Even more proof that Conservatives are not good economic managers

Written By: - Date published: 11:44 am, September 29th, 2022 - 61 comments
Categories: Christopher Luxon, Economy, national, paul goldsmith, treasury, uk politics, uncategorized - Tags:

There has been this carefully crafted illusion that conservative politicians are somehow better with the finances than progressive politicians.

Locally last election this illusion was shattered, thanks in part to some extraordinary blunders by National’s then Finance Spokesperson Paul Goldsmith.

It transpired that there was a $4 billion dollar hole in National’s alternative budget because Goldsmith had used the incorrect figure for “savings” to be made by stopping contributions to the Cullen fund.

Then another hole appeared, this a relatively more modest $88 million hole.  This mistake arose because it used the wrong figure for the capital allowance.

It then emerged that National had double counted a $3.9 billion contribution from the National Land Transport Fund.  Its solution was to just say that the NLTF would have to pay this sum twice.  What fiscal geniuses National has.  Imagine being able to get funding this way by drawing twice on a fund in the future even though you have no idea if it will be able to afford this.

And then another $2 billion hole appeared because National, fiscal geniuses that they are, thought they could cut contributions from the Cullen Fund but still collect the tax earned by these further investments that were not made.  Wow.  Tax income out of nothing.  And they complain that the left believes in magical money trees.

These blunders no doubt led to the size of the left’s victory and also to the left for the first time in living memory being considered to be better managers of the economy than the right.

Overseas National’s UK contemporaries the Conservative Party has made an extraordinary blunder in proposing to remove the top tax bracket completely and to fund this by increasing debt.

The markets have responded dramatically.  The Pound has slumped and the markets have clearly been spooked by the thought of an ever increasing interest bill hit by both massive new borrowing as well as increasing interest rates.

And Tory MPs are sensing the panic and are starting to revolt.  It is not inconceivable that Truss’s short reign could be at stake and Kwarteng looks like he will have to be sacrificed.

From the Guardian:

Tory MPs expressed disbelief at how sterling had slumped after the government’s mini-budget sparked market turbulence, compounded by the chancellor’s subsequent remarks, at a time when households across the country were already struggling with the cost of living.

They said [Chancellor Kwasi] Kwarteng would have to resign for the party to survive the financial crisis, as they urged the prime minister to reverse her plan to scrap the top 45p tax rate, which they said had been received badly in their constituencies.

Simon Hoare, the Tory MP for North Dorset, tweeted: “In the words of Norman Lamont on Black Wednesday: ‘Today has been a very difficult day’. These are not circumstances beyond the control of govt/Treasury. They were authored there. This inept madness cannot go on.”

Yet Downing Street insisted the prime minister was standing by her chancellor. A spokesperson told the Guardian: “The PM and the chancellor are working on the supply-side reforms needed to grow the economy, which will be announced in the coming weeks.”

Neither Kwarteng nor Truss was prepared to comment publicly to calm the markets and reassure the public. Instead, they sent out the Treasury financial secretary, Andrew Griffith, who argued that “all major economies” were experiencing the same volatility as the UK as a result of Russia’s war in Ukraine.

Earlier this week Christopher Luxon was questioned about this.  National has its own proposal to cut taxes and has not explained how this can be afforded or what will be done.  From Radio New Zealand:

National has said it would take a tax cut plan to the 2023 election and Luxon said that had not changed despite some markets seeing tax cuts as adding to inflation problems.

“The UK is incredibly different from our own plan.

“What you’ve got in the UK is a more challenged economy, frankly, as a starting point. You’ve got massive amount of stimulus spending going on and you’ve got massive wholesale tax change going on as well.”

Luxon said National was focused on adjusting tax brackets for inflation, and making sure there was less wasteful spending.

Asked repeatedly by Morning Report if his government would consider borrowing to fulfil its tax cut plans, Luxon said it was a separate issue.

“We’re saying very clearly that we think there’s a way in which we can give tax relief so that people can keep money in their own pocket.”

Borrowing was “a separate issue,” he said, and National would come to an election with a fully costed plan and would look hard at cutting spending.

“We’re going to go through the spending line by line and make sure it’s not wasted and as a result we think we can deliver a much more effective spending that delivers outcomes.”

“We think we can give tax relief in a very simple principle which many countries around the world do, which is just inflation-adjusted tax thresholds.

