What caught my eye this week.
The Tories are out after the worst run in British politics since King John.
Labour has won a landslide in terms of seats, but the magnitude has more in common with hacking credit card points than an overwhelming mandate from the people.
Taxes are at their highest level for 70 years. Brexit has taken 4-5% off annual GDP in perpetuity1. That’s left roughly a £40bn shortfall in annual state revenues that could be fixing the NHS or raising income tax thresholds, depending on how you roll. Instead the new government has little room to move.
The Tories have left us poorer economically and culturally, with our birthright to live and work in Europe traded away after a botched attempt to appease a fringe – ultimately gifting seats in Parliament to a populist you wouldn’t trust to run a Banana Republic. Strategic geniuses, these Eton lads.
This time things really can only get better. Except unlike in the 1990s, it’s now more akin to when you come around from a heart attack and a machine is faintly beeping in the background.
Grow for it
I’m not expecting miracles. I’m barely expecting anything. Just not shooting ourselves in the foot for a few years would be nice.
The best hope for Labour – and more importantly the country – is that stability and sanity at the top, plus some judicious low-cost tweaks to planning and policy – might unlock capital spending and investment.
Many indicators are already turning favourable – notably interest rates and inflation – and Sunak and Hunt’s relatively sensible fag-end innings deserves some credit for that. But there’s a mountain to climb.
With most tax rises ruled out, it’s possible the new chancellor will squeeze a bit more from the wealthy.
And honestly, when you compare the huge asset boom of the low-rate decades with real wages that have gone nowhere since 2008, is that really so unreasonable?
Business as usual
Of course that doesn’t mean anyone wants to pay more taxes personally. There’s always someone richer or less deserving to foot the bill.
So while I wish Sir Keir Starmer and Rachel Reeves the very best, Monevator will continue to highlight how taxes reduce your returns, the best ways to use your pension, and we’ll urge you to fill your ISAs.
Some may see something contradictory or hypocritical here. But it’s not our job to help the government plug the financial holes left gaping by the Brexit-y right-wing Tories. You don’t come to us to learn how to leave a tip for HMRC, any more than you’d read the Shooting Times for hints on veganism.
Of course we all hope the tax take rises because the economy gets going and lifts all boats. And after ten years in fairyland railing against EU bureaucrats, cold young men on boats, and people who live in Islington, maybe MPs can focus again on Britain’s real problems, starting with growth and productivity.
It won’t be easy to concentrate though, given the circus that will be unfolding on the right.
My hope is that the Conservatives will move back towards the centre. Genuinely! Despite what some readers think, I’m no left-wing tribalist and I voted for David Cameron back in 2010.
My despair at the Tories was all about what they became at their worst, not what they can represent at their best.
Where was the gracious Rishi Sunak – who gave two excellent speeches after losing – during the actual campaign? Hiding from Barry Blimp and his own party members I imagine. Fixing the right looks like an even harder task than Starmer faced in purging the Corbynistas from the left.
As for Labour and the new government, I want a mostly technocratic first-term that leaves us arguing the toss about tweaks to the ISA regime or child benefit.
More boring, please!
Have a great weekend.
From Monevator
FIRE-side chat: Actively achieved – Monevator
From the archive-ator: ETFs versus index funds – Monevator
News
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Tax windfall continues for the Irish economy – BBC
Build more homes to cut rents says Rightmove, as latter hits new record… – T.I.M.
…so can Labour deliver on its 1.5m new homes promise? – This Is Money
How Britain’s falling birth rate is creating alarm in the economy – Guardian
Bitcoin below $57,000 as Mt Gox begins moving billions in BTC – The Block
Greece pushes ‘growth-orientated’ six-day working week – Guardian
Portugal brings back tax breaks for digital nomads – Fortune
Zoopla: home prices are still 8% overvalued but will be fair value by end of year – T.I.M.
London houseboat owners being priced out by rising mooring fees – Guardian
We’re in the midst of the longest-ever US bond bear market (by far) – Bilello
Election section mini-special
What the Labour government means for your money… – Which
…and another take on the same topic – This Is Money
Biggest-ever gap between votes and seats hits Reform and Greens – BBC
Brexit backlash: Britons now regret their populist revolt… – WSJ
… and why Starmer should play prosecutor on Brexit [Search result] – FT
Products and services
The big High Street banks are cutting mortgage rates again – This Is Money
No-deposit mortgages enable tenants to buy the home they rent – Guardian
Is it worth opening a Junior ISA? – Which
Sign-up to Trading 212 via our affiliate link to claim your free share and cashback. T&Cs apply – Trading 212
Does broker insurance really make an investing platform safer? – Banker on Wheels
The best packaged bank accounts – Be Clever With Your Cash
Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
Why is Nationwide closing branches on Tuesday and Thursday? – This Is Money
Homes for sale under £350,000 for first-time buyers, in pictures – Guardian
Comment and opinion
The drawbacks to aged-based asset allocation – Oblivious Investor
Should you put your state pension into a SIPP? [Search result] – FT
We live in a society – Money With Katie
The tediousness of running a General Investment Account – Simple Living in Somerset
How does inflation impact retirement? – Of Dollars and Data
Can we normalise ‘phased retirement’? – Morningstar
Being Jack Bogle’s apprentice – Humble Dollar
Not all predictions are created equal – Behavioural Investment
The optimal portfolio for the next decade [Search result] – FT
A painful confession: we all get old – Humble Dollar
“I’m retired and regret my frugal retirement” – Yahoo Finance
Novel US ETFs mini-special
(All US, but interesting – and likely to come to the UK eventually)
Monetising loss aversion for fun and profit – Paul Kedrosky
Boomer candy: sweet treats or investment headaches? – Morningstar
Stone Ridge aims at retirement market with ‘longevity income’ ETFs – FT
Naughty corner: Active antics
GMO’s latest asset class real return forecasts – GMO
The risk of a replay of the lost decade in US stocks [Search result] – FT
US small cap returns: relatively bad, absolutely fine – Acadian
The superior returns of cyclical stocks – Klement on Investing
Steve Ballmer richer than Bill Gates via the time-honoured strategy of not diversifying – Sherwood
The shareholder supremacy – Where’s Your Ed At?
