Best Of

NB, for all those claiming that leaving the EU has had no impact on the UK because we’ve done about as well in economic growth terms over the last five years or so, a new paper published this month by the NBER estimates the total net impact of Brexit at 6-8% of lost GDP!

https://www.nber.org/papers/w34459

The paper takes an interesting approach - they use detailed economic data to construct a synthetic control UK economy built out of parts of other economies from countries that stayed in the EU, combined with known macro & investment data. That synthetic economy has ~7% higher GDP today.

Tom Forth (who runs https://thedatacity.com/ ) had one of their research fellowships try to recreate the same model from scratch this summer (presumably inspired by a pre-print) and was surprised to reach the same conclusion - he’d personally estimated the Brexit impact as being much smaller than that.

Obviously this a speculative paper - we can’t actually know the counterfactual GDP we would have today if the UK had not Brexited, but the finding that the impact has been this large is significant, I think. Sadly, Labour seem determined to completely ignore the possibility of making any changes to our relationship with the EU, regarding it as some kind of political third rail that cannot be touched.

Russia has no tanks left. It has very few IFVs. Its aircraft lob glide bombs in from distance. Even that option ends when Ukraine get long-range missiles (200km+) meshed into their systems. The navy just sits in ever more distant ports, waiting for the latest iteration of the sea drones to find them. All Russia has are huge numbers of bullet-catchers, sent to their doom by officers making money buying and selling them. Whatever Russia has been doing is not sustainable.

Russia is in a bad way, yes.

But, for example, they also have now developed sea drones, which have conducted attacks on port infrastructure in Odesa. They have prioritised drone production so that they have an advantage in drones in front-line battles. They have demonstrated an amazing ability to get help from other countries - most of their artillery ammunition is now imported from North Korea. North Korean workers are manufacturing Shaheds inside Russia. Africans and Cubans are fighting and dying for Russia in Donetsk.

Ukraine have a desperate manpower shortage which is hindering their ability to rotate units out of the front and to do the training that would build a force capable of retaking occupied territory. It is possible that the Ukrainian ability to resist will break before the Russian ability to keep fighting does so - particularly if China is willing to act as a backstop to prevent a Russian collapse.

Europeans have consistently provided only just enough support to Ukraine to keep them fighting. European leaders are still wedded to the idea that a ceasefire on current lines is possible, and they are spending an inordinate amount of time on peace plans and fantasy plans for a post-ceasefire reassurance force, when there is zero sign that Russia or Putin are willing to settle. If Ukraine is to win this war with European support then there needs to be a strategy based on achieving victory, and doing what is necessary to achieve victory.

In principal the frozen Russian assets provide an opportunity to fund such a strategy, but it now seems as though they will be used only to maintain current levels of support for the next few years, a short-term measure to relieve European budget pressures, rather than pushing for victory.

Russia must lose and must be seen to lose. But even nearly four years on most European political leaders do not get this.

Sacked Lord Mandelson caught relieving himself against a garden wall after a late-night visit to George Osborne's Notting Hill home
https://www.dailymail.co.uk/news/article-15289831/Lord-Mandelson-caught-relieving-garden-wall-visit-George-Osborne-Notting-Hill.html

'The wall belongs to Osborne's neighbour James Reed, the tycoon behind Reed Recruitment who has been critical of Labour's economic policies. 'I'm surprised that whichever of my neighbours he happened to be visiting didn't offer him a toilet. It doesn't seem very diplomatic,' Mr Reed told the Daily Mail.

The tenant of a nearby flat added: 'We have to put up with this sort of revolting behaviour during the Notting Hill Carnival. It's a shame to see that people still feel entitled to urinate in the street here three months later, and quite outrageous that the person responsible should be a peer of the realm.'

Fortunately for Mandelson his latest indiscretion is unlikely to incur any criminal charges.

'Technically, it's against the law under a public order act of 1986, but it's very unlikely that someone who gets caught short would end up being prosecuted,' said Julian Lee, a criminal defence expert at Reed's Solicitors. 'The only exception would be if they had caused alarm or distress to another person, or caused criminal damage, or were also doing something of a sexual nature. I very much doubt those factors apply in this case.'

Pee-er of the realm

The Guardian is reporting that the OBR delivered a better than expected fiscal forecast which put the fiscal hole at 20 billion pounds .

Uk govt spending per year is £1.3tn.

If you ask the OBR at three different points of the year to estimate the fiscal hole, you might well get answers of 20, 40, 60bn. 20bn is close to a rounding error in our spending.

We need to stop making radically different plans based on their estimate which is another term for educated and calculated guess.

The reason for this is that we've promised the bond markets that we have a plan to balance the budget in five years time, and it's on the basis of this promise that they are relatively sanguine about lending us vast sums of money. This means that our fiscal reputation is reliant on financial forecasts, which will fluctuate and are imprecise. This is not a problem if we have a safety margin - the forecasts can fluctuate within the safety margin and the plans do not need to radically change. We do not have a safety margin.

