Rishi’s Economic Fairytales

As the dust settles after last night’s turbulent Tory leadership TV debate, Guido has scrutinised some of the more scrupulous claims of the candidates. Few seem so economical with the truth as Rishi’s interest rates arguments. Early phases of the debate focused on the economic impact of tax pledges, with Rishi heavily relying on the claim that Patrick Minford, who supported Liz’s economic plan, argued for a rates rise to “7%”, with Rishi clarifying “that’s the number that he gave”. The trouble is Minford didn’t say this…

While Minford did argue rates should rise, his actual words specified “a normal level is more like 5-7%” with his personal preference being between 2% – 4%. Minford has explicitly denied the quotes attributed to him by Rishi, which are clearly an exaggeration. Nor did he specify that rates would rise as a direct result of tax cuts. Perhaps Liz was onto something with her project fear claims…

Rising interest rates when inflation is approaching double digits means that savers still face negative interest rates. Savers tend to be older, as do Tory voters. Rishi misunderstands the membership if he thinks higher interest rates fill them all with fear. 

Rishi’s monetary misrepresentations didn’t end there. The former Chancellor went on to claim American “mortgage rates are almost 50% higher than mortgage rates in this country because they’re borrowing so much”. While US mortgage rates are higher, this is because of completely different mortgage markets. In the US mortgages are fixed rate for up to 30 years, though can be refinanced whenever rates decrease. In the UK they are fixed rate for between 2 and 10 years, with a charge for refinancing. UK mortgage loans are generally cheaper and shorter. Guido was surprised to see these claims coming from someone so keen to stress his economic competence…

mdi-timer 26 July 2022 @ 12:53 26 Jul 2022 @ 12:53 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Key Pro-Brexit Boffins Switching to the Deal

Brexiteers are waking up to the fact that the writing is on the wall after May’s capitulation on no deal and the Benn / Letwin successful coup on Monday night. First Jacob Rees-Mogg, now Boris and even Dominic Cummings have effectively put themselves in Guido’s camp of “the deal is rubbish but it’s better than all the other options left on the table, provided we get a new PM for phase two”. Tory MPs are now starting to switch in significant numbers…

Key pro-Brexit economists have also been quietly making the switch. Professor Patrick Minford had a “blunt message to politicians that want to deliver Brexit”: they need to “weigh up the risks and not give way to their natural feelings of hatred for Mrs May’s deal. Let not the best with little chance be the enemy of the good with a reasonable chance.” Minford is Chair of Economists for Free Trade has long been the High Priest of No Deal…

Liam Halligan used his latest Telegraph column to say “May’s deal is ghastly – now it’s the best hope” and has warned that “NOW” is the time to back the deal “before Brexit is lost altogether”. He literally co-wrote the book Clean Brexit

Even Shanker Singham, the key intellectual driving force behind a clean Brexit, has all but switched – Shanker retweeted David Campbell Bannerman’s endorsement of Rees-Mogg’s position yesterday before defending him against accusations that this made him a “traitor” and saying Brexiteers “must be realistic about alternatives”:

This coming from the “Brexiteers’ Brain”. Brexiteers can’t ignore him…

mdi-timer 27 March 2019 @ 13:05 27 Mar 2019 @ 13:05 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Brexit Big Beasts Going Wobbly

Brexiteers are getting seriously nervous after Parliament voted this week first to block no deal, and then in favour of an Article 50 extension – with Theresa May’s support – with another load of egregious antics from Bercow thrown in. The Benn/Cooper/Letwin coup was seen off by just two votes. While neither of the main votes was legally binding, the fact that an extension was proposed by the Government and carried with a majority of over 200 has alarmed many committed Leavers…

Numerous Brexiteer MPs have been dropping hints over the past few days that they are starting to feel that voting for May’s dire deal may be the lesser of two evils, given the risks of losing Brexit altogether once lengthy delays start being put into law. The price is that May herself agrees to quit

Resolute Leaver Lucy Allan told the FT: “I have to seriously consider supporting the prime minister’s deal, although in my view it is a worse option than remain”. Conor Burns added: “I’m actively looking for reasons to support the withdrawal agreement. That’s why the attorney-general’s advice was so important, critical to many of us to see whether we could be persuaded to support it.” Burns is one of Boris’s closest allies…

Even Esther McVey dropped a very strong hint today, saying “people are going to have to think a different way next week”. Her diehard Eurosceptic other half Philip Davies already raised eyebrows by voting for the deal at MV2…

Other leading Brexit supporters are also coming round to this view, Fraser Nelson wrote in The Telegraph yesterday that May’s deal is:

“a pale imitation of the Brexit that could have been, the Brexit a different leader might have been able to negotiate. It’s half a Brexit – but it’s better than no Brexit.”

Matt Ridley tweeted out Fraser’s article this morning, adding: “I am fairly sure now, after yesterday’s votes, that this is right.” Even deeply committed Brexiteer economist Professor Patrick Minford wrote yesterday: “Let not the best with little chance be the enemy of the good with a reasonable chance”…

The DUP will be in London all weekend to try to hammer out further reassurances from the Government over the backstop, after Nigel Dodds told the press “we want to leave with a deal” this afternoon. Ultimately they still hold the key, if the DUP come over then many MPs will follow, if they don’t budge then MV3 is going the way of MV1 and 2…

mdi-timer 15 March 2019 @ 17:00 15 Mar 2019 @ 17:00 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
60% of UK Trade is on WTO Terms

Patrick Minford opines…

“… we should opt for a World Trade Deal on WTO terms as we already do with some 60% of our world trade. A clean break with the EU would boost the UK economy by 7% of GDP and benefit the poorest in society by cutting the costs of food, clothing and footwear. A fudge would be a disaster.”

mdi-timer 4 July 2018 @ 16:17 4 Jul 2018 @ 16:17 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments