Rachel Reeves: White Lies For A Black Hole
The more that one considers the life to date of the Labour Government, the more one sees a pattern of behaviour. It is a familiar one. The one that kind of reminds us of not only the antics of this administration, but of the time of Tony Blair. The most famous one of his time was the infamous “weapons of mass destruction”. Now we can substitute WMD for the Black Hole. There have been controversy regarding this since almost the first day Chancellor Rachel Reeves arrived at Number 11, and courtesy of her second Budget, it does not look like it is going to go away any time soon. In contrast to WMD, where they may have been at least an excuse for thinking that the Saddam Hussein regime had something stashed away, we find courtesy of the OBR, that going into this month’s Budget, the nation was in surplus. And so it should have been, given the £40bn rise in taxes over the past year. Now it is another £26bn, with the joint amount rather more than the manifesto pledge of £8.5bn.
However, there are two main reasons why the Budget has apparently been taken so badly over and above the way that the level of taxation is at an all time high, higher than during the Second World War. The first is that this time last year Reeves said she was one and done in terms of mega tax rises. The second is a new even greater blowback, that the proceeds of this years tax rises will be for benefits, and according to Rachel Reeves this morning on Sky News, child poverty. This is of course, a worthy cause. But mulling over the issue for even a few seconds and most of us will realise that the main cause of child poverty is adult poverty. Indeed, we do not even know that when the parents or parents get the extra cash (especially after the two child cap has been lifted), the money will be translated into food and clothing for those concerned. The best way has got to be to leave more money in the hands of workers, so they can look after their families. Nevertheless, the headline here remains that this was a Budget for non-working people
As far as working people are concerned, you may have been forgiven for thinking that Labour last year were promising no higher taxes not for all people who work, This has turned out not even to be the case for the working class, Labour’s traditional voters. So “working people” did not turn out to be a euphemism for “working class”. Instead, it turned out to be a euphemism for people on benefits.
Even before Labour came to power, under the Conservatives, the impetus for entrepreneurs, the private sector, landlords, publicans et al was fading fast. Significant numbers decided to up sticks on the announcement of a Labour victory. Since then, insult has been added to injury in terms of not only the playing field already been tilted against the private sector / business, but now undeniably tilted in favour of those who are not up to much at all. Of course, there is the moral aspect. Unfortunately, there is not enough economic growth and hence money to deliver the welfare strategy that Labour seems hell bent on. It also seems that realising its natural working class support is either going to abstain or vote Reform, it is going for simply buying the votes of those who are dependent on the state.
As for what happens next, we see that there are plenty of calls for Reeves to be ditched, something which is almost impossible to do without Sir Keir Starmer also being replaced. What we do know, especially from watching Prime Minister’s Questions, is that the determination of Labour to carry out its socialist creed of redistributing wealth, and snuffing out success, is something which will go on well beyond Starmer and Reeves. Indeed, it is set to last until the last day of this Parliament. If there are further white lies to tell regarding new black holes, or fresh dire needs, so be it. Even worse, it really does appear that the powers that be in this government, are not necessarily the people wielding power. Even without the current personnel, aggressive socialism is here to stay. We might as well keep who we have.
Ukraine Peace Talks
As one might expect with the Russia – Ukraine war, negotiations continue in Florida and later this week in Moscow, accompanied to on the ground military activity. Obviously, drone attacks on Kyiv are part of Putin’s softening up routine. With allegations that President Trump is selling out Ukraine, and the Russian leader like a turkey needs Christmas, it seems hard to believe that the dates of the war will be February 2022-December 2025. We all know that the best deals are ones that both sides dislike, and it would appear that President Trump is attempting to achieve just that. At the end of the day it could very well be that the main chance of peace comes from the way that everyone knows his main motivation is that he can take the credit for it. This puts him and the US in a decent position as mediator. The question is whether it will be enough?
Ironically, the stock market may be providing a decent indicator / barometer of how things could go, if one looks at the recent share price rise of Ferrexpo (FXPO), the iron ore pellet producer with an operating base in central Ukraine. While not in the front line one would expect the shares to rocket the nearer any peace deal. The shares ended the week at 74p, versus 247p just before the tanks rolled. What is interesting is that FXPO is up some 50% over the past couple of weeks. Most likely we are looking at yet another false dawn, but presumably there are some people close to what is going on behind close doors who may be happy to take a punt at current levels.
The difference between the dawn now and the previous false dawns is that in terms of news from the Ukrainian side, it would appear that there is some sense of division between those who wish to fight and those who wish to sue for peace. Zelensky losing his Chief of Staff, albeit over a corruption scandal was not a good look. While Zelensky can soldier on, Yermak could be there, waiting in the wings if peace talks take an angle that the former does not accept, but others in Ukraine do.
