us to build
– Investment in infrastructure
– Removing disincentives on business growth e.g. zero VAT on services below £80K annual revenue
– Removing trade barriers i.e. the frictions introduced by Brexit. Sorry. Not a political point, just a hard reality.
@TA
Within the writing of blog posts, it’s difficult to discern the underlying belligerence that lurks within the submitted text. But from me, there’s no shouty, finger-poking, or underlying agenda. What you get is friendly opposition to your understandable belief regarding the economics of the Brexit vote.
A Different Context and the Democratic Mandate
I agree that the £60Bn revenue hit is a figure that needs to be faced honestly. However, the flaw in the “This is NOW” argument is that it incorrectly attributes all economic stagnation to the act of leaving rather than the failure of governance after leaving.
The democratic mandate difference is stark:
Decision For 356 Against 244
1971 Entry Vote
Passed by a majority of 112, only with rebel support
2016 Leave Vote 17.4 Mn Against 16.1 Mn
Passed with a Majority of 1.3Mn the largest democratic mandate in UK history
The Real Problem is Policy Paralysis, Not Brexit
You highlight the recanting Brexiteer and the £60 Bn cost, but this is proof of policy paralysis, not inevitable disaster:
The Failure of Execution:
The UK has used its sovereignty to deliver very little active regulatory divergence. We largely retain the old rules, but lost the power to influence them. The £60 Bn gap exists because the Government has failed to use the regulatory freedom to innovate in sectors like FinTech, AI, or gene-editing, where the real long-term advantage lies.
The Services Success Story:
The economic story is more complex than just a goods-trade decline. UK service exports to the EU were 19% above their 2019 level in real terms in 2024, and to the rest of the world, they were 23% above. Our strength as a global financial and consulting hub has been far more resilient than initially feared, with actual jobs moving to the EU (around 7,000) being much lower than the predicted 75,000
The German Reality:
The supposed economic engine of Europe, core EU member Germany, is currently struggling with what many are calling a structural crisis (energy shocks, high bureaucracy, industrial decline). Its problems illustrate that being in the EU is no guarantee of prosperity. Why trade a set of domestic problems for a binding link to both the UK’s and Germany’s structural woes?
The economic issues of the 1970s stemmed from a lack of control; today’s issues stem from a failure to properly use the control that was won, exacerbated by an establishment and national broadcaster (BBC) that many argue never accepted the mandate.
The solution isn’t to retreat back to the EU; it is to demand better governance from our own, sovereign government, who can actually use the tools they fought for.
@ch #54 – Must be why the Greens are picking up vast numbers of new members.
@Wodger
Good one! The Greens are economic fantasists – they’re competing in the pool of voters whose views *won’t* shift on welfare (while the majority’s view does shift); so that’s protest-vote, not election-winning, territory IMO.
@TA 52. Thanks. The point I’m making is a really specific one, which is that the government gave a misleading picture to the public in early November of the fiscal situation as given in the forecast that it had from the OBR. I follow this reasonably closely (more than most at least), and nobody could possibly have taken from the government’s messaging in the run up to the Budget that, according to the OBR, there was in fact no fiscal repair job to be done. Did you have this impression? Or, like most people, did you think the government had to find £20-30 billion just to get back to square one?
When I say they raised taxes to increase spending, I just mean they did not raise taxes to do a fiscal repair job, they did it to accommodate more spending. It’s perfectly legitimate for them to raise taxes to increase spending but that is – as a factual matter – a different thing from raising taxes for a fiscal repair job. For me, presenting one as the other goes beyond legitimate political spin. That others have at times been even more brazen about misleading the public doesn’t make it acceptable.
@CCT101 – I understand your position better now and share your desire for a more transparent and let’s face it honest conversation with the public.
The IFS podcast I linked to gave a pretty clear account of the swings and roundabouts of the fiscal position re: OBR. In broad terms, productivity downgrade, but tax receipt upgrade. (There were a couple of other elements too that meant the situation was not as bad as previously feared.)
If I understand you correctly, you’re saying Reeves knew this in early November but didn’t update her messaging and that amounts to misleading the public.
I wasn’t following her statements closely enough to know what she was saying in early November. (I typically read/listen to a spectrum of centre-left to centre-right commentary to get a bead on the issues. I’m much less interested in the guff the politicians are forced to spout just to get through the day.)
If what she did was widely considered to be outrageous then I think her position is weak enough that she’d be forced to walk.
“That others have at times been even more brazen about misleading the public doesn’t make it acceptable.”
Ethically I agree but then there’s no point bringing a knife to a gunfight etc. Essentially, I think we’re yearning for something that’s beyond reach but please don’t doubt I’d rather live in your world on this score 🙂
Anyway, thank you for a good discussion even though I can tell we come at this from different (yet overlapping) angles.
Experienced investors might consider money market funds and short-duration gilts “cash like”, but beginners shouldn’t.
Savings accounts don’t always keep up with inflation, but the nominal value doesn’t go down unless you withdraw.
Money market funds can go down in nominal value.
@Barney – that is one of the best pro Brexit cases that anyone has offered me.
I can believe there could have been a world in which the UK made a series of enlightened policy choices that enabled us to overcome increasing friction with our largest trade partner.
I would rather live in that world given that Brexit is a reality and I accept the result of the referendum.
However, Johnson, Truss, Sunak, and now Starmer-led governments have all failed to find the correct blend of policy choices.
This suggests that greater sovereignty isn’t a cure-all. Possibly it’s a mirage. Possibly as you say we just haven’t adopted the right course yet. I don’t rule it out.
But increasing trade barriers with your largest trade partner is a reliable way to injure your own economy.
Every other advanced country has unpopular / incompetent politicians and structural issues. Every other country endured Covid. We’re the only country that Brexited.
So I’d be very cautious about arguing it hasn’t hurt us economically. It’s probably not the whole explanation. But certainly it’s a chunk.
It’s fair enough to argue that perhaps we could have overcome the negatives if a different path was adopted. But evidently that path was difficult to find. It may also not exist.
One of the reasons we’re better off lowering trade barriers is because it’s extremely hard for Central Command to not make mistakes. Essentially any plan that’s dependent on our political masters to play a blinder is likely to be a fragile one.