Kindle book bargains
The Hidden Half by Michael Blastland – £0.99 on Kindle
How to Own the World by Andrew Hallam – £0.99 on Kindle
Never Split the Difference by Chris Voss – £0.99 on Kindle
Bejiing Rules: China’s Quest for Global Influence by Bethany Allen – £0.99 on Kindle
Environmental factors
It’s 2024 and drought is optional – Asterix
We can’t comprehend the solar revolution [Podcast] – Full Disclosure via Apple
Water firms could be sued over sewage after ruling – BBC
Let China pay the cost of solar and EVs – Econbrowser [h/t Abnormal Returns]
The complex rise of somewhat eco-friendly viscose – Guardian
An estuary smothered by a thousand logs – Hakai
Robot overlord roundup
Related: using AI to animate old photos [Video] – Science girl via X
AI drives 48% increase in Google emissions – BBC
Off our beat
Why more Britons are making the great move north [Search result] – FT
The fastest data in the world – BBC
A WFH ‘culture war’ has broken out across Europe – Fortune
Are you allowed to shoot down an intrusive drone? – This Is Money
The enthralling and emotional inside story of a house clearance – Guardian
Should lawmakers worry more about Temu and Shein than TikTok? – Sherwood
One man’s lifelong search for fragments of Britain’s Jurassic past – Guardian
Exercise for aging people: minimise risk while maximising potential [Podcast] – Peter Attia
And finally…
“Being democratic is not enough, a majority cannot turn what is wrong into right. In order to be considered truly free, countries must also have a deep love of liberty and an abiding respect for the rule of law.”
– Margaret Thatcher
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- Per the OBR and Goldman Sachs. [↩]
It’s like waking up with a hangover and wondering what you got up to the night before! The money and opportunities wasted.
All the European politicians have for too many years spent and promised more than their economies can afford
Oscillating between right and left won’t cut it
Sadly the bills are now coming due -hopefully it will be remedied by tough times and not a crash/war-unfortunately the all too human solution to serious problems
The US is not in quite the same box with a strong economy, reasonable birth rate and the benefit of being a reserve currency but their debts are unsustainable too in the long/short run
Voters know it and want it all sorted but don’t want to pay the price -politicians between a rock and a hard place
No easy answers
xxd09
Cautiously happy. Just to have less psychodrama will be first bonus (fingers crossed). Next “interesting” time will be the Welsh and Scottish parliament elections in 2026. They have some PR and Reform (appallingly) came 2nd in many Welsh seats. I hope that Reform will self implode before then as UKIP and Brexit party have previously but can’t guarantee that one.
The 20mph thing is mostly sensible but very, very unpopular (even with me and I’m a very cautious driver), plus Vaughan Gething shot himself in his own foot accepting a large donation from a dodgy businessman for his campaign. Hard to point at the opposition for doing the same thing then!
But indifference (turnout was appalling) and insanity seem to have ruled at the GE in Wales so likely to be even more so in 2026.
My best hope it’s that the Labour Party is best placed to reform the inertia that seems to have taken over public services, tackle the entrenched civil service unions and professional health managers. The Tory years saw impreciseness rise in public spending, but to little gain. Infrastructure projects tied up in bureaucracy and lawfare, health services stuck by misplaced nostalgia for a past when cancer, infertility, childhood diseases, and old age afflictions went undiagnosed & untreated, and where childbirth was a significant risk for mother & baby. A new funding and delivery model is imperative, something Europe & Australia may have something to teach us.
For political reasons, the Tories were always unlikely to tackle the NHS, time for Labour to put country first.
#4 The NHS is the most under-managed health system in the developed world with just 2% of its workforce being managers. Indeed a third of all managers are also clinicians. The NHS spends half of the OECD average on admin – 1.5% of its budget compared with 4.1% in France and 7.9% in the USA.
If the NHS england is broken why is the current CEO not held accountable?
A government that’s boring, honest and semi-competent would be a welcome change indeed. I’m cautiously optimistic that Starmer can deliver that. After the last 5 years, the bar is low.
