What caught my eye this week.
Once again we have disappointing economic data in the UK. And once again, the elephant in the room is missing from media chatter.
The Bank of England was split on its decision to cut rates by 0.25% to 4% this week – it had to vote twice to reach a verdict – with stubborn inflation making cutting rates riskier than it should be.
This despite a UK economy that is barely growing.
It’s not stagflation – not yet – but it’s a close cousin. No wonder there’s fewer people accusing me and others of talking Britain down these days.
I mean, it says something when a Coinbase ad mocking UK PLC – and our dumb acceptance of our lot – goes viral not because we’re outraged, but because we see the truths:
Now, it doesn’t seem like this ad was really banned, as some claimed.
And if it was steered off-air by the regulators, it’ll be for disclosure reasons, not because of Stalinist diktats from on high.
All the same, given that almost nobody else dares to speak of the economic ill that continues to grind in our gears, I’m sympathetic to the notion (not the reality) that ‘they’ are suppressing the truth.
Leave it out
Despite this near-blackout on Brexit, at least the public has woken up to its mistake.
A new poll for The Sunday Times showed only 29% would vote Leave again.
And no wonder!
Reminder: not only is the UK economy growing nowhere, but the government is said to face a £41bn fiscal ‘black hole’ which means taxes will have to rise again.
From the BBC…
NIESR said the shortfall in the government’s budget was in part due to weakening growth over the past few months, resulting in a lower tax take and higher government borrowing.
But the reversal of welfare cuts, which were originally designed to save £5.5bn a year by 2030, had also had an impact, it said.
…which is all true, no doubt. But the UK economy wasn’t born yesterday.
I know some are bored of me repeating it, but multiple independent estimates say that a ‘Remain economy’ would be at least £100bn bigger.
And that missing GDP equates to around £40bn of lost taxes.
So – once more with feeling – this £41bn black hole is basically due to Brexit.
My diagnosis: the State carried on with its pre-Brexit cruise control spending, but the economy to pay for it has leaked too much air from the tyres.
Sure things would be rough regardless. Covid happened. Ukraine. Trump and his trade wars.
But we lowered our baseline growth in 2016, and that all just made it worse.
A lot of little decisions add up
Counterfactuals and shades of grey seem hard for some people to understand.
So to give just one example, yes, the City of London has expanded after Brexit.
But it would expanded more quickly without it.
How do I know? Because the banks have told us so – and the wonks have backed it up with research.
Goldman Sachs’ CEO said this week that London’s position was “fragile”, noting:
“London continues to be an important financial centre. But because of Brexit, because of the way the world’s evolving, the talent that was more centred here is more mobile.
“We as a firm have many more people on the continent.”
EY’s Brexit tracker reported this week (paywall) that the five biggest investment banks have added 11,000 jobs in the EU in the five years since Brexit.
Most of those would have instead been high-paying and tax-generating jobs in London in a Remain timeline – simply because there would have been no reason for anything to change.
From the same article (my bold):
Michael Mainelli, the former Lord Mayor of the City of London who leads consultancy Z/Yen, estimates that 40,000 financial services roles have moved from London to the EU because of Brexit.
Meanwhile, the number of people employed in the City has grown since the 2016 Brexit referendum by around 130,000 to reach 678,000 at the end of 2024.
“The City of London has been growing and continues to do so,” he said.
“I remain bullish on London, but proportionately it is likely to have done better if it wasn’t for Brexit.”
Is the penny starting to drop at the back?
It’s not all or nothing.
It’s not depression or boom time.
It’s just a bit worse, year after year, which is more than sufficient to add up to the 4% hit to GDP that the OBR and others have estimated – and to create a £41bn headache for Rachel Reeves.
Dealing with it
Before anyone comments, yes the US-UK trade deal is slightly better than the EU’s.
The trouble is we sell almost twice as much in goods and services to the EU. Europe remains our lynchpin trading partner by far.
What’s more, the EU (and the world) will very likely get a new deal soon after Trump leaves office and economic sanity returns to the White House.
Whereas we’re stuck with our economically-damaging exile from the EU for at least a generation. (Sorry Ed Davey.)
An overnight crisis ten years in the making
Read the right-wing press – even a few sensible commentators who I know read this blog – and it’s implied that the UK’s travails are all Rachel Reeves’ fault.
As if we were all lounging in the sunlit uplands this time last year. Having our cake and eating it.
Look, I agree that Labour has done nothing much in its first year to improve matters.
Labour’s planning reforms should have helped, but so far we’re building fewer homes. And its better relations with the EU are welcome, but Starmer’s new deal was far from an Undo button.
Meanwhile the hike in employer’s National Insurance is hammering small UK firms, especially those in the service economy. I’m an investor in a few, and they all say it’s been another kick in the teeth.
And let’s not even mention Labour’s welfare reform farrago.
The only tough decision this government has stuck to so far is its foolish election pledge on income tax.
Nevertheless, pinning the UK’s malaise on Labour is rank hypocrisy. Not only do these elements shirk their responsibility for our national blunder, they seeks to stick everything on a one-year old administration.
He who smelt of it dealt it
Why do I still bring up all this ancient history?
Firstly because it’s not ancient. As I explained, we’re living with the consequences. Yet that obvious truth is absent from the prevailing narrative, and it infuriates me.
Secondly, because if we don’t know how we got here then we’ll potentially double-down to make things even worse and vote for Farage and Reform. Whereas that man should be unelectable for what he’s already done to our economy.
But I don’t really need to prove my point. The economy today looks pretty much how I said it would nine years ago, after we voted Leave – a bit worse than otherwise every year, which adds up. And obviously nothing fixed by leaving the EU.
Circumstantial evidence perhaps, but pretty on the nose.
In contrast the other side should have everything to explain. Because Britain in 2025 does not look anything like the nonsense they promised us in 2016.
It should feature in every economic analysis. Yet you barely hear a peep about it.
“Move on!” they cry.
British beef
Okay, so where does all this leave us as investors and savers?
Well, interest rates kept higher for longer for starters. The UK struggled with inflation for decades before it joined the EU, perhaps due to its small size and reliance on foreign trade. Like others, I see signs this disease may be re-emerging.
As for UK assets, it’s obviously incredibly tricky to judge – presuming you’re the naughty type who likes to speculate.
All things being equal the pound will be higher given higher rate expectations versus other currencies, but inflation can work against that.
Same with conventional gilts. Perhaps more reason to overweight mid-duration index-linked gilts in our safety cushions?
As for equities, UK companies continue to get taken out by foreign predators, mostly US. (If the fund manager who disputed my prediction of this in our comments a couple of years ago would like to update us, please feel free…)
So despite all the gloom, I remain very overweight the UK market.
Many UK companies still look reasonably priced, especially versus the US. And the liquidation of the LSE is a catalyst to unlocking their value.
Which is good for shareholders, even if it’s a sorry state of affairs for the LSE – and for the UK more widely.
Pips squeak
Presumably some taxes will have to rise, too. For good or ill more borrowing seems to be off the table.
I think Labour’s income tax pledge is foolish not because I love higher taxes from this level, but because I think endless speculation about where they can pinch and pilfer around the margins is more damaging than just a straight hike.
But really we’re taxed enough already by my lights. There are no good options, and I wouldn’t be surprised to see things get worse if more rich people flee.
There’s been a lot of debate and debunking as to what extent this exodus is actually happening, but I do judge something is going on. The collapse in London prime property prices is surely one eagle-sized canary in the coal mine.
Also before anyone waves a copy of Socialist Worker at me, understand this really matters for the welfare state that most of us – and Labour – care about.
Not only do the rich drive a lot of economy activity, but a mere 3% of taxpayers represent a huge chunk of income tax receipts:
Source: Four.Zero
Finally, it usually is darkest before the dawn and we’ve been in a fix for a decade.
Perhaps if something breaks soon it’ll be a wake-up call that could yet see off even worse in four years time.
Have a great weekend.
From Monevator
Is now a good time to invest? – Monevator
FIRE-side chat: Scot-free – Monevator
From the archive-ator: How much in an ISA vs a SIPP for financial independence? – Monevator
News
BOE cuts interest rates to 4%, lowest in two years – BBC
Committee was deadlocked and needed a second vote – This Is Money
FCA to allow us to buy crypto ETNs from 8 October – ETF Stream
Gold futures soar on reports of US tariffs on Swiss bars – Guardian
Wealthier areas set to pay more council tax under new plans – This Is Money
Warning over ‘most sophisticated’ fake savings scam – Guardian
Number of borrowers over 36 taking out 35-year mortgages surges 251% – This Is Money
FCA fines Neil Woodford nearly £46m – FCA
Nearly 3m savers will pay taxes on interest this year – This Is Money
My ‘time-bombs don’t explode’ rule: US corporate pensions – Axios
Products and services
What the interest rate cut to 4% means for your money – This Is Money
Probate: executors reveal the challenges they’ve faced – Which
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley
Get 6.5% interest with a Virgin Money Regular Saver… – Be Clever With Your Cash
…though like these other regular savings accounts, there’s a catch – Which
What to do if your fixed mortgage deal is ending – This Is Money
Get up to £100 as a welcome bonus when you open a new account with InvestEngine via our link. (Minimum deposit of £100, T&Cs apply, affiliate link. Capital at risk) – InvestEngine
With £105m in Premium Bond prizes unclaimed, NS&I urged to join Tell Us Once scheme – This Is Money
Audible vs Spotify Audiobooks – Be Clever With Your Cash
Homes for sale with a roof terrace, in pictures – Guardian
Comment and opinion
The parents who charge their children rent – Sky
“Living on universal credit is a constant battle” – BBC
The latest thoughts from Bill ‘4% rule’ Bengen [Video] – The Unlock via YouTube
Resurgent international value – Verdad
Not one step back – A Teachable Moment
Wise words on market cycles – Novel Investor
The spectrum of infrastructure assets [Research, PDF] – Meketa
Understanding asset return expectations [Research, nerdy, PDF] – AQR
Meme stocks are back mini-special
Meme stocks and Mr Market – A Wealth of Common Sense
No country for short sellers – BakStack
The grand illusion – The Uncertainty of it All
Is the US housing market driving the meme stock resurgence? – Of Dollars and Data
Naughty corner: Active antics
Venture Capital fund maths for dummies – Digital Native
Does moat investing work? – Flyover Stocks
More on the infamous Treasury 2061 gilt – Macro Credit Thinking
Private unicorns may throw a lifeline to stock analysts – Bloomberg via Advisor Perspectives
How to start your own wealth management firm [US regs, but relevant] – Investopedia
Kindle book bargains
What They Don’t Teach You About Money by Claer Barrett – £0.99 on Kindle
Too Big to Fail by Andrew Ross Sorkin – £0.99 on Kindle
50 Economics Ideas by Edmund Conway – £0.99 on Kindle
Mastering the Business Cycle by Howard Marks – £0.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
The rare predator we risk losing from British waters forever – Country Life
Great Barrier Reef suffers worst coral decline on record – BBC
You are contaminated – The New York Times
Can Earth’s beaches survive a sand shortage? [Paywall] – FT
Danish zoo asks for unwanted pets to feed its predators – BBC
World’s rarest shark species found living off Welsh coast – Oceanographic
Are the ‘world’s most beautiful islands’ in danger? – BBC
Robot overlord roundup
Genie 3: Google DeepMind’s new world generator – DeepMind
The rage of the AI guy – Freddie deBoer
Navigating the AI revolution as an asset allocator – Cambridge Associates
It’s 2025, the year we decided we need a common slur for robots – NPR
AI can certainly replace enshittified jobs – Pluralistic
How AI conquered the US economy… – Derek Thompson
…but will data centres crash the economy…? – Noahpinion
…and what would the aftermath look like? – The Diff
Not at the dinner table: US statistics mini-special
Roughly no non-US citizens voted in 2024 election, contrary to claims – NPR
Trump, the BLS, and choose-your-own-reality governance… – Derek Thompson
…with even Republicans condemning Trump’s firing of job-stats wonk… – Guardian
…and apolitical Joachim Klement urging redress – Klement on Investing
…while report warns US data and stats agencies are in peril [PDF] – Am Stat
Off our beat
Notes on growing older – The Ruffian
What the marshmallow test got wrong about child psychology – Psyche
Big Mags: the paedophile-hunting granny who built a heroin empire – BBC
Every message is a gift – A Year of Mental Health
Fandom is big business. This company is poised to cash in – Sherwood
Animals keep evolving into anteaters. Could humans? – BBC
How 100 years of medical advances slashed cardiovascular disease mortality – Our World in Data
Putting yourself out there – We Are Gonna Get Those Bastards
And finally…
“Capitalism works only when institutions are forced to absorb the consequences of the risks that they take on.”
– Sebastian Malby, More Money Than God
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I fancy that the media reports on the BofE cut have been barking up the wrong tree. Methinks this was in fact a sign of “Financial Repression” being on the way (that is, interest rates being consciously put too low to tackle above target inflation – in order to allow Government to inflate away its excessive debts). Time to batten down the hatches and get ready for a lengthy period of inflation being (although Westminster will never admit it) let off the leash? Yes, I think so. I would much prefer that Labour do the necessary and address the fact that far too many of the UK working population pay no income tax.
