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Weekend reading: Brexit took us out of the EU and turned us into Italy

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What caught my eye this week.

Another week in the new unreality of British political and economic life. Pass me the smelling salts.

I said last week how I long for these commentaries to look away from the ongoing car crash in Westminster. That though requires some break in the succession of disasters jackknifing into each other.

Don’t hold your breath – but feel free to skip to the links below.

The concrete developments from a financial point of view are quickly recounted. As well as dropping the scrapping of the 45% tax rate, the planned hike in corporation tax from 19% to 25% will now go ahead in April.

Offing the 45% tax band would have cost about £2bn. Bringing in the 25% corporation tax rate theoretically generates nearly £19bn.

In theory that’s £21bn towards the £60bn hole in the public finances implied by the Mini Budget.

We’ve been promised from the start that spending cuts – or efficiencies, in politician-speak – would make up the rest of the gap. In her speed date press conference announcing she’d sacked her chancellor, Truss found a few seconds to reiterate this intention.

Next week’s chancellor Jeremy Hunt will apparently reveal all on 31 October. If he’s still around by then.

For now at least the reversal of the recent rise in National Insurance and the 1% cut in basic rate income tax due in April both survive. As far as I can tell the additional rate applied to dividend income is still to be abolished and the recent 1.25% rise in dividend tax rates will also still be reversed.

The changes to stamp duty and getting rid of the banker’s bonus cap linger on.

Damaged goods

How we used to laugh at Italian politics, with its revolving door of new prime ministers, its fickle electorate, and sleaze.

But with three prime ministers in six years and four chancellors in three – and Boris Johnson more than filling in the blanks in the scandal department – no Briton need stand in an Italian’s shadow again.

Italy isn’t just a unwanted template for contemporary Britain, however. Because while it’s tempting for someone like me to see the acceleration of culture and technology colliding with the tribalism of social media to produce our current political maelstrom, the reality is other countries have been at it for years.

We just used to do things differently here. If anything, turning Italian at least offers the chance of turning back again.

So what changed?

In the dread word: Brexit.

As a generalization, the most deluded and out-out-touch Conservative MPs were always on the so-called Eurosceptic wing.

When I was growing up they were the comic relief of British politics. Very few serious people took them seriously.

Now and then one appeared as a sort of forlorn and romantic figure standing up for the memory of a fading Britain of yesteryear. You could spare them a moment’s respect. But it was in the way you stop chattering when you walk past a war memorial. You don’t want to go back there.

Tragically, all that changed when David Cameron’s gambit to rid his party of the Eurosceptics growing influence failed and they bamboozled the British public into voting for Brexit.

A project that had nothing to recommend it bar regaining that wistfully wished-for full sovereignty. Itself a red herring in my opinion, and after our politics since 2016 I’m not sure something you’d wish on your enemies.

Brexit was always a self-harming move from an economic perspective.

And I bemoaned how the methods of the Leave campaign – lies, for want of a better word – had damaged our cultural life, too. The loss of freedoms most of us were born with were also grievous.

But I never really argued with the sovereignty crowd. At least their reasons for wanting us out of the EU was intellectually coherent.

However their Brexit wasn’t the one the country voted for.

Not great men

Brexit – as imagined by most of the 52% who expected £350m a week for the NHS, economic growth, leveling up, more democratic politics and all the rest – was a con job perpetrated on the nation.

Its promises were at best amorphous, at most contradictory.

They wilted under scrutiny.

Yet like most such delusions in history, the perpetrators – and those they’ve hoodwinked – only doubled-down afterwards. It’s always easier to do that then recant.

Those who questioned Brexit were the enemies of the people. Those who wanted anything less than the Hard Brexit were traitors to the supposed vote for a proper Brexit.

I’m recounting all this yet again because it explains why we’re in the mess we’re in.

Economically-speaking, Brexit was a bad idea but as I’ve always said it’s a slow puncture. It creates friction and leaks growth. We have to work harder just to stay where we would have been before.

However politically-speaking, Brexit is a filter for incompetence and wishful thinking. That blow has come quick.

After offing Theresa May – herself the first politician to impale herself in trying to reconcile the fantasies of Brexit with the paltry reality – Boris Johnson purged his ranks of the Remainers who’d led successive revolts against the hard Brexit being railroaded through Parliament.

Those who formed Johnson’s government and that which has followed were thus of two camps.

Either true Brexiteers, or else Remainers prepared to pretend Brexit was a good idea.

Hardcore support for Brexit is like a filter that selects for magical thinking, disdain for experts, and the belief that if you say something enough times it must be true.

No surprise that hasn’t worked out so well in practice.

In filtering for Brexit believers, the Parliamentary Tory party had purged nearly all its most capable – or at least realistic – men and women, or sent them to the back benches. We’ve been government mostly by the dregs since.

As for the reconciled Remainers, I understand those who say we need to move on. But I have not heard one of these people (who include Truss and Hunt, incidentally) say something like: “Brexit was a terrible idea with tough economic consequences, but we have to make the best of it.”

Rather, they too spout the nonsense about Brexit dividends and having our cake and eating it.

Which perpetuates the national feeling that has something has gone very wrong.


This is all relevant to our current travails because as I say our leaders have been increasingly selected from the least capable Tory MPs – the faction identified by its disdain for experts.

But it also matters because the fantasy of Brexit-thinking has escaped from the fringes and moved into the public consciousness.

We’re possibly not fatally infected yet. Almost everyone – even many of the rich, and not a few Tory MPs – thought scrapping the 45% tax rate was at the least a bad look. Some sense remains.

But listening to people’s reactions to the Mini Budget and its reversals more broadly, we now seem to be an electorate of cake-ists – only we never got the cake, let alone a chance to eat it.

Few want taxes to rise. Even fewer think spending should be cut. Investors I follow on Twitter are writing to their MPs bemoaning how the corporation tax rise will threaten the dividends they live on.

And while I don’t have much sympathy for Liz Truss, I’m not surprised she keeps banging on about the energy price cap. A potentially vastly expensive relief package that within days everybody took for granted.

When the Maxi-Mini Budget dropped I looked for pros as well as cons, much to some reader’s disquiet. And from the start the tension between a loose fiscal policy and the Bank of England’s fight against inflation was clear.

That’s why I called it a Push-Me, Pull-You budget. It looked sure to cause ructions in the months and years ahead.

But I’m not going to claim I foresaw the extent of market tumult that followed.

Guns before butter

At some point we’ll learn how much of the spike in gilt yields was amplified by technical factors related to the unwinding of pension fund leverage.

Now the damage is done I doubt it can be reversed, anyway. But it’s conceivable that the market’s seeming reaction to the unfunded tax cuts laid out by Truss and Kwarteng was overblown.

What would certainly have improved their position with the markets – though not the electorate, which is doubtless why they didn’t do it – would have been if they’d simultaneously explained where they’d cut spending to help pay for their program.

And also if they’d allowed the Office for Budget Responsibility – which they’d all but sidelined – to cost it out.

But like sacking the veteran Secretary to the Treasury Sir Tom Scholar on taking office, ignoring the OBR was just the latest manifestation of the scorning of expertise (/reality) that has benighted British politics since the Referendum.

With a surname like Scholar he never really stood a chance.

Anyway, would Kwarteng’s have been my Budget for the country in its precarious position in 2022? With the world facing inflationary pressure and the cost of government borrowing rising all year? And a war raging on the edge of Europe? In the midst of an expensive energy crisis?

No, it would not.

Maybe in 2019 it might have had more merit. But as that rare Brexit-y MP with the ability to use a spreadsheet Rishi Sunak so presciently warned, now was not the time.

With that said, I am not going to pretend I saw no merit in trying to shake Britain out of its low productivity slumber – or even to row back from an ever-more costly state.

The issues Truss and Kwarteng identified haven’t gone away. The irony is their antics have probably only made them more entrenched.

Return the gift

I can’t tell you if mortgage rates will settle, or how deep the coming recession will be. The markets were underwhelmed by Truss’s latest U-turns but I expect she’ll be gone in a fortnight anyway.

For now the more troubling question for me is what happens when Sir Keir Starmer’s Labour embarks on its near-certain path to victory in the general election in 18 months or so.

Can it tone down the populist temperature? Dare it say that Brexit was folly and transparently outline plans to at least ameliorate the worst affects?

The crisis in care and NHS staffing is one reason to relax immigration, pronto. And while I expect I’ll have a bus pass when the UK inevitably rejoins the EU, moving towards a softer Brexit via one of the other trading relationships would be a start.

Alternatively, will Starmer and Labour also start to unravel within weeks of gaining office?

Labour has the same problems with a membership base that’s far from what was, historically at least, the center ground of British politics.

I’ve no doubt its MPs are equally capable of scandals and gaffes to be rapidly exposed and pilloried on social media too.

I suppose that’s when we’ll discover whether Britain is just the new Italy, or if something deeper and even more troubling is going on that has put us on this rollercoaster.

Have a great weekend all.

From Monevator

What happens to bond yields when interest rates rise? – Monevator

Capital gains tax on gilts – Monevator

From the archive-ator: Why are we surprised when would-be retirees think again? – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

What was in the Mini Budget, and what has now changed? – BBC

Bank of England warns mortgage defaults to rise in the months ahead – Guardian

‘Windfall tax’ for low-carbon energy firms in U-turn from Liz Truss – Independent

Mortgage borrowers face new wave of interest rate rises [Search result]FT

Natwest is close these 43 bank branches [List]Yahoo Finance

The lipstick effect: Britons turn to small luxuries in the face of cost-of-living crisis – Guardian

Value remains cheap versus growth [PDF]GMO

Products and services

Atom Bank offers first 5% savings account for a decade, fixed for five years – This Is Money

M&S launches its own version of ‘buy now, pay later’ – Which

Can you really save £120 by doing your washing at night this winter? – This Is Money

Claim up to £1,000 cashback when you transfer your pension to Interactive Investor. Terms apply – Interactive Investor

Vanguard adds two new ETFs to its ESG product range in the UK – Vanguard

Can equity release help hard-pressed pensioners? [Search result]FT

What to do if you need to remortgage – Which

Homes for sale near woods, in pictures – Guardian

Comment and opinion

How to tax (a guide for governments) [Search result] – FT

Low taxes aren’t the recipe for growth in the UK, says Guy Spier – FT Advisor

$10 or under? Get it – Budgets are Sexy

The bond vigilantes are back – The Motley Fool UK

The Great British Retirement Survey 2022 [PDF]Interactive Investor

Carrying on spending in retirement as the market falls – Humble Dollar

When will soaring interest rates hit house prices? – This Is Money

The great pension funds panic of 2022 [Podcast]A Long Time in Finance

Tailoring your portfolio when one-size does not fit all – Morningstar

There will be drawdowns – Compound Advisors

Four key questions about today’s market – Banker of FIRE

Fear itself – Morningstar

Another inflation mini-special

Core US inflation hits a 40-year high – Bloomberg via Yahoo

Whither long-term US inflation? – Morningstar

The last time the Fed killed inflation with a recession – A Wealth of Common Sense

Naughty corner: Active antics

The survival game for active fund managers – Behavioural Investment

High yields abound in the UK stock market right now – UK Dividend Stocks

The evolution of endowment investing – Neckar’s Mind and Markets

Bitcoin becoming less volatile than stocks raises a warning flag – Yahoo Finance

The sages of Wall Street – Verdad

The performance of small cap stocks over economic cycles [Nerdy]TEBI

One study of New York commercial real estate suggests a long-term, post-pandemic 39% loss of value [Research]SSRN

Covid corner

The tragic consequences of the politicisation of science in the US [Search result]FT

Kindle book bargains

Mastering The Market Cycle by Howard Marks – £0.99 on Kindle

Go Big: How To Fix Our World by Ed Miliband – £0.99 on Kindle

Talking To My Daughter: A Brief History Of Capitalism by Yanis Varoufakis – £0.99 on Kindle

My Life, Our Times by Gordon Brown – £0.99 on Kindle

Environmental factors

Burn coal and stop building renewables? [No…]Klement on Investing

Off our beat

Summary of Ben Bernanke’s work that won his Nobel Prize – Marginal Revolution

This week on we’re screwed: A.I. Joe Rogan interviews A.I. Steve Jobs [Podcast]Podcast.AI

Annie Duke shares thoughts from Quit: The Power of Knowing When To Walk AwayNext Big Idea Club

How burnout broke Britain, and how it can recover – Guardian

Why are men so hard to help – National Affairs

Text-ure: what the texts messages of tech titans reveal- No Mercy, No Malice

So farewell, Kwasi. Your career died so Liz Truss’s might live for at least 15 more minutes – Guardian

And finally…

“Economists are criticized for not being able to predict the future, but, because the data are incomplete and subject to revision, we cannot even be sure what happened in the recent past. Noisy data make effective policymaking all the more difficult.”
– Ben Bernanke, The Courage To Act

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{ 101 comments… add one }
  • 1 xxd09 October 15, 2022, 12:56 pm

    I think it’s very human to blame one thing for the current disaster
    Unfortunately real life is a little more complicated
    This unwinding of the Westerns economies debt was always going to be very painful
    Going backwards is not popular
    The many symptoms of peoples problems with dealing with retrenchment have been plain to see-Trump,SNP ,Brexit etc
    It would be a mistake in dealing with this shambles by over focusing on what are only symptoms
    Covid and a European war don’t help
    We have all been living beyond our means for too many years and the bill has come due
    PS I thought Italy was in the EEC and therefore theoretically “safe and sound “?