There are two alternatives. Establish fiscal responsibility by cutting the budget deficit in reality, rather than on paper, in the future. Or re-establish the safety margin in the plans, so that fluctuations in the forecast can be ignored. Both of these alternatives involve making more spending cuts, or tax increases, than the status quo.

That's why we are where we are.

EDIT: If we simply decide to ignore the OBR, then Britain loses its fiscal credibility and is forced into cutting the budget deficit rather quickly.

We haven't promised to balance our budget in 5 years (now 4 technically). What we have promised is that at that point the deficit will be falling as a share of GDP which is by no means the same thing. What the OBR are supposed to be doing is measuring our progress towards that Nirvana and it is pointing out we are not on track.

And it will have to keep pointing this out because our underlying fiscal situation is deteriorating, not improving. We have absolutely minimal growth, a very large deficit, a serious increase in the cost of our debt mountain (not entirely sure I mountain quite covers it anymore) and pressure on the defence budget. Even worse we have a government that refuses to recognise all of this and who will try to find spending cuts to even offset these pressures.

Re Labour’s ‘Ming Vase’ strategy; it worked up to a point, they won a huge majority, but it didn’t get them any new votes. Amidst the relief that Starmer and the grown ups were back in charge, too many people glossed over the fact that they actually lost votes. LOST VOTES when the previous government had completely disgraced itself, morally with partygate, and economically with the Truss mini budget.

Of course, a critic of Starmer couldn’t have been taken seriously if they criticised him for not winning a huge majority well enough, but the huge majority was a kind of illusion; they didn’t really win by much.

Was there any need for the ming vase strategy? They had an open goal anyway, they could have done what they wanted. As it is, the victory margins were often so shallow that it’s left the govt too scared to do anything, despite being gifted an amount of power far in excess of what the underlying numbers say they deserved

I’d compare it a football team winning the league with 60 points. Most seasons that would be failure, but if all the other sides fail worse, you’re left as Champions and in the UCL. The right thing to do is surely to acknowledge your luck, then double down by absolutely going for it in the transfer window with the money you’ve gained. Instead, Starmer has decided it wasn’t luck, that they were popular, and the triangulation should continue

All true, but two quibbles:
1) Theresa May had an open goal in 2017 and thought she'd - laudably, in my view - use it to come up with a solution to funding adult social care, and look where that got her. Meanwhile, it was a strategy nit so very removed from Ming Vase which led to the 1997 landslide. While I agree with your point I can understand Labour's reticence.
2) One of my many, many gripes with football is the way you can just buy someone else's players. That's not sport, surely? "We won the league!" "What do you put that down to?" "We bought all the other clubs' best players." It's not really 'we', then, is it? People in football seem so firmly embedded in this culture that they don't appear to see the absurdity of this.
When Nottingham Forest won the league, they may have aquired a handful, but half the team were those who'd been playing in Division 2 the previous year.
I appreciate this is incidental to your point.

Yeah, I agree on your second point. It bothers me when Arsenal sign a load of players as I want to win with those I’ve come to regard as ‘ours’. But I soon get over it to be fair

I can also see why Labour did what they did. If they’d been bolder and lost, people would have slaughtered them, but reality has shown that the grass isn’t always greener. Had they been bold and lost they’d have ruminated about how a large majority won by a ming vase approach would have given licence to radically change the country, but it’s not been the case

Labour, promising tax increases, would still have won 340-350 seats, I’m sure.

I know 'courageous' has become a synonym for out there policies but every successful politician needs a modicum of that quality. From breaking pre-GE promises then not even having the balls to own those broken promises to triumphantly whipping out a royal invite to Daddy Trump, from adopting Reform-lite rhetoric to refusing to grasp the tax nettle, the defining aspect of Starmerism is lack of courage. Their political epitaph will be 'Gutless'.

Not only did the Ukrainians hit the oil terminal in Novorossiysk (the explosion there was massive), and air defences there, but they also hit the Saratov oil refinery again and a fuel depot near the Engels airbase.

Meanwhile the Russians hit nearly a dozen apartment blocks in Kyiv.

Russia must lose and be seen to lose.

Yes, the contrast between the targets of the two sides was quite stark yesterday.

On the front lines the action is in the town of Pokrovsk, with the Russians sending tens of thousands of men there in the last few days, most of whom meet an unfortunate fate.

FPT:
Oil pipeline terminal in Novorossiysk, with a bit of a smoking problem.

https://x.com/tendar/status/1989110149127238095
https://x.com/jayinkyiv/status/1989196881931694280
https://x.com/bohuslavskakate/status/1989121637367836967

Also a military facility in the same city, probably air defences and ammunition.

https://x.com/osinttechnical/status/1989146396256334302
https://x.com/tendar/status/1989124320598073606

The Russians, meanwhile, well they’re bombing apartment blocks in Kyiv.

https://x.com/bohuslavskakate/status/1989122025143824804

Russia has fought a very stupid war.

Three and a half years after Operation Barbarossa started, the Red Army was closing on Berlin.

Three and a half years after the SMO began, Russia has advanced 20 miles into the Donbass.