To afford their cuts National has to either increase debt or cut spending significantly.  One possible source of funds is Luxon’s refusal to inflation proof health spending but to afford all of its proposed tax cuts the cuts to primary Government activity will have to be severe.

But Luxon cannot have it both ways and should be up front about National’s plans.  Although I expect he is looking very nervously at what is happening in the United Kingdom and wondering if the extraordinary events over there will affect local perception about whether or not National can actually manage anything, let alone a modern economy.

61 comments on “Even more proof that Conservatives are not good economic managers ”

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  1. arkie 1
    29 September 2022 at 11:56 am

    The quality of management is great for those for whom they are actually ‘managing’ the economy:

    Prime Minister Liz Truss had hosted a dinner for hedge fund managers shortly before her spending plans sparked a selling frenzy in sterling and gilts. “They were all supporters of Truss and every one of them was shorting the pound,”

    https://fortune.com/2022/09/26/short-the-pound-uk-government-liz-truss-kwarteng-budget-hedge-funds-george-soros/

    • PsyclingLeft.Always 1.1
      29 September 2022 at 12:21 pm

      A truism that most "managers" rarely have real competency. And makes you wonder how they ever got to become one. Oh.. of course! They generate astounding amounts of self promoting/serving BS. Seems to work for them world wide.

  2. tc 2
    29 September 2022 at 12:16 pm

    Conservatives excel at not giving a rats arse and the UK media may as well be writing scripts for coronation street.

    Truss courted the markets who were in on the moves and profited from it. The brexit shit show rolls on.

  3. Poission 3
    29 September 2022 at 12:26 pm

    We are in a slightly worse position now then the UK,with an overvalued currency,high current account deficit,and a budget with a substantive deficit,which will not decrease due to increased borrowing at higher rates.

    There is also substantive depreciation in the government books,with investments such as NZsuper and ACC taking hits,and housing depreciation affecting Housing corp with its increasing debt burden.( nearing 8 billion).

    There are good arguments now for the reversal of the fuel tax cut on petroleum now,due to sustained price destruction ( keeping the RU due to global diesel shortages) and keeping the PT subsidy.

    The superfund contribution is merely a tax refund,returning what they paid.

    • Ad 3.1
      29 September 2022 at 1:48 pm

      I don't understand your comment on NZSuper. Can you expand?

      • Poission 3.1.1
        29 September 2022 at 2:17 pm

        The NZ super contribution is around the tax received ie Tax paid last 10 yrs 7.57b,crown contribution 7.5b (last 12 months 2.4b tax 2.1b)

        NZ super would still pay tax and should have an investment return ( market meltdowns aside) even if contributions ceased.

        The transfer of around 1/2 the fund into low carbon investments is poorly thought out,as investment should be into value now growth at present.

  4. tsmithfield 4
    29 September 2022 at 12:28 pm

    Providing tax cuts and borrowing seems a crazy solution given that the UK is facing huge inflation, and these measures will be like pouring fuel on the fire.

    But, from what I can see, there are no easy solutions. It looks to me that the UK will be facing massive stagflation, which is a very difficult problem to deal with.

    https://www.thetimes.co.uk/money-mentor/article/stagflation/

    It is easy to criticise. But what would be a solution to deal with this problem? It seems to me that any measure to solve the problem through any form of stimulus is going to end up in the same situation, be it from the right or the left. Any solution that actually deals to the problem is going to be incredibly painful, and likely not politically survivable. So, no easy choices, and the leadership change was a bit of a poisoned chalice.

    As someone tweeted:

    https://twitter.com/Rob_Merrick/status/1575144324769120261

    LOL

    • Obtrectator 4.1
      29 September 2022 at 12:48 pm

      "It looks to me that the UK will be facing massive stagflation, which is a very difficult problem to deal with."

      During the UK's big financial crisis in the mid-70s The Economist was briefly bandying around the word "slumpflation", which sounds even worse, and could well be what's about to happen there now.

  5. Kat 5
    29 September 2022 at 12:30 pm

    Its all about perception, how could that nice man John who used to work at a big bank and the new man Christopher who used to run an airline not be good economic managers……….they have to be…….right…….

    If I have one criticism of this Labour govt it is how it keeps its safe and steady economic management the best secret in the country.

  6. joe90 6
    29 September 2022 at 1:02 pm

    Marvelous.

