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Ed Conway

Nov 18, 2019 • 11 tweets • 5 min read • Read on X

Today on #CampaignCheck: The Liberal Democrats claim that they're now the party of "sound finance" with the toughest fiscal rules. bbc.co.uk/news/av/electi… This would be a big deal. Have they really taken the Tories' place as the party of fiscal discipline? To find out read on...

There are broadly speaking two kinds of fiscal rules. One which limits day-to-day spending/borrowing - CURRENT spending. The second kind puts limits on how much you can invest - CAPITAL spending. Before we get into the nitty-gritty, it's worth emphasising:

ALL major UK parties (Con, Lab, LD) are loosening fiscal rules this election. ALL their plans imply govt will carry on notching up deficits as far as the eye can see. Most of this new spending will be on INVESTMENT. Key differentiator for the LibDems is on current spending...

Tories & Labour both propose balancing the current budget over a 3yr & 5yr horizon respectively. Their rules give them some (not much) headroom to spend more or cut taxes. This chart shows you broadly how much (NB Tory prob have more headroom following today's C-tax cut u-turn)

LibDem rule is to target a 1% of GDP SURPLUS on the current budget. In other words, it looks a lot tougher than the others' rules (the yellow line here). That implies cuts/tax rises - tho they say there'll be a "remain dividend" that will bring in money to help meet the target

@resfoundation

But here's the thing, that target, designed by the @resfoundation, has some important small print (see below). It's better described as a "range" rather than a simple number target. If the economy disappoints the rule will allow the LibDems to borrow, well, quite a lot

In other words, the LibDem fiscal rule is actually better depicted like this: a massive range which, esp in the event of a recession, could allow them to borrow even more than the major two parties.

The LibDem rule on the current budget is in some ways more sensible than the other parties', which look quite inflexible. If there is a recession there's a sig chance Lab/Con bust their rules overnight. BUT do the LibDems really have TOUGHER rules than the others? Not really.

Esp when u consider what they're spending on investment: basically smack bang between Tories and Labour. "Sound finance"? "the party of fiscal responsibility"? Hmm, not quite. Rules maybe slightly better-structured but it's not clear they're much tougher #campaigncheck

@resfoundation

I'm told the LibDems are also adopting the @resfoundation rule on investment: "to deliver an improvement in public sector net worth". Basically the same rule as Labour. They'll ask the NAO or OBR to regulate it and ensure those investments are sensible...

@resfoundation

This @resfoundation report has been used as the blueprint for new fiscal rules for:
Conservatives ✅
Labour✅
And now the LibDems✅
raising a question: has ANY single recent think tank report had as much influence on economic policy? resolutionfoundation.org/app/uploads/20…

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Ed Conway

@EdConwaySky

Jul 20

🧵
80 years ago today, newspapers in Europe carried news of the unexpected death of a very important man, in a hotel miles from the nearest city.
A man who, said some, was helping the Allies win the war.
But there was a twist to the tale. The man in question wasn't actually dead

That man was John Maynard Keynes. The 61 year old economist was at the Mount Washington Hotel in New Hampshire for what became known as the Bretton Woods conference. And the day earlier he had indeed collapsed, following a heart attack. It was a moment of high drama.

The conference had already overrun.
It was supposed to be done in two weeks and there was talk that the delegates would soon be kicked out of the hotel. This was, to put it lightly, a problem.
After all, in the absence of an agreement there was a chance of yet another world war

Read 29 tweets

Ed Conway

@EdConwaySky

Jul 10

https://twitter.com/hmtreasury/status/1810674259452190951

It says something about how confusing Labour's green investment policies are that seemingly even the Treasury has misunderstood them.
Contrary to what the picture in this press release👇 suggests, the National Wealth Fund has nothing to do with wind power or indeed green energy

https://twitter.com/hmtreasury/status/1810674259452190951

Instead it's very specifically designed to focus on all the low or zero carbon technologies that AREN'T really to do with generating power.
- Green steel
- Hydrogen
- Clusters
- Gigafactories
Here's the sectors the institution will focus on 👇

Simple way to think abt this:
Pretty much ALL heavy industry today emits carbon, directly or indirectly. The techniques we use to make stuff mostly date back to the industrial revolution. Getting to net zero involves redoing the industrial revolution! edconway.substack.com/p/yet-another-…

Read 7 tweets

Ed Conway

@EdConwaySky

Jul 5

🧵
How did Keir Starmer manage to win a landslide majority even though fewer people voted for him than for Jeremy Corbyn in either of his election bids?
A quick thread looking beneath the numbers.
Let’s start with swing…

Election nerds like to focus on two-party swing - essentially showing how voters shifted between the main parties.
And on this metric, Labour enjoyed a MASSIVE swing. 11%. Slightly more than Blair in 1997.
But there’s more to this chart than meets the eye…

Let’s take the same data, two-party swing, & break it down. Red bits of bars show change in Labour vote, blue bits show Tory change.
Now look again at that 2024 bar (on the far right).
The vast, vast majority of swing to Labour is in fact swing AWAY from the Conservatives.

Read 10 tweets

Ed Conway

@EdConwaySky

Jul 2

🧵THE STRANGE CASE OF THE YAKOV GAKKEL🧵
A thread about the energy story no-one wants to talk about.
About how UK companies are helping facilitate Russia, as it earns money to finance its war.
And about how the cost of living crisis didn't end quite how you prob thought it did…

But before all of that it's a story of a ship. A v unusual ship.
The Yakov Gakkel. A vessel that routinely passes these shores. As I type this it's somewhere north of Norway. But I first saw it in the English Channel.
And at first glance you might not think it all that special..

But beneath that enormous blue hull is some incredibly advanced technology. Because the Yakov Gakkel is a cutting edge liquefied natural gas tanker, capable of holding vast amounts of natural gas at temperatures of approximately −163 °C.
These things are pretty incredible!

Read 21 tweets

Ed Conway

@EdConwaySky

Jul 1

🧵You know the idea, posited by @theIFS, that the main parties are engaged in a "conspiracy of silence" this election.
Their original point was about spending plans.
But I think you cld go much further.
I can think of at least 5 other areas where there's a conspiracy of silence

1⃣Taxes ARE going up under all the main parties' plans.
But they prefer not to talk about this, hiding instead behind the claim that tax rates on income tax, NICs and VAT won't rise. But they've still signed up to plans which will mean the AMOUNT of taxes we're paying will rise.

2⃣The magical tax avoidance money tree.
All the parties think they'll raise enormous sums clamping down on tax avoidance.
So much that they need not raise other taxes. This is v uncertain. But since they've all done the same trick they remain silent about its ridiculousness

Read 7 tweets

Ed Conway

@EdConwaySky

Jun 23

🧵
You've probably heard this claim - both from @rishisunak and more recently from @Nigel_Farage 👇
UK has leapfrogged others to become the world's fourth biggest exporter! And all after Brexit!
Unfortunately the reality is somewhat less impressive than this sounds.
Here's why:

First thing to say is that the bare bones of the claim are certainly true.
Between 2021 and 2022 the UK did indeed rise from 7th in the league table of the world's biggest exporters (counting both goods and services) to 4th.
We'll get to why this happened in a moment. But still

However here's some (very) important context.
It's not like the UK has only JUST hit fourth spot. In fact, it was in 4th place in 2020. And in 2015, 2014 and 2013.
Actually if you look at the modal average of our position in the past decade it was... fourth.

Read 12 tweets

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