I agree with you that EU membership is no guarantee of prosperity. However, we generally had much more freedom of manoeuvre within the EU than people like to admit. (Or perhaps realise?)
I’ve heard various iterations of the “shackled to a corpse” argument. Well, right now Poland, Ireland and most of southern Europe are doing rather well.
I’d bet on the Germans to reform and resolve their current problems. They have done it before.
Regardless, we’d have enough latitude in the EU to make our own way for good or ill.
I don’t know what you mean about the largest democratic mandate in history. It was 52% to 48% in favour of something that nobody could define. Brexit means Brexit and all that. Now the majority of the country thinks it’s a mistake.
Regardless, I’m not disputing that Leave won. What that actually meant wasn’t obvious to anyone. It turned out there was no master plan.
Lest there be any doubt about it, I am a proud Brit. I want the country to succeed. I’d be very happy if we were to suddenly enter a golden age of prosperity founded on our ability to chart a course outside of the EU. I’d gladly eat an entire hat shop if that happened 🙂
Followed your blog for a few years and as a resource for investing it’s peerless. The seemingly increasing need to reduce everything back to brexit is tedious though. You’re making errors of confusing causation and correlation. Brexit happened; it’s the only version of reality we have and creating alternative realities that are economically “better” is a fallacy because they simply don’t exist. If you just want to be better off economically would you be happy becoming the 51st state of the US? I doubt you would. If you want to campaign to rejoin the eu fill your boots but presenting your politics as some kind of economic truth lets you down so please give it a rest and stick to what you’re good at.
Obviously this blog has had 2 strands going simultaneously for some time through the moderators choice? ie politics/economics and investing
Why not? -the political discussions seem to be polite,knowledgable and create much more light than dark and is the discussion the country at large is having out there at the moment
The investing information remains uptodate and the best currently available as always
Just been informed that my eldest grandchild who will be qualifying as a junior doctor next year is off to Australia or New Zealand as are a lot of her contemporaries because there are not enough jobs available in the NHS
Sad times when possibly the best and brightest of the young have to emigrate for work.Not sure the country can survive with this sort of situation generated by our current political leaders
xxd09
@ch #58 – According to their website, the Greens are proposing:
– A Wealth Tax of 1% annually on assets above £10 million and of 2% on assets above £1bn. Only a tiny minority of people would pay this tax.
– Reform of Capital Gains Tax (CGT) to align the rates paid by taxpayers on income and taxable gains. This would affect less than 2% of all income taxpayers.
– Aligning the tax rates on investment income with the tax and National Insurance Contribution rates on employment income.
– Removing the Upper Earnings Limit that restricts the amount of National Insurance paid by high earners.
Plus a raft of other policies like a carbon tax and bringing railways, water companies and the Big 5 retail energy companies into public ownership.
This all sounds eminently reasonable to me.
@Barney – over the years, Germany has been variously labelled Europe’s “powerhouse”, “hegemon” or “sick man”. Current problems are from home-made blunders (dependence on Russian gas; an overzealous debt brake) and Trump’s trade wars.
Remember the “PIGS”, they were a mess 10 years ago and now they are doing well.
Economies move in cycles and the media exaggerate. There is plenty of room for good or bad national policy within the EU.
I find these “if only Brexit had been done right” arguments odd. The leaders of the Brexit campaign were in power and could have taken advantage of all the fantastic Brexit opportunities, if they existed.
The Telegraph (!) made a good point why “it was always inevitable” that Brexit would be “a major disappointment” (yes they wrote that).
There never was any coherent project but “an unholy alliance of different groups and interests with often strongly divergent views (…) Small state, low tax, free trade libertarians do not make natural bedfellows for anti-immigrant, nationalistic protectionists”
@TA #52: thank you for your question (re #31 @Sparschwein), and thank you also for MC’ing the comments today. Sorry for the delay in replying.
It’s the same question which Issah Berlin grappled with in his Two Conceptions of Liberty (1958), and which Adam Curtis so engaging covered back in 2007 on the BBC in Part 3 of “The Trap: What Happened to our Dream of Freedom?”:
https://youtu.be/m25q3it0rDs?si=4Jq6wQvIrJM888AN
I don’t think I can usefully add to his tour d’horizon.
Reading some of the comments here, I wonder whether a subset of Brexit true-believers aren’t xenophobes at all, but the most heartbreakingly naïve globalists imaginable. People who genuinely think the world is a frictionless marketplace just waiting for plucky Blighty to wander in and start signing trade deals.
“Take back control and trade with the world!” Excellent. With whom, exactly?
China? A partner that treats intellectual property as optional and capital controls as a lifestyle choice. Forget about any tech transfers from the Yanks ye all who wander that way. Also, anyone in financial services who’s tried building a presence there knows the routine: you can put in as much money as you want; getting it out is an entirely different sport.
India? A big market, yes (albeit not very rich on the consumer side). Navigating the bureaucracy and institutional “challenges” (ahem, corrupt) can turn even basic commercial arrangements into something quite trying.
Much of Asia? Shows promise, currently some of it a bit poor, and not exactly waiting with open arms for a mid-sized economy that voluntarily detached itself from its own neighbourhood. Also, most of it has already been divvied up between China and the US, anyway. And: some of the similar challenges to India (ahem, corrupt).
Africa? A “growth opportunity” in places, but also “affordability concerns” and political and institutional volatility (ahem, corrupt) that doesn’t disappear because Britain turns up with a trade delegation.
South America? Some interesting markets, but also familiar GFP per capita and governance problems (ahem, corrupt), albeit not uniformly so.
You see, the thing with trade is that selling stuff (that includes both goods and services) is only half the equation; the other half is actually getting paid for it, and that’s where institutions (and per-capita GDP) suddenly matter a great deal.
So who’s left?
Canada and Australia? Friendly, familiar, and very far away, and Australia tends to align with the US (the 51st state, etc.) on trade, not Westminster nostalgia.
The United States? We’ve tried that. The “special relationship” seems to translate into “special tariffs,” regardless of how much diplomatic flattery (ahem, orange-ass-kissing) is deployed.
So… who exactly is this new global trading bloc Britain is supposed to lead? And when are they arriving?