The our world in data post is really good.
For some reason it reminded me of this that I saw earlier this week: https://henrytapper.com/2025/08/08/dying-is-an-art-that-is-really-expensive/
The original Stephen Bush Times article is probably even better – but I am too mean to pay for the subscription.
All true @TI, no doubt, save that the fact that so many still think that things will be better under Faragism (up to 34% now, and rising) versus still supporting Brexit (down to 29%, and falling) by itself indicates that things are likely to get a lot worse before they can get any better.
The market in foolishness can’t turn until the last buyer of stupidity becomes a Bear and tries to sell, finding no buyers.
Until then, on current GE polling, expect the worse for 2029-34.
I blame all this on Cameron (for ignoring Osborne’s plea – as his friend, ally, confidant and Chancellor – not to hold a Referendum), Corbyn (for torpedoing Remain from the left, with less than even half hearted support) and Starmer for being as useless in the face of Farage now as Biden was with Trump.
Cummings, Boris and Farage just did as they could be expected to. Remain lost an argument it should easily have won.
It’s too late now. With Corbyn and Co about to siphon off Labour support from the Left, likely handing Farage a majority, or at least a working coalition with a self radicalised Tory party, I see no way out before 2034, at the earliest.
Maybe not so much darkest before the dawn as (not yet) darkest at midnight. 🙁
BTW thanks for the early release of the W/e links. Much obliged 🙂
I do not think our Irish cousins across the sea are enjoying being members of the European Union. They have leaders as competent as ours.
Yes! We *are* so bored of you repeating it. That damned referendum was nearly 10 years ago. Give it a rest, for the love of everything that is holy, please, we implore you, pity us and relent, we need to find peace. You are stuck cycling between denial, anger and bargaining. You have to move on to depression, and then finally acceptance.
Btw – love the investing and retirement planning content, top notch as usual, keep up the good work!
@Delta Hedge ‘Remain lost an argument it should easily have won.’ Exactly.
@TI, I think you may be too optimistic :).
Notice how the West’s attempts to grant our idea of democracy to supplicant nations has failed? I wonder if a thriving capitalist economy is necessary for democracy to hold. So when our economy can no longer deliver the promise of a better future…..?
All the causes held dear to our hearts…..carbon zero, reducing inequality, better workplace rights…..have a flip side: they make us less competitive so lose productivity and lose jobs (unless the government employs more obv.).
In past times perhaps they would have said we have lost vitality but it is just the spirit of the times.
When talk of putting the retirement age up beyond 70 becomes accepted then that will be a further sign ( you don’t think that will apply to those dependant on social benefits or on the government payroll do you?). Our democracy will strain under that.
And all this is without mentioning unfunded public sector pensions….
I’ve just hit 70 and the piece by The Ruffian captures it pefectly!
I can only assume the link to Woodford’s research around tax payers as well as posting a link to the rather large fine is not a coincidence!
It’s absolutely bonkers that the main focus this week from the loonies who appear to have the whip hand over the govt, is the need to remove the two child benefit cap, which is estimated to cost another £2-£3 bn annually. Why tax payers should be subsidising parents who sired more than two children without being able to afford them is beyond me. I’m sure it will lift circa 0.5m kids out of relative poverty. Country can’t afford it let alone its current expenditure.
Govt is in a major fix. 12m ago they pulled off a political masterstroke in blaming the notional £22bn blackhole on the conservatives, which is arguable correct given the Brexit fiasco. Appears that following one of the biggest tax raising budgets in history the blackhole is now £40-£50bn. It’s going to be politically very very hard to pin this on someone else now.
Can’t obviously see how they’ll plug the gap without eliminating pension relief here. Probably with some headline public spending increases but overall austerity in departmental budgets will increase.
I’m not convinced CGT take is lower because of the tax increase. The CGT take bounces all over the place year on year. If they raise it to income levels, then presumably we’ll see some real deferrals.
Equally the numbers of basic tax-rate payers must surely be going up as the conservatives let in millions of people over the last decade. It’s an interesting conundrum to consider where we might be without those economic immigrants.
The wheels are going to fall off sooner or later. Another exogenous shock would probably push it over the edge or least to the cliff face. In the meantime, we’ll unhappily edge closer to it.
Here’s to Farage having a weekly audience with King Charles in a few years time. What happens when the electorate realises he’s got no palatable answers either is anyone’s guess.
@Baron — Leave voter, then? 😉
Look I know it’s boring. But given nobody else talks about it and pundits act like it didn’t make a difference, I feel the occasional redress every couple of months is proportionate.
I don’t go on about high energy costs every few weeks, say. People understand that and cite it, because it’s not a third rail politically. (Miliband etc aside) Hence there’s no need.
I won’t repeat my post but this is basically my issue. There’s a conspiracy of silence about a major reason we’re on the rack, and it needs to be factored in.
They said “time will tell.”
Well, time has told. Yet you hear nothing.
Cheers for the nice ps! 🙂
Id still vote for it. Just wish we actually won. 0 -1 to democracy. Don’t worry, if enough of the minority moan you will get another chance.
@Griff — Eh? You got the hardest Brexit on the table. Out of customs union, no free movement, etc.
If you’re complaint is that one investing blog still wants to hold the results of this terrible choice to account then you have a different definition of democracy to me.
@Griff me old mucker. I understand the complaint about the professional and managerial class. Seriously, I absolutely do. I am not so even sure that I subscribe to TI’s forlorn hope that there even will be an EU to putatively rejoin, the inherent contradictions of the euro are hidden in plain sight.
But if this is what success looks like, God help us from failure. Sic transit gloria and all that.
Oasis has reformed, don’t look back in anger!
The UK feels one bond crisis away from melt down. Not sure being in the EU, even with another 40 billion in revenue, would make me feel any better off.
I think Britain needs to own this one.
Harping on about your freedom of movement and substituting Polish plumbers for North African delivery riders whilst discovering the extent of irregular migration because we’re actually looking rather than sweeping it under the French lorry is going to fix the government’s addiction to debt, welfare and health spending.
Happy weekend all,
It’s my birthday today and it’s also the birthday of the global financial crisis, 18 years ago! This has a great timeline of events
https://www.economicsobservatory.com/why-did-the-global-financial-crisis-of-2007-09-happen
@SF (#8)
“Why tax payers should be subsidising parents who sired more than two children without being able to afford them is beyond me. I’m sure it will lift circa 0.5m kids out of relative poverty. Country can’t afford it let alone its current expenditure.”
This is an investment not a cost. Kids growing up in poverty are more likely to have poor physical and mental health and academic underachievement with subsequent employment difficulties. The quantitative effects of Sure Start (Best Start) on academic achievement (0.8 grades at GCSE) and reductions in hospital visits (with consequent NHS savings) have been well documented.
Every blog has it’s eccentricities. If TI wants to point out what they are seeing every few months or so as a result of Brexit, then that’s fair enough. It’s also what free speech looks like 😉
I’d actually welcome some xxx years on/now the dust has settled here are some Brexit related money management/investment etc articles – from both sides of the aisle eg why everything is going great/new/unexpected opportunities that have emerged as a result of Brexit for the pro side, what’s gone wrong/defensive postures to take if you are in the anti-camp.
I don’t have a dog in this fight as I’m an anarchist so don’t vote.
As they say, it’s not a conspiracy if they’re really out to get you. I was spluttering into my home-made yogurt this morning over an article in The Economist about AstraZeneca “leaving” the UK (by which they meant, rather less dramatically, they were thinking they might relist the company in New York). Ominous words about how drug trials and R&D had plunged between 2017 and 2021. Was Brexit mentioned even once? You’d think the fact that the European Medicines Agency that left the UK around then might have some bearing on it? (Another thing Brexiteers claimed, ridiculously, would never happen). Nope, the conspiracy of silence continues.
Keep up the good work, TI!
Great article. Regarding Brexit, it should be a great opportunity, but our politicians and senior civil servants aren’t up to the job. For whatever reason, they all seem incapable of utilising what could be an advantage to the UK.
In reality, the current malaise started in 2008. Well before Brexit. There has been no real economic growth since then, even with mass importation of people to boost the top level GDP number. Brexit hasn’t helped, but is only a factor.
Finally, FS firms have been doing their best to push as many roles outside of London as possible. And govt have supported that with IR35 making it less risky to push work project overseas, instead of doing it in the UK. Which also reduces the tax take.
All that political passion and not one mention of the drag mass migration has had on GDP-per capita, what people really feel. More acutely even, the bubbling tension around irregular migration (illegals) and the impact the evident changing face of towns, villages and cities is having on the British public.
Governments of both colours have failed on this front and I’d argue it ranks higher than Brexit’s impact to the working people of the UK.
The above is not to say that Brexit has gone well, just that society want change and it isn’t necessarily a return to the EU.
If taxes are increased and fiscal drag continues while the above is continued relentlessly, my partner and I (working professionals, 30’s) are seriously considering taking at least a few years out and trying somewhere else. We don’t really want to and have resisted for a few years now but ultimately it gets depressing. And we’re the lucky ones!
@all — Re: whether things would be better in the EU, please digest my point about counterfactuals and incremental worsening.
It wouldn’t be great but it would be better, economically. We got nothing for something.
Thanks for all comments and the supportive notes too, I’m at a wedding today and will be moderating but any replies may have to wait. Though I think I’ve said enough for now.
@Alistair — Yes, I’m acutely aware of the repeating myself issue so I can’t keep restating every aspect of the debate and my stated position each post 🙂
But fwiw I agree mass immigration was clearly a major impulse behind the Leave vote, even if many of the leading lights denied this.
However, again, how nine years on has Brexit helped?
We just had a record immigration burst. There are complicated reasons for this, but personally and from a detached perspective on this particular issue I think if we’re going to have lots of people movement then the bulk being fellow Europeans and the rights behind two-way and actively reciprocated made much more sense.
Illegals/boats etc is a huge long term existential issue, true, but all European states face it, and Brexit demonstrably hasn’t helped.
I sail with quite a few Vote Leave “Barry Blimps,” and I’m afraid you’re being wildly generous in thinking they might ever “see the light,” even if you stood over them with a searchlamp and an unlimited supply of facts.
Brexit? Ancient history, old chap. The latest reason Britain’s apparently going to hell in a handcart is… the rampant spread of political correctness. In fact, I was out on the water with a few of them yesterday, and the lunchtime great outrage was a tale about the public sector now insisting all interns must come from working-class backgrounds. Don’t know if it’s true — I’ve long since given up fact-checking their drivel.
Frankly, even if it were true, I can’t see the harm in letting a few underprivileged kids past the gates of what is essentially the last closed shop for the mediocre offspring of well-connected parents. (I’m being kind with “mediocre” by the way, was going to call them congenital cretins but changed my mind). I mean, just look at the dazzling brilliance with which that lot handled COVID spending, every major building project in recent memory, and the small matter of regulating water companies dumping sewage into the rivers.
Barry Blimp’s counterargument? These working-class youngsters might discover public service isn’t for them, and the internship will have been “wasted.” Yes, because heaven forbid we squander a slot in such a peerless system. As for owning up to the Brexit omnishambles — well, dream on. Case closed, your honour.
Since everyone seems to agree that britain is a sinking ship (while quibbling over the particular iceberg), could we have an article for those considering emigrating abroad? As a handy follow-up to the personal finance guide for immigrants to the uk from 2021.
I am not unsympathetic to the present government, they (probably) mean well.
The previous administration would not do any better.
It’s obvious that the present economic situation, with government spending trends, dependency culture etc is not sustainable.
If something is unsustainable then by definition it stops at some point.
Rather like going bust, “gradually, then suddenly”
Anecdotally a lot of more intelligent older people are ( imho mistakenly ) supporting Farage, amongst others.
Benefits of all types need a unilateral freeze, some benefits need to be time limited, the creep of dependency needs to slow.
When in a hole stop digging ….at some point this will happen, be it bond crisis, political instability …
Brexit has not been good , it’s just a general drift downwards , it’s slow enough that it can be denied by many but objectively cannot be denied.
Housing buying and renting are increasingly difficult and expensive for young people.
Personally I’m upsizing my home size by a factor 500%*+ of the present size, to create a multigenerational family home ( despite a salary about twice the national average , a family member has difficulty affording a suitable home)
Oddly the massive increase in size comes at under half the price per square foot, that’s an interesting thing in itself , nice area on the edges of the New Forest, large houses have fallen sharply behind inflation over the last 20 years)
Buying a house as a boomer wasn’t easy… but without family support, young people have a very much tougher experience now.
I still think this is why Sunak held the election when he did and tried so little to win it – he could see the whole load of shit that the Tories had created in the past 15 years coming to land in the next few years and thought “Nah, don’t want to handle that , thank you” – here’s a nice toxic parcel to hand to the Labour party.
I agree that Labour should have never said the stuff about taxes – although I understand why they did. I just wish they’d find some courage now and get on and raise one of these taxes. Yeah, they’d get a major kicking – but how many manifesto pledges did the Tories break in 15 years? And they are getting permanent kickings anyway. It’s still 4 years to 2029 – a lot can happen in that time. It’s a classic political tactic after all to raise taxes early in Parliament and then lower them as a “bribe” just before the election.