Labour do have an overwhelming mandate from the people. They got a historically huge majority in parliament and that’s all that matters. It makes no sense to measure the results in a First Past the Post system by the yardstick of proportional representation. The parties all know how the system works and run their campaigns in a way to optimise their tally of MPs. And more importantly, voters know how the system works and choose their vote accordingly.
You talk so much crap that Monevator will be voted out like the Tories, if it’s not happening already. Get over Brexit. It was a democratic process and that trumps everything else.
Agree with #7. Under a PR system people would vote differently – e.g potentially higher support for Greens , rather than it being a “wasted” vote under FTP.
@TI. I take no side but I agree re Sunak and Hunt. I’ll give Labour 12 months before making any judgement.
Unfortunately I don’t share TI enthusiasm. I think that Sir Kier is an intelligent chap and hopefully will push things forward Ditto Rachel Reeves, it’s the likes of Angela Rayner etc that I worry about. Let’s see how they get on. Also don’t forget that infamous note a labour minister left his successor – welcome to the job I’m afraid there is money left, all spent. Also lets not forget Gorden Brown,s good work re final salary pensions – killing off DBs schemes overnight. Re Brexit 51% of the people who cast a vote did so for Brexit, democracy in action only 34% of people who cast a vote did so for this government? I’m hoping for the best BUT
@Jason I notice that every single member of the new cabinet was a remainer. Hopefully that means we can start creeping back towards membership now. The economic case for it is overwhelming.
Mostly though I’ll be glad to have some boring politics for a while.
I don’t have any sense of optimism with hapless Labour either (and obviously had none with the absolutely hopeless Tories either). Just more of the same – empty promises/manifesto lies/scandal/corruption. Ask yourself why is there such low turnout and why are the public so pissed with politicians?
Can’t see them doing much good at all – taxes will rise further on those who have saved their hard earned for their later life (as opposed to those who fritter it all away and then rely on benefits system) – as often not always possible to hold in tax shelters (not always practical to tie up in SIPPs with no access to capital/small annual ISA allowance). As usual benefits Britain will pay nothing and the wealthy will use avoidance schemes and so falls again on those who saved a little for later life.
Not impressed with Starmer – his glory speech yesterday was abysmal and, before it was mentioned by others, I noticed just how many times he constantly looked down at notes, apparently over 180 times in that short period. He was speaking so sloooooooowly as well so as not to stumble whilst re-gathering where he last was in that written (boring) masterpiece. I thought he was trying out his latest impression of sleepy Joe Biden. Totally useless for someone in his position on likely the biggest day of his life to not even learn the speech, which he likely had written for him anyway, and then just read it like an 8 year old at primary school. Just shows it does not come from his heart otherwise he would know what he was going to say – if he actually believed in it he would just stand up and proclaim his vision.
Even Farage can do that and would likely make a better job of stopping the scroungers coming across on boats and the taxpayer from funding them with millions a day in hotel bills. No other word but SCANDALOUS.
@13
“….stopping the scrounges coming across on boats…”.
Wow. This could have come from the Daily Mail comments section. No refugees fleeing from war zones, oppressive regimes etc?
@Mr Optimistic — Indeed, plus you remember your rich mates ordered all the fancy cocktails and then did a runner without paying.
@xxd009 — No easy answers but that’s what voters are looking for. You’d have hoped we’d have learned our lesson here, but 15% of the population apparently want to double down with Reform.
@Sarah — The Reform votes in Wales are a bit surprising.
@Fremantle @Martin @Nwian — I have a friend in London with Spanish residency who I’ve known several times to pop back at the weekend to see a GP, and be followed up in a hospital the next week. Yes they pay some kind of levy for this (I forget the details) but it’s far less than what we pay in taxes for the NHS. I support the latter in principle, but I suspect we probably do need to layer on some kind of near-universal extra private insurance aspect to (a) help pay for improvement (b) enable people who can pay more to get a smoother service without compromising core care for those who cannot afford to pay anything (c) maintain broad support for the massive level of funding etc. My knowledge in this is all very weak though, and whenever I looked into it pre-Covid the NHS didn’t seem to perform too badly globally speaking. Maybe there was just no slack in the system…
@Sparschwein @Bazza — Indeed. This is certainly too what makes adding the Reform votes to Tory votes and saying a merged block would have a majority far too simple. Many of those Reform voters choose that party explicitly because they weren’t the Tories. It would be the Lib Dem / Tory alliance effect (for the Lib Dems) on steroids.
@Jason Simmons — On the democratic aspect, yes it was a vote — for an ill-defined outcome, fuelled by a uniquely mendacious campaign, and delivering an outcome that almost nobody is happy with, including its chief proponent, not least because so many Leave voters disagreed 100% on what they were voting for beyond ‘Brexit’. As for why I continue to talk about it, it’s because its outcomes are meaningful and still with us. It’s costly to business and GDP, and our rights to live and work in Europe aren’t magically coming back (yes those with money like me and many Monevator readers can do what we like, but we’re not the majority). If your dog came around and did a giant mess on my living room carpet, I might clean it up and move on quietly. If you came over every Saturday and the dog regularly dumped on the carpet, I’d point it out and protest, especially if you complained about the stink. If the icing on the cake was your dog barking outside my house to stop me moving elsewhere, then good luck asking me to get over it. All that said the architects of this rubbish-ness are out of power and in many cases lost their seats, so that particular aspect of my complaints are over.
@Factor @Bally001 — I wouldn’t say I’m enthusiastic. (My exact words were “I’m barely expecting anything.”) Following social conventions, not labelling the legal system that protects our rights as ‘the enemy of the people’, and Prime Ministers that ask longer than a few school terms would be a nice start though. 🙂
@Ducknald Don — We’ll rejoin eventually (barring unforeseen developments on the continent) as we’re naturally part of Europe and on the edge of an ocean, it’s a no-brainer economic boost, we’ve seen post-Brexit that the UK needs immigration anyway, and people will eventually wonder what exactly we gave up the right to work and live in Europe for. (Answer: nothing). But I wouldn’t hold your breath, it’s at least a generation away IMHO. Hopefully we can continue to do mutually beneficially micro-deals to improve things until then though. (Windsor etc).
@Angry Reform Voters — No need to write me angry emails / tweets to tell me you’ve unsubscribed from Monevator. Yes you looked at all the candidates and voted for the party you thought was the best. That’s exactly why I’m as happy as you are for you to move on. Cheers!
@ST @Lee Briggs — I missed this comment while writing my own. Suffice it to say fewer than 40,000 people came over on boats last year (down on the previous one) versus over 700,000 *legal* immigrants and whatever ‘millions’ we are spending on hotel bills, it’s completely trivial in the grand scheme of things, something to be left to the appropriate services to deal with, not to justify a bespoke political party led by a chancer getting 15% of the popular vote.
Immigration is an issue big picture, and it will only become more serious in the years ahead. That’s exactly why grown-up discussion and policy — and close contact and work with our near-neighbours in Europe — is what’s required, not dog whistle far-right rabble rousing.
I am so pleased the circus act is over and the clowns sent packing. I was away for most of the campaign and did not really follow it, but I believe Labour have tempered expectations. No one should be expecting rapid improvements to anything. If everything stops getting worse and starts heading in the right direction that will be achievement enough for the first term.
Personally I would not mind paying more tax if I felt it was being put to good use. Under the last lot it never seemed that way. Sky high taxes, deteriorating public services and money wasted on stupidity such as Brexit, Rwanda or ending up in the pocket of some crony such as Mone.
Obviously impossible to predict the next five years but I don’t feel particularly optimistic. Ignoring likely tax increases on wealth.
Practically what can labour do to improve standards of living sustainably when economic growth is so anemic, the population is aging fast and interest bills for historic expenditure is, I think, our second largest expense item? Do we expect immigration to suddenly collapse when it’s the only obvious lever for economic growth? Will house prices suddenly become affordable? How are they going to afford the necessary investment in public services? Are we going to rejoin the single market – No? Are they going to tank corporate tax rates to emulate Ireland ? No chance!
Reform hope they won’t as that will provide a perfect platform to campaign into FY29. A dirty secret – I actually voted for them this time round. Not because I wanted them to win any seats (zero chance in my constituency) and if they look like they might be in with a shot of winning the FY29 election, I’ll campaign for any other party but it was a protest vote to encourage the mainstream parties to try and start to grapple with the key issues. I think it would dangerous for anyone to ignore the fact Reform came second in a lot of constituents and that they had the third highest vote share. There is rank discontent amongst the electorate now and the next election could be seismic. Or indeed not.
Good old Nigel may be very short on any policies that can be practically implemented and there appear to be a large amount of undesirables in the party but no one can deny his persuasiveness on large parts of the public.
@Naeclue
If tax & spend worked, we’d not have any problems.
Doing the same thing again and expecting different results has a name.
Reform is required.
I’m happy about the election results. Lots of reasons. They come across as intelligent unlike the last lot. They don’t drone on about boats and tents. Just being mildly competent will be a huge improvement on the Tories.
I would disagree that it is just a “trivial” amount spent on illegal immigration – approx. 10% of NHS England budget for this year (see Hansard link below). The 700,000 legal migrants – nobody is arguing about as they are here legally – many working (and needed) and paying into the system and others get legal asylum – not a problem.
This was taken from Hansard in May regarding illegal migration:
“The Government’s impact assessment of the Illegal Migration Act 2023 estimated that the total cost of providing public services to a UK national is around £12,000 per person. Even the most basic calculations put the economic burden on the British taxpayer of an illegal migration population of 1.2 million at £14.4 billion. That is just shy of 10% of NHS England’s budget for this year. Imagine that cash injection on frontline services or to help people who are struggling with the cost of living.”
The link to this:
https://hansard.parliament.uk/commons/2024-05-07/debates/64997110-88BF-4157-8177-D9687A25841B/IllegalImmigrationCosts
Plus in 2023 France got another 480m from us on top of what they’ve already had to stop the boats which they largely fail to do.
Farage may be a tinpot dictator and I don’t agree with all he says or does (like Brexit/spending plans) and neither does he have all the answers but he does have a point on some issues such as this. You could ask yourself why does he get 15% of the popular vote? (and only likely to rise) Because people are fed up with this ongoing issue (as well as other things). Who can they turn to? The 2 main parties consistently do nothing about it (Tories Rwanda and Labour will “smash the gangs” apparently but don’t seem to have any clue how. And then they just argue amongst themselves. It’s not about other nationalities legally coming here or racism but about people being fed up funding illegal migration whilst this country is a complete basket case in terms of debt.
The Hansard policy paper above also makes these statements:
“More recently, we have seen large numbers of people making these dangerous journeys who are from well-established safe countries, where it is clear they are not at risk of persecution.”
“These journeys are also unnecessary, as those making these crossings are coming from safe countries, such as France, where they could have claimed asylum.”
“It’s also not fair on the British taxpayer. The current broken asylum system currently costs the UK some £3 billion a year and rising, including nearly £6 million a day on hotel accommodation.”
“It’s not fair that those coming to the UK with the intention of becoming economic migrants are able to exploit our asylum system, which should be prioritising those whose lives are genuinely at risk.”
“We cannot continue, year on year, with this inexorable rise in the number of illegal arrivals adding unacceptable pressures on our health, housing, educational and welfare services.”
England winning on penalties. Maybe it is a new dawn, people… 😉
@ST — Just briefly as have people here, I don’t disagree it’s an issue that needs sorting, nor that people should come here legally, nor that immigration will probably be an increasing challenge in the years ahead due to climate change et cetera.
It’s a matter of focus, attention, and energy, and whether proper calm and considerate policies are better than shouting about Rwanda et al. (Look where it’s got the Tories.)
I’m not surprised 15% of people voted for Reform. It’s called populism for a reason. Sometimes there’s a signal in the noise and it’s not to be ignored, but populism and dog whistle politics has a bad reputation for many historical reasons.
@Jason
“Get over Brexit”
No. We’re not getting over the consequences of stupid binary decisions with multiple ramifications that we all have to pay for.
What was the flavour of Brexit you voted for? Was it the lower immigration one? The ‘more money for the NHS’ one.. Clearly those are going really well aren’t they?
Good luck with your reform vote. I’m sure Nigel has your best interests at heart. Just ask those fishermen!
@Jason there’s no principle of democracy that you can only ever have one vote on an issue for all of time.
If your reasoning was right, then there could have been no referendum in 2016 because there was one on staying in back in 1975.
I’m confident that before 2040 there will be another referendum, and that after that we’ll get back in, if the EU will still have us.
On that last point, according to Cebr WELT, we’re currently on track to fall behind Poland by 2035 in per capita Gross National Income at Purchasing Power Parity.
So we can only hope that things improve both fast and far on the Tories’ abysmal economic record, notwithstanding the shackles, ball and chain that is Brexit, which has been welded onto the UK.
At least polls now show that, even just a few years into Brexit, a clear majority of voters recognise that it’s a disaster, and an ever increasing number of Leave voters (though evidently not you, yet) now regret their decision.
@Ducknold @TI
I don’t think we’ll be getting any closer to the EU next few years – Reform came second in almost 100 seats. A man with such a fragile majority unlikely to be looking to throw that away. The Tories are a legacy party with lots of infrastructure and data… Reform has presumably five years to put that all together, and people have seen it can win seats. Funny isn’t it, we keep being told by people that never speak to any Leavers that Leavers have changed their minds… does it look like it
@BBlimp Reform did come second in 103 seats, of which 93 were won by Labour, but get a grip here.
Reform won just 4 mn votes (a mere 14% of the total) out of the (as Leavers never cease to repeat) 17 mn leave votes in 2016.
Looks like a lot of those 2016 Leave voters (three quarters) were not prepared to vote for Farage now.
And, as for Reform’s seat tally, well 5 is just pathetic.
However soft the support may be, Labour have just secured 421 seats, and the Liberals 71 seats.
As the exit poll came in, Farage Tweeted that he’d get over 6 mn votes and many seats. Sounds like the tall tale of the £350 mn a week for the NHS to me.
In a sense, Reform likely can’t win because if they increase their vote share against Labour in 2029 (or whenever the next GE is), then they’ll probably help a resurgent Tories to win back what are now the new Labour marginals; and, after the absolute s*** show, of the past 5 years, it’s quite likely the Conservatives will have realised that Brexit is not a vote winner. Pragmatism was the Tories historic USP. Let’s hope they find it again.
I am not sure which is more boring, watching England play football or listening to Sir Keir… although to be fair they both seem to have a habit of winning when they don’t really deserve to.
34% and a stonking majority in the commons… wow, the people have really spoken!
On Brexit, it’s been 8 years and I still haven’t met anybody who can say to my face that they voted for it.
@TI , good synopsis, I’m looking forward to a lack of political drama for a while, that hasn’t got us anywhere. Boring competence would be fantastic.
Can’t we just all be happy that markets are on the up, unlike 2022, and we’re all making plenty of dosh ……..for the minute anyway and until I get my capital gains and dividend tax bills.
(I’ve even got enough to cover the costs of the second mistress now.)
“GMO’s latest asset class real return forecasts”
Has anyone done a dig into their historical forecasting record? Are they accurate? They are stated in so many places, which makes you think they must be gospel, but I have no idea? It’s not hugely encouraging given that J Grantham seems to have forecast ‘nine of the five last recesions’ to borrow a quote.
tom_grlla #31: since 2009 GMO’s forecasts have not been great tbh, but who’s to say whether they will be right or wrong now for the future?
They do produce some readable analysis to back up their predictions, but past accuracy or inaccuracy in asset return forecasts doesn’t (sadly) predict future accuracy (or inaccuracy) reliably.
They’ve tended to lean into the mean reversion school of thought, rather than modelling by extrapolating earnings. Absolutely nothing wrong with that of course, but it hasn’t worked well since 2009 – although the next decade could be different.
To those who support Reform, are you happy to support fascist sympathisers and racists? Because that is what the Reform party is, on the whole. You only have to do a bit of background reading to discover that. Of course they’ll always tell you they aren’t fascist or racist, because they hope to pick up undecided and poorly informed protest voters, but the reality is that is what they are and that is what their core vote is based on.
There is a clear dividing line between Reform and the Tories, and that is that Reform would make friends with fascists, while the Tories usually oppose and fight fascists. During WW2 there were many on the right and in the aristocracy who believed we should make a deal with Hitler rather than fight him. Thankfully Winston Churchill stepped up, supported by Labour on a cross party basis. I don’t have much respect for the Tories but at least they usually oppose fascism, unlike Farage, Trump and their ilk.
Anyway it’s fun to hear Reform voters complaining about First Past the Post. Those of us on the centre and left have been arguing for proportional representation for decades, after seeing our vote split between Labour, Lib Dems, Greens, and SNP. I do actually believe Britain is overall a centre-leftwing country that keeps getting saddled with rightwing governments due to our electoral system, but we have got better at playing the system, as evidenced by how well the Lib Dems did (who incidentally got 11% of the seats in the House of Commons from 12% of the vote which is roughly proportional).
Farage stepped down half of the Brexit Party MPs in 2019 because he was worried about the prospect of a 2nd Referendum. I can’t see him doing that again, indeed he seems to think he can do a reverse takeover of the Tory party and this latest result will only embolden him. So I suspect the right will be split for some time to come which will be a gift to Labour and the Lib Dems. It is possible that Reform and Tory voters might learn how to do tactical voting, but again that seems unlikely. The only way the Tories can win again is by moving to the centre, more liberal ground, as Cameron did, and hope to take votes off Labour, though they probably need Labour to do a poor job in office or they need some big external event (eg a GFC) to help.
So yes, I’m looking forward to a long spell of sensible politics again. It feels like we’ve done our time. The politics of populism (ie Brexit) has demonstrably failed but the good thing at least is that by allowing the populists to own that project they now carry the blame for it’s failure.
Already some very sensible appointments including James Timpson as Prisons Minister.
Seems a long way from the likes of Charlotte Owen receiving peerage.
Hopefully now we see some consistency and stability.
I wonder if politics isn’t entering a ‘sloshing mode’. I think generally the problem is that we want and expect things that we now simply can’t afford.
Is tactical voting to be applauded where people organise to defeat their opponents rather than vote for who they truly support? Doesn’t that accelerate and amplify the dynamics ?
On the poll predictions, I wondered what model they use to translate voting percentages into predictions of seats to be won…doesn’t sound easy to me.
On illegal immigration, there are dangers in not being able to control your borders. Take a look at Marseille. It’s not all about hard hearted people who want to deny succour to the victims of the world.
“That’s exactly why grown-up discussion and policy — and close contact and work with our near-neighbours in Europe — is what’s required, not dog whistle far-right rabble rousing”
Erm, have you seen who is in charge of our “near neighbours”?
You might be stuck in 2016, but they’ve moved on…. In a direction that will have you clutching your pearls.
Re Brexit/UKIP/Reform/ whatever fascist outfit of the day.
I understand that people are frustrated. This country only works for the rich. Housing crisis and inflation? Financial and real assets have done splendidly. Broken NHS? Excellent private healthcare is readily available. Poor public transport? It’s only for the plebs anyway. Crap schools? Expensive private schools are there to perpetuate class privilege.
What baffles me is that people fall for the distraction again and again. Illegal immigrant numbers are tiddly and the financial impact is moderate; yet demagogues scream of an “invasion”. Instead of blaming the weakest of the weak, how about those who, you know, *own and run the country*?
The upper class and their Tory mates have mismanaged the country and robbed it blind. PPE, water companies, Brexit, Truss debacle, tax havens and loopholes for the rich, you name it. But look, those brown people over there.
Thanks for your thoughts and links as always TI. I especially liked the ‘Money with Katie’ one.
I myself am very pleased that the conservatives have been voted out and that even though the vote share is not as large as the seats look, when you add up all the greens, Lib Dem’s and even probably a good few of the conservative votes, we might be looking more centrist than a lot of other countries at the moment. The reform share percentage also wasn’t that much more than UKIP previously so I don’t think it’s a Polar shift especially when I think a lot of those votes are still just protest votes against labour and the tories. They are not simply mostly racists and idiots either.
I think some people hate labour because of the past or tribal politics only. I myself have voted conservatives before and Liberal Democrat’s this time. I can’t help but almost over night though feel a little bit more less embarrassed to be British.
