Gideon's Grim Delusion

The usually-arrogant Chancellor, Gideon Osborne, is occasionally rattled when he comes under challenge: then he quacks like a cartoon duck. His place in history will be that of a pathetic puddle-duck, swimming aimlessly on a polluted pond while he is under the impression that he is a Master of the Universe.

His boasts about the strength and the growth of the British economy now face the fact that the economy is really so weak that taxation revenues are falling - spectacularly. As this blog has reported for some years now, the growth has been of spending by consumers: largely on imported goods, or on goods that are produced by foreign-owned firms so that any profit is allocated abroad and not to the development of the UK economy. Much of that spending is supported by benefits: including in-work benefits because mass wages are not sufficient to maintain families decently. So even with 20% VAT payable on some items, the exemptions of food and children's clothes mean that even VAT revenues are less than the statisticians would have expected from the GNP that they report to exist.

Now he admits that - in the unlikely event that he will be the Chancellor in the next government - he would have to make cuts in state spending that would be so severe as to make national defence, policing, education and the functioning of both urban and rural local authorities non-viable. But, of course, he does not interpret what he says in those terms; because he has a huge disadvantage. He studied Economics and he still believes in it. So he is taking the country to hell in a handcart; unrestrained by his fellow PPE graduate the Prime Minister.

Meanwhile the financial services industry is also doing its bit to encompass the ruin of the economy. An 'expert' at the normally-excellent advisory firm, Investec [by the name of Rami Myerson: note that well!], suggests that one of the best of British firms should be subjected to asset-stripping. He proposes that Rolls-Royce should either sell off its heavy engine business [that which supplies marine, railway and large tractor engines] to release cash to short-termist money-grubbing shareholders. He may be right to note that many institutional shareholders employ such stupid 'analysts' themselves that they do not recognise the advantages of diversification [by the right management] and just want to own aero-engine shares even if that market is suffering from the European recession and the slower rate of growth in China. Many of them will be equally purblind with him, and fail to see that large companies are better served by having diverse aspects of business. And if he has studied Economics he will probably have succumbed to the idea that investment just 'happens; that it does not need soundly to be planned. He is the sort of twerp who has done much to assist in the deindustrialisation of Britain; and he would doubtless regard it as a feather in cap if he could stimulate a seismic shift for the worse in the national economy and in the micro-economy of Derby where devastating unemployment would follow.