Chancellor wins the Game of Bullshit Bingo – Labour wins the Argument

Blain’s Morning Porridge Extra 17^th Nov 2022: Chancellor wins the Game of Bullshit Bingo – Labour wins the Argument

“The UK can no longer afford a conservative government.”

This afternoon: UK Chancellor Jeremy Hunt did an excellent job presenting a tough Austerity budget to sound like a route to potential future growth, but Labour has many valid points: words are cheap, actions speak louder, and the Tories were straightjacketed into Austerity by their previous incompetency.

Let’s give Jeremy Hunt the benefit of the doubt. He delivered a frightening austerity budget well. He made the strychnine coated sugar lump sound vaguely palatable, he made sure we all know the Office for Budget Responsibility had been consulted, and he scored a full Bullshit Bingo Card in his opening statements, referencing:

• Stability
• Growth
• Public Services
• Protect the vulnerable.
• Compassionate Conservative Government.
• Strong NHS and Educational System.
• High inflation is the enemy of stability.
• Russia’s fault
• Blah. Blah. Blah….

He achieved the one critical thing hid career depends on: The market did not crash.

Gilts are a few basis points wider in higher yields, but Traders already knew how bad things are going to get. The market was never worried the UK is going to default on Gilts, but that economic policy mistakes will impact sterling and diminish future UK performance, making the UK a progressively less and less attractive place to invest. That remains the base case – and that’s a massive ongoing handicap for UK Inc, no matter how much the Chancellor references his innovation-led, high-wage, high-growth economic hopes for the UK.

For everyone else, the great British public, it’s going to be a tough few years. Higher costs, lower take home wages, fewer services. The OBR says workers will see a real 7% decline in their standard of living. The rich will smile, especially Non-Doms, and will remain rich. The poor will get poorer. Although Hunt presented a picture of increased Education and Health spending, their bottomless maws will demand more and more money as austerity bites.

The big issues like how do workers afford their rents, get on the housing ladder, work while paying child care, how to get workers into social care to empty bed-blockers from hospitals, were left unaddressed. Energy bills will rise, taxes will increase, there will be lower discretionary spending. Millions will find themselves financial strapped. Small businesses would have preferred VAT cuts.

And all because it was a “Cost of Chaos” budget (wow.. never thought I’ve ever use a Liberal Democrat soundbite). Hunt had zero choice but to try to re-establish the Conservative’s reputation for financial prudency. Not sure that he did.

It was all a gift for Rachel Reeves, Shadow-Chancellor of the Exchequer, who pointed out the lack of actual growth strategies, 12 years of failure, and the greatest repression of real wages in history.

Nothing really changes. No matter how competent the Sunak/Hunt government may be, the UK is trapped into recession by the actions of it predecessors.

The UK needs a political, budget, monetary policy, fiscal policy reset – which only a General Election can provide. That will be the moment to buy back into UK plc.

Back to the day job…

Bill Blain

Strategist – Shard Capital