As to Farage, I just don’t know why people can’t see him for the grifter he is – but apparently they can’t.
So I guess The Investor and I will be first against the wall when 2029 comes around. (Though I still live in hope that Reform will die a death of incompetence.)
@Sarah – absolute agree that Farage is a moron with no credible plans at all. The only reason he is in the running is that he is not Labour and not Conservative. Both of these parties have serially failed the electorate over the past quarter century or so and understandably the electorate are looking for anyone else.
@hosimpson – the ‘drivel’ you refer to about civil service internships being only for working class candidates is true. And it is important as those internships are how grad roles are allocated. It is true that the civil service has been a major enabler of failure but I don’t think changing the entrance exam from “which Oxford college did you study classics at?” to “Was your Dad a binman?” is going to improve standards.
@Rebster – you are absolutely right. Best reply so far. UK banks have shifted far more roles to India and China than to the rest of the EU. It’s a lot more about cost than it is about Brexit. And it is bad for the future of the city as the centre of gravity for middle/back office roles moves to Asia. Also, you are right about growth too. The trend line changed down in 2008 and hasn’t budged back up as the regulations have made it all but impossible to finance risky projects which improve growth.
@Seeking Fire – you are right about the two child cap. It is a good idea. In fact I would go further and eliminate child benefit and replace it with a child tax credit. No taxable income – no cash. This would also mean that it was more valuable as your marginal tax rate rose and would encourage higher earners to have more children. These will likely be more intelligent, law abiding, productive members of society.
While I can understand the gloom, the UK is not special. Pretty much every developed country is suffering from the same issues. If the UK was worse, we’d see the impact through a weak currency. Yet, EUR/GBP is basically unchanged post Brexit. GBP/AUD is now back at the same levels as before Brexit. The US may look better but that’s due to tech. Take that out, and US productivity looks just like Europe (if not worse).
I’m sure Reform will either get a majority or be part of the next coalition. The Tories seem to be in the same place as the Liberals in the early 1920s. Those with Narcissistic Personality Disorder (Trump, BoJo, Farage) are pretty much made for the new attention economy. They easily convince voters who hate the status quo, hate the “other”, and want to live a fantasy world. Once they get into power, it will all fall apart. They have no interest in detail or reality. They will placate their base by generating anger and throwing anyone under the bus (including their base).
I come back, though, to what’s different about that to anywhere else. The US administration is totally corrupt, authoritarian and ensuring that the mid-terms will not be free or fair. Vance is more dangerous to democracy than Trump. Europe? It’s all very well cheering Europe spending 5% of GDP on defence until the Neo-fascist AFD gets into power in Germany. Meloni? Le Pen? Orban? Europe really isn’t an alternative. I don’t even think Oz offers much better. There is a very clear risk when emigrating of jumping from the frying pan into the fire.
Ignoring the fact that this is @TI’s blog and he can write about what he wants, I’ve always felt that his comments on Brexit are entirely consistent with the investment principles the blog espouses.
There’s always an emphasis here on the drip-drip effects of the fees for active management, and how that effect compounds over years and years. It becomes frighteningly big over time, and it needs pointing out repeatedly. If it isn’t, the danger is investors stop even noticing that money disappearing, or that there is an alternative (indexing). @TI and @TA don’t say that active funds will automatically lose all your money.
It’s the same with Brexit- @TI has never claimed that the country will implode- just that the drip-drip effect adds up. Small reductions in our GDP year on year compound, and the figures are a hell of a site bigger than in my ISA.
I’m afraid it does need pointing out, if the Mail and Express only mention the £40B black hole that Labour is going to steal your income to plug, and don’t talk about the £100B black hole that whose creation they actively supported.
On tax and spend I recommend looking at the FT chart in @AlCams link (#2), which shows the tax take/ cost by age cohort. (I tried to paste it but wasn’t able to). What I found interesting was the comparatively low level of welfare spending amongst working age people, it shoots up enormously after 70. In fact welfare seems to be a bigger cost than health and social care combined except for the over 90s.
On immigration, a friend has just undergone emergency surgery for cancer and is now thankfully recovering well. The NHS care provided was exemplary. They said about two thirds of the staff they came into contact with at all levels were foreign nationals who have to pay the ridiculous visa fees, NHS surcharge etc on top of the normal deductions.
Re Brexit, before the referendum one of our major clients spent a lot of time analysing the various possible effects on their business, which was worldwide, with centres in Asia and the USA, as well as the UK. They took the decision in summer 2016 to proceed with the construction of a manufacturing and distribution facility in the EU to guarantee that they could maintain their business if a ´hard’ Brexit came to pass. As it turned out, and thanks to the incompetence of the May and Johnson governments, this was the provident approach. So they spent tens of millions in project costs and staff time and created jobs in the EU, just to be in the same position as they were in pre referendum, and this is just one medium sized company, how did that scale up UK wide?
My issue with brexit chat is not any concern that you are wrong, unread on the matter, or even biased by your readings. Indeed, it seems so far from brexit now with few people mentioning it (as you point out), that it does not really invoke the fires of conflict in most discussions now. I do wonder though, and it does annoy me, that you do not articulate what you see as possible routes out of the situation. Are you shouting in the wind and raising somewhat valid concerns knowing you are doing so, or are you proposing any solutions that could be realistically considered?
The issue you have is one rooted in the benefits and pitfalls of democracy especially in an age of social media, half-truths and general untrustworthyness of many elected representatives. No one has been able to demonstate voter fraud or technical failures of the brexit vote that would render the vote invalid – leave won. This subsequently leads to some difficult considerations if we really think brexit should be reversed as we either:
Overrule the outcome at government level, and any future outcomes we vote on and the government decides later they don’t like; basically throwing democracy out of the window – dangerous and we know where that ultimately can lead when state leaders can do what they want.
Keep having votes until the will of the current government and/or current opinion of the loudest voter base get what they want? – dangerous, and resource expensive – when do you stop? Further, until the view of small boats and immigration is resolved, I am not even convinced a new brexit vote would return the outcome you think it would once the pro-brexit machines got mobilised as a lot of the pain points being pushed by brexit supporters haven’t really been solved. I could believe polling on brexit was, and still will be, much harder to get representative samples.
Something else?
I get less agitated than most about brexit chat but as you obviously feel very passionate about this, have thought about it, and have the basis of your views rooted in sources which can at least be referenced and verified, it would be nice if you also dealt with the reality of reversing it if that is what you wish to happen?
Suppose you were in charge, and constrained only by the accepted notions of democracy (assuming you are not proposing full dictator mode), what is your move?
My only hope is that in all the inevitable political turmoil on its way we might just get proportional representation.
On the finality point:
1. We’ve already had 2 referenda on EU membership. No one in 2016 was saying it was illegitimate to have a second because of the vote in 1975. And there’s no reason there has to be at least 41 years between votes.
2. At the moment nearly half of voters appear (from polling) to favour another ballot (and only 29% still support the 2016 decision), but it still has to be clear what’s actually going to be on offer to rejoin. Most might vote for the arrangements which we had in 2016 (opt outs and rebates), but they’re not on the table now. That means a single currency and a single interest rate. That’ll be a much harder sell. Maybe things will look different in 2034 assuming Farage becomes PM in 2029 and then screws up. Brexit has (so far) been tried by 5 PMs since 2016 from both main parties. Before people are sufficiently repulsed by it to embrace what the EU would now offer, Brexit probably needs to be seen to have continued to fail to deliver under a 6th PM from a 3rd (outsider/insurgent) party – especially as Farage is even more associated with it than, say, Boris and Co ever were. It’s probably not enough for it to just be seen to fail. It has to fail under each and all of its possible permutations.
@Larsen (#26):
It is an interesting graph* – as is the chatter that follows it and what is probably driving the very notable uptick for the age 70 and older cohorts.
*I do not recall seeing anything like it before which is primarily why I linked to it; I suspect that there are probably some issues of interpretation too – but that is pretty much par for the course with these sort of things
Re: immigration. The fertility rate is now 1.45 and breakeven is 2.1, so for every 10 of child bearing age, we get 7 children and 5 grandchildren. So in two generations, you’d end up with 12 workers for every 10 retired.
We need 4 workers for each retired person for the public sector the UK voter wants (state pensions, unfunded pbliuc sector pensions, NHS), at the tax levels they want. We are heading sub 2. At that level, the public sector is functionally a wealth tax on young workers to pay for the retired.
AI and automation may bail Western nations out of this issue. If that doesn’t work out, though, what’s the game plan from those that want less/no immigration? I’m hearing nothing from these people or at least nothing that that makes any sense.
@Random Coder
“Overrule the outcome at government level, and any future outcomes we vote on and the government decides later they don’t like; basically throwing democracy out of the window – dangerous and we know where that ultimately can lead when state leaders can do what they want.”
This is a fundamental misconception that unfortunately is very widely shared. The chief problem with the 2016 referendum was that it was actually profoundly undemocractic. Several million people who had lived her for years/decades and in the vast majority of cases had paid taxes to this country during that time were denied a vote and excluded from the democractic process in a crucial decision over their own futures, in order to skew the outcome.
The perversity of this was exacerbated when Commonwealth citzens from countries ranging from Malawi to Malaysia, who had lived here for just 6 months, were allowed to vote in an election which didn’t affect them.
The vote was so close that this anti-democratic decision in all probablilty skewed the outcome. It is still shocking that this rigged election is being held up as evidence of ‘democracy’ and shows how far this country has fallen.
@Faustus (#32):
I assume you are referring to “the 3 million” that turned out to be more like 6 million. If so, then I totally agree with you.
There is a lot to unpack in your statement, but the suggestion the brexit vote was somehow rigged is quite a suggestion given that the person that called it and the PM at the time was pro-remain. Regarding the margin of victory, you have a point for any vote/election and it does point towards the need to accepting a PR type wider voting system as we continue to have governing parties coming in with relatively small percentages of the overall votes.
I couldn’t even consider voting leave by the time of the election as I viewed it as borderline racist as the entire narrative seemed to be about immigration, which was not what it should have been. Despite this, I personally would not call the outcome rigged by any means, especially when you consider who was in power at the time and the nature of all the bodies that decide on the circumstances of the vote. I viewed the entire debacle as like the guy who has an expensive gym membership considering his options for renewal, but he doesn’t use the gym, or attend classes, and he doesn’t like all the updates he gets on whats coming down the line, but he likes the swimming pool. He really would like the pool, but the gym membership rules don’t allow him to just have the swimming pool at a reduced rate, and they keep imposing rules he does not like such as them saying you need to pay if you want to use the car park before 10am, he likes to swim at 8am. To me the remain side argument was the equivalent of the guy being being fairly sure a swimming pool pre-10am free parking deal would become available, and that today’s arrangement is fine. The leave sides view of this was we don’t even want the pool and can do better ourselves with other options. None of the sides were getting what they wanted, but it didn’t really matter anyway as the gyms position was: You pay for the full membership like everyone else and will take the rules, you currently might be operating slightly outside of how we expect most members, but further carve outs and exceptions should not be expected, and more rules are coming down the line.
Calling a vote to be “rigged” on a topic with a binary outcome (in terms of vote choices) in a democratic country with voting commissions and all sorts of checks and balances, is a strong statement to be making, especially when the PM at the time was in favour of remain (who was doing the organised ‘rigging’ unnoticed by the government and authorities?, or are you suggesting they were in on it).
A comment above rings true with me though about what would rejoining the EU look like? The UK was arguably never even part of the EU as it should have been. Even the idea of accepting a single currency now would be rightly viewed as high risk and potentially undesirable. My only interest in brexit/EU now is the future, and no one has even articulated anywhere yet (in government or otherwise) what rejoining the EU or whatever we are calling it would look like. Until then, chat about the benefits of rejoining the EU is nothing more than wishful thinking (or to bring up the classic phrase, ‘cherry picking’ the bits that are desirable and ignoring the rest – as a start, I don’t even think many hardcore remain voters would be happy taking the euro). The guy is not going to ever get his pre-10am free parking and the parts of the gym membership he likes at reduced cost, without all the things he doesn’t like. This is where we are now with the EU.
Anyway, this is my last post on brexit in this thread, as my only real point/questions are on future of this, and I didn’t mean to aggravate anyone. I accept the past as done.
Don’t forget that UK citizens in the rest of the EU were also excluded even though they had also organised their lives on the basis of continued EU membership. They now have a reduced status in terms of rights. ´Rigged’ might not be the correct word but ´profoundly undemocratic’ I would agree with. Never mind the imposition of a trade border between constituent parts of the UK…
@ Hospitaller
I think you could be right on financial repression. The media tried to frame the Bank of England meeting as a devilishly tricky decision between beating back inflation and helping weak demand. But it wasn’t really a tricky decision at all. They should have kept interest rates where they were until inflation is at or below target. So why did they do the opposite? Their decision on the day smacks very much of a decision, coordinated in private with the Treasury, to start helping the Government to try to deflate away its debt problem by putting interest rates below where they ought to be to control inflation.
When a government has a problem of excessive debt, as I understand it, it can a) cut spending (Labour are more than reluctant) b) raise taxes (while ideologically attractive to Labour, it can send the economy into a doom loop, particularly when the upper earners are already, for example, paying a very, very large share of total income tax and appear mobile) c) “restructure” its debt (less politely default) which causes catastrophic market reactions or d) adopt financial repression and hope the population does not notice that continued above target inflation is making it poorer and poorer.
Financial repression would have very large consequences for investment portfolios – but as far as I have seen, only Fidelity of the bigger platforms have cottoned on seriously to what may be going on here and offered thoughts on what to do to portfolios.
I agree index-linked gilts look a good idea. It’s a shame that in 2030 they shift from RPI to CPIH. ILG prices don’t show any compensation being offered for the subsequent loss of, history tells us, about 0.9% of returns.
The silence around Brexit just shows how bad the political culture has become. (Byline Times is the rare newspaper that keeps calling out the Brexit nonsense, and how large parts of the media have actively enabled it.)
Brexit belongs on the agenda because the UK’s relationship with the EU is far from settled. It was always moronic to frame this as a simple in/out choice. Leave had no mandate for the extremist hard Brexit they pushed through (if you believe that a vote obtained by lies, law-breaking and collusion with Russia is a mandate at all). There is a large grey zone between “in” and “out”, and world has changed since 2016. The UK and EU have many common problems and interests. They should be able to fudge an alignment with the single market in all but name, and collaborate again in many other areas. Starmer has taken a few baby steps in this direction, but seems to lack the courage for decisive action.
As disappointing as this govt has been so far – the Tories were in power for *14 years*. Obviously they own the mess the country is in. It boggles the mind that anyone would claim otherwise. Again, that’s media that are purely partisan, with zero intellectual honesty.
“Perhaps if something breaks soon it’ll be a wake-up call that could yet see off even worse in four years time.”
The last 10 years have made me a pessimist to be honest, albeit with a view from across the pond. I don’t believe in wake-up calls.
Brexit was a coin toss, Trump 1 was a gamble. Then 8 years later, fully informed by his first term, Jan 6, impeachment and a felony? Returned to office. If anyone thinks it cannot get much worse, buckle up.
Perhaps a saving grace of UK politics is that if the leader is reckless enough then they can be removed. Imagine if Truss had 4 years and didn’t back down. We have 7/8th of the Trump 2.0 term still to come.
@Faustus #32
The idea that the referendum was ‘rigged’ to produce the outcome that it did is absurd. We had a Referendum because a Remainer PM in a Remainer government proposed legislation to a Remainer Parliament to call a referendum. That Remainer parliament voted in favour. Eligibility to vote in the Referendum was exactly the same as eligibility to vote in UK general elections. And that was a decision made – again – by a Remainer parliament. I appreciate you’re still furious that your side lost, but peddling delusions does your cause no good at all.
The truth is all rather more prosaic: those who proposed the Referendum (Cameron) did so entirely for reasons of internal party management, and those who voted for it to be held (Parliament) never dreamt in a million years that they’d lose. But lose they did.
So we work very hard, seem very stressed, but achieve very little (as a collective in terms of growth) – oops!
I personally wouldn’t have done Brexit as you just swap EU migration for global migration, but the key imo is that there are no political magic bullets – even cancelling Brexit. Politics actually doesn’t have much ability to move the key dials. Most costs are uncontrollable, you can only really play on the edges – hence the great DOGE failure.
Generally I think as a country we just need to not worry so much and let the government get on with stuff. In the annuals of time we’re still in the top 0.001% in terms of what we have at our disposal individually. Just use what you have and make the world around you a better place – and realize the potential you individually have got.
@Rob #43: “Make the world around you a better place”.
Maybe. But can we actually change anything. I mean really change it? We’re talking about human nature here.
2016 – “Brexit means Brexit”
2019 GE – “Get Brexit Done”
2029 GE (?) – “Stop the Boats”
“The rules are simple: they lie to us, we know they’re lying, they know we know they’re lying, but they keep lying to us, and we keep pretending to believe them.”
Elena Gorokhova, A Mountain of Crumbs
It’s always seems the same. The names change but the game appears not to: “It’s all just the same thing over and over; we can’t help ourselves. And you and I can’t control it or stop it, or even slow it, or even ever-so-slightly alter it. We just react. And we make a lot of money if we get it right. And we get left by the side of the road if we get it wrong. And there have always been and there always will be the same percentage of winners and losers, happy ****ers and sad suckers, fat cats and starving dogs in this world. Yeah, there may be more of us today than there’s ever been. But the percentages-they stay exactly the same.” Mr Tuld (Jeremy Irons), Margin Call
Perhaps all we can do is focus on what might matter for us individually, as investors, i.e. just in the last week:
→ S&P 500 2nd quarter operating earnings are up 11% over the prior year
→ The bond market is now fully pricing in 2 rate cuts by year-end and 3 more in 2026
→ The S&P 500’s price to peak earnings ratio has moved up to 26, its highest level since 2000
→ Nvidia now makes up over 8% of the S&P 500, the highest weighting for any single stock
→ US Tech sector outperformance hit new record high
→ The Ratio of US Large Caps to US Small Caps is at its highest level since the April 1999 peak
→ The ratio of Growth stocks to Value stocks in the US has hit a new record high
Although the Brexit referendum was a fair fight (it is permitted to tell lies), it wasn’t an even fight. What Cameron failed to take into account when he called the vote was that an organised cause fighting for change will beat a loose coalition supporting the status quo. The Brexiteers had the planning, the finance, the people and, most importantly, the energy to take their fight to the streets. Who were they up against? A government can make arguments but is not a campaigning force, the LibDems had been walloped in the post-coalition election, so we were left with people like Anna Soubry chirping from the sidelines. I honestly believe that if each voter had a quiet ten minute chat with a Brexiteer and a Remainer the outcome would have been very different. I think exactly the same goes for Scottish independence referenda; the pro-UK side start behind the 8-ball and need to do more than believe they have the stronger arguments that a ‘sensible’ electorate will favour.
Is it actually true that the UK would be forced to adopt the EUR or would the UK simply have to promise that it would eventually join (if conditions were right)? I note the Swedes and Polish have not yet adopted it, even if they don’t have the type of opt out that the UK had previously.
@MC (#42):
Me thinks tragic rather than “prosaic” and that is being polite.
@Baron is correct, we’re all bored of hearing your one-sided puerile anti-Brexit rants. Accept you were and are wrong. The UK wants Brexit and is better off without the EU.
@3MintTea: I am not bored with the debate. Interested in arguments on both sides. You have not made one, but you do sound a bit ranty.
@3MintTea – you may want to consider how extensive that “all bored” is. Perhaps you’re bored, but it is a big stretch to claim it for every other Monevator reader. Rather removes credibility from the rest of your comment.
@ZXSpectrum48k
The argument that we need constant immigration is a pyramid scheme and proving false in practice.
We have been told for generations now that we need workers to “pay our pensions”, boost the economy and similar.
We now have had a few generations of migration and at least one of mass migration. Despite the promises, we are told that the previous migrants didn’t save enough for THEIR pensions. We now need to pay more tax, take away fuel allowance and delay pension ages. Despite that we still need to borrow more!
Like Einstein said, doing the same thing and expecting different results is insane.
Technology will replace a lot of jobs, in the same way that JCB diggers reduced the number of people we needed to dig holes in the ground. Ai and automation will lead to many many white collar jobs going, in the same way as typists disappeared as a common job.
Remigration is now the next step.
@Tom – who would be doing the jobs immigrants do if there wasn’t any immigration?
Are you advocating for remigration? As in this: https://en.wikipedia.org/wiki/Remigration
“Despite the promises, we are told that the previous migrants didn’t save enough for THEIR pensions.”
What do you mean?
Brexit; yeah, I know.
And that sodding Reformation: time to reverse it too.
And the Normans – those so-and-sos abolished slavery. How bloody dare they?
And expel all those German immigrants whom King Arthur fought so gallantly against.
And yer Romans: I demand revenge on those swine.
This link is quite funny as it simultaneously pokes fun at TI’s inability to move forward (in the same vein as dearime above) whilst also lampooning those responsible for Brexit – https://vimeo.com/437542256. Personally, I think TI has another five years or so of justifiable ranting before they should reasonably consider putting it to bed. NB that routine was written pre-brexit I believe, in 2013.
If we’re going to devolve into quoting the (excellent) Stewart Lee to make our arguments, then here he is on Brexit:
https://www.youtube.com/watch?v=uovt1sC3rtM
There’s no point me repeating myself, so I’ll only do so briefly:
– Brexit is costing the country about £40bn in lost tax receipts
– The government is about that in the hole.
– Taxes are going to rise again as a result.
– Everything will be blamed except Brexit.
Where I do agree is that all countries have their problems, and Brexit just happens to be one of ours.
However (like Trump, but not say Ukraine (yes yes Merkel)) it is an unforced error.
We’d still be moaning but we’d be moaning from a more prosperous less heavily taxed place.
As for why I keep bringing it up, perhaps I’d be more willing to let it go if Reform wasn’t top in the polls.
Yet they are! It’s incredible to me, and while it may indeed be futile to flag these contradictions on a blog with a fairly niche readership of mostly like-minded people, I suppose I hope it might catalyse a bit more discussion in a few more pubs / WhatsApp groups to point out this out.
They made things worse. They delivered no benefits. You’d only vote for them again out of masochism.
Where Brexit left me as an investor and saver was in totally disconnecting my personal financial fortunes from those of UK Plc. I started this in earnest straight after the disastrous referendum and had completed it by 2018, which is when I retired.
The final committing of Brexitcide in early 2020 was later than expected because Leave didn’t have one single clue what they were doing at any stage, but I could remain (ha!) phlegmatic because we were financially isolated, but losing precious travel and residency rights wasn’t exactly anything that Leave broadcasted. Odd that.
After 7+ years of retirement we have slightly less in our SIPPs but massively more in our ISAs, so we’re fine. I do wonder how the average Leave voter has been finding the ride, but they knew what the outcome would be. They knew that because experts told them. Ah well.
Yes, remigration is coming. I don’t care if Wikipedia paints it as a scary fascist conspiracy theory. That is wrong.
I remember when you would be called a conspiracy theorist if you doubted that the USSR wasn’t a workers paradise, more prosperous than the west.
I remember when wanting to leave the EU project was called a far right conspiracy.
I remember when Thatcher was deemed a fascist. Then John Major was a fascist. George Bush senior and junior were both called fascists. Even David Cameron was shouted down as fascist.
I also remember that Trump would never get voted in. Then Trump wouldn’t change anything. Then apparently no one would vote for him again. Then apparently a ‘resistance ‘ would ‘stop fascism’.
It’s all histrionics.
Remigration is coming. It’s not that big a deal.
@gadgetmind #56: did the same beginning on the morning of 24 June 2016.
Although I diluted the ‘short the UK’ theme slightly (but only to the tune of ~5%) in order to take @TI’s lead on stocking up on discounted UK ITs over 2023/4; otherwise keeping well clear of £GBP denominated assets worked a treat in early 2020 and late 2022, as risk off meant US $ appreciation.
It continued to work until it didn’t, which was abruptly in April this year when markets (but especially US markets) fell, and somehow the once mighty dollar wilted whilst the formerly pathetic pound rallied.
I’ll tell you it was b***dy painful to see a simultaneous double drawdown on both $ price and the FX rate.
Much worse, in fact, than the index falls worldwide in 2022.
Now I’m not so sure as I was from 2016 to this April that one can effectively disconnect one’s PF fortunes from UK plc.
It only works if the old correlations play ball.
@TI #55: on the incredibleness of Reform being ahead despite the disaster of the hard Brexit which Farage birthed – it’s only incredible if your prior is that the default state of humanity is sanity.
Once you accept that it’s all just nonsense, and that people hold self contradicting and obviously bonkers beliefs as a matter of course, then, paradoxically, it starts to make a lot more sense.
That’s why the public blame the state of the country on people in small boats, and not those on large yachts; on those trying to manage the mess of Brexit, and not those who made the mess to begin with.
Faced with the choice between admitting a mistake or digging a deeper hole, I’m afraid it doesn’t take much guesswork to work out which option most people in practice prefer.
Like in the States, the rise of the culture warrior right is a post (occasioned by, but reacting against) neoliberal drift from free markets towards Peronism, protectionism and parochialism.
It, unfortunately, likely has a very long way to run yet.
As the earlier commenter (@Leaner #41) said, buckle up, because things are likely getting worse before they get any better.
@Tom #57
> Remigration is coming. It’s not that big a deal.
I am not of purely Aryan extraction, though I claim jus soli, being born in the Great Wen. It’s a big deal for me and I call your fascist whistle-blowing for what it is. I observed the battle of Lewisham and always wondered if it would come again. Your Nige will bring it in, I hope I have capital enough to have alternatives, should it come to that.
Indeed ermine (#59), how far we have come since 1977 – from a small band of idiotic right wing thugs advocating ethnic cleansing (sorry, “remigration”) to the real possibility of electing a government in or around 2029 that will have barely concealed aspirations in that direction.
And I thought it would be hard, as a nation, to make a bigger mistake than we did in 2016. Looks like we’re going to give it a try………
@TI – please keep ranting, it may be very difficult to unravel our last national stupidity but it’s existentially important that we avoid the next one.
@ermine @Porlock Vale — Well, at least @Tom has done us the courtesy of revealing where he really stands, rather than obfuscating about NHS hospital waiting lists or whatnot.
Needless to say the Monevator comments will not become a venue for normalising chit-chat by the far-right. There’s (alas) plenty of other places for that.
Remigration looks like a thin veil for racist ideas and policies AFAICT. Deeply grim not to mention looney tunes. I hope anyone supporting this is kept well away from the levers of power. Ideally you’re not in charge of your own toilet breaks.
@ermine #59, @Porlock Vale #60, @TI #61 and @TA #62: all well said.
It’s shocking to me how far the level of acceptable debate has slipped since 2016. Not so much an Overton window now as an Overton sewer.
It’s the parlous state of the world since 2016 which has largely undermined my faith in human nature/goodness.
We urgently need someone with charisma and a connection to the public who can champion basic values of dignity, civility and elementary compassion.
Unfortunately, I don’t think that Starmer has in him to be that person. For the sake of the greater good, he should step aside now and let someone else from his own party try.
The degree of nasty “othering” since ‘that vote’ has been really shameful to see. It’s one thing to argue that we don’t have the money, homes, public infrastructure etc but quite another thing entirely to treat fellow human beings with contempt.
Very interesting set of links as always.
Surely the (negative) “Sternstunde” for the UK economy was the global financial crisis & aftermath. Everything since (including Brexit, Truss, Reeves, trade deals or not ) is just minor detail.
One post previous to the one linked to on the MacroCreditThinking blog wrt debate on the effect of tarifs, quote :
“One reason I picked up on these points was that I had seen the exact same thing play out with Brexit. In 2016, economists scrambled to estimate the effect on trade from Brexit and came up with figures in the region of 0.1%. Embarrassed to publish reports saying “actually trade doesn’t matter for a services based economy like the UK”, the forecasts were fudged by assuming a consumer confidence shock**. It was too embarrassing to forecast that trade didn’t matter, so economists asserted that it did. “
It’s not about race, it’s common sense.
If a lily white person was illegally in Canada, USA or Australia they would be deported. It should be the same here.
We should remove those, regardless of colour, that are not a benefit. We have plenty here in the UK that are net negative, we don’t need extra.
It is in our interest to take the brightest from other countries – say those earning 50% above median household income – regardless of colour.
That is the way the winds are blowing now, so get used to it.
It says a lot that you all instantly jumped to race.
And performance of Reform, Corbyn -Party or other new or protest parties isn’t a mystery. The gap between the nice parts of UK and the rest is still as wide as in 2015, if not wider. Tory “Levelling Up” was a fantasy, & don’t see that Labour are doing much effective, at least not quickly enough.
@ermine #59, @Porlock Vale #60, @TI #61 and @TA #62 are all utter left-wing lunatics. There are NO “right-wing” groups in the UK, let alone “thugs” or “ethnic cleansing”. There IS however left-wing lunacy, where previously normal people start exhibiting things like ‘Trump Derangement Syndrome’, or imagining that normal working class people in the UK are all Hitler’s minions. Of course they then all get proven wrong, time and time again, at which point they scream “racist” at anyone who will listen.
If we do have maniacs in power in the future who commit heinous crimes against humanity, history teaches us it will be from the left-wing – just like every communist dictator.
@Tom is completely correct.
The rest of the idiotic left are the reason the UK (and this blog) has gone downhill.
@Tom (#65) – you chose the term remigration. I was unfamiliar with it, curious, and searched it – “a far-right European concept of ethnic cleansing via mass deportation” – so I’m pretty sure we all jumped to the right conclusion.
I think your intentions are clear but I now realise that you actually meant removal of everyone who isn’t net beneficial to the country, regardless of race, on some yet to be imposed criteria. That’s even dafter than racism.
Who are these people, exactly?
Those who are here illegally? Fair enough, I’m in favour of complying with the law, but that won’t move the dial very much.
You go on to say “We should remove those, regardless of colour, that are not a benefit”. Benefit to whom? Who decides? What are the criteria? Where will you send them? Can you not see what incoherent twaddle that is? Can you not see where it leads?
It’s anything but common sense.
I can’t see “the brightest from other countries” wanting to come anywhere near the version of Britain that you espouse. I can see the brightest of those that are already here deciding to leave though, accelerating our decline.
Well this is all getting a bit unpleasant, I have learnt a new word in ‘remigration’ , though a part of me wishes I hadn’t.
But interesting posts from GM and DH on the complete elimination of home bias from your portfolio though. That is a genuinely interesting avenue for discussion off the back of the decline and fall of UK plc, particularly with respect to gilts. Next year I need to remortgage, so if I can’t get a rate I deem worthwhile, then it’s going to be a big portfolio rejig to pay things off. I am inclined to plagiarise xxd09 and ermine, i.e. ditch specific UK gilts and go global, and get a bit defensive with gold. PS just watched the coinbase ad which was hilarious, but tricky to understand what they were advertising?
@3MintTree @TruthSeeker — Please feel free to go elsewhere. If I wanted to lower the IQ of this blog’s comment section I’d fit my cat up with a keyboard. Further posts will be deleted.
As I’ve said before though, I think it’s edifying for casual centrists like me who wonder why I fret about the rise of Reform and so forth to see what these comments quickly degenerate into. (And believe me, in the past I’ve deleted much worse, for example from people who began their comments espousing democracy etc and ended up talking about a Sharia law takeover.)
Again, Reform are leading the polls. That’s why I talk about it here, though I try to stick to the economic illiteracy aspect in my articles to keep things on-topic.
@Rhino #70
> but tricky to understand what they were advertising?
Pity me then, as an actual customer of Coinbase, as I sure as hell couldn’t work out what they were advertising either 😉 Though I did appreciate the modern update of the Four Yorkshiremen sketch.
@Porlock
You have it the wrong way around.
The fact that we have 1 million people coming to the UK every year is the extreme position. That is bigger than many cities.
Are we building a city worth of hospitals every year?
Open borders and mass migration is the extreme position. It is normal to enforce borders and deport those that should not be here. Try to live in Singapore or Dubai after overstaying your visa.
Sadly the open experiment was run for too long and will require some cleaning up. For example, anyone resident less than 5 years without 5 years of full NI contributions should go automatically. And to clarify for those that automatically jumped to race previously, boot him out even if he is a pale ginger from New Zealand!
@TI, you do seem to have attracted some oddballs this week. Paranoia over “left-wing lunacy” seems extraordinary when we have a Prime Minister who despite being Labour occupies a position in the political spectrum not very different from Margaret Thatcher. If you asked most people to name a current left-winger it is unlikely they would come up with anyone other than Jeremy Corbyn who is hardly a credible leader (as recognised by the British electorate, to their credit, in 2019).
The provokers of violent riots (e.g. Stockport last year, plus Rotherham and the others that followed) have not been left-wing even if the right-wing label may be misleading. The analysis of those arrested (40% with prior domestic violence records) suggests they are primarily misogynistic thugs.
Came here to comment on some of the links, but must first thank the team at Monevator Mansions for keeping banging on about Brexit. It caused economic and political damage which continues to weaken us today, and pretending it never happened and never had any consequences is just rewriting history.
And as for the ‘remigration’ is essential/inevitable commenters, I am old enough to have witnessed as a child the last battle of Ridley Road in 1962. It was clear to me at the time that these were some really nasty people, and it appears that the same strain of thinking is alive and kicking, and just as nasty 63 years later.
Anyway, my real comment was about the Rage of the AI Guy and Cory Doctorow’s piece on AI replacing enshittified jobs. Both definitely resonate. Large language models are statistical and have all the strengths and weaknesses of statistical models. I was using statistical models in chemical design during the 1980s. We called them Quantitative Structure Activity Relationships (QSARs), but they are much smaller versions of what LLMs do. Useful within the range of their training set, but prone to going boom as soon as you step outside the parameters they have seen. They were valuable tools for saying “Have you thought of looking at this area of chemical space? It might be interesting”. But all of the rest of the work needed to be done by humans. And you certainly never trusted them to be right about anything.
LLMs feel the same. I had not come across the phrase ‘stochastic parrot’ before, but it is so apt. Originality is not the name of the game.
Freddie deBoer is right about the overhype from enthusiasts and their rage if they are in any way challenged. It seems, for some reason, they must believe, whatever the evidence. And Cory is right that the jobs they are most suited to do are jobs that don’t need doing, because they have already been stripped of any meaning or utility.
I confess to using ChatGPT when researching an area new to me. But what I am looking for is who are the best experts, what are the best introductory resources, and have I missed anything? I certainly don’t believe the AI ‘summaries’. They vary from unhelpful to positively damaging. Once, in the fairly recent past, I could post a fairly natural language query to Google and get some useful starting points. Now I am faced with a braindead AI summary and several pages of sponsored links that have very little to do with my query. It is weird that ChatGPT now makes a better search tool than Google.
Anyway, my point is that these are two great articles and well worth the time to read if you find yourself overwhelmed and made fearful by the AI hoopla.
Sorry I meant Southport.
I was on the fence re the vote. The sovereignty argument, the fact we’d never voted to join what is now the EU & the desire for greater political integration weighed a bit – but for me was outweighed by (a) the obvious economic advantages of being in due to geographic proximity (b) increased sovereignty having limited effect against the big hitters such as US / India / China (c) our favourable EU deal.
It was obvious to me Brexit would be a failure, it’s turned out largely how I thought it would. IMHO there is zero chance of re-joining but over the coming years & decades we will inch our way back through individual agreements.
Interested to know what people who advocate leaving the EU feel the benefits have been. For me (a) As I have an EU passport I get to smile smugly as UK only passport holders queue – at Geneva can be an hour + (b) we / reform / wingnuts such Jacob Rees Mogg (remember him!!) can’t blame our problems anymore on the EU.
Granted – we have 10% tariffs vs the EU at 15% and we did get the vaccine a bit earlier. Anything else anyone?!
The one bit I did get wrong was the massive immigration from outside the EU. It’s been a unmitigated disaster I think beyond boosting GDP somewhat. Particularly social cohesion. Whilst I don’t subscribe to the recent comments it’s provided the perfect platform for reform. I’m sort of keen for them to get in next time in a masochistic way. But they don’t have any coherent policies and blaming our economic problems on the massive immigration is so obviously incorrect albeit I would also strongly prefer immigration to be much less than it is.
It’s our ageing population, our welfare state dependence and other countries we could previously call third world just catching us up. This is not a UK specific issue.
But this being, a personal finance blog, recently, I’ve been wondering at what point in your net wealth, you can stop caring apart from a patriotic perspective. Whilst this is a massive generalisation….
– Up to a mil – I think you are going up or down with the ship. really not much you can do apart from a bit of private health care as & when the NHS fails you & some insulation from any tinkering in the state pension.
– 1 mil to 5 mil – quite a lot of options, particularly if much of it is liquid. Can to a greater or lesser degree divorce yourself from deteriorating public services (e.g. health, education, state pension) Probably not enough though to avoid the cross fire though if something relatively serious happens & you are right in the cross hairs of future wealth taxes
– 5 mil – 10 mil – pretty much escape velocity. You live in wealthy neighbourhoods, you barely use public services except for the ones you cannot outsource – e.g. roads albeit you avoid public transport as much as possible. You spend plenty of time thinking about how to keep your dosh out of Rachel Reeves mitts & you are thinking about retiring overseas to pull it all out tax free. You’ve read about the pros and cons of an offshore bond and a FIC about a dozen times but you don’t think you’ve got enough to pull the trigger. All your friends are local and if push comes to shove you’d probably have to suck it up, I suspect.
– 10 mil + – who cares? You’ve likely got an offshore bond loaded up, some overseas property, wealth is nicely spread around. You keep a decent house in the UK and a mil or two of liquidity in zero coupon ILG which have limited tax implications & can hold purchasing power largely. You know people all over the world and frankly if it all goes south, you’ll check out for a few years, keep the pad in the UK and come back if it all blows over.
@Tom (#73) – ok, I give up, it seemed worth a try (briefly)!
Just for clarity, I’m pretty sure I’m about as centrist as anyone can get. I’ve never even contemplated joining a political party, nor could I now, since the centre ground seems to be a vacant space these days. I’ve never been to a political meeting in my life. Never even glued myself to something (well, only accidentally).
I just fear for our future, when sensible and necessary political discourse around important issues (immigration being just one of many) is constantly being drowned out by extreme and nonsensical posturing (and yes, I concede it’s from both ends of the political spectrum). You don’t have to be a student of history to recognise the direction of travel here, nor the likely destination.
@Tom (#73)
Before you deport the ‘useless’ part of the population (‘telephone sanitisers’?) it might be useful to consider:
Immigration was 940k in 2024, emigration was 510k, leaving a net increase of 430k (not a million). This is a lower than the post-COVID spikes around 2022-2023.