  • 2 The Investor October 15, 2022, 1:22 pm

    Nobody least of all me says being in the EEC means you’re “safe and sound”.

    This article is about the political bifurcation caused by Brexit.

    Italian politics has been that way for many decades.

    P.S. The problem for me is I’m aware I can sound like a broken record, or a one note drum.

    But for all we expect everything to change in an instant these days (the alternative techno-social explanation of what has sped up government turnover to breaking point) the fact is the consequences and absurdities of Brexit are still playing out.

    I warned in 2016 we’d feel it for decades. To be honest I thought that would be more directly trade and economics related though.

    Brexit and the Referendum from day one was a disaster for British politics but I didn’t predict this chaos.

    [Edit: added this PS to clarify ahead of further responses, as I’ll now be off the comment moderation until early evening latest]

  • 3 HariSeldon October 15, 2022, 1:42 pm

    I don’t think there are actually many people left who wouldn’t agree that Brexit has been ‘unhelpful’ over the last few years, its friction, minor inconveniences when your travelling, when you want to buy something online, when your e bike gear hub has to go back to Germany for repair ( lost in German customs for a month before being shipped unopened back to the UK…) Small businesses give up on dealing cross border etc.

    At some point we need to stop blaming the 52%, when you’re in a hole then stop digging, on a government level admit the facts are what they are, it did not pan out, a degree of cooperation with your neighbours is needed.

    I rather suspect the EU would magnanimous in victory, the others have learnt the lesson by observation.

  • 4 Bb October 15, 2022, 1:46 pm

    The country is broken. The silver lining in this latest shit show is that it shows the Torys up for what they are. I hope Labour have the courage to commit to higher taxes and not pretend that we can keep limping on without investing on our public services

  • 5 The Investor October 15, 2022, 1:46 pm

    @Hari Seldon — Exactly. And for me what’s become clear is this is needed for political even more than economic reasons, if we’re to get back to reality in Westminster.

  • 6 Barn Owl October 15, 2022, 1:54 pm

    Very good article this week TI. Moving away from experts and evidence to a world of opinions leads to cake-ism and inflation. I suspect it’s not just Brexit that has led to this, but it has certainly contributed. May be the silver lining of the current instability is that we will value evidence based thinking more in the future.

  • 7 Bb October 15, 2022, 1:59 pm

    Also… time for PR. Cant see how the ludicrous “strong government ” arguments for FPTP sustain

  • 8 Don October 15, 2022, 2:01 pm

    As always, a perceptive post. Brexit was always a delusional adventure, but we tend to forget the conditions that created the Brexit vote. Brexit emerged from the 2007-2008 crisis and the remedies put in place by the government and BOE that inflated asset prices and reduced public spending and services. It didn’t take long for what used to be considered the lunatic fringe of politics to make the imaginary link between the EU and the real and painful living conditions for those without sufficient assets. We might be witnessing the end of the Brexit fever now in politics, but as we enter a new period of economic instability, we should probably be careful what we wish for.

  • 9 mr_jetlag October 15, 2022, 2:03 pm

    I highly recommend the Economist leading article on Liz Truss that went viral – “The Iceberg Lady”. This one will be in the annals of great political commentary long after she’s been shuffled off the political stage.

    Can’t argue with any of the Brexit stuff, but surely a bigger issue now is the completely woeful state of both major parties? Can’t see a single blue or red figure to lead the country out of its current malaise. Starmer is all but guaranteed for the next GE but his bench is just as devoid of talent and the LibDems are still recovering eight years on from the 2014 wipeout.

    Lastly, have held off on gilts (despite all the coverage on them) and on bonds in general. Have continued to average into VWRP at shockingly low (2019-20) prices though, with 10% inflation we’re getting onto -30% real returns in equities, surely we’re closer to the bottom than the top by now? (said through gritted teeth!)

  • 10 Tony October 15, 2022, 2:07 pm

    “How we used to laugh at Italian politics, with its revolving door of new prime ministers, its fickle electorate, and sleaze”. This and the headline, is objectionable to me as an Italian and inaccurate regardless. There’s no analogy here. The reasons Italian governments average lifespan is a year are totally different than the UK’s governments post 2016 failures. Very different political system, not least PR and coalition governments. Sleaze was mainly Berlusconi. The electorate isn’t fickle, they are desperate for effective reform of the economy. Each time the coalitions fail to deliver or fall apart, the parties regenerate to something different. Also, Italians would never vote to leave the EU. Far too shrewd for that. People don’t believe in economic Unicorns in Italy, particularly when sold by politicians. Agree with the rest of the article.

  • 11 Mr Optimistic October 15, 2022, 2:14 pm

    ‘However their Brexit wasn’t the one the country voted for.’

    You know this how ?

    ‘they bamboozled the British public into voting for Brexit.’

    Oh the gullible fools. Almost makes you want to give up on democracy doesn’t it ?

    However to get a full understanding I think a trip to Peterborough or Boston to actually talk to the voters might be necessary. Not that a better understanding would change anything.

    Think you underestimate the emotion and discontent with immigration and how this fed a feeling of no longer having control. That I think might square the circle that puzzles you without having to insult that part of the electorate that voted differently to you.

    If asked in the future for a definition of failure reckon I might just say ‘Truss’.

    In some ways it’s a pity as she was trying to get back to a Thatcherite view that money has to be earned before you can tax it. After a couple of generations of relative economic backsliding and inadequate investment I don’t hold much hope that higher taxes now will do anything in and of themselves no matter which party holds power. Did much change in this respect under Blair and Brown for example ? A change in perspective might just have kick started something, however that’s gone now. Well done Liz.

    While I hesitate to promote the value of work for its own sake to the FIRE community, I suspect our culture has gone too far in masking the brute realities of life, that it is a competition and you have to earn if you want to spend and this is as true of countries as it is of individuals.

  • 12 Alister October 15, 2022, 2:24 pm

    Great Article! Interestingly, there was a very similar set of points made in the Guardian today by Jonathan Freedland https://www.theguardian.com/commentisfree/2022/oct/14/markets-take-back-control-brexit-humiliation-britain-suez?CMP=Share_iOSApp_Other

  • 13 Neverland October 15, 2022, 2:30 pm


    “In some ways it’s a pity as she was trying to get back to a Thatcherite view that money has to be earned before you can tax it”

    Pull the other one, its got bells on.

    The thacherite view was that supply side reforms had to be proven to be working before cutting taxes

    Truss just attempted a massive electoral bribe to be paid for with other peoples money and unsurprisingly foreign investors refused to lend except at much higher rates

    To date apart from some guff about fracking and wind farms there have been no announcements about supplyside reforms

  • 14 Michele October 15, 2022, 2:34 pm

    I’m Italian and, based on the title , perhaps more we complain about others more we become similar to them. The UK should stop comparing with others or complaining about others and invest more time and energy in solving domestic problems. Just my thoughts.

  • 15 ermine October 15, 2022, 2:59 pm

    > while I expect I’ll have a bus pass when the UK inevitably rejoins the EU,

    That ave me a chuckle. But it’s what, 15-20 years off? That’s making the assumption that there will be OAP bus passes, that the EU will be mindful to readmit perfidious Albion in its role as sick man of Europe (take 2), and perhaps more significantly, there is an EU by then. Vlad the Mad is still rolling, he may be bloodied but he still has, in a former leader from that of the world’s pithy remark, more divisions. Fingers crossed, eh?

  • 16 159F October 15, 2022, 3:22 pm

    Intentionally glib but remember the UK have had 4 Chancellors in as many months. Italy has had 1 Minister of Finance serving for 18 months as of today. Forget turbulence in the market. That’s not the issue.

  • 17 Neverland October 15, 2022, 3:37 pm

    I have to say the number of Italians coming here and complaining about their country being compared to the UK’s current state is …. not a good sign

    However one of them did put it famously and well

    ““If we want everything to remain as it is, everything must change.” Il Gattopardo, Giuseppe Tomasi di Lampedusa

    The conservatives just deserve to spend the next decade or two out of government to figure out what they stand for

  • 18 far_wide October 15, 2022, 3:55 pm

    I saw a tweet the other day (sorry can’t recall who) which said that a silver lining to recent events is that it shows our politics is perhaps healthier than we had thought.

    The logic being that just about everyone agrees that Truss has been a disaster, whilst if Trump had done this in the US o A you’d still have probably 35% of the country saying that he was 100% right to do so.

    I find that notion quite cathartic, and I also wonder whether this shock might be a first step in this country turning a page on Brexit and beginning to get back to grips with reality.

    It’s a prompt to engage properly again with our trading partners, as our fantasy-led leaders and anyone who believed in them have been shown by the markets that no they cannot just make their own self-sufficient reality – they have to engage with the World as it is.

    Whoever assumes power now in the short term is going to be entirely beholden to what the markets and what the public think. Perhaps I’m wrong, but I’d be surprised for example to see more idiotic sabre ratting over the NI protocol, we just can’t afford it anymore.

    So for the first time in a long time, I think I can see a chink of light at the end of the tunnel in the far far distance.

  • 19 Mr Optimistic October 15, 2022, 4:19 pm

    @far_wide. I think it was the bond markets which forced the issue, not the opinions of the people. If the bond market hadn’t reacted it would have just been Opinion Time bluster.

    I don’t know whether two party politics is a cause or a symptom but periodic oscillations between two opposed world views doesn’t seem conducive to long term strategy or direction. Perhaps we have just become addicted to the circus.

    The SDP had a go at breaking the mould in 1981 and where are they now ?

  • 20 Hospitaller October 15, 2022, 4:43 pm

    @ Mr Optimistic

    I am pretty much convinced that the answer to our political situation is to change to Proportional Representation. This would have growing pains undoubtedly but should in the end lead to more consensus politics – where an MP’s role changes a great deal – from shouting loudly at the main opposing party to one where his or her job is to end up reaching compromises, all day, every day – in a government representative of a majority of the popular vote, not a government where the winner takes all (even if they have less than 50+% of the popular vote). I suspect the present Brexit-infiltrated Conservative Party may be so eviscerated at the next General Election that such a change becomes possible. (And no, I am not a LibDem seeking world domination).

    @ TheInvestor
    Your point that we are largely dealing with the dregs with today’s Conservative MPs is well made. “Wanted: An MP candidate specialising in ignoring hard realities and complaining about largely fictitious disputes with neighbouring countries”. The purge of the sensible ones from that Party could never end well – and here we are today.

  • 21 ermine October 15, 2022, 5:05 pm

    @Mr Optimistic
    > I think it was the bond markets which forced the issue, not the opinions of the people. If the bond market hadn’t reacted

    Yeah, funny how all that BS about Taking Back Control disappears like summer rain when Taking Back Control involves borrowing money from other people eh? All of a sudden They Take Back Control because of a time-honoured principle, he who pays the piper calls the tune It’s been a terribly long time since the Great British Pound was the world reserve currency, that sort of Taking Back Control is reserved for our American friends who can currently make foreigners pay for their deficits, for the moment.

    I’m not even necessarily so dead against the concept of Trussonomics, but it sure as hell makes a better impression on the bank manager when you ask for the loan if you go in there with some semblance of sums that add up in normal arithmetic, rather than Trust Me, I’m “Ain’t Going Anywhere” Krazy Kwasi and I have been dreaming of this moment ever since I put my name as lead author on the cover of Britannia Unchained in 2012. Along with that also-ran, Liz Truss MP.

    Telling us where the £60bn of cuts in public spending would come from to pay for the lost revenue would have been a tremendously good start. What’s that? Wouldn’t have got that past the voters, I hear? Well, that’s the difference between student politics and getting to act out the hot mess IRL. Looks like there are limits to how far Eton self confidence fake it till you make it can take you, and Kwazy just faceplanted that limit 😉

  • 22 Always Late October 15, 2022, 5:45 pm

    I am reminded that the main media had so much to do with the Brexit con with a lack of good information at the time. Perhaps I missed it but very little that I found was trying to educate or inform the public. As now, it is just shouty opinion, blame and ridicule on the news, with no discussion or thinking through, just ‘you’re wrong’. And the government didn’t appear to want to educate people by showing that many problems were probably not actually due to the EU but to our own weaknesses. However, we should remember that most of the globally trading world has been finding things a little tricky recently.

  • 23 Seeking Fire October 15, 2022, 5:57 pm

    Great comment Bb. We need to raise taxes and invest in public services.

    Looks like the black hole to match current spending to taxes is about £65bn.

    Let’s assume there’s no recession, that companies don’t put off investing and the corporates don’t decide to move to Ireland where the tax rate’s 11%. So the rise in corporate tax has no impact on activity and raises a solid £18bn as hoped.

    We’ve got £47bn to go……

    So putting the top rate of tax back up to 45% has got us another £2bn. Let’s assume for kicks that making it 75% has no impact on on people’s willingness to work 80 hours a week plus. After all it’s only fair that those with the broadest shoulders should pay the most isn’t it and we’re doing it for the kids right? So that’s another £10bn.

    Just £37bn to go.

    hmmm. running out of a bit of road but let’s keep going. I’ve got it – let’s put up the higher rate from 40% to 50%. Nice one – that’s another £13bn. After all if you earn over £50k your minted right? Well beyond the average of £27k.

    Just £26bn to go to balance the books.

    ah that’s the ticket. basic rate rises. every 1 penny in the pound raises £5bn. Cool – let’s raise basic rate of taxation to 25p – that’s another 25bn and we’re done.

    So to balance the books I recommend we

    – increase the additional rate to 75%
    – increase the higher rate to 50%
    – increase the basic rate to 25%

    I assume you are on board with this……Last time a govt tried to raise basic rate of taxation there was almost a riot and it’s probably the best way to get unelected but we’re all in it together now.

    Let’s now reinvest in public services. Probably needs at least another £50bn when you add up all the departments and massive austerity over the last decade. We’ve kinda maxed out on general taxation one would think. Ok, let’s pull the big one. Wealth tax – let’s go big or go home – £55bn if you pull all the levers for anyone with more than £1m. Let’s also assume that they wouldn’t leave the country.

    So that’s the manifesto with data sources below.



    The tax base collapsed post the financial crisis. It was artificially elevated anyway in the noughties by the great easing and an epic US housing boom and ever since 2008 we’ve been on a one way ticket of managed decline. Brexit, the pandemic and now Ukraine are just accelerants on the smouldering mess that’s our economy.

    I’m a bit nervous about my manifesto as well. France killed off it’s wealth tax idea as guess what – everyone checked out. Plus I don’t reckon I’d be up for working in seriously stressful jobs if I’m giving up 75% of my dough.

    Really the best people to pluck are the masses of basic rate taxes. They are less mobile tbh. I suppose if we went all in on them we could do it by raising basic rate of taxation by 13% (£5b x 13) to plug the funding gap and then another 10% (£5bn x 10) to raise the revenue needed for investing.

    Maybe eventually we might as an electorate decide to stop blaming govts (who btw tend to be elected because they promise people what they want not what the need….) and start figuring out as Al Pacino said in Any Given Sunday, we can either stay and get the shit kicked out of us or climb out one step at time.

    Like investing in education, infrastructure, maybe and here’s an idea get a closer trading relationship with the EU…..Might take a few decades. I suspect things are gonna get a lot worse before we eventually x the rubicon.

  • 24 CJ October 15, 2022, 5:58 pm

    The kind strangers have finally said f*** off however its been a good opportunity to buy some short dated Gilts. I also had a side bet on the 60p Tesco iceberg lettuce being the winner.

  • 25 BBlimp October 15, 2022, 6:09 pm

    Hariseldon and others comments that public have magically turned back on brexit makes me laugh. That’s based on conversations with how many Leavers exactly ?

    I remember the same being said nearly every day (on the bbc) between June 2016 and the European elections and general election in 2019. If one surrounds themselves with outer remoaners, don’t be surprised if you think we all want to remoan.

    The words ‘levelling up’ weren’t mentioned in the run up to 2016. I don’t even think May used them in her general election. They came far later, in 2019, after the election, to hold together the coalition of hard brexiteer libertarians with the forgotten people of seaside towns and the north that Labour scoffed at. Is there a set of policies that can hold these groups together ? I believe that there is, that most people are aspirational and that managed decline isn’t what they are really after. Guess we’ll see.

  • 26 Neverland October 15, 2022, 6:48 pm


    Less than 3 weeks ago you were loudly hailing the masterstroke of the mini-budget as a means to drive us into the sunny uplands of growth like singapore and a second decade of conservative rule


    Now the chancellor sacked, the prime minister’s self life has been compared to a lettuce, labour are 25-30 points ahead in the polls and the country is being run by a politician who campaigned to stay in the eu

    You’ll forgive me if I don’t put much weight on your predictive powers

  • 27 BBlimp October 15, 2022, 7:09 pm

    Neverland I’m sure you won’t be too disappointed to hear I don’t mind what you think. Like Kwasi, I think tax cutting was the right route and would have produced good results. In hindsight, I’m sure they are wishing they started from a footing of secure public finances.

    But to sit around, only talking to other remainers, and coming to the conclusion ‘Ah the markets were worried about the gilts getting paid back ergo the majority of people who voted four times to leave the eu don’t want to’ is silly.

    If you want to know what leavers think, talk to some. Buy the express or the telegraph. But don’t lurk in remainer websites thinking a small state chancellor being sacked means people are unhappy they voted to leave.

    And I’ll remind you – there’s only one pill that matters. You were probably pretty shocked when Boris routed in 2019… little internet troll that you are must have been full of vitriol at brexits fourth victory.

  • 28 Neverland October 15, 2022, 7:31 pm


    Truss started from a poor financial footing because she announced a two year price cap on energy bills with an unlimited price tag, just estimated to have a cost of 60bn in the first six months, and cancelling 30 bn of scheduled tax rises

    It was all self-inflicted idiocy and obvious to anyone who can add up

    Want to quibble?

    Here’s a bunch of whining remoaners, The Spectator: https://12ft.io/proxy?q=https%3A%2F%2Fwww.spectator.co.uk%2Farticle%2Fwhy-liz-truss-failed

  • 29 The Investor October 15, 2022, 7:36 pm

    @all — Solid comments thank you! 🙂

    @Italians — Please don’t be offended. I’m a great admirer of Italy in many ways aside from its politics, and I think Italian men won the genetic lottery. (Italian women are great but I don’t think they got the better bargain…)

    What I am talking about though is pretty clear in the numbers.

    Between UK PMs Edward Heath in 1970 and David Cameron to 2016, Britain changed Prime Minister eight times.

    Over the same period Wikipedia tells me Italy changed leader 28 times!

    I am certain there’s nuance to the Italian political system as you say (coalitions etc) and other reasons for the changeability that I’m not privy to.

    However the difference is stark. To us in the UK the Italian political system once seemed an unthinkably chaotic game of musical chairs (again, from outside).

    Yet from 2016 – from the moment the Referendum result was declared, and the Tories began knifing each other in the back – we’ve become very similar.

    Even if I hadn’t been watching the other factors that I reference in the post (the Remainer talent purges, the inherent contradictions of Brexit, and more) that one fact alone would be pretty persuasive to me.

    @Mr_Optimistic — I am not going to partake in depth in a discussion about “how I know” what the Brexit vote was for yet again. We’ve been around this myriad times.

    It was for everything (in that lots of dreams were pinned to it) and nothing (in that those dreams are inconsistent and contradictory).

    I am certain some large slice of the Brexit vote was for full sovereignty.

    That’s one reason I reference it every time – the other being that unlike most Brexit motivations it actually makes sense in its own terms.

    However the Brexit vote was clearly also for many other things, as revealed by myriad opinion polls and vox pops then and since.

    For instance you seem to be saying today it was about immigration?

    I’ve literally been screamed at on this website in the past for suggesting immigration was a real driving force to Brexit.

    How dare I say it was about immigration! We’re not all xenophobes! Etc etc.

    Indeed our own @BBlimp — who rightfully has begun to acknowledge the diverse nature of the Leave coalition — has taken issue with this in the past.

    Anyone who can’t see the essential incoherence within the motivation for Brexit six years on must be trying hard not to.

    It’s exactly why it was so hard to get through Parliament, except ultimately in a hard Brexit that ‘burned all the boats’ (as opposed to the softer ones touted by some during the Referendum).

    And ironically even now the likes of Farage still say we have a phony Brexit – because boats of migrants are still arriving in Dover.

    I don’t know…perhaps being in the EU wasn’t the reason why the boats were arriving in Dover?

    The world is much more complicated than most of the Leave rhetoric allowed.

    As for democracy, it’s a terrible system but better than all the rest.

    I believe large minority of people were unable to evaluate the pros and cons of being in the EU seriously, yes.

    The benefits were broad and diffuse. The downsides are blunt and appeal mostly to the heart.

    We don’t expect everyone to be able to understand lots of other complicated things, but apparently we were all supposed to become experts in the counterintuitive nuances of free trade and economics. Freshers studying economics struggle with David Ricardo for months.

    What anyone can now do though is add up the benefits of Brexit (approximately none, not even lower immigration for those who wanted it) and the disadvantages (long list of economic costs and freedoms lost) and decide if the decision to Leave was really worth it.

    Personally I’d have changed my mind years ago.

  • 30 The Investor October 15, 2022, 7:40 pm

    @BBlimp — I’ve asked @Neverland in weeks prior not to call you names, probably best you don’t do the same.

    That way you can both educate us all by teasing apart the downfall of Kwasi without it getting too hot and personal.

    (And I know I’ve used the same description in the past. But I’m in charge of the law around these parts, and thus occasionally have to use force. 😉 )

  • 31 WCTL Flashheart October 15, 2022, 7:48 pm

    Just when I thought surely no further damage could be done on our current self deprecating journey from fiscal incompetence to fiscal incontinence, Truss strikes once again. She is simply appalling.

    When forced to think on her feet (asking for questions yesterday) she looked utterly lost. If you’re a politician, you must give confidence (and dare I say be competent too). Anyone can read a prepared and practiced script.

    She will be gone by Xmas.

    On a positive note (looking deep into the bottomless barrel) it was a relief to hear Bailey say his conversation with Hunt today went well. To quote “I can tell you that there was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that”.

    If this was a conversation between student and tutor for an essay…. Not a problem. But a conversation between the BoE Governor and Chancellor… Jeez. At least it’s an agreeable baseline… What a world we live in!

  • 32 Andrew October 15, 2022, 7:57 pm

    To hell with raising taxes further. I’m sick of people saying earning £150K makes you “wealthy”.

    Liz Truss is estimated to have a net worth of £8M+… how much of that do you think is down to her £160K Prime Ministers salary? Bloody none of it. You likely couldn’t buy her pad in Greenwich on that pittance!

    The top rate of tax is *already* almost 55%. For every £1.16 the employer pays out the government take 16p in *employers* National Insurance, and the employee pays 2p of NI and 45p of income tax, leaving 53p…

    In addition you get shafted out of your marriage tax allowance, free childcare hours, child benefit, pension tax relief, and God knows what else.

    We need to get out of this pitiful “£35K is a good salary” mindset in this country. Salaries have lagged behind for too long.

  • 33 Seeking Fire October 15, 2022, 8:05 pm

    Andrew – Indeed. What’s your plan to balance the budget then?

    £65bn is about half the NHS annual budget? Perhaps we could close it down?

    And then there’s the (a) investing in public services (b) small matter of the £2.4 trillion national debt that ideally would be paid down.

    Anyone got any ideas? One’s that might actually work? I’m fresh out of ideas.

  • 34 The Investor October 15, 2022, 8:23 pm

    @Seeking Fire — Indeed. Here’s what I wrote in 2016:

    I have no doubt though that Britain is going to be poorer as a result of this vote. The extent to which whoever gains power in the aftermath implements the professed wishes of Leavers will determine exactly how much poorer.

    It’s easy enough to paint apocalyptic scenarios – a run on the pound, soaring interest rates as we lose our triple-A status and foreigners refuse to finance our deficit. Maybe some localized violence.

    However the truth will likely be more mundane, economically-speaking.

    London will come off the boil, much global capital will head elsewhere. A few Northern exporters irrelevant in the grand scheme of things will sell a few more widgets to China and India. If immigration is massively curbed, then there’ll be fewer jobs but hourly wages for the crappest jobs might rise by a few pennies.

    But most things will be more expensive because labour costs will increase and for as long as the pound is weak we’ll import inflation. The poorer regions who voted for Brexit will see less money as tax revenues dwindle and growth slows.

    I don’t see any reason to revise my view six years later.


  • 35 Andrew October 15, 2022, 10:04 pm

    @Seeking Fire

    This energy cap bailout (£100bn+) is the result of decades of chronic under investment in critical infrastructure and energy security. It’s a symptom of our weak economy and our weak leadership, and it’s been this way for decades.

    You claim the solution is to raise taxes, but I don’t have faith that this government, or any other government in the last 20 years, ever had what it took to *invest* in energy security. I certainly don’t think they have what it takes now.

    A country such as ours, with access to north sea fossil fuel resources we have, should never have been put over a barrel by this energy crisis… we should be selling fuel and related services to the EU!

    I’m not saying Liz Truss’s agenda is the correct one. All I know is my partner got a 2% pay rise last year, inflation is running at 8%, my mortgage could bankrupt me in 5 years unless everything goes perfect in my career, and the “early” in FIRE realistically means 60 years old.

    A high growth, high salary society is exactly what we need to get out of this mess. Dumping house prices by 35% won’t get people on the housing ladder when mortgage rates have tripled, and taxing the wealthy more won’t fix the NHS.

    The whole situation is just depressing.

  • 36 BBlimp October 15, 2022, 10:16 pm

    @seeking fire – if they raise benefits by 10pc and freeze public services, does your argument hold ?

    To save money;
    -We could build some houses and reduce the housing allowance element of benefits
    -We could incentivise people on universal credit to work more than 16 hours a week
    -We could incentivise people who have left the workplace to rejoin it or not to leave it (I’m thinking cheaper childcare, higher pension life time allowance, sure there are many more)
    -We could diverge from solvency and mifid, remove caps on bankers bonuses, attract top banking talent to locate here

    @Neverland – I’m really not sure about your point there. I’m not surprised you can find leavers who think the PM has done badly – I’m sure she must take stock and think sacking her chancellor a month in isn’t a great sign – but do you see Leavers wishing we hadn’t left?

    @TI – As for why Kwasi ‘fell’. My analysis would be it wasn’t the right time for his theory and he didn’t have the requisite backing from his party to weather the market turbulence or polling dips.

    I agree with Kwasi’s direction – create an aspirational society. I think, had Boris chosen him to be Chancellor in 2019, he’d released that mini budget and there was no pandemic, we’d think it was a healthy and necessary reset. Especially as growth improved. The Tories would follow Boris through any backlash because many of them would credit him with winning their seat, and most with winning the Tories their majority.

    But it wasn’t Boris. It was a PM who doesn’t have a personal mandate from her mps or the public. As soon as there was a market wobble, or a bad poll the party pounced. We’ll never know whether cutting taxes and introducing difficult supply side reforms would have worked, because we didn’t try them. And if @Andrew thinks ‘those with the broadest shoulders’ are taxed high now, I suspect he’ll be pretty disappointed in the future. Having seen the fuss over removing the 45p rate it’s lot easier to see it going up than down.

  • 37 Seeking Fire October 15, 2022, 10:19 pm

    @Andrew – cheer up, you could be in Lebanon.

    Just to be clear, I absolutely don’t think the solution is to raise taxes. But when suggestions to deal with the deficit are to raise taxes or cut spending per a previous comment, we need to put some numbers behind them so people really understand what they mean. Facts not feelings. Gove was bang wrong when he said we’ve had enough of the experts a few years ago.

    I’m reasonably sure that the solution will be more of the same medicine from the last decade. Tighten the taxation vice a bit further, cut spending in real terms a bit more. Jezza Hunt is suggesting exactly that this evening. Pretend we’ll get to fiscal neutrality at some point in the future. Pass the buck onto the next chancellor. The bond markets will swallow that for the foreseeable future so we can kick the can down the road for a few more years / decades.

    There’s not a whole lot of fat to cut from departmental budgets really and its electorally suicide for the conservatives. We could get rid of one of the aircraft carriers? It would fund the NHS for about a week and half if we get £3bn for it?

  • 38 The Investor October 15, 2022, 10:25 pm

    @Alister — Thanks for the pointer to Freedland. Just read it! I agree it is similar, though he is more trenchant and of course I must admit a more strident writer. Still, I guess I could always become a back-up columnist if my active investing touch doesn’t return. 😉

    I believe it will eventually become widely accepted that all this began in 2016. However what does stop me quite blaming it *all* on the Referendum campaign and the vote to Brexit is, as others have pointed out, that we see some of the same magical thinking in other countries where Brexit per se is obviously not a factor.

    The obvious parallel being the US and Trump — where the polls suggest a majority of Republican voters still believe Biden stole the election.

    This sort of statistic has one turning to social media, Twitter, and all the rest of it as a cause. Not just for the first-order effect of ‘fake news’ distorting people’s sense of reality, though I’m sure there is some of that. Nor even its ceaseless undermining of experts, institutions, and simple social norms.

    But also for the sheer tribalism that can crowd out rationale thinking (and that I have to guard against myself, obviously, as we all do, and as I doubtless fail to do now and then.)

    In Britain we can look to America and see that the idea Biden literally stole the election is anything but a fringe fantasy that wouldn’t be out of place a Thomas Pynchon novel.

    It also seems clear to unbiased onlookers that the fact this mass delusion can inspire thousands to storm the White House shows it’s not something to be brushed under the carpet and never spoken about.

    Rather, it’s live and dangerous and consequential for the future.

  • 39 Neverland October 15, 2022, 10:51 pm


    “but do you see Leavers wishing we hadn’t left?”

    Indeed I do. Economics editor of the Daily Telegraph good enough for you?

    “Downbeat predictions by the Treasury and others on the economic consequences of leaving the EU, contemptuously dismissed at the time by Brexit campaigners as “Project Fear”, have been on a long fuse, but they have turned out to be overwhelmingly correct, and if anything have underestimated both the calamitous loss of international standing and the scale of the damage that six years of policy confusion and ineptitude has imposed on the country. A serious house price correction, substantially higher interest rates and a permanently impaired exchange rate may be the least of it.”


  • 40 BBlimp October 15, 2022, 10:56 pm


    Shock horror, he was a remainer 😉

    As I told you couple weeks ago, some newspapers allow people with different views.

    Got to say, by using a remainer as an example of a leaver who’s changed their mind… well… says it all

  • 41 random coder October 15, 2022, 11:55 pm

    Lots of interesting remarks here. As a Scottish taxpayer I should point out that raising taxation could happen and has already happened years ago in Scotland and it was accepted, and this is with a proportional representation system that almost surely leads to a government without a huge (or even any) majority. We are currently 21% and 41%, 46% (https://www.gov.uk/scottish-income-tax), with the most important rates in terms of those hitting those at moderate parts of the income distribution (20%, 21% and 41%) coming in at lower thresholds than in rest of UK – most people earning average incomes or higher, are paying more tax in Scotland. The tax burden in Scotland is greater and no one is rioting. I am not a huge supporter of the SNP, but politics seems a little more civilised and less chaotic (certainly just now) than the UK situation, and that is with a higher tax base. I actually watch the news now and sigh a little, but the truth of the matter is that many of the measures of the mini-(non)budget would only indirectly hit Scotland via the various mechanisms that lead to Scotland funding, but there was no doubt in my mind that regardless of how the dust settled on this uncosted proposed experiment, tax rates and thresholds in Scotland were not getting looser regardless of what happened in England. The argument that no one would accept more taxation in wider UK is not necessarily true, based on the experience of your very friends and neighbours living in Scotland. My employer is now struggling to deal with the diverging tax situations because of home working, and this problem would have got hurrendously worse if England reduced the top tax bands and employers suddenly had to worry about differential after-tax pay levels for the few highest earners doing the exact same job in the same land mass (UK) but one was in England and one was in Scotland, especially when huge numbers of jobs are now home based.

    Regarding who should pay the most taxes and ‘fairness’, I am very careful to try never calling our or arguing with anyone here, as most contributers offer something, and the situation of everyone is different. Despite this, I state my same point as before in previous posts, if you are struggling to live in the upper tails of the income distribution, you are in a better position than most people around you, and you are choosing to make life harder for yourself by your spending choices – the vast majority of the country is living on much less than those in the right tails of the income distribution.

    The reality that politicians and everyone needs to deal with is that you/we as a country can’t just ‘take a punt’ on some strategy/ideology, and this is reflected in the key point of this blog post that I agree with – we actually need an evidence base or a plan to reach an evidence base for massively expensive decisions, you certainly do not just propose to implement them on trust, and you probably want an electoral mandate for anything a bit radical. Other (current) politicians have had a punt on various economic theories but done it sensibly, a recent one was universal income, the idea that everyone gets a basic level of money regardless of employment status or earnings. The theory is complicated, and it’s a bit pie in the sky, and it probably won’t work… But it was an interesting theory, and it doesn’t take much to see that it could have worked in a theoretical sense*. A few pilot studies in areas have been done, that were massively costly, but a proper evidence based set of research was being buit up to understand if and when it could work and the unintended consequences etc, and proper independent research was involved. There are details online, and the conclusion is it sort of works in some areas and for some people, but the evidence base just isn’t there yet. I imagine some readers of this blog might be appauled at the idea or think it’s a terrible idea, and that is fine, but the key difference here is that we didn’t gamble the whole countries economic future on something that is little more than an ideology that has some merit and might just work, the need for a demonstrable evidence base is required.

    I struggle to watch the clown show that is the UK government ongoings most days now, especially given the fact the very people in power are on record bemoaning the UK workers, calling them ‘worst idlers’, and talking about lack of productivity. We have just had 3+ months of our top people effectively downing tools and spending their full days actively working on their promotion application instead of actual productive work, followed by a period of output from them that has had little evidence base, and then unsurprisingly has been reeled back or completely removed. This is not productive work activities and the people involved are in no position to talk down the actual workers who have been producing actual positive output while the clown show continues amongst our MPs.

    The mess we are in today is likely not entirely brexit, but a huge amount of progress can be made by fixing some of the non-brexit related matters that are within our control and can be fixed. We can’t reverse brexit overnight, possibly ever, but as indicated by others, let us just accept some damage has been done and we should start repairing what we can. The reality is that this will likely involve more taxes, and those taxes will likely fall on the most wealthy. If a bunch of conservative politicians want to spend billions of pounds on their economic policy, the least they can do is properly cost it, have those costings independently verified, and give the evidence base for the plan and timelines, it is not too much to ask. I personally don’t like Jeremy Hunt, but at least he is currently behaving as someone who is trying to work within the normal accepted rules. Then again, this is a very low bar.

    *The basic premise of showing it could work theoretically, is everyone gets £X a year say, regardless of salary, and tax bands and thresholds are adjusted accordingly so that the same amount of money is brought in or slightly less since the assumption is the majority of the benefits and possibly state pension system is effectively dispensed with overnight (as the universal income replaces it) which saves some money – this obviously requires a period of adjustment and new employment areas of those people working in these areas, so it is not as easy as this. However, in theory, this could work in terms of being able to demonstrate net costs to the state being the same, although it undoubtedly would result in taxing at higher rates and possibly sooner, and behaviours would change etc so assumptions would likely later be shown to be flawed, and of course, potential inflationary impacts… In theory though, it could at least be costed.

  • 42 Steve Follows October 16, 2022, 12:22 am

    It’s typical of a Remainer wanting to blame Brexit for everything. The developed world ‘including the EU’ have all got drunk on cheap money for the last 13 years and now inflation is driving a painful reset. This country is not alone in having developed a sense of entitlement that has forgotten that money has to be earned, rather than borrowed on the never never, and then thrown into the giant money pit of public services like confetti. Then surprise surprise, when the proverbial finally hits the fan, all those vested interests who thought it was a great idea to pay people to sit at home and be unproductive, the left wing media, and remainders just want to shout and scream, point the finger, and blame anyone to suit there own point of view! In Truss & Kwarteng, they at least recognised that something had to change, but as soon as all the vested interests smelt blood due to poor presentation, they shouted & screamed like spoilt children and went for the jugular, just so they can keep their particular show on the road for a little bit longer!

  • 43 Boltt October 16, 2022, 7:08 am


    Do you fancy writing an article about UBI/UBS and similar? It’s an interesting topic and we’ve touched on it before in various comment threads. I even recall ZX saying it was more than affordable than you’d naturally expect.

    From what I’ve read the trials weren’t that positive, and one the books did a better job selling UBS (universal basic services) – health, schools, travel, police/army, homes, broadband, utilities etc. this feels a lot more sensible and lower cost, and obviously much closer to where we are now, in the Uk.

    The interesting elements (for me) are housing, travel, food and clothing – free school dinners and uniforms but no child benefit. Food parcels/voucher is used in US but thought a step too far here (UK) by some.

    I likes the idea of parcelling up the tax free allowance as a cash amount ie about £50 a week (20% of £12570) per adult, a decent underpin for 2+ adult houses. But then every pound earned is taxed. The implied tax rates to cover UBI were well over 50% and deemed unmotivational.

    As ever Housing is the issue – having non-working people living in £1m homes in the capital (possibly with spare bedroom) doesn’t feel right. More cheaper, lower quality options are needed – think pre-fabs etc. now it starts getting political…

  • 44 far_wide October 16, 2022, 8:48 am

    I find it so bizarre that there’s still even any semblance of a debate here about whether Brexit has turned out well, or seeing people trying desperately to keep ‘leaver/remainer’ tags on even now.

    I can only assume that even if Britain did turn into Lebanon then there’d still be bickering here about it being the lefty podcasters fault.

    Happily anyway we’re not there yet, and the amount of the country who thinks this latest political situation is just misunderstood/badly presented/someone else’s fault is comparable to the numbers who think the moon landing was faked. Which is why despite noise in this little corner of the internet, I feel a bit more optimistic despite the circumstances.

    Whoever is in political power in Britain going forward, wishful thinking time is coming to an end. Thank god.

  • 45 Mr Optimistic October 16, 2022, 8:51 am

    @TI. Not for the first time I forgot to say thank you for your article and efforts over all these years. I have been reading your blog for more than 10 years and it was invaluable to me in taking the mystery out of investing and overcoming the terminology.

    Perhaps we underestimate the simple thing that if people are generally unhappy and disgruntled they will be seduced by the possibility of change, why vote for a status quo you are not happy with ? That holds the door open for pedlars of dreams, Peronists, Trumps, Berlusconi.. ( and historically much much worse). For us it was Brexit, a few miles north it is the SNP.
    Ever since Tony Benn’s white hot technology revolution I have had the opinion that we say we want this that and the other but when it comes to it we don’t want the hard work or the sacrifices. Its not cool to be good at school. The status quo and path of least disruption wins. Our national mythology insulates us from reality. Still we won the world cup in 1966 and stood proud and alone in 1939 and despite the evidence of our own eyes the NHS is the envy of the world. Poor world .
    However, this latest business with Truss has even me recalibrating.

  • 46 Wephway October 16, 2022, 9:15 am

    If you look at the polling most people now think Brexit has gone badly and many of those who voted for it regret voting for it. Something like 38% of Leave voters think the economy has suffered because of Brexit. Take this poll for example, only 16% think Brexit has gone well since the end of the transition period, vs 54% who think it has gone badly: https://yougov.co.uk/topics/politics/survey-results/daily/2022/06/28/8746b/2

    There’ll always be a hardcore of Brexit supporters who say we’re just not doing it right, fortunately most people now see through their arguments.

    Interesting recently some Brexiteers who thought quantitative easing was bad are now saying we should have more quantitative easing to help the government with their tax cutting agenda, regardless of the consequences for inflation. I listened to Patrick Minford on Radio 4 this week, the only economist who supported Brexit, and Evan Davies quietly made him sound like a fool.

    And now there are Brexiteers arguing we should increase immigration to help growth! You couldn’t make it up.

    The quickest way to increase growth and resolve some of our budget pressures would be to rejoin the Single Market, I think it is time we start making the case for that.

  • 47 BBlimp October 16, 2022, 9:21 am

    @Far-awide – I’m sure you could have told yourself that every day between 2016 & 2019, yet the elections that year didn’t seem to go the way the world according to the bbc and sky were expecting did they ? Remember your surprise then? Fool you once shame on them, fool you twice….
    I guest you take a look at the mail, the express, the telegraph..you know, the news they don’t give away free online that people are actually willing to pay for without being forced , you’ll see people still don’t agree with you.

    @random coder – that’s only if you look at income in isolation. There is a housing shortage which falls disproportionately on the young. Is a 30yr old who’s renting and earning 100k really in a better position than a 40yr old earning 40k who bought a home 15 years ago that is worth 700k ? I’m not at all sure. The end of zero interest rates will help with this of course, it’ll be pretty painful for some people whose wealth depended solely on interest rates being low, but it seems unlikely having average house prices at 12x average earnings was sustainable.

  • 48 Neverland October 16, 2022, 9:29 am


    I’ve lived and worked widely and most people in most developed nations think their country is unique and great so the “great britain” attitude is fairly typical actually

    The only place I’ve ever worked where they didn’t think their country was the dog bollocks was Belgium (its a made up country)

    The UK is just a typical european country with typical european issues

    The uk went from needing an imf bailout in 1976, paying it off in 1979 to having a decent economy by ten years later

    Its just the cumulative effect of sensible policy

    There are plenty of policies to choose from suiting the centre-right or centre left inclined that work elsewhere that can be adopted

    You just need a government made up of serious people committed to public service

  • 49 far_wide October 16, 2022, 9:46 am

    @BBlimp , You mean these papers?

    Telegraph main headline “Jeremy Hunt delays 1p tax cut as Bank of England backs Chancellor”

    Daily Express main headline “Revealed: Secret plot to replace Truss with ‘sensible 6’ -”

    Daily Mail leads on a Royalty story, but features a Peter Hitchens (no less) article “Liz Truss bought her opinions on eBay… the Tories have now run out of gimmicks”

    These don’t sound like ringing endorsements to me…

  • 50 BBlimp October 16, 2022, 10:03 am

    @Far_awide you seem to be conflating the Truss govt with brexit ? I’m not sure that makes sense ? It’s perfectly possible to think brexit was a good idea AND not be impressed with the past six weeks, I’m sure that’s the position 52pc of people find themselves in. I’m not talking about individual contributors on individual articles but are those papers advocating leaving as a bad idea ? At all ?
    No ?! The bbc and sky, the guardian and the independent are..: and they all were before we voted to leave.

    @Wephway… indeed there were similar polls before the 2019 European elections… the brexit party took the largest share of the vote. Why do you think no party is advocating rejoining the eu or the single market ? It’s not even difficult for you to leave the remainer bubble, get a subscription to a leave newspaper, until you have; don’t kid yourself people have changed their mind.

  • 51 Haphazard October 16, 2022, 10:22 am

    Interestingly, there does seem to have been a bit of a shift in the polls on whether, with hindsight, Brexit was a good idea. I don’t know whether this is new voters coming onstream, or people changing their mind.

  • 52 Wephway October 16, 2022, 10:24 am

    @BBlimp, no there weren’t, now you’re just making stuff up. If you can show me a link though I’ll be happy to take a look. In any case I don’t think there were any polls showing a 16% vs 54% split like the link I’ve shared above. You could argue the polls aren’t always correct I suppose, but they aren’t usually that far out. The polls before the 2016 Referendum were admittedly showing a slight Remain lead and they got it wrong, but they were still only a few percent out.

    Interesting that you point to the 2019 European elections. The Brexit Party got 30.5% of the vote and 29 out of 73 seats, do you think that is a majority of voters? (Answer, it’s not.)

    Anyway, doesn’t matter what media you read/watch, the polls show a decisive shift against Brexit. The people have decided Brexit was a mistake, and they are right.

  • 53 Naeclue October 16, 2022, 10:45 am

    @TI, I completely agree with every word. However, I do think there may be a chink of light at the end of this particularly dark tunnel. The unhinged brexity fantasists that have been so influential and eventually took control have finally run into a brick wall of reality. As I said last week, you cannot BS the markets and they have been completely unable to blag their way out of the mess they have created.

    There will still be a rump of reality denying fanatical Brexiters who, much like the communists, will try to argue that the problems the country face have nothing to do with their Brexity ideology, that remoaners are standing in the way of a true Brexit, etc. but the British public are increasingly seeing through that BS.

    We still have a cabinet full of nutjobs, but I get the impression that JH will be calling the shots from now on, with Truss some kind of lame duck figurehead. I doubt his safe pair of hands will save them at the next election though, unless we see the re-emergence of Labour’s nutty wing.

  • 54 far_wide October 16, 2022, 10:50 am

    @BBlimp, to be clear, I think we’re a long way from the Daily Telegraph or Express campaigning for us to rejoin the EU or saying they had it all wrong. That’s not what I’m saying.

    What I am saying is that seeing the Truss govt as flowing from Brexit makes perfect sense. It’s the culmination of wishful thinking hitting against reality. This leadership didn’t arise out of nowhere, it’s been years in the making.

    TI has already explained the detail here, and it’s in many of the papers too. For example, the Sunday Times explains it today in the article “A six-year cult has the Tories in its grip. Only defeat can free them”. You clearly disagree.

    Whatever – I think this moment marks a low point on a road back to sanity. I certainly hope it does.

  • 55 BBlimp October 16, 2022, 11:17 am

    Wephway…by your clever logic we’ll soon see both the Tories and Labour pledging to rejoin ? This feels very much like your position on London not experiencing house price falls … whatever the truth of the matter you keep your preconceived idea and stick with it. Amazing how everyone regrets leaving the EU and yet half the papers (the ones people read) and the political parties haven’t picked up on it.

  • 56 Marked October 16, 2022, 11:19 am

    I’ve seen here TI’s prediction of Truss gone in a fortnight as well as Kwasi’s perhaps prophesizing too (saw the headline, didn’t read it to see if an actual quote).

