Britain’s finances in hands of a hedge fund manager

Has Sunak lost his Midas Touch?The Tories’ golden boy is finally losing his lustre, and not before time. Having charmed us with his assured manner, his slick presentational skills, and his winning smile; and having risen to the occasion of the pandemic with lavish funding of emergency relief; Rishi Sunak is, judging by Treasury leaks, about to mess things up spectacularly in his coming budget by raising taxes at the worst possible time (the depths of a recession) in the worst possible way (on struggling businesses). A steep rise in corporation tax risks not only killing off the recovery before it has begun, but penalising spending in the one area it is most desperately needed: capital investment to raise our dismal levels of productivity and secure future growth.

I confess I have never warmed to Sunak’s persona, his smug ‘cat that got the cream’ assurance, which seems to derive from a combination of elite public school (Winchester) background and vast inherited wealth. While an understandably nervous-looking Hancock was being mercilessly pilloried at those interminable press conferences for the government’s incompetence, Sunak seemed to handle them effortlessly, bathing in the glow of his financial largesse (except for the self-employed who were left to rot), as if personally bestowed on the masses, congratulating all concerned including himself for their ‘amazing’ efforts, with not a glimmer of doubt or regret, and not a bead of sweat forming on his brow.

But my main objection to Sunak is that his qualification for the job of chancellor, for rebuilding our economy, for boosting investment and productivity, for developing an industrial strategy, for safeguarding our strategic assets, is that he was a hedge fund manager, a financial speculator. In other words, he made lots of money by shuffling around financial assets (on borrowed money) to maximise short run profits and capital gains – precisely the opposite of what is needed if long-term investment-led growth is to be secured.

Sunak knows how to read a set of accounts and is keen to balance the books as quickly as possible. But any serious economist could tell him that governments can never balance their books like a private household or business. It is a fundamental principle of macroeconomics. For if a government raises taxes or cuts spending, and by doing so triggers a recession or stifles a recovery, the effect is to reduce its tax receipts and increase its spending on benefits (the national income multiplier). Though taxes will need to go up and/or public spending will need to be cut once the economy is growing, doing so now risks making things even worse. 

But equally important is the need to boost private sector investment and productivity. The neoliberal notion that it did not matter if our industry went to the wall so long as the City of London flourished and engaged in ‘financial innovation’, that manufacturing could be ditched in favour of services, that open borders, free flows of hot money and cheap labour, and booming property prices were all that were needed for global markets to flourish, has been cruelly exposed in recent years – by our dismal investment and productivity, by the pandemic, by Brexit, and above all by the Chinese mercantilists.

For ‘Global Britain’ read ‘Warehouse Britain’, where our young people are deskilled and our regions are deindustrialised, and where we flog off our strategic assets one by one (euphemistically termed ‘attracting foreign investment’) to plug the hole in our trade deficit. Few remember that if Vince Cable had not stepped in as business secretary to block it, much to the anger of Conservatives at the time (who no doubt stood to benefit from the City’s cut of the takeover proceeds), AstraZeneca would have been flogged off to Pfizer. Then where would our vaccine programme be now? 

Industrial strategies which seek to pick winners are fraught with danger. We need only recall Tony Benn’s National Enterprise Board and British Leyland, or the sad tale of the British nuclear industry and its air-cooled reactors – though truth to tell, our dire industrial relations and our toxic class divide had much to do with it. But ‘aerospace valley’ in south-west France shows what can be achieved when things are not left to global markets and equity fund managers. We might just begin by ring-fencing our hundred fastest growing and most strategic firms from take-over, and ensure they have access to the long-term finance they need to invest, to innovate, and grow; and fund proper apprenticeship training on the German model, redirecting funds from University arts, humanities and social science courses if needed. But we should not hold our breath.

It is no longer a matter of managing industrial decline. Our very survival as a nation is at stake. And yet we have entrusted the task to a hedge fund manager.

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8 Comments on Britain’s finances in hands of a hedge fund manager

  1. How hard would it be to identify which groups receive how much in cash transfers from which creators of wealth? Be sure to account for both tangible and intangible items and services. Include security surveillance, policing, court and incarceration costs, and all matters pertaining to border protection, healthcare, and education, esp negative effects on kids who are relatively educable, attentive, and non-violent. Include all other civil service costs pertaining. And add in the costs to private citizens incurred by violence and other criminality by perpetrators.

  2. Billions and billions sloshed about like Gordon “Global, global” Brown on stilts. Government Bonds+massive”fractional” reserve+pension funds+taxing the future young middle class (despite a “reduced” stamp duty)+depriving Afro-Asian of their own achievers+trade wit an open world aka China+ditching Saxon & Norman neighbours for Saudis & Nigerians. Largely because of an open-door to Covid-carriers (aka “medical racism”) at the outset. As old Enoch said, Those whom the gods make mad….

  3. Our figures for apprenticeships are indeed dismal and getting worse. Why train young Brits when you can import something cheaper and ready qualified, or invest in capital to raise productivity or research when share earnings are hit leaving you a target for asset stripping?

    Cameron and Osborne had it sorted. We would prostitute ourselves to the Chinese and they would get rich working as consultants for their new masters, but then the Chinese went and spoiled things by engaging in genocide (not for the first time, remember Tibet) and showing that they were generally intent on world domination.

    As for our ‘industrial strategy’, my guess is continued asset stripping and a rapprochement with China so we can become part of their Belt and Road initiative.

  4. Why pick on Sunshack in particular? The entire Johnson Cabal is a collection of third rate chancers, bombasts, and spivs, lying, twisting and evading the civic retribution that like a spring field awaiting its delivery of slurry, is on route.

  5. Main matter in the nation’s finances: What proportion of the surpluses created by the capable, productive classes can “the government” confiscate and send over to the non-capable, non-productive, nett consuming classes? Such analysis requires one to question the “government” policies that are increasing the proportion of the populace that is nett-consuming. And one must consider nett-consumption in all tangible and all intangible ways that nett consumers place costs on capable producers -including violence, other criminality, demands for power, celebrity, and reparations based on Identity, and climate hysteria.

    Also yes, one must assess the ways in which “the government” helps or hinders the application of capital -in all its forms- to the task of creating wealth that can be confiscated and re-distributed to nett-consumers. And then there are the ideological/anti-empirical factors that cause “the government” to hinder the creation of wealth -wealth that is so sorely required to finance the life-styles of nett-consumers.

    Finally, let us consider an obvious problem: No Saviour, or Team of Saviours, is coming to rectify all that is mistaken in the ideology -that now dominates the Anglosphere- that the rights of nett-consumers and climate fantasists, home-grown and arriving from everywhere else, must dominate “government” policies that constrain wealth-creation and enforce the transfer of funds created by capable producers to parasites.

  6. Has anything changed since Lloyd George’s thieving Budget of 1909?

    What was evil in 1909 is still evil now. The same evil. The evil of socialist redistribution.

  7. Actually, the finances of the UK, indeed the Anglosphere, are now in hands of those would ensure the Big Three Justices:

    Racial Justice, Climate Justice and the biggest of all: Cosmic Justice