UK fertility rates have been below the replacement level of 2.08 since 1973 and fell to less than 1.5 in 2022. But life expectancy has increased leading to more old people and few younger young people.
About 30% of NHS doctors and nurses were not born in the UK. Getting rid of them in one go will lead to the collapse of medical provision in the UK.
Interesting to note that Singapore’s (since you mentioned that country) population increase remains driven by net immigration (rather than births).
@TI – I for one would be delighted to not have to have the comments section polluted by people suggesting ‘remigration’ as a constructive way forward.
Having said which, I did vote for Brexit. And I do see benefits. Economic ones? Not so much. But we’re no longer on the hook for some of the negative things in the run up to the Brexit vote, such as Greek, Irish, Portuguese, Cypriot or Spanish debt defaults or aiding and abetting Eastern and Southern European corruption. The EU looked potentially able to fragment at that point too, with AfD, Le Pen and the Five Star Movement in Italy to name a few all looking like potentially causing their countries to leave the EU, which would have put us in a much better place as we wouldn’t have been caught up in the messy divorce. Ironically, Brexit may have saved the EU from that perspective as it gave Brussels the opportunity to show how messy leaving would be for the other countries.
We then also have the way the UK would always seem to do its best to follow all the rules, while others (e.g. the French) would pay lip service at best, except when it really suited them (see, for example, illegal French bans on British beef imports 1999-2002), and the repeated failure of British Prime Ministers to negotiate robustly around the UK’s rebate – or at least sell it to the UK public like they’d done a good job.
Regarding mentions of Brexit in the blog, I’d would also rather see constructive suggestions around what we could/should ask politicians for, rather than just saying Brexit was bad. Should we be asking them to accept free movement in exchange for a better trade deal? I’d be fine with that. Are there other, more complex arrangements that are more politically feasible? I’ve no idea.
Somewhat strangely, my alternative to Brexit was actually a proper union of and with the EU, since half the problems the EU seems to have revolve around having a political union without fiscal union. I suspect that’s even less palatable to UK people though as I see no way that could involve anything less than hugely increased flows of cash from tax receipts flowing to poorer areas in the EU, which, regardless of how people may feel, the majority of the UK is not. That would then lead to less cash for things like the UK’s health service, policing and so on (a bit like we got anyway, just via a different route).
@Seeking Fire #77
> As I have an EU passport I get to smile smugly as UK only passport holders queue
Can you enter the EU with that passport (saving the aggro) and re-enter the UK using a UK passport, presumably saving the reverse aggro? Airlines normally want all those details up front, though I suppose by the time you get to border control it’s up to you which passport you pull out?
@FireIT thank you at last for a reasoned presentation of the benefits of Brexit. There don’t seem to be any economic ones, but even as a remainer I can see some of the items you cited. Like @Seeking Fire I see zero chance of rejoining – I think it’s a distinct possibility that there won’t be an EU to rejoin due to the inherent pathologies of
> half the problems the EU seems to have revolve around having a political union without fiscal union
The EEC was a happier place before that bastard hybrid was concocted. I love the Euro for making travel to Europe easier and you dodn’t end up with a pocket full of shrapnel on your return, but the price has been high. Now we have FX fee-free debit/credit cards that problem would be less, and countries could live according to their predilections, the lira, the drachma and to some extent the GBP always dropped relative to the DM because that’s the way we wanted to live, each to their own
@Alan S – well said.
@Old eyes – thank you for the Freddie deBoer tip. I missed it in TI’s links. A welcome corrective to the AI hype.
@No one in particular – I don’t see why we should “move on” from Brexit given the enormity of the decision, and its consequences. We should be able to discuss Brexit’s impact for good or ill and to review the decision in the cold light of day as its effects become clear.
I don’t understand what’s to be gained from closing that debate down. Other than a quiet life?
If Brexit had been a great success then those in favour would be at liberty to shout it from the rooftops. Some of us on other side of the debate would have to admit we were wrong. But Brexit has not been a great success (or a great disaster). Why wouldn’t we want to talk about a better way forward from here?
@old_eyes — Re: the phrase stochastic parrot, it comes from an academic paper of 4-5 years ago by Emily Bender (noted AI skeptic) and others.
Interestingly in the ancient history days of LLMs (so about 4-5 years ago) I’d advanced a similar argument personally among friends, but I’d come at it from the other side — I was arguing that what the human brain does and what LLMs do is perhaps functionally equivalent (a sort of ‘no free will of speech’ argument, our brains say things based on our knowledge and if we do have a consciousness it follows in the wake). Later on I discovered (as happened repeatedly in the early days of this branch of LLM) that it had all been thought of a few years before and debated to death, and that arguing the human brain was just a ‘stochastic parrot’ was a pretty nihilistic take…
I say “interestingly” because I have gone around and around in circles on AI and what it means practically and philosophically. At the time I introduced the AI links section to the blog (mid 2023 I think?) it was because I was certain the developments were going to have a big impact on markets (at least via capital allocation) but I also thought it seemed extremely likely they’d massively impact the real economy. But I’ve gone back and forth on both. I also no longer believe the human brain is a stochastic parrot, which is something I suppose. Seeing every LLM model unable to count the ‘b’s in blueberries enough times will make you a believer in a persisting difference in our wet-ware. (Note that specific quirk may have been (manually?) addressed by now).
I’ve never been as uncertain about any technology as I am about this AI revolution. Not to say I was always right about other developments, but at least I generally had a firm view. This stuff, combined with capital expenditures sufficient to move US GDP on their own and ungodly-sized bets in the market, is confounding.
@FireIT – Thanks for that sane and reasonable comment. I don’t really agree with your Leave-vote rationale, of course — yes there were messy compromises with being in the EU, but the benefits were sufficient I think to paper over a lot of that, similar to how if you use a tracker fund yes you will certainly buy some inefficiently over-priced companies as a nailed-on certainty, but the borrowing mechanics and cost benefits will inexhorably tilt you towards doing better than the average active investor.
A lot of the ‘we suffered because of that issue or diktat’ can be flipped/neutered by realising *all* countries had to make compromises. The French (and to a lesser extent the Germans) routinely complained about how UK freer-market thinking and influence had steered the common market and so forth. The Southern European states sometimes bemoaned interest rate decisions and whatnot overly-swayed by the bulk of the German economic engine, and so forth.
Perhaps the key was selling the benefits, but generally they were boring and relentless, rather than showy and occasional. Also I suspect some of it was just too hard a sell to anyone who wanted to account on short-term economic benefits — for example, overt fiscal transfers to central and Eastern members to bring up their standard of living was certainly in the long-run good for Europe/the EU by my lights if it helped them become developed economies 5-10 years ahead of schedule. A bigger better educated country of consumers and producers, sooner. But many people think too short-term for that.
I’ve always had somewhat cold feet about ever-closer Union myself. Like @ermine, I preferred the free market of independent states incarnation of the EU. But I didn’t think it was so terrible that we had to exit at all costs, and the political basket-case the UK became for more than half a decade after Brexit was worse than I imagined, and did not exactly engender any extra faith in the special qualities of being the mother of all Parliaments… 😉
Regarding what should be done, well as I’ve already said I want the economic accounting to be continually taken into account for starters by the mainstream media. This way we’re at least talking about reality rather than fantasy. People should be reminded with every big report that we voted for some economic hardship. We can then perhaps as a country understand the extra difficulty politicians are in, and potentially swallow some bigger sacrifices (e.g. tax rises or welfare reforms, depending on your preference for medicine).
Re: actual EU issues, absent the (to me beyond the pale) Reform wildcard, I suspect we’ll just incrementally edge back towards integration where possible, but we’ll continue to compound our GDP growth at a lower rate because I see no chance of frictionless trade without free movement, and enough of the UK public clearly doesn’t want that — even when, as we’ve seen, the economy and politicians (mostly Tory re: the big spike remember) clearly seem to believe it’s required to keep the British engine running, the NHS working, and so forth. So as I said further up the thread, we’ve swapped Europeans and reciprocal rights to live and work in Europe for people who generally present an even thornier issue re: integration and migration fears (e.g. North Africans), which wasn’t on any Leave voter’s bingo card.
That’s the sort of thing that happens IMHO when you make policy based on untruths, incorrect ‘common sense’ (see Farage), and biases. Which is, again, why I want to hear a proper accounting for why Britain is so strung out in reports and debates about the economy.
We don’t need to relitigate it but we should always acknowledge it. Similar to how if you lose a leg in a traffic accident, you don’t expect to be told every time that you should have been driving more carefully or in a safer car or whatnot, fair enough, but you probably want everyone to acknowledge implicitly and explicitly that you only have one leg and hence can’t function as you used to be before.
Sorry to add another comment, but, just in case anyone is interested in the debate about LLM capabilities and economics, I’ve been adding interesting (at least to me 😉 ) links to the comment thread to the “First they Came for the Call Centres” piece on Monevator last year (comes up under ‘call centre’ in the Monevator site search box at the foot of the page).
Like @TI (and as documented in that thread) I’ve struggled to form a view on the prospects for AGI (especially in the near term), and have gone back and forth on this issue like a double pendulum.
I’d recommend, in particular, the recent link to Toby Ord’s piece on “the Scaling Paradox” as included in (and towards the bottom of) that thread.
What I haven’t considered properly, or at all, is if, and if so then to what extent, pre and post training scaling and inference could perhaps overcome some, or all, of the otherwise seemingly daunting problems of the limits (to accuracy/test loss) scaling in model training.
Because of the uncertainty + complexity of the situation, I’ve ended up as an AI agnostic.
On the one hand we know intelligence is possible. Humans, dolphins etc are empirical proof of that.
And our brains are ultimately just a bunch of quarks and electromagnetic fields obeying well understood predictable natural laws.
Both of those observations strongly suggest that there’s no inherent impossibility to either AGI or (even) ASI.
On the other hand, that’s obviously not the same thing at all as saying that LLMs specifically, or even neural nets generally, can, less still will, get us to AGI.
The only way I can see AGI not being possible in principle would be if one of these three apply:
– The theists are right, and dualism applies, and there’s a non material ‘spirit’ etc. That seems nonsense given that it contradicts what we’ve learnt about the brain, and indeed universe, since the Enlightenment.
– Somehow intelligence is only possible as a byproduct of Darwinian evolution. Of course all natural intelligence is the result of Darwinian selection, but I’ve not yet seen a convincing argument for why that process is a prerequisite.
– Penrose’s Orchestrated objective reduction (Orch OR) theory is right, and somehow consciousness depends on quantum processes in cellular microtubules. Now Penrose is a Noble winning physicist, but he’s way outside his area of competence (black holes) in proposing Orch OR, and it seems that basically no one of stature in the scientific community thinks his idea could possibly be right. Max Tegmark’s (and many others) criticism that decoherence would prevent any quantum-based effects in the warm environment of the brain giving rise to consciousness seems especially fatal to Orch OR.
So, that seems to lead to the tentative conclusion that, in principle, we could make an AI and maybe have what Dario Amodei, CEO of Anthropic, calls the “country of geniuses in a data center”, each operating at 100x the speed of human thought and never sleeping.
But, it seems long way from where we are (and what we’ve got) right now to such a point, and it’s not clear to me that LLMs are the right roadmap – i.e. are OpenAI et al even climbing the right mountain here?
If LLMs aren’t the right approach to AGI, and if they don’t show a positive ROI soonish, then my sense would be that it would eventually create an almighty reckoning in the value of the biggest US stocks; albeit that the return of free cash flows to investors (via dividends and buybacks) for Meta, Amazon, Oracle, Google and Microsoft (as the big AI spenders / hyperscalars), instead of going (as it does right now) into data centre Capex, might put a floor of sorts upon any crash at the index level.
@Delta Hedge
>Somehow intelligence is only possible as a byproduct of Darwinian evolution. Of course all natural intelligence is the result of Darwinian selection, but I’ve not yet seen a convincing argument for why that process is a prerequisite.
I don’t see any reason we can’t apply Darwinian selection to prospective AI code. Compute is cheap enough we could apply mutations to a code base, take it through a training cycle analogous to childhood, select for performance on the test of our choice, and have a next generation mutated from the best performers.
I’m in the camp that AGI is inherently possible, but I doubt LLMs to the nth power will result in it.
What is more immediately important and isn’t clear is if we can get to a capable enough point with LLMs that they result in mass unemployment and resulting social upheaval.
I’ve enough experience with staff in the workplace that I’m left thinking that at least an LLM is unlikely to require such tedious management and appraisal processes, so even if their output is slightly inferior to a good employee, it may be a net win.
@DH #85 > And our brains are ultimately just a bunch of quarks and electromagnetic fields obeying well understood predictable natural laws.
Philosophically this is a seriously restrictive assumption. Even strictly within the realms of materialist rationalism there are fundamental limits to the understood predictable nature of things following natural laws. Heisenberg would like a word. Philosophically I take serious issue with the ‘well-understood natural laws.’ The black-body problem did for one previous instance of such certainty in the past.
Starting from incorrect or incomplete axioms can get your inferences into the weeds real fast.
This is pretty much how LLMs are already trained, as you know. 🙂
I suppose we could take a more mutational/Darwinian process with reasoning/inference somehow (though all those really are as I understand it is LLMs checking each others homework…)
With that said, I agree with you that there’s no obvious reason why Darwinianism doesn’t apply to AI development, unless there’s some sort of brutal forcing-function about starvation / a lack of mates versus Joe Dataset Trainer iterating a model and discarding the weak. 🙂
I have been pointed towards this piece written by one of the Brexit *cough* masterminds *cough* Daniel Hannan.
It was posted on 21 June 2016 and begins:
…and somehow it gets more preposterous from there.
Readers can compare Hannan’s delusional fantasising with my take a week following the Referendum result…
https://monevator.com/day-three-in-the-big-brexit-house/
…and make up their own mind as to who has the better record on forecasting Brexit’s consequences.
More generally, this Hannan piece is a wonderful find (thanks to the reader who emailed it over) and a perfect time capsule regarding the nonsense they served up.
I will be returning to it when I next write about Brexit for sure.
Can somebody point me towards the stagflation bit please, like what is an appropriate asset allocation ?
Think @TA did a series of articles on this a while back but my take is directly held IL gilts and commodities including gold, but needing income can’t just be restricted to these.
@TI (#89):
Bozo must have liked it – he nominated Hannan for a peerage and he is now officially known as Daniel John Hannan, Baron Hannan of Kingsclere.
@ermine #87, @TI #88: Strangely, the backward propogation method for LLM training is a bit like fine tuning in the theistic God of the gaps.
Humans provide the labeled training data (input-output pairs) beforehand. This is like initial condition fine tuning in Creationist cosmology.
However, the forward pass, the error identification through loss function (mean squared error cross-entropy) quantifying the difference between the model’s predictions and true (target) outputs in training data, and the back pass to adjust all the model weights (a trillion or more nowadays) all just happens automatically, which is a bit scary, when one comes to think about it.
Obviously, there’s fundamental limits to knowledge. Godel’s incompleteness theorem in mathematics, Heisenberg’s uncertainty principle in physics.
If (big if) the true foundation layer of reality (i.e. at the level of where do the laws of nature come from, why are their laws at all, and why do we observe these laws, and not others? – so below String Theory unification and interpretations of Quantum Mechanics) is something like Stephen Wolfram’s physics project (postulating all possible laws of physics, and all their physical insatiations as universes, are each discrete in nature, and can be described by simple programs akin to cellular automata) then there would also be an even more foundational limit on knowledge of computational irreducibility (which would invalidate determinism).
But none of that means that there’s any limitations to reductionism or materialism per se.
And it also doesn’t mean that there’s some sort of magic ‘Woo factor’ behind the ‘hard problem’ of consciousness. Or that machines can’t (in principle) ‘think’.
We’ve much to learn, and we may not be on the right path to an AGI. But just as we solved the UV catastrophe and explained the blackbody spectra through the conceptual breakthrough that light/ radiation was quantised (thus avoiding infinite frequencies), so too we’ll likely have to go through (perhaps multiple) conceptual breakthroughs on our way to AGI, if we ever get there
The dilemma practically is whether (and how and when) to go long or to go short this AI stuff?
US Large Growth seems to have worked for an unreasonably long time now, but that’s on the basis of BAU still applying, and of there not having been a paradigm shift.
The most expensive words in investment are ‘this time is different’, but only until it really is different, which at least 80% (but not 100%) of the time it’s not.
@Delta Hedge, sometimes it is best not to think too deeply about fundamental stuff
https://www.eoht.info/page/Founders%20of%20thermodynamics%20and%20suicide#:~:text=%E2%80%9CLudwig%20Boltzmann%2C%20who%20spent%20much,work%2C%20died%20similarly%20in%201933.
@Paul_a38 #93: Blimey. I hadn’t realised! Pretty grim coincidence 🙁
Reminds me of Évariste Galois, the mathematician who died in a duel and who thought he was on the cusp of a career defining break through the previous day, but who didn’t have time to finish his work because it was pistols at dawn, and he was understandably a bit distracted by the prospect.
On a similarly upbeat note 😉 – if we do end up using Darwinian techniques (per @xeny #86 and @TI #87) to develop (‘birth’?) a future AGI, then surely there’s a risk that it will then develop all the evolved traits which we don’t want it to have – fear, overriding self preservation instincts, aggression, manipulation, dominance.
It could end up being our last mistake.
Although, if it was our final error, then at least I wouldn’t have to worry anymore about what effect the latest Mad King Trump tariff or Fed firing tweet was going to have. Keep that man away from my portfolio!
@TI,
I agree with you on many things, including Brexit. But, for me, that ship has sailed. Here on Monevator, I don’t see much point in pointing out the problems it has caused, and will continue to cause. Most of the people who should read such points (a) refuse to accept them, and (b) aren’t reading this fine blog. I suspect you’re mostly preaching to the choir. (Although, clearly, a few non-believers found their way here.)
Like you, I don’t think that Brexit is the sole cause of our current situation. I think of it as just another “fee”, negatively compounding against the UK.
Sure, this is your blog and you can say what you like, as often as you like. (For what it’s worth, I think you’re getting the politics frequency about right, but others – perhaps a minority – clearly don’t.)
Instead, your strength is that this is a Personal Finance / FIRE blog – a mostly UK one, at that.
Farage, Truss, and co’ have dealt us lemons, so let us learn how to make UKPF/FIRE lemonade.
And by “us” I mean all of us; you, TA, guest authors, and commenters.
If you’re looking for a topic to research, consider this:
There’s a chance that Farage and co’ will deal us battery acid sometime around 2029.
That’s a few years off.
How can we prepare our finances for that?
How can we continue to drink lemonade after 2029?
@DH #92 > here’s a risk that it will then develop all the evolved traits which we don’t want it to have – fear, overriding self preservation instincts, aggression, manipulation, dominance.
One word. Grok.ai – musk’s wet dream
I fear you lost me from the first sentence in #92 but I wasn’t particularly postulating God as a solution, more the philosophical difference
> But none of that means that there’s any limitations to reductionism or materialism per se.
Let us start accepting this axiom This still does not mean everything is knowable, because there is inherent uncertainty in observability. And yes, arguably in computability even with perfect observability which I think is what Godel boils down to in this case
> The dilemma practically is whether (and how and when) to go long or to go short this AI stuff?
You don’t have to take a position either way 😉 I know the boosters would like everybody to believe AI is everything but it isn’t. Indeed AI is all has some characteristics of a religious belief in itself, which I think is what the de Boer link was driving at
Blimey, I’ve only just got around to reading this weekend’s reading – 96 comments! There must be loads of thought provoking financial and investing ideas/comments this week. I’m really looking forward to seeing what I can learn and consider for my own portfolio…!
Have a great week everyone.
@SF (#77):
I have spent a bit of time thinking about your groupings (up to 1m, etc) and must say I have little to add, bar repeating @ZX’s frying pan/fire comment.
Would also be interested in your reply to @ermines Q (#82 IIRC) about passport usage?
Sweet Jesus – just read that Daniel Hannan 2016 piece.
Initially I thought that he was describing an especially disassociative Acid trip in the style of Terence McKenna talking over the Shamen’s ‘Re:evolution’ (for those if you not coming of age in the early nineties, you had to be there).
Then I thought that it must be some clever Agitprop parody.
Finally, I eventually realised that he wasn’t even being ironic.
Totally delusional.
How could anybody be so wrong about literally everything?
The bit about energy prices dramatically falling after leaving the EU particularly cracked me up, although in a not sure whether to laugh or cry sort of way.
Hi Al Cam / Ermine.
Yes I use a different passport depending on the location (EU to EU, UK to UK). I am reliably informed that this is breaking the rules. No one seems to care.
The groupings, I came up with are informing my approach to building wealth over next few years with a general plan to be beyond escape velocity despite the ever increasing gravitational pull!
@SF (#100):
Thanks for info.
EU to EU or GB to GB would work.
However, I fairly regularly do UK EU UK and AFAICT they always check (in the EU at least) that it is the same doc on the way in and out. That is you can only have an exit stamp if you have an earlier entry stamp (and the stamps are differentiable too by use of in/out arrows).
Also, seems there are new rules to look forward to in a couple of months too. Bodes well, especially initially where the plan seems to be to run the current system (stamping) in parallel with the new one. Lovely!
There are also some new rules in the same time frame for EU passport holders coming and going from GB too. These seem similarly simple and well advertised ……..not!!
Our next few trips look like they are going to be even more joyous than they currently are!
Best of luck with your plans!
@DH (#99):
Yup – DH piece is something else is it not!?!
Re: the Shamen – believe it or not, I went to school with one of them!
It’s perfectly possible to enter the EU with your EU passport and on return enter UK with your UK passport, there is no stamping of passports if you do this. Whether the authorities like it may be a different matter…
Although you should take care as I suspect you would face an issue if you enter the EU with your UK passport but then show you EU passport on exit, without clocking out so to speak – it’s likely to raise questions around the 90 day rule
And if your EU passport is an Irish passport there is no issue anyway on entering the UK because of the Common Travel Area.
@Flotron (#103):
But why would you currently even want to do that? Why not just use your EU passport at both borders – as currently that involves no stamping either.
I only have my UK passport so this discussion is of theoretical interest for me, but I foresee problems using two passports on a single round-trip journey. As the airline/Eurostar/ferry company collects passport details, presumably these are forwarded to the destination country. If the appropriate passport does not subsequently pass through that country’s border control, surely that is a red flag?
For example, suppose I held both UK and German passports (avoiding the CTA issue raised by Larsen). I book a return flight from UK to Spain, checking in with my German passport so that on arrival I can speedily enter Spain through the Schengen passport lane. On most airlines the checking in will happen simultaneously for both the outward and return legs. On return I exit Spain again using my German passport, avoiding the queue of Brits having their UK passports stamped. On arrival home in the UK, if I were to produce my UK passport would my German passport not be flagged as a non-arrival or a passenger who had somehow avoided UK Border Control?
As Al Cam points out there is currently no incentive not to use the German passport at the UK Border also, but are there not plans in the future for UK to introduce a reciprocal scheme for the EU’s ETIAS?
Oops. In #33, I seem to have dropped a grenade and then walked off!
None of those against immigration actually have a solution. They double down. Mumble about attracting the “brightest and the best”. Seems magical thinking. Every western country will want the best immigrants.
Meanwhile all those grubby care home and NHS jobs are going to be done by who? The brightest and best won’t want to do them. Not unless we pay up big time. Which we cannot afford.
I assumed the response would have been to make it more attractive to have kids. My view is that hasn’t really worked elsewhere (Hungary, Scandinavia etc) but it might help at the margin. It’s just a very complex issue. Yet it seems some just reach for the simple solution: “remigration”. Ffs.
AI: must admit I’m in the stochastic parrot camp, for both LLMs and humans. I don’t see any reason why AGI is unattainable. Then again I don’t really see the scientific evidence for free will.
For me, the ability to reason is some emergent but, most importantly, convergent property of scale. I see an analogy with trying to approximate a function using perturbation theory: expanding a complex function as a simpler power series. The big assumption is as we add extra terms in the power series (scale) we get closer to the correct unknown function: convergence. The issue is most power series actually diverge after a fixed number of terms. Many become totally unstable.
The issue is I don’t think LLMs, as they currently stand, scale. They become more unstable, rather than stable. That implies they may be divergent.
I suspect LLMs are part of the solution but it’s needs something else, more symbolic, to force convergence at hyper scale.
Meanwhile, I come back to my prior comment that current LLMs are very good at replacing BS jobs. The productivity boom from AI may just be eliminating those negative productivity effects that tech has delivered over the past 50 years. Sort of progress.
Sticking to the topic – is there a journalistic “cover up” about Brexit – Nick Cohen interviews an ex-Tory MP on that subject this week: https://nickcohen.substack.com/p/the-brexit-cover-up-is-killing-british
@ZXSpectrum48k #107.
Agree that I can see no reason to rule out AGI (if by that we mean a variant Turing test that finds behaviour indistinguishable from human GI), and also agree that LLMs as currently conceived don’t scale.
Interesting article here from MIT Technology Review (https://www.technologyreview.com/2025/08/11/1121460/meet-the-early-adopter-judges-using-ai/) reporting on early use of AI in the legal system in the US. The problem is that LLMs are explicitly designed to sound ‘sensible’ without necessarily being ‘sensible’. The way the are constructed means that they should always sound OK (although they frequently fail at basic logic- not good at that), but cannot be trusted so you have to follow up everything they say.
@BinaryTreeHugger – You make a fair point and one well worth chewing over at length. All the same, it’s hard to suck on lemons and not exclaim, “Bloody lemons,” every now and then 🙂
@Mr Optimistic – You may be thinking of this piece: https://monevator.com/inflation-hedges/
The pickings are slim!
Maybe this comment belongs on the “What to do if you’re queasy about the US stock market”.
If so, my apologies. But I thought that I’d put it here, rather than there, on reading @ZX’s point about BS jobs.
I think there’s a problem for the labour market regardless of whether or not (probably not) we’re getting AGI off of LLMs.