I think boring politics as you say and a fresh grown up approach with the right things being said (all of which I have heard a lot of when listening to Starmer lately) is such a breath of fresh air. I hope he also follows this up with actions that compliment it of course. I really hope we can show the world that we are back so to speak. I hope we get the security pact and improved trading with the EU via the proposed veterinarian agreement all the while keeping to the red lines of staying out of the custom union, single market and free movement. I was also anti Brexit and lament it but I think for now, it’s better to simply patch up the slow puncture as best we can.
@TI – England winning last night was certainly a good sign!
TFJ
No real surprises on the outcome. I agree with your point regarding Sunak – where was he during the campaign? That kind of was the problem with him as a prime minister, he was never to be seen and always was going to do his best work with some space and problems where no emotions were ever at play i.e. he was never prime minister material outside of a booming UK where everyone was prospering. However, I do concede that he, at least, was the first recent, and best attempt available to be boring and to attempt to restore to the masses in public the view that your top of government don’t necessarily need to be corrupt or charlatans. People do say a lot of bad things about him, some of them with some truth, but few would argue that he meant well and tried to at least be a decent guy standards and behaviour wise (even with the covid fine). He was destined to failure given what he was taking on and what was going on amongst his MPs (their issues largely having little to do with what the country needs sorted, but whatever…). Being massively wealthy as well was never going to be in his favour whilst so many people in the UK were choosing between heating or eating in recent years, even if you do believe that his actions at the time actually made those experiences less painful than they could have been.
Like Sunak played his role showing people that the top politicians in government can be decent and not all in it just for themselves, I see Starmer and the labour government having the same type of impact on the perceptions/views of politics/governments more generally, not just the top people. I don’t expect tonnes of sleaze, charlatans and self serving and just some boring, not really doing anything exciting governing. More importantly, I imagine anyone in the party with a confirmed behaviour/conduct violations will get dealt with. Achieving restoration of the view that politicians can be “good guys” trying to deliver the countries needs in a united government is all I really expect from this government to be readily achieved, and really if that is all they achieve, it will still be beneficial. Quite simply, we need to get back to basic political work. When I talk to my parents they shouldn’t know more about all the latest scandals of MPs than they do of the policies and such trying to be implemented and delivered by the current government, it really is/was depressing.
I normally avoid politics, but I just want some peace/rest from this all and for them to do some of the work that governments should be doing and the country needs. Only in politics can everyone down tools and spend 6 weeks simply to campaign to keep their jobs, and the “work” they do shows almost zero suffering or real consequence.
Who knows what it will mean for money, taxes and all the things this blog is really concerned with, but we shall find out.
@Wephway ‘poorly informed protest voters’. Really? What a cheek. I know people with degrees in law and politics and employed in these areas who voted Reform. I wish I could have done so if they had run a candidate in my constituency. Your comment smacks of Gordon Brown’s disparagement of Mrs Duffy and also shows you don’t understand Trump’s success in 2016. I loathe Trump btw. But I understand why many voted for him then.
@Sparchswein, from my own anecdotal experience the NHS is not broken. Hospitals where I live offer outpatient appointments on Saturdays and Sundays. You are given the choice of private hospitals eg Holly House. And I don’t live in London albeit I live in the South East. People read of problems in the media and amplify them.
@Delta Hedge the EU will probably not exist in 2040 or at least not in its current form …
For those complaining of ‘fascism’ on the right, tell that to Jess Phillips who had to face disgraceful abuse from the Left. And others who are fighting left wing anti-semitism.
Good discussion with polite participation from both side of the political divide plus middle of the roaders
No doubt sensible answers will emerge from this vigorous uncanceled debate in due course
No one mentioned the number of single issue independent Muslim MPs-probably got the same number of votes as Reform and the same number of MPs
An ongoing immediate problem for Labour?
Today we have a vote in France a founder member of the EU fraught with all sorts of possible results but driven by issues affecting the British election
People out there seem to be seriously hurting-will the politicians rise to the occasion or be overtaken by events?
xxd09
@Wephway 33 & Sparschwein 37
Totally agree with your comments, let’s call out what Reform really is and what they are trying to do ‘punching down on immigrants’. For some reason a large swathe of the population agree with them and that’s the problem. It’s not just seen in the UK, but many other countries. Rationale and analysis goes out of the window as ‘immigrants’ get blamed for most problems in society. Funnily enough the Big Short film ended with the comments on who would get blamed after the GFC and the prophecy certainly came true with Trump.
Well, it’s only day three in the Not New Labour House and uncle Tony digs out his old ID card trick. Unfortunately, Yvette (Flipper to her friends) had already told voters they wouldn’t be considering it any form….oops.
Was uncle Tony just throwing meat to his dog Fartrage or was Flipper fibbing?
Meanwhile, next door poor old Manu throws a Sunday night party and it all turns into un bordel de merde.
@Gil — Apologies for your comment taking a while to appear, FYI it was caught in the spam filter and I wasn’t able to do my several-times-a-day check for mis-labelled comments until this morning. Cheers!
@Gil
I fully understand why people might have chosen to vote Reform, or Brexit etc. There are parts of the country that have been left behind. One of my colleagues recently went on holiday in Great Yarmouth and said it was really grotty, really run down. And they’ve just elected a Reform MP.
What I’m saying is that these people, the people in charge of the Reform party, they do not have your best interests at heart. They are closet fascists and racists and if elected to run the country would take us down a very dark path. If you want to protest, there are other candidates, other parties you can lend your vote to, or even just spoil your ballot as spoilt ballots are counted too.
I urge you to do a bit of background reading on Farage, you may be shocked to see what you find. You say you loathe Trump but Farage is good mates with him and that is no coincidence. They are both rich men very much of the establishment, claiming to speak for the people but who actually are only interested in advancing their own interests. Farage’s act, his pint holding, tweed jacket wearing ‘man of the people’ act is just that, an act. His racism is always there, just below the surface, and we have seen the mask slip every now and then.
Farage and Trump have both encouraged (or at the very least turned a blind eye to) Russian interference in UK and US elections also, a fact that doesn’t get reported very much in our press.
I fully agree there are bad actors on the far left as well as the far right, no disagreement from me there, what Jess Phillips has had to put up with is shocking.
@ST What you refer to as a “policy paper” is in fact a statement from Andrea Jenkyns, a (now former) Conservative MP who was Deputy Chairwoman of the European Research Group (ERG)–so not exactly a person one would call unbiased.
But let’s look at her numbers. According to the statement, NHS care per person costs around £12K and the total NHS England budget is a little over ten times £14.4 billion. So let’s call it £150 billion. Divided by £12K per person this budget would pay for £12.5 million patients, of which the supposed 1.2 million illegal immigrants for which the NHS supposedly pays all healthcare cost are indeed around 10%.
However, the population of England is almost five times that, so the numbers don’t add up. In fact, looking at ONS, they say: “Total current healthcare expenditure in the UK in 2021 was £280.7 billion, equating to £4,188 per person.” https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthcaresystem/bulletins/ukhealthaccounts/2021
Regarding the illegal immigrants, it would seem unlikely anyone has an exact number, for obvious reasons, so the number quoted above would need some sources. Furthermore, it would have to be shown that all of these illegal immigrants use NHS health services to the same level as British citizens. That would seem unlikely both due to the challenges of assessing healthcare if you are here illegally, but also as illegal migrants are on average much younger than the UK population. That means they need less healthcare. Studies have shown that EAA migrants are net contributors to the UK healthcare for that reason (https://www.nhsconfed.org/articles/immigration-harming-nhs). Illegal migrants won’t pay into the NHS, but one cannot use average UK citizen numbers to come to conclusions about how much they may or may not cost in terms of healthcare.
Please be careful labelling people ‘closet fascists and racists’. It cheapens the term when not applied correctly.
London is seeing a huge rise in antisemitism by groups which are about as far as you can get from the media’s portrayal of Reform supporters. In Hampstead the posters of the hostages held in Gaza are regularly being defaced, I doubt that it is Reform voters on a day trip to London doing so.
As I say, I’m not talking about Reform voters, I’m sure many of whom are good (if misinformed) people. I’m talking about Reform’s leaders.
Also fully agree regards antisemitic and far-left groups who are just as bad if not worse in my view.
I am careful when labeling ‘closet fascists and racists’ and I’m fairly confident that is the correct term to describe Farage and his henchmen.
Trying to get back to investments, as everyone seems to think their world view is perfect and others naive, stupid or easily led, or worse.
Do platforms have “Sipp and isa” in the same way they do “bed and isa” – ie ultra thin bid offer spreads transfers.
Had a Google but didn’t find the answer, and a little less politics would be good for my blood pressure
The bright young things working at Tony Blair’s Institute have piped up with their prognosis for Starmer ‘solving the big problems ahead’:
https://www.institute.global/insights/economic-prosperity/the-economic-case-for-reimagining-the-state
It’s AI all the way down.
Regarding the £40Bn off services etc, I’d have thought more! But you’re right.
If we’re at 5% of GDP off due to Brexit which is 5% of £2.4Trillion GDP so we’d be at £120Bn less and the tax take of GDP for 2023 was 35.7%, so it comes out at £43Bn.
Still a nasty black eye.
I hate to concede anything to @BBlimp 😉 but…
This seems on target
https://www.theguardian.com/commentisfree/article/2024/jul/11/landslide-election-labour-tories-disarray
IMO both Cons. and Lab. are indeed in dire long term straits:
– Both Lab. and Con.: For not appealling enough to Red Wall (former mill, mine and seaside town) socially conservative, blue collar voters. It’s not a good look when neither of the two largest parties has the most credible claim to the values of the ‘traditional’ working class.
– Lab. only: For alienating parts of it’s ‘core’ electoral coalition of (by and large socially liberal) students, professionals and post-grads, big city renters, EU immigrants and public sector workers. You might call this a flip side to the Red Wall, but only partly situated within the new ‘precaritariat’. (The Cons. have not really gotten votes here since 2019).
– Con. only: For alienating Blue Wall Remainer and moderate Leavers. These are the voters who look up to the likes of Rory Stewart and Michael Helestine, and who voted for Cameron in 2010, for Major in 1992 and for Thatcher in 1979, 1983 and 1987. But they also voted (or claim they voted) for Blair in 1997. There are many of these people. Lab. focussed their efforts on them in 2024.