@Hopeful firer – You’re right we don’t have a counterfactual but that cuts both ways. What we have is the best estimates of the impact and the knowledge that increasing trade barriers reduces prosperity. Raising trade barriers with the EU could have been compensated for by lowering them with the rest of the world. That didn’t happen as @hosimpson pointed out.
Would I want the UK to be a client state of the US? No. But we’re more vulnerable to the true geopolitical giants precisely because we can no longer use the entire EU as a counterweight.
Inside the EU we were a big player inside a club of middle-sized powers. We had the size to make our voice count. We’re like fleas on a dog re: the US or China.
Here’s a thought experiment. If everyone in the UK could forget tomorrow which way they voted, would the majority think Brexit had:
(a) Made life better.
(b) Made life worse.
(c) Made no difference.
If the answer was (b), wouldn’t it be worth changing course, not doubling down?
If the answer is (c), then what the hell was that all about?
If the answer is (a) then why is nobody raving about how great Brexit is?
I think it’s politically impossible to rerun the referendum in the short and medium term.
But I do think we should face the facts about what happened. Possibly not fall for the same trick next time. For example, everything will be brilliant once we’ve left the ECHR or scrapped net zero targets or waved this magic wand I’ve just found.
@hosimpson….bang on. Totally naivety by the average telegraph reader 🙂
Reasonable strategy to max QoL in UK as a average / moderately above average school leaver these days.
1 – Get best qualifications you can
2 – Don’t go to Uni and get a loan, instead – go for a trade / school leaver scheme
3 – find a partner similarly minded to spread out costs of living
4 – Move to midlands / NE, NW to buy a house £50k each…..
no way aim to earn more than £100k unless you can make it £300k + and if you can see 1% below
Below average school leaver
1 – minimum wage job – decent wages these days
2- partner up with someone similar
3 – soak the state as much as possible with UC / CB etc etc
The 1%
– Move to the US
– Earn bucket loads – will be 50% on average > UK
– Avoid the madness that comes with it all
– World’s your oyster at 40
You may well be right and indeed we may well have been ecomically better off had the country voted remain. You may well be wrong too. My point is that it is folly to keep going on about an alternative reality that didn’t happen. The country is stuck in a cycle of negativity about such stuff and IMHO things will only get better once we all, the political class in particular, snap out of seeking to prove who was right over something that happened almost 10 years ago. Life’s too short stick to the positive stuff. All the best.
@Wodger,
Unlike the Greens, I realise that while wages are paid by businesses out of pre-tax income, dividends are paid out of post-tax profits. That means taxing dividend income at the same “rates” as earned income results in double taxation – that’s why dividend income tax rates are where they are in order to mitigate this. Similarly with capital gains.
Furthermore, pretending that uncertain profits arising from risky investment is analogous to contractually-guaranteed wages earned from employment is simply naive.
The Green’s tax policies would disincentivise risk-taking, investment, entrepreneurship and economic growth. The precise opposite of what the UK needs to lift itself out of stagnation. Their broader economic policies would be disastrous and would almost certainly precipitate severe UK Gilt + GBP responses (collapses) on Day 1. They’re not serious people, with a serious policy recipe for the country, and shouldn’t be treated as such. Sorry!
@Hopeful firer – I understand where you’re coming from. I have a different perspective but I get why you want to move on. All the best 🙂
Xxd09
“Just been informed that my eldest grandchild who will be qualifying as a junior doctor next year is off to Australia or New Zealand as are a lot of her contemporaries because there are not enough jobs available in the NHS”
Is this really true ?
My son’s friend achieved all the grades to study a medical degree but couldn’t get a place because all the places were full not because he wasn’t qualified.
So if this is true we don’t have enough NHS doctors because a) we don’t have enough places to train people from the UK who are qualified and want to be a Dr, b) we then don’t offer jobs to newly qualified Dr’s!
Then we are told we don’t have enough doctors so we need have mass immigration to fill the need…. something doesn’t add up , is it just total mismanagement…or is it we just want “cheap” imported doctors that we don’t pay to train and will accept lower wages etc..?
It also seems morally wrong to be “stealing” medical staff from poorer countries that have paid to train them up and need them for themselves.
@Kwaker
Yes, rather shockingly it is true. Government controls the number of medical school places and the number of training posts for young doctors. Medical school has always been highly competitive as far as I know.
But a combination of insufficient training posts and allowing applications from abroad has led to huge numbers of young doctors from UK medical schools unable to get a training post after their first couple of years as a doctor. The BMA said about half this year but that’s from a survey so should be taken with a modicum of salt.
https://www.bma.org.uk/bma-media-centre/bma-seeks-deal-on-doctor-unemployment-as-survey-reveals-half-of-resident-doctors-finishing-foundation-training-have-no-job-to-go-to-next-month
Many GPs are also struggling to find work as practices can’t afford locums (or have employed physician assistant/associate types instead).
Meanwhile, in hospitals, some medical specialties can’t find enough consultants to employ, this is in spite of the huge numbers of consultants we take from other countries. Some of the more specialised services are genuinely on the brink of collapse as the consultant body ages and there are too few replacements. There is absolutely no slack in the system – in some places it just takes one consultant (or other highly trained member of staff) to be ill or leave and an entire service can spiral into dysfunctionality.
Government is entirely responsible for all of this.
Despite being an employee and a strong believer in the NHS model, I find myself contemplating purchasing private health insurance. And, if nothing changes, I personally think the NHS will die through a path much like dentistry has – theoretically it will exist but in practical terms most will either pay for private care or find they can’t find an NHS provider anyway.
It is probably sensible for investors to now start factoring in paying for some health care now as it will be another likely call on their finances especially as they gets older ie in late retirement -it’s expensive!
Personally we already pay £40 a month for dental care -£15000 plus this year for my wife’s knee op done in decent time etc etc
Changing times
xxd09
@ch
Thank you for taking the time to spell this out about the Greens (and any others) spouting this sort of populist nonsense that would lead to disaster
On the NHS, anecdotally all the medics I know taking out private health care cover chimes strongly with this. To all intents and purposes it could be the case we are already there in terms of no longer having an NHS.
So on Saturday we had that outbreak of sanity in the Telegraph, where it acknowledge that Brexit has cost the UK economy up to NINE PERCENT of annual GDP (please let that sink in those of you who still think I’m being a hysterical silly at stressing its importance in the national conversation about Brexit).
