But heavy govt deficit spending (in the right areas) is entirely appropriate & beneficial for an economy operating below the capacity of its real resources to produce.
The problem is, Brexit’s shredding that capacity. /1.
For example: Brexit-induced labour & skills shortages, friction & barriers to productive economic activity, increased costs through the above & £ weakness … all at the same time as very high deficit spending. That’s where Weimar or Zimbabwe comparisons become real. /2.
The Covid (temporary) part of the deficit spending is vital. So is a major, longer term govt deficit funded investment in the economy. Unless the UK is to sink further into relative impoverishment. /3.
Which means the Brexit-caused destruction of capacity must stop, & be reversed, sharpish. The only way for that to happen is the UK rejoining the customs union & single market, or substantially identical arrangements. /4.
(Which just happens also to be the only sustainable way forward for NI, the NIP being a short-term sticking plaster, not a solution). /5.
If not, everyone had better get back up to speed with Keynes’ ‘Economic Consequences Of Peace’. And an understanding of the role played by the preceding war destruction - fundamental to Germany 1923, & the economic, social & political consequences which followed. /6. End
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The country can well afford to continue, for many more months if necessary, to use large scale, government deficit spending to support all sectors of the economy & workers unable to go out to earn a living. /2.
That’s because there’s no inflation risk to the direct creation & spending of the many hundreds of billions of £ needed to pay for that.
For those of us who remember East Berlin in the 1980s this, from Tesco in Milton Keynes 40 years later, looks eerily familiar. Although the colour photography is superior.
It’s what happens when ideologues set about systemically wrecking the prosperity & well-being a country.
Russia’s in the news again. As is the re-emergence of a fantasy, from Germany & France, of a western “reset” with President Putin. The UK has been guilty of the same. So has the US. President Biden looks to be clearer sighted. No more wishful thinking, please. A (long)🧵 /1.
That requires a realistic assessment of Russia as it is, not as some members of the Euro-Atlantic Alliance might hope it to be. And clarity about what needs to be done, & how, to protect & promote Alliance interests. /2.
Understand what you’re dealing with. Russia is run by the people who own it. Principally an elite of a few dozen people, largely dominated by ex-KGB officials with a world view formed during Soviet days. Vladimir Putin is at the apex & calls the shots. /3.
.@DavidGHFrost appeared before @TomTugendhat & @CommonsForeign yesterday, together with one of his most senior civil servants, the Director-General of the EU Secretariat in the Cabinet Office. You don’t need a body-language expert in order to understand how it went. /1.