    I think Truss played a blinder with the new Chancellor selection. Not based on Hunt’s ability, but because he’s a one nation Tory that will have the heckles of JRM and the old ERG mob up. She did it to try and bring the party together – something Boris did the opposite of (casting out Churchill’s grandfather and Hammond for example). A good move, but is it too late? Who knows, but if Truss wants a growth strategy it will take more than 5 years so she needs a GE which of course at this moment is political suicide if the polls are to be believed. I’m not actually sure how the Conservatives can change this ship in 2 years without immense amounts of contrition, but I think Hunt has given Truss more runway than two weeks!

    Oh how these crystall ball moments age so badly!

  • 57 Wephway October 16, 2022, 11:28 am

    @BBlimp, Labour are trying to avoid the conversation which makes sense politically (ie trying to win back the Red Wall). I see the Tory moderates are starting to win the argument in their party. We can see by the polls what the general public thinks of the Brexiteers in charge…

    Anyway I can see you’d prefer to insult me rather than engage with facts or logic so might as well leave it there.

  • 58 Joe October 16, 2022, 11:41 am

    There is a great article in The Times today by Matthew Syed.

    Basically he is explaining how cult members, double down and divide into factions when presented with evidence that goes against their beliefs. The only way to cure that is to take time away from the cult to gain some perspective. Brexit is the same thing.

    I see myself as a professional educated person, who was completely hoodwinked by Brexit delusions and (I am ashamed to admit) voted for it.

    However in a twist of fate after voting to leave the EU, I got the chance to go and live and work in the EU. Only after taking time out from the cult of Brexit, do I now see the delusions clearly. Other people I know, including family members are still in the grip of the Brexit cult. Blaming everything apart from Brexit for our current problems or saying that Brexit would be a success if it wasn’t for lefty media/civil servants, ect.

    I really don’t know what the solution is at this point. Will it take all out economic collapse to wake people up to the realities of this world?

  • 59 Fatbritabroad October 16, 2022, 12:08 pm

    Good news TI. No need for a paywall to support this great site.

    You can just sue the Telegraph for stealing your article idea


  • 60 Prometheus October 16, 2022, 12:09 pm

    Brexit will end up like the Iraq invasion.

    In a decade or two no one will understand how it happened, or admit to having supported it. Everyone will blame it’s instigators…

    Memory is short, and hypocrisy is long in politics….and perhaps also most people.

    Ps I have no strong view on the Iraq war, just an example of how time changes perception….

  • 61 BBlimp October 16, 2022, 12:13 pm

    @wephway ? Doesn’t really make sense does it ? labour needing to stay quiet on brexit to win back the red wall when everyone realises brexit was a mistake ?
    Surely if everyone realised brexit was a mistake they wouldn’t need to keep it quiet from the red wall ? Not quite everyone then…

    Hmmm ?

  • 62 Weenie October 16, 2022, 12:18 pm

    What is to be gained (apart from smug satisfaction) from polls that show Brexiteers regretting their decisions? It doesn’t help and is focused on looking backwards, shoulda, woulda, coulda.

    Someone suggested on here that the only real way to affect politics was to join the Conservative Party.

    I duly did and voted for Liz, over Rishi. Please shoot me, it’s all my fault.

  • 63 Matt October 16, 2022, 12:33 pm

    So I don’t deny that the UK has gotten itself into a bit of a state. But being pro-Brexit myself, I don’t put it down to that (although it did seem to drive a large part of the British elite utterly deranged). Apart from the obvious, enormous current account deficit, to my mind, the big issue has been the poorly thought out tinkering with the British constitution. The fixed term parliament act (thankfully now gone) was a predicted disaster and the chief cause of the 2019 political nonsense. Even worse, in my opinion, was both parties changing how their leaders are selected. Rather than by MPs, which is sensible in a parliamentary system, as they’re the people that the leader needs the confidence of. Instead, we have the more extreme elements of the country selecting the leaders (ie the Labour and Conservative party members). In my opinion, if we went back to MPs electing leaders, we would have better government and better opposition. David Milliband instead of Ed Milliband. Andy Burnham or Yvette Cooper instead of Jeremy Corbyn. Literally anybody instead of Boris Johnson and instead of the nonsense of the last month, Rishi Sunak instead of Liz Truss. That’s consistently pro-Brexit Rishi Sunak instead of Liz Truss, BTW, who definitely wouldn’t have prodded the financial markets with a big stick. So I don’t think Brexit is the immediate cause of all this.

  • 64 kibtf October 16, 2022, 12:50 pm

    Having left the UK 30 years ago to live in Hong Kong I am watching on in horror how the UK is committing economic suicide. Borrowing and spending without tax revenues to match has caused the basic problem – and Lizz Truss hasn’t exaberbated that just highlighted to the international markets- basically I think she had the right approach but not the PR skills to explain it properly and the whole press against her. If the UK wants to survive as a credible country it needs to do basically what she advocates otherwise the UK slips into irrelevance. I am aware that that is not a popular viewpoint from the comments but loads of Brits who have lived in HK for years are leaving and almost everyone is rejecting returning to the UK permanently because of the tax rates. These are almost all people who would be on top rate tax if they returned.

  • 65 Naeclue October 16, 2022, 1:25 pm

    @kibtf, the UK press cannot buck the markets any more than prime ministers. Truss failed because she presented a half baked plan based on fantasy economics, not because of media criticism. What the country needs is investment. The Brexit vote and the shambolic governments we have had since have deterred investment. I am not an active investor, but if I was I would think twice about putting money into the UK.

  • 66 ermine October 16, 2022, 2:16 pm

    @Steve Follows #42
    > as all the vested interests smelt blood due to poor presentation, they shouted & screamed like spoilt children and went for the jugular, just so they can keep their particular show on the road for a little bit longer!

    Hmm. These are the vested interests which are the people whose money Truss and Kwazy wanted to fund their projects? Too damn right you are that if you want to use a lender’s money to pursue your boondoggle they are vested in the result. Looks like they took one look and said nah mate, not gonna fly and demanded a higher moron risk premium.

    For the pair that co-wrote a student tract titled Britannia Unchained it seems a terribly elementary mistake to make. Let’s take a look at Britannia Unchained and read a pearl of wisdom

    To get ahead in the new type of jobs you need to be able to reason and think logically.

    Seemed to be a bit lacking in the mini-budget – “Trust me, I’m Kwasi” is more a call to faith rather than reason.

    Save up for your vanity projects first. Or bring up your divisions and point guns at the heads of the poor saps that will lose out if that’s your style and you have the power, but if you need Other People’s Money you get a side helping of Other People’s Opinions. Don’t like that? Pay your way, pay the moron risk premium or do without. Easy-peasy, Kwasy.

  • 67 Always Late October 16, 2022, 2:18 pm

    Also thank you from me @TI 🙂
    @Wephway: ‘Something like 38% of Leave voters think the economy has suffered because of Brexit.’
    If this is true then it really has lowered my opinion of 62% of the people who voted to leave. It was absolutely obvious, blatent, an impossibility of anything other than the country would lose out economically in the short term (the long term conceivably holding the only benefits). So far we have had only short term. And 62% do not even recognise this has happened? Ok, COVID disturbed the water but, really? Wow. Forget bonds, some serious effort is required teaching the basics of evidence based education and practical international trade to 32% of the people in this country.

  • 68 Eric P. October 16, 2022, 2:34 pm

    Brexit is a bit like pouring concrete into your car’s engine instead of oil and expecting it to go faster and perform better.

    Obviously not going to work.

  • 69 ermine October 16, 2022, 4:45 pm

    > Obviously not going to work.

    Could do wonders for the straight down option, Galileo’s hammer and feather notwithstanding,

    After all, our Dear Leader’s first tweet was that she’s going to hit the ground on Day 1.

    Many a truth is said in jest and all that.

  • 70 Grit Fell October 16, 2022, 5:05 pm

    Blaming it all on Brexit is too simplistic, as always there’s multiple overlapping complex issues. Not least of all there’s a systemic incentive issue in politics, which favors short term fixes on a 5 year election cycle, not whats best for the country long term. Letting the party membership choose the leaders doesn’t help, the average Labour or Tory party member will be further towards the extreme left or right than the average voter. The leadership candidates incentive is therefore to pursue policy the members agree with in order to win the leadership election, which is not necessarily the best policy for the country.

    There hasn’t been any thought out energy policy in the UK for the last 30 years, is it any surprise we are now paying the price. Sizewell B was commissioned is 1994 there has been no new nuclear plants since then. The energy price gap is estimated at £100 billion, you could build 4/5 Hinkley Point Cs for that. Notice that the press has been silent on the awful “inflated” £92.50 per MWh strike price for Hinkley C that many were bemoaning a few years ago now the wholesale price is ~£500 per MWh.

    Not a lot to do with Brexit that we are paying higher energy bills and far more to do with over-reliance on foreign gas imports.

  • 71 Learner October 16, 2022, 5:13 pm

    Fascinating retirement survey by III, including two cohorts (national, customers). Some high(/low)lights:

    1 in 4 over-65s still renting.
    BTL ownership: 7% of 22-40 y/os, 3% of over-65s.

    50% of women and 30% of men dependent solely on state pension.
    Overall average income of over-65s: £16.5k

    50% of young people are primarily focused on saving for a home.
    25% think it should be for retirement.

    BOMAD contributing an average of £18k for their kids’ mortgage deposit.
    Households with income under £30k gifted £15k on average.

  • 72 Unwilling Codemonkey October 16, 2022, 5:25 pm

    @kibtf, #64

    I am obviously misunderstanding your comment as I read you saying that “borrowing and spending without tax revenues has caused the basic problem” but then you go on to say she had the right approach?

    Which bits do you think were right and which bits wrong, as both bits she advocated for.

  • 73 The Investor October 16, 2022, 5:33 pm

    Thanks for the excellent comments, and for those who’ve shared a few generous words — you’re welcome and it’s always appreciated. 🙂

    Re: “blaming it all on Brexit”, I am not blaming the entire state of the UK’s finances on Brexit.

    I’ve seen very credible estimates on the long-run GDP impact of Brexit translating into a loss of revenue to the Government of £15bn to £40bn a year. Last one is from the OBR and it’s probably as good as any, but let’s generously assume some of the worst impacts get ameliorated eventually, there’s a small amount of catch-up, maybe we get a magical trade deal that is actually additive and that again can begin to recoup the damage already done.

    It’ll take some time but for the sake of argument let’s call it £30bn a year in lost revenue (/money that can’t go on state spending or paying down the debt).

    (Note, incidentally, that absolutely nobody credible thinks we’re anything but hundreds of billions in the hole in terms of forgone GDP already after six years of Brexit.)

    It’s obviously hard to unpick the last 5-6 years with Covid et al, but it seems extremely plausible on these numbers that the UK state is at least £100bn short of income already compared to where we’d be if about 3% of the vote had gone to Remain instead of leave. (So 51% for Remain, 49% for Leave).

    That alone is enough to pay for all the cancelled tax cuts, the national insurance reversal and so on, and leave something on the sides to pay down the energy crisis relief costs!

    Proving again as I’ve said many times, whether you’re on the left or the right, Brexit was not the answer to anyone’s problems IMHO. (We could have raised minimum wages and certain taxes on the left. We could have done massive tax cuts if we’d wanted and a fair amount of economic reshaping without it on the right).

    Still in this weekend’s piece I am not blaming everything financial that ails us on Brexit or even on Truss. (Indeed I’ve gone out of my way over the past 2-3 weeks to stress FWIW that I agree we need to think more about the low productivity trap that’s been identified. And as I said above, perhaps Truss’s might have been a budget for 2019, assuming it’d had been delivered in the usual way with costs up front and so on).

    However I am blaming Brexit for most of (it’s never *all*, we agree) the political direction of travel since Brexit won.

    It’s clearly become a sort of self-reinforcing political doom loop.

    Politicians on the broken down Brexit wagon either have to recant or else double down. So far they have mostly doubled down and talked absolute rubbish about the Brexit dividend etc. (See the lost GDP and revenue above. There is no economic dividend).

    Under Johnson it also led to a purging of the ranks of talent (and a further descent into fact-free political communication).

    And the talent drain eventually brought us Truss.

    I do agree (and have said above) that the membership bases of both parties are a problem. They should not vote for Prime Ministers, if that’s needed elected MPs should. They can have a role selecting candidates for MPs or even leaders in opposition / ahead of GEs.

    The Tory base rejected Sunak, who seemed to me the man of the moment even though I obviously profoundly disagree with him about Brexit. Who knows what will happen next, but I could imagine a Sunak PM / Hunt Chancellor alliance? (I’d prefer a general election. Just speculating.)

    Finally, re: polls and whatnot. Depending on how you ask the question, over 50% of the UK population wants to bring back the death penalty for certain crimes. Sensibly, no major party has this in their manifesto. There are lots of ways in which the party system forces compromises at the ballot box, where you have to vote for some things you like and others you don’t.

    If Labour, say, put re-entering the EU on its manifesto, it’d probably have a 5-10% swing away (speculating) from it in various seats it needs to win, as it lost hardcore Brexit supporters. The nature of our political system is you can’t risk that sort of thing. This is why Brexit is so hard to undo. 🙁

    We are governed by a tyranical minority in many ways. Sometimes they are eventually proved right given enough time (e.g. to my mind women’s reproductive rights or racial equality) and other times not so (the inability of US politicians to roll back the war on drugs, or instigate better gun control).

    Sadly Brexit is going to be like that for us for at least a generation I imagine. Which is why I kick out a serious discussion of reversing it for 15-20 years.

    It’s probably a bit like smoking a joint in your teens and 20s — a scandal for a politician in the 1960s, but something that it is presumed everyone did at least once by the 2000s. Or even playing computer games and realizing there’s more to them than space invaders!

    Culture and thinking changes in part because the old guard expire.

    As has been well said on this thread already, sometimes you just have to wait until enough of the people who can’t let go die off, and fresh people unencumbered by the baggage of past wars look again at the problems anew.

    Genuinely wonder what the index-linked gilt market will do tomorrow! Thought Hunt was ok on Laura on the BBC this morning, given the circs.

  • 74 Always Late October 16, 2022, 5:57 pm

    @TI “The crisis in care and NHS staffing is one reason to relax immigration, pronto.”
    Mmm, do you want to have this discussion here? When you say ‘relax’, what exactly do you mean? Do you mean let as many doctors and nurses in as possible? Isn’t that what the ‘Health and Care Worker visa’ is supposed to do?

  • 75 The Investor October 16, 2022, 6:18 pm

    @Always Late — Yes, and it’s welcome, but this isn’t all about doctors and nurses. For instance I have a family member who was stranded in hospital taking up a bed because there were insufficient staff to do the various things required to get her back in her home. (From certifying the home ready to ensuring initial care and so on). It was implied to us that this was due to staff shortages that didn’t used to exist, although some of that will be due to Covid (both in terms of emigration and also the backlog) too. In the meantime she was taking up a hospital bed. In the end a couple of us assumed responsibility and took some time out to make it happen.

    I am not an expert in this area, but I’ve heard similar referenced many times right down to the (important) level of cleaning staff and so on. (Remember the NHS is a huge employer of all sorts of people, and a massive operation.)

    For example:


  • 76 The Rhino October 16, 2022, 6:54 pm

    One thing I’d quite like to see off the back of all this is a generic world lifestrategy product. No UK bias on either the equities but particularly the bonds for obvs reasons. That would be really good for lots of countries, now including UK. Of course you could DIY but I’ve found personally my discipline to be lacking of late in the rebalancing dept. I think the lifestrategy isn’t just for the lazy, it’s value is also tied up in the fact that rebalancing is hard.

  • 77 Bb October 16, 2022, 7:55 pm

    @Andrew… 150k is a very high salary and people on that income are not “shafted” out of tax allowances, pension relief etc… these are simply not assistances that the state needs to give them to help them support themselces and pfovide for their futures.

    @seeking fire…
    I think we look at:
    – cgt – harmonising rate with income tax, abolishing primary home exemption
    – IHT – reduce/avolish exemptions and increase rate
    – ISA annual contribution reduced to 5k
    – Abolish higher rate pension relief (would kill lifetime allowance too)
    – Charge VAT on private schools
    – 45p tax on income over 90k 50p over 150k (probably need to do something about the child benefit and personal allowances as whilst – per above – high earners dont need these breaks, the crazy marginal rates they introduce arent sensible)

    Finally, the economy is not a household budget, borrowing to support defecuts that allow us to fix our broken public services and national infrastructure will genuinely drive growth. (Eg Huge NHS backlogs reduce the working population)

    In addition you get shafted out of your marriage tax allowance, free childcare hours, child benefit, pension tax relief, and God knows what else.

  • 78 Seeking Fire October 16, 2022, 9:47 pm

    BB – the only one of the suggestions that has a good hope of making a serious dent in the deficit is cancelling higher rate taxation relief on pensions – from memory it’s a circa £20bn saving.

    The rest of it in aggregate (appreciate I’m estimating) gets you around £15bn of savings (e.g. 45 – 50% at best gets you £2bn, CGT raises about £15bn in total only, VAT on private school fees potentially costs the govt money and at best raises a few hundred million – it’s a complete envy tax etc etc).

    Given the latest estimate last night was a deficit of £72 bn minus the corporate tax rise of £18bn minus higher rate pension tax relief saving of £20bn minus let’s assume £15bn aggregate for the other suggestions you are still about £20bn short?

    Let’s go big on a wealth tax……to make up the difference.

    And the markets aren’t too keen on borrowing to invest any more 🙂

    Maybe we should be a little bit worried high earners might relocate? After all, if you move to Italy you can pay only 15% income tax for 10 years on their expat package (potentially extendable to 15 years)? Feels attractive no? I’ve got a couple of friends in FS earning over £500k each a year who’ve done just that. Whisper it quietly….it was because of Brexit but the tax breaks are nice:)

  • 79 Bb October 16, 2022, 9:52 pm

    @seeking fire
    I dont think we neccessarily need to close the rest, we can run a defecit….

    Im not really sold on wealth tax, i think logistically its too hard. Happy taxing unearned gains hence view on cgt/iht

  • 80 ermine October 16, 2022, 10:38 pm

    @The Rhino #76

    > One thing I’d quite like to see off the back of all this is a generic world lifestrategy product.

    Make like an American? VSMGX 60/40

    22% down this year in USDollars, though considerably less down
    in your Kwasified Lesser British shitcoins. 22% down has improved the future prospects, I guess 😉 Join the 600lb gorilla before Trussonomics makes the country run out of wheelbarrows, Weimar-style

    It’s not strictly a world Lifestrategy product, simply Americans trying to avoid total home bias. Given that the US is 50 of world capitalisation, it’s a better approximation to a world Lifestrategy product that the more parochial variants.

  • 81 The Rhino October 17, 2022, 8:38 am

    @ermine – brilliant spot! something like that could well fit the bill.
    I wonder how you buy it though? Doesn’t seem to be availiable via HL or iWeb.

  • 82 ermine October 17, 2022, 10:04 am

    I guess you may have to go with one of the bigger boys’ brokers like Interactive Brokers.

    Failing that if it’s specifically the outrageous UK home bias of VGLS60 you’re trying to avoid, you could try for the euro flavour V60A.AS (or V60A.GY), which at least minimises UK home bias. IG will let you hold that in an ISA/share dealing account, because they explicitly say the carry from the German and Netherlands exchanges too, it appears. Would save you filling in the W8-BEN form I suppose. You get a certain degree of Euro home bias, but that’s integrated over a wider investing universe than the UK, and the bias seems less bad at a cursory glance. A sort fo don’t let the perfect be the enemy of the good choice.

    Interactive Brokers has the attraction of a much higher protection limit

    Your eligible assets are protected from loss under the US Securities Investor Protection Corporation at in an amount of up to USD 500,000 (subject to a cash sub-limit of USD 250,000). As with all securities firms, this coverage protects against the failure of a broker-dealer, not against the loss of market value of securities.

    which is a limit of roughly three times the usual amount, taking 1 GB shitcoin ~ 1USD. The downside is you get to press your case against Uncle Sam. Good luck with that one as a foreigner 😉

    OTOH Real Men working in the UK finance industry seem to be happy with IB. FireVLondon used IB, and indeed a margin loan from IB against his portfolio, which is waaay above my pay grade.

  • 83 Grumpy Tortoise October 17, 2022, 10:13 am

    And so evidence-free politics, which started with Brexit has finally crashed into the buffers of reality. Six years ago people were told that in the modern world there is no such thing as unfettered ‘sovereignty’ that countries have to accommodate their neighbours, the global economy and something called economic reality.
    The zealous convert Truss refused to hear it and Conservative party members (many of whom still suffer from post-empire malaise) thought that any disent was just being negative.

  • 84 Stephen Francis October 17, 2022, 1:14 pm

    Very good article and reflects my views entirely. All very depressing. Other than hiding in a cupboard for the next two years or so, I see little that can be done. With the S&P in freefall, global issues with Ukraine, China and others, there is little to be optimistic about.

  • 85 ermine October 17, 2022, 1:36 pm

    > With the S&P in freefall, global issues with Ukraine, China and others, there is little to be optimistic about.

    Look on the bright side. The SPX has actually fallen faster than the value of the Great British Shitcoin + relevant inflation this year. I have offered to buy VWRL at £80 and a bit now. True, I hate myself a little bit for paying £86 a month ago, and there’s a bit of a feeling of how low can you go?. But compared to the current clowns in charge it feels a better bet, given it’s non-UK assets in the round 😉

  • 86 mr_jetlag October 17, 2022, 1:53 pm

    @ermine: If you’re rebalancing away from UK equities there are also ex UK funds like LGITI which have held up reasonably well despite the current S&P convulsions.

    After much deliberation I have temporarily given up on trying to add bond funds to my portfolio. I forgot who said it (here or in the links) but QT will eventually run its course and the equity risk premium will reassert itself… whether it’ll do so in time for my RE plans is another thing entirely though. That means (gulp) I’m long cash right now and may look at a bond ladder instead. Any tips appreciated.

  • 87 kibtf October 17, 2022, 2:36 pm

    @Naeclue (65)/
    The press might not ultimately be able to buck the markets in the long term, but they can sure as hell influence them in the short term, which is sometimes all you need to get the political, or other, result, they want.

    @Unwilling Codemonkey(72)
    Sorry. I wasn’t as clear as I intended. I meant borrowing longer term since 2008 or earlier rather than just the Lizz Truss proposal. This is a western/developed world issue since i am aware that many european countries borrowings are higher relative to their GDP than the UK. Her borrowing proposals, mainly for energy subsidies which most european countries are doing in one form or another, resulted in, in my opinion, a hysterical response in the UK press, triggering overreactions in the markets (see my comment to Naeclue above). Given that many european countries borrowings are higher relative to their GDP and their, generally unfunded, proposals didn’t get the same response I believe it was more political manoevering by the conservative mps that didnt want Truss unsettling the markets short term and the market seeing the chance to make a short term buck as a result that caused the movements over the last couple of weeks.
    However the fact that this could happen so quick and so hard suggests that UK/western borrowing has pretty much reached its limits without major future consequences, so the idea of incentivising growth and cutting back on the continuious expansion of the state which underpinned the mini budget was probably necessary- although awefully explained and executed.

    Watching from afar the UK tax system is fundamentally broken. The % of people not paying income tax being above 50% is simply wrong (everyone working should pay at least some to have a stake in society decisions), and Gordon Browns working tax credits are proving to be a disaster. Working, what, 18 hours a week, entitles you to tax credits which put your income up to average earnings of full time workers-more if you can get housing benefits. Who on earth thought that would increase productivity given the human propensity for individual self interest?

  • 88 The Investor October 17, 2022, 2:58 pm

    @kibtf — In as much as Truss and Kwarteng were punished for their high-handed dismissal of institutions and general contempt for experts and process, it’s hard for me not to see this outcome as a good one. As I’ve belaboured above, I’m praying the silver lining to this chaos is a return to more conventional politics (not necessarily conventional ideas, but a focus on evidence-based and costed ones.)

    With that said, I have some sympathy as I’ve also said with both the symptoms they diagnosed, and the view that their remedy was excessively harshly punished. True, I expected a lot of tension (push me / pull you) but I thought that would play out over months or even years, not days.

    Perhaps the bond market vigilantes confidently and accurately discounted the future — I genuinely think that’s possible.

    However I suspect historians will flag up the deleveraging / collateral raising of LDI pensions as hugely amplifying the short-term impact.

    I was messaging my co-blogger while it was happening saying I’d never seen retail ETFs like INXG and IGLT trade the way they were trading. A retail ETF is very far from the strained markets in individual gilts, and the close up and bloody battle that seems to have been waged by those on the market front line, yet perhaps even more telling for that. Further reading in the FT and elsewhere this weekend really rams home how tense it was.

    In other words, I think a lot of people see the Bank of England’s intervention in a strained pension (/knock-on to banks etc) environment as a symptom of the distress in the market. It’s acknowledged that strain was also a cause, but it’ll be very interesting to learn to what extent.

    As for the press and even MP scuttlebutt, I’m rarely very persuaded by that sort of thing — the times and bond market moves really were extreme, I’m not surprised they were reported and felt that way. 🙂

  • 89 old_eyes October 17, 2022, 3:01 pm

    A very interesting blog this week with an excellent discussion below the line. As ever, my thanks to everyone for a worthwhile debate.

    I am coming to this discussion very late, with our new Chancellor burying what remains of the Truss plan. It all looks very sticky for the immediate future.

    What I am seeing on the airwaves, in print and on social media, is a very large number of libertarians and Brexiteers saying loudly and repeatedly that the crisis has nothing to do with Brexit. Many of them are even prepared to trash the Conservative government to prove that it is all down to political incompetence, not a decision to leave the EU.

    I’m afraid I do not see it that way. To be clear, I voted Remain, am a Europhile, and have lived, worked and traded across Europe in my time. I belong to that group of people who have been steadily saying for the last six years “sorry, how does this improve our lot exactly?”.Yes, our situation is complicated, but to deny the impact of Brexit seems foolish.

    First of all, Brexit has clearly made us economically weaker. Perhaps this will come good in Rees-Mogg’s 50 years, but right now it has hurt our economy. So whereas everyone has been suffering, we have been hit far harder than comparable economies.

    Secondly, I would argue that we have the government we have precisely because of Brexit. The relentless attacks on any Conservative MP who asked difficult questions about whether a hard Brexit was the way forward, or whether the Northern Island Protocol was a risk-free way of escaping the problems of a hard border, have driven many away. Those who hung around and tried to fight for a bit of caution and care (at the very least) were purged by our previous PM. With them went a great deal of experience, pragmatism and sensitive political antennae. What remains of the Conservative party is ideological and lacking in critical political skills. Truss, Kwarteng and their political allies are an entirely logical and predictable endgame for the direction of travel since 2016. Sooner or later, drunk on power and ideology, they were going to try ignoring experts, and fishing the tired old ‘trickle-down’ philosophy from the bottom of the barrel.

    Brexit is not the complete explanation for where we find ourselves today, but it’s a bloody big contributing factor!

  • 90 Seeking Fire October 17, 2022, 10:04 pm

    Pretty grown up statement from the chancellor today. Largely free from politics (imho), he was able to tell it as it is.

    Although quite laughable only a few months ago he was calling for corporation tax to be reduced to 15% 🙂


    Going to be very tough for next decade one would expect…..At some point we’ll have squeezed the pips, not yet though.

    Slow return to trying to get back into the single market is likely on its way over next decade. The economic idiocy of Brexit accelerated our problems along with Ukraine and the Pandemic. Economic necessity may start to trump ideology from hereon.

    Most important person in the room is no longer the electorate but the bond market – a clear measure of how much things have gone wrong since 2008. Means unfunded public spending unlikely to happen. So taxes must surely rise from here in lock step with further public spending needs to just keep pace with inflation.

    Got to expect dividend tax and possibly CGT to start equalising to income tax rates with potential reductions in limits?

    Maybe we see a lowering of the tax bands?

    And certainly spending cuts in real terms one would think.

    Me, I’m definitely starting to look abroad work wise although it won’t be easy. If you are a high earner there are a few places now where you pay similar tax rates and receive better public services.

    Certainly if you are in your early twenties and part of the elite – i.e. more brains than the masses in the UK, it’s making increasing sense to try and look overseas. Why pay massive rates of tax for little in return?

  • 91 Wephway October 18, 2022, 7:16 am

    I note a couple of articles on inflation and interest rates in the US and New Zealand this week – there’s a growing suggestion that maybe interest rates aren’t helping bring inflation down and may actually be exacerbating it. So the argument goes, the inflation we’re seeing is supply-side driven (higher energy costs primarily) not demand driven, and higher interest rates are actually increasing costs for businesses thereby forcing them to put prices up further. Normally higher interest rates would help to reduce and slow demand-side inflation, but are they the right tool against supply-side inflation? Will be an interesting discussion over the next year, maybe it’s just wishful thinking on my part given I have a mortgage due for renewal end of next year, but I do hope the Bank of England shows restraint when raising interest rates.



  • 92 Grumpy Tortoise October 18, 2022, 7:22 am

    @kitbf – I’d like to know your source for the proportion of people not paying income tax. Current data shows 34 million people in the UK are projected to pay income tax in 2022/23. That is 63% of the estimated 54 million people aged 16 and over, meaning 37% of adults will not pay tax (Source: HMRC and Office for National Statistics (ONS) population figures for mid 2020).

  • 93 Boltt October 18, 2022, 8:38 am


    There’s quite a few sources stating 43% of adults don’t pay income tax, here’s one. Hopefully it will increase with the freezing of allowances.


  • 94 Grumpy Tortoise October 18, 2022, 9:21 am

    @Boltt – thankyou for the interesting reading and evidence, although I notice that the 43% of adults in the UK do not earn enough to pay income tax figure quoted is based using figures from 2014/15.

    I also notice that the figures stated still full short of being the case that the majority of people do not pay income tax as asserted by the orignal poster…

  • 95 Always Late October 18, 2022, 10:30 am

    @wephway Certainly a review of ‘raising interest rates = decrease inflation’, given we don’t, as a country have the ability to quickly increase energy supply, is something I would like to see from those wiser than I.

    Here’s a thought that almost certainly allows for far too much intelligent design than is realistic. If a government decides it is going to have to hike up taxes, why not first send a couple of sacrificial lambs in and get them to announce that taxes are going to be massively cut. The pension markets go crazy, people see this means more debt and we get press hysteria. Overall, the (albeit probably very short term) feeling left with the sheeple is that we need higher taxation. Just a thought.

  • 96 Vilehackwriter October 18, 2022, 10:32 am

    An entertaining and insightful post, as always, followed by some interesting commentary below the line – much of which is illustrative of the mental gymnastics going on around the Brexit debate.

    The term ‘cognitive dissonance’ was only coined in the 20th century but the phenomenon it explains is as old as humanity itself.

    As argued by Matthew Syed in the piece referenced by Joe in the comments, what is Brexit if not a cult? And in this case, a cult thrashing its way through having to explain why the predicted rapture event has not happened.

    The issue we face is that many people never realise they’ve been had, and the core beliefs persist down the generations. I give you as an example the aftermath of ‘The Great Disappointment’… https://en.wikipedia.org/wiki/Great_Disappointment

  • 97 Marked October 20, 2022, 9:32 pm

    Comment #56 aged well.

    Why I passively invest!

  • 98 Dan October 21, 2022, 12:36 am

    An interesting piece. I was a supporter of Brexit on the grounds of sovereignty, accepting the economic cost for what I believed was the greater good. True democratic control. What I failed to factor in was the fact that our government, loose of the ‘shackles’ of the ‘red tape’ of progressive human rights and employment law, would decide to eat itself and those rights along with it. That outright corruption would become the norm.

    I genuinely thought we had more principled politicians than that. Naivety through the optimism of youth.

    Now 6 years older I am dismayed at our political system. The famous checks and balances are not the bastion of democracy I believed in. The corruption I have seen in plain daylight has disgusted me beyond measure.

    The tory party have always claimed to be the party of fiscal responsibility. My eyes have now been opened in that regard. The tory party is the party of self interest. The party of ‘jobs for the boys’. The party that will gladly further increase the gap between the rich and the poor. PPE contract scandals, blatant disregard for the rules, 12 years of underfunding public services, selling off the last of our publicly owned assets. Personal scandals do not bear a huge amount of weight with me – people’s personal lives can be messy. But politician’s voting records do. Their obvious disdain for the common man. Their contempt for the rules.

    The ‘free market’ without regulation is not something that should be regarded as an aspirational goal. Profit for profits sake leads to greed, profiteering, huge gaps in equality, exploitation and corruption. I will genuinely never vote tory again, and I have lost all faith in our political system. It relies (relied?) far too much on the baseline integrity of it’s participants. Once that moral fibre has broken down, which it so clearly has, we are left with – well, with a laughing stock. An Italy, a Greece, an emerging nation.

    If I could travel back in time, I would not have voted for brexit. I also would not have voted for the conservatives.

    I appreciate your commentary on these issues, you have a different perspective to many people I speak with.

  • 99 The Investor October 21, 2022, 12:17 pm

    @Marked — Thanks for coming back. Indeed, forecasting ain’t easy, especially about the future! 😉

  • 100 The Investor October 21, 2022, 12:24 pm

    @Dan — Cheers for your extensive comment. It has been said that people lose their minds as a mob but come to their senses only one by one. I don’t want to suggest it was mad for you to vote for Brexit (especially as you voted for sovereignty, which in my view was entirely legitimate if ultimately misguided and over-weighted given the real world) but more that something gripped the country in 2016 that got the vote to a 52% share it should not have rationally had, and it’s taking a lot of time for people to walk back from that.

    Changing one’s opinions with new evidence is the hallmark of a sophisticated mind. I try to think to myself “have a changed my mind about anything big in the past six months?” and if I haven’t it usually means I’m not challenging myself enough with fresh perspectives.

    Equally of course change for change’s sake is foolish. I don’t see much reason to change my stance about anything Brexit-related except that I don’t think it will necessarily bring down immigration (with various consequences) as seemed likely. In fact, immigration is up. So I was wrong about that, but given that it was the most concrete aim of Brexit I don’t think it’s really a plus point for the project, either.

    I’ve voted Tory a couple of times in my life but I wouldn’t trust most of the current crop to run a lemonade stand. Their MPs intoning how a return to the reputation-trashing era of Boris Johnson six weeks after he was booted out for one scandal too many sums it up.

    Hopefully they will get a couple of terms in the wilderness like Labour in the 1980s to sort themselves out.

  • 101 Nkanani October 22, 2022, 7:46 am

    We tend to blame politicians, but we as people are the reason we are where we are. Politicians use lies, that is a standard world over. Whether to believe them or not, is up to us.

    David Cameron, I would give him, at least he said clearly, Brexit is not a good idea, risking his own job.

    When asked, we voted for Brexit, and we got Brexit.
    When asked, we voted for Boris, and we got Boris who said he will get Brexit done.
    When asked, we voted for Liz Truss – low tax high growth plan, and that’s exactly what she did with mini budget.
    (I dread, we might again be asked something soon!)

    Our politicians are actualy WYSIWYG, we need to be more reasonable with our wishful thinking when the time comes for voting again.

    And one more thing, if I drive to a wall, I don’t hesitate to reverse back and change course, there’s no doubt I’ll damage myself more if I continue thinking, “oh well, I made this decision, so I must stick to it” 🙂

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