But today we’re back to business as usual, with Lord Elliot – widely considered with Cummings the mastermind being Brexit – writing a long lament about how the UK is set to be overtaken in per capita terms by (EU member, though he doesn’t note that) Lithuania by 2034.
Elliot laments a hostile environment for growth and taxes. No argument there.
But not once in this entire piece does he acknowledge the massive economic growth hit from Brexit, nor the c. £60bn shortfall in tax receipts that the chancellor is trying to cover through her decisions.
Yes we can discuss whether raising taxes or cutting spending is the best way to address these issues from here.
But to frame the discussion as about Reeves’ choices last year, while completely ignoring the 9%-per-year GDP smashing elephant in the room is at best a mendacious reframing of the problem. And at worse the Leave campaign redux.
Again, I’m not expecting these people necessarily to recant and (unlike them) I am very happy to acknowledge the other factors.
But the article should *routinely* run “the UK is in near economic stagnation due to Brexit, Covid, and the impact of the war in Ukraine”. They can add a second line if they must saying something like “These factors have been made worse by a moribund government response” although as @TA and others have argued on this thread, when it comes to Brexit it was only ever going to be at best a triage and salvage job for economic growth.
I accept we can’t shout ‘but Brexit’ forever. But there’s a gulf between forever and less than a decade into leaving, when many of its supporters and its leading architects still literally pretend it didn’t happen.
I don’t accept this whole “let’s stop talking about it, no point assigning blame, Remainers should pull their big-boy pants up and move on” line.
If something went wrong, we get to talk about it. That’s how grown-ups handle decisions with real consequences. So let’s run a little thought experiment.
Replace “Brexit” with “chemical spill,” “Brexit voters” with “a chemical company,” and “economy” with “environment,” and see how some of the comments here read.
Here, for example:
“The seemingly increasing need to reduce everything back to [that unfortunate chemical spill] is tedious though. You’re making errors of confusing causation and correlation. [The chemical spill] happened; it’s the only version of reality we have and creating alternative realities that are [environmentally] ‘better’ is a fallacy because they simply don’t exist. […] presenting your politics as some kind of [environmental] truth lets you down so please give it a rest and stick to what you’re good at.”
Or this one:
“You may well be right and indeed we may well have been [environmentally] better off had [we not dumped all that sludge into the river]. You may well be wrong too [the oil company next door to us might have had an accident, or the people in charge of the cleanup might have done a better job, but that didn’t happen]. My point is that it is folly to keep going on about an alternative reality that didn’t happen. The country is stuck in a cycle of negativity about such stuff and IMHO things will only get better once we all, […], snap out of seeking to prove who was right over something that happened almost 10 years ago. Life’s too short — stick to the positive stuff.”
Imagine saying that with a straight face.
When the decision is consequential and the damage is real, “stop talking about it” is not wisdom, it’s denial dressed up as moderation. If we don’t analyse what happened and who pushed for it, we’re just guaranteeing we’ll make the same stupid choices again.
@ch
The Green Party is just as dangerous as Reform in their populism and economic ignorance. Another example is their imbecilic policy to remove the upper earnings threshold on NI, thereby creating almost a 50% tax rate on the quarter of working people earning £50k+, and an effective 68% tax rate on those over £100k (e.g. most doctors). At such ludicrously punitive rates why bother? Difficult to think of a more effective way to destroy productivity and economic growth.
Asking others far more informed than me – don’t some of the Nordic countries have higher rates of tax than us, yet also have higher productivity and growth than the UK?
@xxd09 [76]/Rhino [78] I fear that you are right that we need to include Medical Insurance as a top up for those who do not have it under company benefits. The market for these policies will grow (my HSBC Premier Account now has a bundled ‘Health’ feature of access to a virtual GP, which must be a sign that the financial providers are increasingly thinking about this).
As the father of a UK Med Student I can only agree with the earlier comments. Super competitive to get a place and the model of five years Med School then two years as a Foundation Doctor then three years on your chosen speciality is now totally broken. Med School places were increased to “do something” about the shortage of doctors whilst no equivalent funding was allocated to the pipeline for training them (which also relies on consultants who are in short supply). Some bright spark then came up with Physician Associates as a cheaper alternative to a Doctor so all the holding jobs that existed between Foundation and Specialist are now done for less money by less qualified people and fully-qualified UK Doctors are consequently unemployed or have to go abroad.
A shameful and Incompetent waste of talent. Let’s not forget that they will have about £70-100k of student debt by the time they are unemployed after Foundation training as well unless the Bank of Mum and Dad stepped in! I don’t see any of the Tax raised in this budget being used to fix this problem and it has no relation to Brexit either.
I see no prospect of the UK rejoining the EU in the immediate future: EU countries wouldn’t even discuss it unless there was complete unanimity among all political parties, and they would not entertain for a moment the “opt-outs” the UK used to benefit from.
However the UK will surely move closer to the EU. The reality is that the economy carries the legacy of Margaret Thatcher that we lost any strategic economic planning keeping us at least partially self-sufficient in key areas of manufacturing and food production. To be fair to her she was a huge proponent of the Single Market which mitigated and shared the risk.
Now however we are an isolated country that can’t anywhere near “go it alone”, we have to suck up to a bigger economy. The choice is between being bullied and exploited by the US, being bullied and exploited by China, or having a collaborative relationship with the EU but no seat at top table. Surely the latter is the only rational choice.
As state pensioner, I received from the DWP today the princely sum of £10, it being my annual Xmas bonus. Initiated by the Heath government in 1972 and made permanent by the Labour government in 1979 via the Pensioners’ Payments and Social Security Act, the amount has never been uprated.
If it had been increased to keep pace with inflation, then per Wikipedia it would now be £119.47! Rachel I trusted you, and all the other “purse minders” over the years, and you’ve all let me down.
Sob!!
@TI You write
“But the article should *routinely* run the UK is in near economic stagnation due to Brexit…”
In a similar vein, can I respectfully suggest that you could routinely append a link to an article detailing your thoughts on Brexit to each of your posts? This would allow you to scratch the itch while saving those of us who feel we’re already familiar enough with your views on the subject from having to always pick out the excellent financial insights from the fulminating.
(Writing this as someone with no strong feelings on Brexit, but much more interested in reading what I should be doing with my money in today’s world rather than how much better things would be if things had gone differently 10 years ago.)