    • tsmithfield 7.1
      29 September 2022 at 1:30 pm

      I get that you don't like right wing policies. But, looking past all that, what is a better solution to the problem (I mean "better" not ''different'')?

      Given that UK government debt is around 100% of GDP, and that inflation could push 17% in the near future, and that it appears the economy is already in a technical recession:
      https://home.kpmg/uk/en/home/media/press-releases/2022/09/uk-economy-marred-by-uncertainty-while-high-inflation.html

      This mix is something that any finance minister would probably have a meltdown over I think.

      So, what is the way forward in this situation?

      • pat 7.1.1
        29 September 2022 at 5:48 pm

        An acceptance that growth is ending and an adaption to an economy of decline is required….politically an oxymoron because the voters will not accept reality so the brown stuff will be spread by the whirly thing….popcorn optional.

      • Blazer 7.1.2
        29 September 2022 at 5:57 pm

        I hope are not asking..'inane' questions!laugh

        Tax cuts for the rich and tanking the pound are what not to…do.

        • tsmithfield 7.1.2.1
          29 September 2022 at 7:35 pm

          Don't tell me what not to do. Anyone can do that. What do you propose can be done that is better (not just different) to what they are doing now?

          • Blazer 7.1.2.1.1
            29 September 2022 at 7:47 pm

            I am more concerned with 'inane ' questions.

            You accused me of making an inane question which btw was not even asked of you..this is it…'how does it play ..out'?

            As above you said…'

            'So, what is the way forward in this situation?'

            Now apply your vaunted deductive reasoning and tell me the distinctions..if you can.Thx in advance.

            • tsmithfield 7.1.2.1.1.1
              29 September 2022 at 8:05 pm

              It is not an "inane" question because it emerges from research and identification of the problems.

              If I was able to provide an answer that saves the British economy I would probably earn a knighthood and be recognised as an international financial celebrity.

              But launch into it yourself if you want to. Perhaps you might come up with the magic answer.

              • Blazer …
                29 September 2022 at 8:07 pm

                So make your case for the difference in stating my question was…'inane'..the same criteria apply.

      • roblogic 7.1.3
        29 September 2022 at 7:55 pm

        Step 1: turf out the pricks that caused Brexit and Austerity and the present collapse of the economy

        Step 2: restore worker protections, re-balance the tax system, regulate housing and landlords and banking

        Step 3: extirpate all legislation that grants the City of London and other private corporations sovereignty in British territory. Prosecute money launderers, fraudsters and corrupt politicians

        Step 4: Nationalise banks and utilities that are presently bleeding the UK dry. Ration power and gas if needed.

        Step 5: Restore proper funding to essential public services: the NHS. welfare. education. police. It is a shameful thing for Britain to have poverty worse than in Dickens time.

        Step 6: Try and normalise relations & trade with the EU. At the same time, stop the crazy immigration policies that are importing 1 million per year. This was the cause of Brexit and is an ongoing failure of the entire political class.

        Step 7: Rebuild infrastructure, restore environmental protections, reset the economy according to the ideas of Steve Keen and Kate Raworth. Invest in human flourishing rather than infinite GDP and endless corporate pillage.

        Step 8: Declare foreign policy independence from the EU and America, and denounce Russia. Try and rebuild friendly relations with other democracies. Emancipate Julian Assange (and any other political prisoners)

        • tsmithfield 7.1.3.2
          29 September 2022 at 8:48 pm

          The problem with the steps you are proposing there is that it doesn't answer how the economic problems of high debt (around 100% of GDP), high inflation (possibly up to 17%), and a stagnant to shrinking economy will be solved.

          Whatever the structure that is set up, it needs to be either include a dose of austerity, (think of the pressure Germany put on Greece after the GFC) The idea being that the economy is stabilised by increasing income through raising taxes, and cutting government spending, with the aim of balancing the books and reducing debt.

          The problem is that economies can end up in a death spiral as growth shrinks and and tax revenue falls.

          Or, a stimulatory policy can be enacted. This means growing the economy by leaving more money in the economy, borrowing where necessary, and inflating debt away via inflation. This appears to be the strategy the UK is using.

          The method this is done (tax cuts, borrow and spend, or a combination) can be debated, but it all ends up in a similar outcome.

          The problem in the UK scenario is that inflation is already high, and this sort of policy will make inflation a lot worse. Thus, UK citizens will be enduring the squeeze of rapidly rising prices for quite awhile.

          But they might be able to deal with the growth side of stagflation, even though inflation will likely run amok. Also, a lot of debt will be inflated away as a lot of UK debt is in GBP. However, the corresponding fall of the exchange rate will mean that imports will become much more expensive. This will, to a degree, help British exporters. But their imported input costs will be much higher.

          The reason for asking the question is because I don't think there are good answers. That is, as in a silver bullet that solves all problems without making other problems worse. But I am open hearing contrary points of view on that.

          Your suggestion of spending on infrastructure could be good if debt wasn't so high. But at 100% of GDP, there isn't a lot of headroom for further borrowing.

          • roblogic 7.1.3.2.1
            29 September 2022 at 11:15 pm

            I profoundly disagree. The City of London and many other crime organisations hold incredible wealth that needs to be unlocked and shared with the rest of society. Actually implementing such a radical shift will require revolutionary fervour. But Truss seems intent on giving the working class no choice but violence and chaos in order to survive.

  8. newsense 8
    29 September 2022 at 1:14 pm

    It’s just naked class warfare. In the case of Britain an agenda that the country absolutely didn’t vote for. Two years of it- remember that when any politician raises a 4 year term.

    Here the journalists need to call it what it is, on top of the housing market. It’s pay back for those who struggled through the pandemic only making millions of dollars on their increased property values, (but under a red government so it was stressy socialist millions) , need more money!

    . It’s funneling money to the rich.

    Gordon Campbell on tax cuts

  9. tsmithfield 9
    29 September 2022 at 1:15 pm

    Further to my post above, I can actually see some logic in what the Brits are trying to do. Bearing in mind there is no perfect solution, and any attempt to solve the problem comes with huge downsides.

    Firstly, an advantage with tax cuts is that this measure will hopefully make the UK seem a lot more attractive for foreign investment. The more foreign investment, the more quickly that growth will be restored. So, I assume that is an outcome Truss et al will be hoping for. Whether that materializes is another matter.

    Secondly, I understand that most of the UK government debt is in British pounds from what I heard on a report the other day. Someone may be able to clarify that, because I haven't found a link that specifies the amount of debt according to currency. But, assuming that is the case, then inflation will actually inflate away a lot of government debt. So, to one extent, inflation will be positive for the UK in terms of debt reduction if a lot of debt is in GBP.

    Finally, looking at it from a traders play, the move would be to pick the bottom (if they can do that LOL) and, at that point borrow large in USD. Then, as the GBP recovers, the USD debt will also be reduced due to the exchange rate improving. But, it is a risky play, because if the GBP continues to decline….

    • AB 9.1
      29 September 2022 at 2:10 pm

      Firstly, an advantage with tax cuts is that this measure will hopefully make the UK seem a lot more attractive for foreign investment

      When demand has been eviscerated by lowering real incomes for the bottom 80%, investment in anything productive (goods, services) is pointless because it does not produce the desired return on capital. There is a crisis of over-production. So all that windfall cash going to the wealthy from tax cuts will go into speculation causing asset price inflation (mostly in property).

      The only tax cut that might lead to growth is a re-balancing so that poorer people pay less and richer people pay more. But as you imply, under current conditions, that may also be inflationary in the short-term if it produces a sugar rush of consumption – allowing those with pricing power in the market to hike prices for no other reason than the fact that they can (and that they like money excessively).

      Secondly, I understand that most of the UK government debt is in British pounds

      Yes – Varoufakis was saying this morning (somewhere, can't remember exactly) that it is only this fact that means the UK is not Greece. The Bank of England is in effect 'printing' pounds now to buy government bonds in order to keep the price up. This is to prevent pension funds which have borrowed to buy government bonds – but now see them falling in value – from rushing to sell these bonds in order to minimise their exposure to risk. Because that panicked selling will cause them to drop further, so that those pension funds may not be able service debts and become insolvent. So yes – they can maybe create as many new pounds as they want, but it seems like uncharted territory if they do.

      Ironically, it seems that the terrorist sympathiser, anti-Semite and enemy of the British way of life – Jeremy Corbyn – would never have been so reckless. Maybe he understood who gets hurt most when this absurd financialised house of cards starts to wobble.

  10. SPC 10
    29 September 2022 at 1:33 pm

    And yet it still leaves their top rate of tax at 40%. And they continue to have a CGT and an inheritance tax.

    Their home ownership rate is 65.2%, ours is 64.6%.

  11. Incognito 11
    29 September 2022 at 1:46 pm

    Bring Back BoJo!

    Truss proves the wisdom of the saying that you have to be careful what you wish for.

    I cannot truss Luxon and his cronies to manage the economy any batter than Truss and hers and he’ll stick to his guns mantra of tax cuts for the better-offs giving us glib platitudes about inflation and all that blahblah.

  12. tsmithfield 12
    29 September 2022 at 2:35 pm

    I think a whole new economic model is going to emerge after the pandemic and the war are over.

    Peter Zeihan gives excellent analysis of the rationale for this. Amongst other things, current economic models are based on an assumption of unending growth. However, declining demographics around the world are going to upend that assumption.

    Well worth a watch.

    • Blazer 12.1
      29 September 2022 at 6:40 pm

      I know you're a bit of a frantic vlogspotter,but think about what you really mean when you cite 'declining demographics'….don't be vague,be specific or people will start to wonder about your self professed academic..credentials.

      • tsmithfield 12.1.1
        29 September 2022 at 7:31 pm

        Think "baby boomers". It is an issue that countries have been aware of for decades.

        To understand that, have a look at demographic pyramids. For instance, Germany is in really bad trouble in that respect as is most of the rest of Europe. Russia is in even worse shape, not helped by killing off large numbers of the most critical age group in a stupid war. And China, with its decades of the one-child policy is terrible.

        The point is, many of these populations are in decline. According to projections, China is due to halve its current population by 2100. And according to Peter Zeihan, errors discovered in a recent census suggest the decline could be much faster so that China halves its population by 2050.

        Hence why growth driven models are going to be unsustainable going forward.

        • Blazer 12.1.1.1
          29 September 2022 at 7:49 pm

          Yes as a vlogspotter extraordinaire you can be relied on to come up with what Peter Zeihan and a host of other commentators think…how about you trying to formulate your own…opinion….it's not too hard ..is it?

          • Descendant Of Smith 12.1.1.1.1
            29 September 2022 at 8:32 pm

            I was pointing this out a few years back. That the economy had a great time with the baby boomers having paid off their mortgages ages ago, kids had left home and most often both working had so much surplus money to spend that if you couldn't run a business in the previous twenty years and take advantage of that you likely weren't a very good businessperson.

            But as they retired and retirement villages and rest homes took their money their spending would reduce. This all by itself would cause a recession.

            It is why putting our eggs in low paid crap like tourism was never going to work. Miles insufficient to offset the loss of baby boomer spending.

            The increasing death rate of the baby boomers coming likely means funeral parlors will be a good investment though you are likely too late. I know one US investment firm was going around the OECD countries over 10 years ago buying them all up where they could.

            The facts is is that the baby boomers are spending less, much of their wealth is going to retirement villages and this will continue to accelerate. This at the same time as their burden on the state will also rapidly increase, particularly in health and welfare.

            The thing is, is that we all know this and it is pretty immutable as you cannot control the current age of the population.

            On the other side we need to be looking after our young people and reducing poverty because that is our future workforce many of whom will be needed to look after these baby boomers and to keep the economy running.

            Any tax cuts now are only creating a downstream problem. We should likely be encouraging young people to have children now and make sure they are well supported.

            • Blazer 12.1.1.1.1.1
              29 September 2022 at 8:40 pm

              Agree with what you say.

              But is so called 'inter generational theft'…real?

              Seems to be.Why would any young person hang around NZ given their prospects of owning their own home are not good at all.

              A giant retirement home ,a hollowed out middle class..and state beneficiaries…the future looks ..bleak.

              • Descendant Of Smith …
                29 September 2022 at 9:04 pm

                Benefit numbers were declining pre-COVID and are declining again now. Any growth areas I suspect are at the older unwell end. I tried to find out but the MSD site doesn't break the numbers down to enough detail.

                That's why Luxon is a moron – dog whistling about young people when the problem is his generation. Sanction the fuck out of them – lazy early retiring bastards.