We more or less know that, for a variety of reasons, but including (for better or worse, in terms of corporate performance) LLM early adoption; entry level (and, doubtlessly, some non entry level BS) jobs are getting much thinner on the ground.
All very sad for graduates (get out the tissues and the violins).
But this has implications beyond the job market. In the US in particular new graduates are auto enrolled into 401k plans that are basically 100% passive S&P 500 or US Total Stock Market. If they’re no longer recruited they’re no longer enrolled and that money won’t flow from their pay to the relatively (compared to their outsized cap weight) inelastic tech giants in the index.
At the same time the US boomers (numbers peaking in birth cohorts 1948-1957) are starting to reach their mandatory minimum pension scheme distribution time (at 72 yrs in 401k).
And more long timers are now taking early retirement than before because (again, rightly or wrongly) firms think that ‘AI’ can replace their jobs or because it means that fewer staff can do more (and, as the most senior staff, in both senses, the older staff are the most expensive, and, therefore, attractive to replace).
And when the greater than expected numbers of early retirees go they’ll stop contributing to passive flow into US markets (and disproportionately into giagantosarus tech leaders) and instead become a source of net selling.
This is bad.
I’ve banged on about passive flow effects before and don’t apologise for mentioning it again. Price is supply and demand. Elasticity and inelasticity. Substitutability and non-substitutability. Simple as. End of. Sure, fund flows and demand curves are linked to stock fundamentals and macro economic cycles etc, but price follows the direction and volume of net fund flows, whatever causes them.
And the impact on market cap change at the index level of a $ of price sensitive active and a $ of price insensitive passive are not equal. In the US it’s perhaps 2x for active (up or down, depending on fund flow direction), compared to 17x to 20x for passive (and rising, as the ratio of passive to active share continues to change in the former’s favour).
Exhibit A: Mike Green (6/7/25) (long, so recommend you play at 2x speed):
https://youtu.be/WSpR770JvXg?feature=shared
So an AI revolution in getting rid of graduate hire entry posts/BS roles and pushing out the over 50s could, conceivably, precipitate a steep fall in markets especially for the richly valued (and relatively most inelastic) mega cap US tech titans.
Now, you can disagree with Green here. That’s fine
But you have to give solid reasons and arguments backed not just by the theory of how passive should work (a la John Bogle) but empirical studies of what actually seems to be going on.
Since H2 2023 the top 10 US stock share has gone from 30% to 40%. And the US has pulled further away (until April this year). Maybe that’s just the AI fever. But if passive flow effects are also playing a role it creates a whole new vector of risk. A trough of investor disillusionment with unproductive (low RoI) AI Capex (and reduced FCF for buybacks), disappointing LLM performance v hype and rising economic stress from LLM induced job loss and/or opening position reductions could combine with net fund outflow of boomer Required Minimum Distributions etc to cause something to break.
In any event, it’s something else other than Brexit to worry about 😉
Nick Murray gave an interesting talk on Morningstar -“The LongView”
Quoting if I remember correctly correctly that the S&P has compounded at 10% nominal pa over the last 100 years -7% real
Index investors following a “buy and hold” investment plan using the stockmarket index (preferably the US) would have had exemplary portfolio outcomes
This situation continues to this day and for the foreseeable
Two items (amongst others) mitigate against this successful investment policy
Investors cannot resist tinkering,timing the market and chasing the next big thing
Investors continually spook themselves with “Armageddon is just around the corner behaviour “
We are indeed our own worst enemy
xxd09
@xxd09: Michael Green’s arguments reinforce the futility of market timing in a flow-driven, distorted market.
We’ve never before the S&P in the 2020s had a major equity market which was dominated (now >50%) by price insensitive passive overall share of invested funds, and by the near monopoly of passive over net inflows (and, therefore, never before had a major market which was increasingly characterised by reducing price discovery).
There just isn’t a precedent, and, as such, the past is unlikely to be a reliable guide to the future here.
If passive net inflow increases prices at multiples (and growing multiples with increased passive share) compared to active, then the greater risk is probably to not be fully invested.
Markets go up more and faster. And recover further and more rapidly. Until they don’t.
But, if passive flows reverse, and become net negative (with increasing drawdowns by the boomers, and with ever less active share left for passive to take over), then the impact, in an ever more passive dominated market, is similarly amplified, but now to the downside.
Since 1900 (125 years) the S&P has returned 8.5% p a. in real terms and 11% p.a. in nominal.
But all but 0.5% p.a. of that is explained by the starting 8% earnings’ yield in 1900.
The earnings’ yield now is only 3.5%. See my #63 here, and link to Elm Invest research:
https://monevator.com/what-to-do-if-youre-queasy-about-the-us-stock-market-members/#comment-1902240
So, the ex ante long term forward total real return to the S&P, upon that basis, would now only be 3.5% p.a. in real terms.
@DH. My view is that while AI is replacing some entry level jobs, it’s also being used as a cover for overhiring during the late COVID period (2021-22) when many companies overexpanded.
As for inelasticity, my view is that it’s getting worse all the time. Many active investors are index tracking with a majority of their portfolio. If formal index tracking is 40%, active is 60% but with 80% of that index tracking, then actual index tracking is 88%.
We’ve removed so much discretionary risk taking from the system since 2008. It will be karma when the regulations to stop another 2008 helps trigger the next market crisis.
@SF (#100) and @Flotron #103 Thanks! Mrs Ermine was of the opinion that this would be taking the piss in spades, so it’s good to hear it’s been tried and tested in some cases
@DavidV #106 > As the airline/Eurostar/ferry company collects passport details, presumably these are forwarded to the destination country.
They do collect that data, and they do qualify this at check-in, but I don’t see any evidence of later correlation. The airline’s job is done when they deliver you and your luggage airside at the destination. Airside seems to be a curious no man’s land, there was that story a while back of some guy in CDG for years. Airside you have have not yet entered the destination country through passport control, but you’re off the airline’s hands.
So you get your EU passport and show it at the EU border, and you enter as an EU citizen. This is not underhand or illegal, because you are one. You go sightseeing or whatever, and return to the airport, passing through exit border control as an EU citizen with the EU passport. The complication could arise on boarding at the gate of the EU airport, you are no in no man’s land again. If the airline had your UK passport details and you show that UK passport, they may query the absence of a stamp, but it’s not their problem, they seem to want to cover their backside as far as UK immigration is concerned, ‘cos else they will presumably have to return you to the originating EU airport. I haven’t observed then scrutinise EU stamps.
I don’t know what the form of the new EU visa system will be. If that is a separate requirement then you’d need to present at the UK airport with an EU passport and at the EU airport with a UK passport, so return tickets would be out.
#115 – ermine.
Precisely. EU passport in and out of EU country. UK passport in and out of UK.
No one currently cares and not obvious what you are doing wrong anyway.
My best memory so far is a flight with a chap who was I suspect a clear Barry Blimp. I managed to shake him at border control. It took him a minute to figure out where I was going and where he was not.
Where do you focus your UK overweight? I own the 350 index to give me some mid-cap exposure without getting into the (likely?) additional trading costs of picking up the relative minnows in the All Share.
You’ll like this I hope @TI
https://www.theguardian.com/commentisfree/2025/aug/27/nigel-farage-keir-starmer-brexit-truth
Has Brexit’s wall of silence now (finally) been breached (sort of)? At least the Guardian isn’t 100% signed up to omerta.
If we get “Nige” as PM in 2029, rather than as the relentless pub bore he is now, looks like we’ll be joining the plucky band of brothers that are Russia and Belarus as the only countries to have withdrawn from both the ECHR and the UN Refugee Convention – although the Greek Colonels’ regime did briefly pull out of the Council of Europe – so we’ll be in good company 🙁
@Delta Hedge — Of course I agree with the tenor of the article and its verdict on Brexit. But Starmer et al are in a difficult position because as the author asserts:
It’s a Gordian knot but I can understand the impulse to incrementalism in the face of the intractability of a large cohort of delusional Brexit/Leave voters.
Problem is the incrementalist approach might be the least bad option, but it’s not the popular one.
People want simple solutions, and simple slogans.
Labour isn’t working. No more boom and bust. New Labour, New Britain. Take back control. Get Brexit Done. Stop the boats.
It doesn’t matter that it’s all, at some level, cobblers. It’s what people respond to.
Winning in politics isn’t about having the best policies, and the most detailed and thought through plans. It’s about getting people to vote for you.
The heart rules the head, and most people don’t like thinking things through too much.
You can have the better ideas, the firmer ethical foundation, history on your side; but, if you don’t have the best lines (and ones which you can deliver with conviction, in the voice of the proverbial ‘man in the street’), then you’ll likely lose.
Thatcher got it. So did Blair and Boris.
Farage understands it.
Sadly (and I voted Labour last year FWIW) Starmer doesn’t.
As Dominic Sandbrook put it in a side quip to Tom Holland on the RIH podcast, Starmer sounds more like Ted Heath every day.
‘Who rules Britain’ Mr Heath demanded to know sending the county to polls in 1974, against the background of a miners’ strike.
And the answer came back, ‘Not You’.
God only knows what our country will look like come 2034 after 5 years of Farage. I don’t think I’ll recognise it compared to 2014, and not in a good way.
In a depressing, but (sadly) pragmatic note, it looks like the Dems might just adopt voter turnout suppression as their best hope of ending the Mad Orange King’s reign:
https://www.slowboring.com/p/when-people-dont-vote-democrats-win
Given that they’ll likely vote Green, for Corbyn or Liberal, I don’t think giving 16 and 17 year olds the vote is going to help the Rejoin cause generally, or Labour specifically. Indeed, it’ll likely just further split the anti-Farage spectrum. Fatal in first past the post.
Another Remain/Rejoin (and Labour) own goal 🙁
Having compared Starmer to Heath, the DT today ‘jumps the shark’, and outdoes Sandbrook, comparing the PM to Yuri Andropov, and Farge to Gorbachev!
“Britain’s managerial class increasingly resembles that of the Soviet Union in the early 1980s. They know that change is coming, but they’re doing their utmost to ignore the fact as best they can, for as long as they can. Keir Starmer plays the part of Yuri Andropov – a once plausible face of the system, now presiding over a stagnant regime that few believe in and whose old solutions no longer have any effect. When his time is up, perhaps Angela Rayner or Ed Miliband will stand in briefly as the British Konstantin Chernenko; an absurd, puppet-like centrepiece of a court riven by indecision. But Reform is coming. Waiting in the wings is Nigel Farage, poised to play the role of Britain’s Gorbachev…” And so it continues in that vein.
Good God what planet do these journo hacks live on?
While I appreciate flair in drawing parallels for Britain’s political malaise, it’s a overly spicy take whose analogies crumble under even the mildest scrutiny.
Andropov was a hardline KGB chief who cracked down on dissent and corruption in a system built on repression; his “plausibility” came from enforcing the status quo with an iron fist, not from bland centrism. Starmer, by contrast, is a former human rights lawyer navigating a multiparty democracy with elections, free press, and public accountability.
If anything, Starmer’s “stagnation” stems from pragmatic governance in a post-Brexit, post-COVID economy.
Chernenko was a frail, Brezhnev-era relic who lasted 13 months, symbolising a geriatric leadership vacuum.
Rayner and Miliband, love them or loathe them, are active politicians with actual policy chops—Rayner on housing and workers’ rights, Miliband on climate.
This analogy reeks of personal disdain rather than insight; it’s not “indecision” but coalition-building in a parliamentary system, unlike the Politburo’s secretive power struggles.
If we’re talking puppets, perhaps look closer at Conservative and Reform party donors or media influence.
The core analogy—Nigel Farage as Mikhail Gorbachev—might be the most flattering to Farage, but the least accurate historically.
Farage isn’t “opening up” Britain; his policies, like mass deportations, could close it further to migrants and international norms.
And let’s not forget Gorbachev’s reforms accidentally hastened the USSR’s dissolution – implying Farage might unwittingly break up the UK. Scotland and NI might agree.
On the economic front, the DT’s ludicrous call for a “British Perestroika” via supply-side reforms sounds bold, but analogising Britain’s welfare state to Soviet inefficiencies ignores apples-to-oranges differences.
The UK’s “bewildering array of benefits” evolved from democratic consensus (post-1945 Beveridge Report), not top-down central planning.
Untangling it isn’t revolutionary; it’s Thatcherism 2.0, which Farage’s base might love until it hits their pensions or NHS access.
And warning of “deeper radicalism” leading to a British Yeltsin or Putin? Yeltsin was a chaotic reformer who enabled oligarchs; Putin, an authoritarian consolidator. This hints at fear mongering about nationalism, but it undermines the analogy—if Farage is Gorbachev, why project his “shake-up” as inevitably spawning dictators?
It feels like the DT wants the drama of collapse without admitting the risks.
Soviet parallels flatter Reform UK by framing it as inevitable destiny.
Britain’s problems—stagnation, inequality—need fixing, but through evidence-based policy, not cosplaying as Cold War heroes.
If Farage is anyone’s analogue, it’s more like a Brexit-era Peron than Gorbachev: charismatic, divisive, and prone to overpromising.