Some eye-opening comments about the NHS here. Private healthcare has become essential for us. Thankfully insurance is very affordable through my partner’s job. The NHS GP became too hard to access, and then they did nothing or put us in inacceptable queues (3 months for a dangerous heart condition; a year for crippling pain etc.) It’s incredible that we can’t get appointments while qualified doctors are out of work.
Healthcare cost is the biggest factor that can derail our retirement plan. I should include this in the model but not sure how. It would be great if Monevator could delve into this.
@reactive — In some ways that would address the issue, but perhaps not surprisingly I’m going to push back.
Firstly, there are usually only about three to five ‘full Brexit’ articles a year nowadays, out of 150 total. Also they are pretty much all Weekend Reading ones, and so very skippable.
They have come in a glut in 2025 due to the Budget. Perhaps there’s been 1-2 more this year for the same reason, but even I was surprised when I did a post-2020 audit after previous complaints.
This is different from me adding a couple of lines to an article pointing out the Brexit impact. I presume this annoys Brexit denialists, but for the same reason your proposed solution would too.
Secondly, as I and others have explained in this thread, it’s a *live* issue. It is senseless to talk about the Budget and the need for tax rises etc without acknowledging the c. £60bn a year missing receipts from Brexit.
It’s not just that “it might have been better”.
It’s “this is a big reason why it’s like this, so don’t just blame something else” whether the latter be Reeves’ choices, the Motability scheme, or immigration, or something more sensible like an ingrained drop in productivity following Covid. (On immigration, of course someone can believe we have too much of it, but understand that in the ‘10,000 people a year’ post-Leave fantasy, GDP would have plunged since 2020, so don’t advance it as a cause of macro level GDP sluggishness. We all understand the per capita situation is much more nuanced. Not addressing you specifically here.)
If you just want to focus on ‘what to do with my money’ then just skip all these articles.
Finally, I think the fingers-in-the-ears brigade really need to realise that they are *outnumbered* by readers of this blog who actually appreciate the ongoing discussion. (I suspect a majority are indifferent.)
For sure that might be because it’s not been a place that has supported Brexit nonsense since 2016, so is off-putting for its fans. But it is what it is.
Moreover the fact the proof is now in the pudding means I want to make sure everyone realises that.
For years I was told “just wait”.
Well here we are and the numbers are in. They stink to the extent that even some ardent supporters have (to their credit) finally recanted.
When I write Brexit articles there’s usually at most 1-2 extra ‘unsubscribes’ from the email list, and a small few people making a fuss in the comments. I fully understand better than most (because I’ve done this for 20 years) that these numbers do not tell the whole story, but it is directionally correct.
Brexit was a crock. Monevator readers are intelligent and informed and understand this. Most of them are happy with a certain amount of reckoning of the consequences, ESPECIALLY with Farage actually (FFS) leading in the polls.
I don’t mean this with any harshness but really, just skip the articles if they’re so offensive to you, and skip the blog if the idea of us covering a huge and still massively under-acknowledged* hit to the economy when talking about the economy doesn’t sit right.
*outside of academia, experts, etc.
On Brexit, I’ve personally never been in favour. But I think talking about it is a way of distracting ourselves from even more difficult subjects about the UK’s place in the world, our national strategy if you like. Those questions would loom pretty much as large if we were still in the EU and UK GDP were a little larger. Our politics seems incapable of bringing forward serious answers, that seems to me to be the deeper problem.
Or put differently, Brexit didn’t come from nowhere (or from some lies on a bus). Even if the referendum had gone differently I expect we’d still be failing to deal with those questions.
On a related point, the UK’s productivity growth collapse started in the 2000s, a decade before Brexit, and a lot of what we see around us starts with that.
@CGT101 — Broadly agreed with all but the ‘talk is just distracting’ part — and it’s also all taken into account in the now-numerous studies by leading academics showing Brexit is costing the UK c.£60bn+ in missing tax receipts.
(i.e. they don’t base their modelling on a different UK economy pre-2016 to the one we had!)
Why should this one *massive* impact be uniquely discounted from the conversation? (As @HoSimpson notes above).
I don’t see it distracting anyone. I see an entire Budget that made a one-word reference to it (no numbers, despite them being credible and available) and masses of commentary that makes zero reference to it.
People are incredulous that Brexit might mean the economy is 9% smaller than it would have been without it.
But the UK grew faster than the rest of the EU for decades. In 2015 for sure things were not perfect (especially long-term planning) but despite coming out of the GFC the economy was not in a terrible place.
(Also, readers of this blog in particular should understand the impact of compounding. A 0.5-1% a year drag is plenty to deliver a 9% smaller economy. This was my whole ‘flat tyre for 20 years’ post-Referendum position.)
It’s a London-centric view but, well, London was booming in 2016. It was vibrant in a way that only tourism still maintains in 2025 (likely due to the collapse in the pound).
I was regularly going to investing events where I met any number of exciting founders working on great new businesses. Some of these (e.g. Revolut) have gone on to massive things.
Politics was hardly great (when is it) but under Cameron/Osborne there was a general feeling we had sort of a more fiscally responsible New Labour, which I was happy enough with.
Tax allowances were being increased, ISAs boosted, IHT softened for those who care.
Since 2016 it’s been endless retrenchment, squabbling over a shrinking pie, taxes growing, and nasty bickering.
Again, Brexit DID NOT cause *all* this. But as @TA said up the thread, it definitely put the boot in.
We went from the confident ‘we’re winning’ country of the 2012 Olympics to something more akin to a faded cash-poor aristocratic couple in a too-expensive country house, trying to keep the house heated in winter.
The things you discuss are all important. They were already, as you note, live issues in 2016.
We were sold a crock as to how to deal with them — a damaging fantasy — and it made all of them *worse*.
The country needs to realise that, as a routine part of the accounting.
If this small blog can play a tiny part, then I’ll continue to make sure it does.
@TI I find it a distraction in the following senses:
1. The productivity growth collapse (which started either post GFC, or a little earlier, depending on which economists you prefer) is the bigger issue. We’ve all seen the charts showing where we’d be had pre-GFC productivity growth continued. Brexit was self-destructive but it wasn’t the origin story for how we got here. The break point was 2008 (or earlier), not 2016.