          • tsmithfield 12.1.1.1.2
            29 September 2022 at 9:03 pm

            “how about you trying to formulate your own…opinion…”

            Have you ever studied at university? If you have, you should realise that personal, uninformed opinion has the value of used toilet paper. Perhaps if you started from that perspective the quality of your posts might improve.

            • Blazer 12.1.1.1.2.1
              30 September 2022 at 9:15 am

              A tad surprised at your reluctance to offer your own opinion.

              I took it as being an informed one for…granted.Que sera.

              • tsmithfield …
                30 September 2022 at 2:30 pm

                Because my own opinion isn't worth anything, especially if it doesn't relate to an area I have any specific training in. So it is just wasting people's eyeballs offering it.

                However, a position supported by evidence and the reasoning of people who know what they are talking about is worth a lot more.

                • Blazer …
                  30 September 2022 at 7:30 pm

                  Interesting attitude.So you see your role on an inter active forum like this as a conduit to various vlogs you…stumble across.Very good.

    • roblogic 12.2
      29 September 2022 at 8:07 pm

      Cheers. Zeihan is always worth a watch. Some people are missing out…

  13. AB 13
    29 September 2022 at 3:20 pm

    How long till Rupert gives Sir Keir the nod of approval – thus permitting the end of Tory rule for a limited period of time?

    • tc 13.1
      29 September 2022 at 5:36 pm

      Next election probably, Sir Rodneys purged those pesky types and their 'for the many not the few' so very electable to the powers that be now.

  14. Tony Veitch 14
    29 September 2022 at 3:43 pm

    There's no difference between the Truss plan and the Luxon plan – both will prove disastrous for their countries!

    https://twitter.com/g_reweti/status/1574913903141654530

    • tc 14.1
      29 September 2022 at 5:44 pm

      I don't think Luxon thinks we're all stupid it just illustrates how welded to disproven neoliberal dogma they are with media playing their part by not asking him how he pays for it.

      But hey he's run an airline and paul goldsmith's probably re-visited his high school maths so should be fine.

  15. Bearded Git 15
    29 September 2022 at 4:01 pm

    Starmer's Labour has been pushed to the Left by Miliband and friends, as the Tories crumble.

    Roll on the next UK election.

    https://www.theguardian.com/commentisfree/2022/sep/28/keir-starmer-no-10-liz-truss-labour

    • SPC 15.1
      29 September 2022 at 4:27 pm

      The policy writes itself, we'll finance our green economy programme by reversing these tax cuts.

    • tc 15.2
      29 September 2022 at 5:59 pm

      I'm not buying any of that, this is all orchestrated IMO as Starmers made labour more palatable to the establishment now.

      So he's gone and got some bold policies, predictable with the al jazerra doco out there for all to see what UK labour is really about. I've a brochure for Fiji doesn't mean I'm going.

      • Bearded Git 15.2.1
        30 September 2022 at 8:32 am

        I agree tc. Starmer's behaviour in relation to Corbyn is reprehensible and disgusts me. Singing the National Anthem at the start of the Labour conference must have been endorsed by Starmer and is, frankly, embarrassing.

        But at least people like Miliband have forced some decent policies into the mix.

        Lets hope the introduction of a PR electoral system makes it into that list of policies (it has been supported by the conference but Starmer the dinosaur has ruled it out) then the UK would no longer be ruled by the elite privileged empire-loving toss-pots currently in charge but instead by a government more representative of the population including the Greens.

  16. Poission 16
    29 September 2022 at 9:12 pm

    Truss in first media response,says business as usual,tax cuts will see growth in future.

    Markets react with growth in gilt yields coming up 10-15 bp across spreads meaning growth in higher interest rates will hold,and market commentators suggesting a growth in the BOE hike from .50 to .75.

    The pound also depreciated 1.1% (around .1% per paragraph) confirming growth in inflation.There will also be growth in the current account deficit.

    https://twitter.com/BloombergUK/status/1575385645354303493?cxt=HHwWioC–bm58twrAAAA

    • Ad 16.1
      30 September 2022 at 9:15 am

      Many of those same bankers will be at the Conservative Party conference this weekend. Smiling into their bonuses and tax cuts. Up or down that's London's biggest industry.

      Call me bonkers but the Pound crashing is surely going to drive more and more local substitution for imported energy. UK only brings in about 11% of its oil and petroleum.

      At some point Brexit and internal resilience are going to intersect.