2. There’s not much space to reverse course on Brexit. Even if a political consensus somehow arose in the UK to align more closely with the EU, I hardly see the EU desperate to welcome the UK back. (Just look at us!) One reason that might change is if we were coming from a position of economic strength, which takes you back to (1).
@TI #90 > Since 2016 it’s been endless retrenchment, squabbling over a shrinking pie, taxes growing, and nasty bickering.
I’m no lover of Brexit, but I wonder if this was part of the problem
> It’s a London-centric view but, well, London was booming in 2016. It was vibrant in a way that only tourism still maintains in 2025 (likely due to the collapse in the pound).
I entered the city in early 2016, and I agree it stank of money. But it’s an outlier, and the liminal spaces of the edgelands where hope came to die in the rest of the UK are not far off, as I saw from the train drawing out from Liverpool Street
Unlike you I am of the view that Britain never recovered from the GFC, it holed the financial services to the highest bidder model below the waterline. Brexit was a symptom of this, though I’d agree that it accelerated the decline.
Your eyes were shielded by that London-centricity. I’d fix your narrative simply
> Since 2009 it’s been endless retrenchment, squabbling over a shrinking pie, taxes growing, and nasty bickering.
The retrenchment started from the bottom, Osborne’s austerity drive, nto felt by you
This is what decline looks like. The West took an easy ride from China making all the things in the Noughties, but an easy ride is never cost-free
@CGT101 — Thanks for the elaboration. Just quickly:
1) Yes, it’s a big issue and arguably the bigger issue. But why should another issue be ignored? Especially when it compounds the productivity issue. (Both the study cited by Warner’s mea culpa on Brexit and the earlier one this year cite a meaningful reduction in productivity due to Brexit).
We don’t live in a world or this or that. We live in a world of this *and* that.
2) I agree we’ll never go back to the good deal we had pre-2016. I think it’s almost inevitable we’ll go back eventually on less good terms, because it’s an easy win and at some point younger generations will wonder what on earth we’re doing out of it, and the older die hards (as you know Leave votes skewed much older, and already the mass of opinion has turned anti-Brexit) will die out.
But as I noted, Nigel Farage is leading in the polls. The architect of this national disaster is on-track to get the most votes.
I cannot believe this would be the case if the now-discredited Brexit was being routinely blamed for much of the reason why taxes are going up and welfare is getting worse (not the only reason, but say £60bn of the reason).
Of course, as the likes of @ZXSpectrum48K invariably reminds us, a certain large cohort of his voters are immune to rational. And another chunk have their own rational reasons for voting Farage that have nothing to do with the economy.
But if people knew that voting for a man who at best made a lifetime level misjudgement and at worst (and perfectly accurately) misled the electorate is likely to make things worse, then in four years time we might be less likely to find ourselves still digging in the same hole.
@ermine — Of course when I wrote it was an admittedly a London-centric view, it was because I was (a) aware of that and (b) aware someone would pick up on it.
Can’t win!
I don’t think the UK had recovered from the GFC. I said:
The UK as not doing amazingly great but it was not doing terribly. The vibes were okay-to-good except where they were rubbish and they are still rubbish. So Brexit has just levelled us down in that sense. I don’t chalk it up as a win.
The City has never recovered from the GFC in full. Brexit has made this worse too. (As well as over regulation versus bankers etc, compared to the US).
In 2016 US banks still traded under book value like ours. They began to shrug off that as the decade continued. Our financial services industry got its USP cut from under its waist. It didn’t die (it wasn’t going to die) but Brexit hurt the might-have-been.
I don’t accept your ‘since 2009’ rewrite. Rather, I see: “Since 2009, the country began to recover from the body blow of the GFC. People were angry on multiple fronts. Rather than give it more time, they voted to make things worse, and set back any recovery by another decade at least.”
It’s a pretty simple story. It’s akin to ‘struggling man lost his job, found another one after a couple of years but his wife had enough of his moping and left him so he turned to drink.’
Who would complain about someone highlighting the drinking, even if the job loss was the catalyst? Nobody.
Doesn’t mean losing the job wasn’t an important part of the story.
I honestly don’t believe it’s my narrative that needs simplifying. I have *never* said Brexit caused all of the UK’s woes. Since 2016 I’ve described it as a ‘slow puncture’.
A slow puncture doesn’t explain where Britain is now, but it does make everything much worse.
Cheers!
@TI Agree it’s not “this or that” (though I think there’s probably a causal link from GFC/productivity collapse to Brexit, via austerity – so Brexit is really a consequence of GFC). But we should be able to do something about productivity and growth, even outside the EU, while there’s nothing much to be done about Brexit.
I guarantee that, absent a political alternative perceived to be better, many people who are well aware that Brexit has been bad for the economy overall will vote for Farage. Even people who don’t buy the “botched Brexit” excuse!
@CGT101 — Agree with your thoughts on the electorate. However ‘we’ don’t need to persuade everyone, just enough, to see off Farage. If 2% of voters in Referendum had voted the other way then the ‘overwhelming mandate’ from the British people would have been to Remain.
Some Leavers complained (ironically, now) that I should have talked about the Referendum more *before*. The truth was I didn’t think Leave would win and I didn’t want to provoke the divisions and rancour we subsequently saw.
Well, that actually was a fair point and I won’t make the same mistake again.
In the post-2016 discussions I many times said there was a conceivable ‘Singapore-on-Thames’ path that could see off much of the Brexit damage and perhaps even leave us ahead after 10-20 years. It was a narrow path, and it was certainly not what the 52% voted for!
What would it look like now? Massive deregulation and scrapping much of the welfare state in a ‘burning the ships’ national rewiring akin to the pain countries like Singapore actually undertook to get where they are.
You’d probably start with slashing super expensive pensioner support (mostly benefits those too old to contribute to future growth) and the NHS (ditto). You’d redirect State money to supporting the young (education and training).
You’d also slash support to the economically benighted areas of the country (they are net takers on the State) and redirect it where the money is mostly made (London, the SE, and the University cities).
The onus would be on people to move where the jobs and money are, and let the markets take care of where the profits come from, via incentives and the invisible hand.
State support, such as it existed, would be to double down on winners.
You certainly wouldn’t indulge in nativist Barry Blimp daydreams about returning heavy industry to the Clyde etc. As @ermine has alluded to here it is globalisation and technology that has done a number on second-tier Western countries. Fighting that will only leave us more unproductive. (See also my thoughts on the lunacy of trying to ‘save’ the British steel industry versus just importing cheap steel.)
Needless to say all of this would cause massive hardship for a majority of Brexit voters (many of them old, many of them poor and provincial). We’re talking endless stories about pensioners not being able to keep the lights on, soaring poverty in places like Boston etc as welfare is withdrawn.
As a purely personal economic matter, I’d do well out of it. Must admit it also has a sort of intellectual appeal (in principle, not practice). But I’ve never voted just for me.
In any case the country is in no way shape or form prepared for it.
What we were prepared for (as Ermine says) is gradual and relatively comfy decline. Ideally with infusions of younger EU migrants to keep the lights on.
But ‘we’ voted against that.
There is no easy solution.
p.s. Sorry, to be clear by ‘leave us ahead’ I mean in terms of raw GDP. Possibly per capita. But outcomes probably very unequally distributed.
I rarely venture into political comment here but since it seems to be coming increasingly a part, I will chime in, at the risk of being banned or deleted perhaps.
I think besides the economics of those feeling left behind Farage is ahead in the polls because the dark underbelly, mouldy onion ring that Ermine comments upon is spreading further out and becoming present in not just big cities but smaller towns nationwide, even into the shires and rural extremities of Britain.
This is the tipping point for Reform, appealing beyond red wall and Brexit voters to more affluent (previously Tory) voters who don’t want their home area, their village or pretty market town, to go down the toilet like the inner cities. You only have to look at the poll maps.
This is a combination of both (actual) working class and middle class voters.
Some of these people may have even voted to Remain, and don’t even like Farage particularly but are scared sh1tless of what will happen if Labour get another term, or the possibility of some mad Labour, Green, Your Party, SNP Open Borders/Tax The Wealthy coalition.
As for the LibDems, they only really pick up votes in areas completely unaffected by mass immigration. You might think they should be hugely benefiting from the simultaneous collapse of both Labour and Tory polling, but that isn’t really happening all that much, because the areas where they do well are shrinking in size.
Anyway, to this more rural cohort of voters, demographic change is becoming more visible to them and in fact accelerating.
They do not see their behaviour as irrational at all. You can talk about dependency ratios, but they don’t want the whole country – especially where they live – to resemble Birmingham or certain other cities/large towns I could mention as a price of that.
I even think Reform may pick up a few LibDem votes in four years time, not many granted – and they won’t tell their neighbours – but enough.
I’m just writing this because some of you with a more Guardian-centric view are going to be incredibly angry in four years time and not understand why it is happening because you have a limited social circle/echo chamber and don’t travel around the country very much.
More useful would be hearing investment tips to plan for the inevitable.
E.g. I’ve recently sold Greencoat UK Wind and other renewable trusts, happy to have just received posthumous dividend from Greencoat, and thinking where to invest for when Reform open up North Sea exploration again.
@TI Thanks for the reply. know that I’m not going to win the argument, but to be clear, none of your articles have been in the least ‘offensive’ to me. Even if I did strongly oppose your arguments, which I don’t, it wouldn’t offend me to read a contrary opinion. Rather, by now, I’m just finding them occasionally a little redundant. It would be wrong to believe that everyone suffering from ‘Brexit overload’ is a rabid, swivel-eyed leaver.
You write “Brexit was a crock. Monevator readers are intelligent and informed and understand this”
Quite so. Perhaps your job here is done 🙂
@SemiPassive — A thoughtful and relatively even-handed comment like that won’t get deleted on Monevator.
As I’ve said many times, I rarely delete comments. (There’s not some huge swathe of pro-Brexit stuff being deleted. That rounds down to zero). The only two comments I deleted on this thread I did so because they were kind of quippy asides that added nothing to the debate but noise. As for banning, only one person has been banned for Brexit discussion. I even dropped that ban for a bit, but he returned to his troll-like behaviour.
It wasn’t the content of his views. It was his utter lack of regard for the discussion, the facts, the points made in counter to his points, or indeed anything but posturing.
This thread has been a good discussion. It’s exactly what we need to see more widely.
@reactive — Cheers for the clarification, and thanks for the thoughts.
It’s a vitality important to grasp and internalise that one about speaking up for Remain*before* the Referendum.
We Remainers took a win for granted.
After all, we had the logic and all the evidence.
We were right, and we knew it. That was our downfall.
And we got completely stuffed because of the complacency of being on the right side.
A moral victor who loses the World Championship on points.
Only it was worse than that, because, with the Referendum, there was no guarantee of a rematch or another tournament ever.
I can remember picking up a leaflet at the station from a Remain campaigner the evening before the vote as I commuted back to the overwhelmingly Leave countryside where I live from the overwhelmingly Remain city where I work.
What was the point of my picking up that leaflet? I was already going to vote Remain. Likewise Mrs @DH.
That Remainer campaigner was preaching to his own. No one to convert. He needed to get out and about in the countryside and try and win over ‘the other side’.
Same (Tony Blair in 1997 aside) for Labour.
They only win when every fool and his dog can see what a horlicks an incumbent Tory administration has made. They don’t really try and reach out and persuade those not already inclined to vote for them or not already sufficiently repulsed by Tory action/inaction.
Remain just never put the hard yards in to build out a broad enough coalition.
Being right does not equal winning.
Paraphrasing Bezos on the early Amazon: every single morning of the Referendum campaign we Remainers should have been waking up terrified that we would fail. Only the paranoid survive.
A premortem is always infinitely preferable to a postmortem.
@TI 96: I share what I (think is?) your pessimism.
If enough people around the country don’t see their and their families’ lives improving, or at least the prospect of it, then they will be prepared to take wild bets politically. When such bets (like Brexit, or a Reform government) don’t pay off, I don’t think the response will be a turn to benevolent centrist technocracy – it will be to double down on wilder and wilder bets. I’m not sure what breaks that cycle other than a real crisis, or more benign economic conditions appearing out of the blue.
Let’s hope, like the current government must, that the growth fairy makes an appearance soon! Job-rich growth too please, not the AI-led unemployment-creating variety.