      • Poission 16.1.1
        30 September 2022 at 9:41 am

        They need to import gas for electricity generation,(and they also import and export electricity) there is little onshore storage for gas (since contracting out).

        Oil and petroleum substitution has already seen demand destruction,and new generation in the UK (for baseline) is to be very expensive,although storage batteries etc have some new developments with lowering price points.

        The city with its ability to raise capital has been a strong point,but when the City is essentially saying the tax cuts (funded by debt) are wrong by any macro analysis,(and the fact their tax cut wont cover their mortgage increase) that they are essentially unwinding positions (as hedges lose cover) there is now some capital flight.

        NZ is to some extent in a similar position,with a large current account deficit,High government deficit,increasing interest rates ( limited buyer interest in the NZ bond tenders) wasteful spending for limited outcomes,a decreasing gdp etc.

        • Ad 16.1.1.1
          30 September 2022 at 9:51 am

          Isn't petroleum demand destruction a good thing?

          UK has both a North Sea to Norway HDPV cable and a UK to France HDPV cable. We are through 2022 closer to a functioning European electricity grid than we have been. For sure it will be a tough winter, but with strengthened policy gains as a result.

          I do see the comparison to our housing situation. Essentially NZers have nothing else. Choking real estate and redirecting towards more productive sectors is surely what both countries want.

          Why a housing crash scares Britain like nothing else – POLITICO

          I find it hard to see capital flying to China or Russia, or even Frankfurt. Some expected the City of London to essentially decline after Brexit, but it didn't.

          • Poission 16.1.1.1.1
            30 September 2022 at 10:39 am

            Some went to Franfurt for the Porsche float.Mostly it is being transferred into liquid assets that are US denominated ( see US$ appreciation).There are such huge movements in the bond markets few want to take risks with the huge hedge costs.

            Demand destruction for petroleum is by both cost,and increased efficiency and replacement of ICE with EV.

            https://afdc.energy.gov/data/10562

            Europe imports of electricity are expensive ( last night Norwegian at 387e mw) and when wind fails as it does,the baseline with imported gas is needed,and cold weather coming fast.

            https://twitter.com/JavierBlas/status/1575396531536105472?cxt=HHwWgMC8qY6z99wrAAAA

            The UK and Europe energy subsidies are now around 5% of GDP all borrowed money.

  17. Jackel 17
    29 September 2022 at 10:10 pm

    "Tory MPs expressed disbelief"….. Read em and weep, tory.

  18. Mat Simpson 18
    29 September 2022 at 10:20 pm

    " These blunders no doubt led to the size of the left’s victory and also to the left for the first time in living memory being considered to be better managers of the economy than the right.

    WHAT LEFT ? It no longer exists. The nearest we got to " the left 'was the Alliance 1991-2002 and prior to that Kirk Rowling until 1983.

    There is only neoliberal kindness or the Nasty Natz.

    You do everyone a disservice by not being honest by talking like you actually believe the NZLP is socialist and represents real left polices and values. It doesn't and the political landscape has changed.

    • Ad 18.1
      30 September 2022 at 9:08 am

      This current government is easily the most interventionist we've had since the 1981 election.

      Also the most redistributive.

      Also the most nationalising/recentralising.

      Sure the 1950s aren't coming back, but who would want them?

      • arkie 18.1.1
        30 September 2022 at 10:47 am

        They obviously could still be more interventionist, redistributive etc etc. if they were concerned their actions were insufficient.

      • Mosa 18.1.2
        2 October 2022 at 12:54 pm

        " This current government is easily the most interventionist we've had since the 1981 election "

        No intervention means something completely different if you are talking about 1981.

        And if they were serious about " intervening " we would have seen a hell of a lot more progress and real results after five budgets and nearly 1800 days in office.

  19. Chris 19
    30 September 2022 at 10:35 am

    Generally most conservative MPs are financially successful in their personal lives which feeds the attractive but illogical assumption that they'll be good financial managers for the country. Couple that with NZ's appallingly ignorant default position on who should govern which is "it's time to give the other side a go" means we have beneficiaries voting for the likes of John Key even though John Key's policies make the lives of the poor even more hellish than they are already.

    The reality is that conservative governments are "good with money", but only for a select few. Then a members of the select few enter politics, just like Chris Luxon, and the cycle continues.

    Labour, and this government in particular, is atrocious at communicating this to the voting public.

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