@SemiPassive #98
Kistos Holdings Plc (KIST) ?
Good write up on undervalued-shares dot com from January this year.
Thanks Algernond, Kistos Holdings significant share holders, R Tice, Z Yusef, N Farage, interesting. Up 43% YTD, nice.
(Edited: Just kidding on the shareholders!)
Demographics often comes up in discussion, I found this essay on the subject instructive.
https://www.lrb.co.uk/the-paper/v47/n21/david-runciman/are-we-doomed
“the average person thinks the stock market is akin to gambling”
I suspect that the average person always has. Certainly a bright undergraduate reacted with outrage when I told her that her parents’ pensions were invested largely in equities. And that was forty years ago.
Wouldn’t it be interesting to compare people who do daft (= guaranteed to lose on average) gambling, people who do mild gambling (Premium Bonds), and people who do equities gambling? Is there a large overlap between the first and third categories? A hae ma doots.
Let’s look at cumulative gdp growth rates since Q1 2020
France 9%
Uk. 7.5%
Italy. 6%
Germany 2.1%
It is hard to believe that the result for the UK would have been top of the table and above that of the 10.2% the USA achieved had we remained within the EU.
It’s not a political point, I only question the 6/8/9% annual perceived loss on leaving.
More interestingly, the two highest cumulative gdp leaders have the lowest energy costs of the cohort.
@Bassavoce — IMHO you need to look at the cumulative rates since 2016, since the four years of uncertainty prior to leaving was when a huge wodge of the damage was done. (Capital flight, investment plans curtailed, busywork by companies trying to second-guess what plans to put in place to cope with the trade frictions).
And as I’ve said many times, the UK grew faster than the wider EU cohort for decades.
Moreover our financial sector in particular was finally getting off its knees after suffering more than Europe did in the GFC. (Well, European debt crisis notwithstanding). Financial services have continued to soldier on with Brexit, but I think looking at the US experience (our closest comparison really, much more relevant than European capital markets) I think we probably would have seen something of a boom.
Personally I find it pretty easy to accept a 5-6% lower than otherwise GDP since 2016. Of course I have my biases, but given basically nothing good has come of it (incredible trade deals, revitalised industry, massive reform) and the uncertainties and subsequent frictions were nailed-on hits, there’s not really any ducking a substantial drag.
@semipassive, there’s always been a paradox in migration in that the areas unaffected by it largely vote for anti-migration parties while people in the areas with large populations of migrants realise their neighbours and the folk they see at the school gates, who by and large come here to make a life for themselves and contribute to society, aren’t actually the demons that the racists would have us believe. That’s not to disregard the edge cases and concerns people have about cultural change and it all happening a bit too fast for the older generations but that’s nothing new. Which is a long way from saying this isn’t spreading from the cities to the shires and post-industrial shitholes, it has always emerged from there and been rooted in fear. And this discussion is related to the budget because, as others have pointed out, it was all a bit meh and ignored the key issue facing this island which is the demographic timebomb and the dire need to address it imminently before it’s too late. There’s no point being rich when you’re old if there’s no-one to wipe your arse or do your bloods etc etc. but keep on howling into the moon about an extra £40 a week going to poor families who have an extra kid than society deemed them able to afford.
Hi TI,
Here’s the data from Q1 2016
France. 14.2%
Germany. 11.8%
Italy. 8%
Uk. 12.5%
This from Eurostat/ONS
For comparison, the USA delivered 29% over the similar period.
These numbers continue to suggest,to me at least, that Brexit is a second order issue when compared to the gdp lost due to energy and associated regulatory costs.
If growth is the objective then a key factor is the ready availability of cheap energy
@Bassavoce — Thanks for the extra detail, and I certainly see where you’re coming from on those numbers.
However I’d reiterate I’d fully have expected the UK to grow faster than those EU countries without Brexit, especially if financial services had not had its rebound kneecapped and London was still today the default gateway into Europe.
I’ll grant you that 18-20% (i.e. + 6/8%) does sound a bit toppy by comparison to Italy or France etc. (Though we do have to recall that Brexit will have caused the EU some degree of slowdown, albeit to a far lesser degree. I haven’t seen stats on this that I can recall/point to right away though.)
However there are comparable countries IIRC that grew in the 18-23% range over that period besides the US. Canada, Australia, Spain, others.
So the ‘without Brexit’ numbers are not totally incredulous. The UK is/was not a typical EU economy (more a midway between US and Europe) in particular with respect to services, as you doubtless know. It grew faster than the EU average while in the EU.
To be clear I’m certainly not saying we’d have grown at the US’ 29%! 🙂 But say 18% is feasible in my view, especially with now multiple studies from different sources estimating as much. (If it was one then maybe, but there’s many.)
No doubt energy is an issue in the UK, as in the rest of Europe, in part due to Ukraine and also in part our particular charging mechanism and regulatory direction. Of course we could flip off the regulatory stuff and make it cheaper, albeit in my opinion we’d still face transition costs to a more electric-heavy grid whether you call it green or not.
I believe in climate change, my little nephews and nieces having a nicer future, and the need to push towards Net Zero so I don’t support that… 😉
But there does seem to be plenty of evidence we could have a better way of costing/charging for energy in the UK. Hopefully the big transmission upgrade will help the underlying picture too.
Of course without Brexit we might have spent the 2016-2020 focusing on that kind of actually nationally important stuff, and it’s a great shame we did not.
Also here, do the facts that the US has been massively reducing/ reversing migration from 2017-21 and since 2025, whereas the UK has not, and the decline of Sterling post 2016, not both mean that the US per capita figures when fully adjusted for purchasing power parity are much more impressive vis a vie the UK since 2016 than the raw GDP change figures at market exchange rates alone suggest?
We’ve essentially had to import workers to, in the short term, keep up the tax base, and support private and public sector service demand provision.
Arguably, in doing so, we’ve created significant long term social entitlement (health and benefits) costs’ to the Exchquer issues for providing for the dependents of newly arrived workers.
Despite increasing immigration in 2021-24, the US has not really experienced this phenomenon over the whole 2016-25 period by anything like the same degree as the UK.
I suspect the PPP per capita adjusted data is fully compatible with a 6% to 9% Brexit shortfall in the UK against the relevant counterfactual.