Brexit Part XXV: The state of the nation? Part II

Budget/economic policy

Meanwhile, Britain’s economic policy has not adjusted to a model that encourages risk and growth through low taxation. This is not surprising as the ‘remainer’ Hammond has proved a disaster with his conservative and limited thought process. Mind you, the writing was on the wall as he was also a disaster as the Defence Secretary. Looking forward, however, with Britain in an expansive phase of its new cycle, politicians should remember that empires are always built by individual wealth generators and risk takers, not bureaucrats. The more incentive this element of society is given by the government, the faster will be the growth of the nation. Now with Trump seeking to create a low tax regime, there is an added external driver for this radical overhaul of Britain’s economy. The simple answer is a flat tax, the instigation of which over a phased introduction in the years ahead would encourage a wave of external capital further encouraging economic growth. However, one note of warning is that Britain like all the Western nations will have to navigate the impending bond crisis in the months ahead; and the more policies that it can enact to make it an attractive safe haven, the greater will be the capital inflows. However, one negative consequence of this will be the knock-on effect of an appreciating currency that will curtail exports. As such, exporters should be educated to hedge their FX risk at these levels for years ahead. We belive that the low is in place and that the sterling has now started its climb to a higher value against all the other major currencies.

The curious case of Scotland

The recent attempts by the Scottish First Minister, Mrs Sturgeon to reignite the independence issue illustrate some key issues. Firstly, as we long have maintained, a smaller nation like Scotland will only leave a larger one like Britain, if it is in economic failure. However, conversely, whilst the larger organisation is expanding there will be zero chance of success. Conversely, even if the EU were to accept Scotland into its fold, which it will not, then why would Scotland wish to join a failing EU? Again, it is very unlikely indeed. In addition, as the price of oil is as low as it is now, this only potential source of national revenue is too low for the nation to break even, and with the next two years of deflation ahead, there will be no chance of the situation improving. As such, Sturgeon exhibited a spectacularly bad judgment to be flogging the same dead horse. In contrast, Mrs May acted with a determination and resolution that was subsequently backed up in the polls and has been further strengthening her position as a formidable negotiator, who kicked the moot topic of Scotland’s independence into touch.

The black hole of Health Care and Social Security

These two areas of the national budget are out of control and need radical change. Whilst Social Security should support those who, through no fault of their own, are unemployed, it should encourage those who can work to move into the workplace. Meanwhile, the key questions for the NHS have to be:

• Are our doctors practicing the most effective form of medical care by global standards?

• Should the NHS not place greater emphasis on preventive programs?

• Should the NHS not encourage the population to take more responsibility for their health?

In summary, without bold and radical changes in these two spending areas, it becomes harder to spend money on areas where it is really needed which right now is on defense and the safety of the realm.

Defence

This area remains a backwater of the government policy despite the significant threats to national security that continue to increase. In short, this national disgrace needs urgent attention. Failure to ensure that Britain has a strong defence policy and is able to defend its hard-earned democracy against all threats is a cornerstone for capitalising on our renewed independence. The defence policy must change and bring the spending increase in line with the Breaking the Code of History special report on ‘a New Model for British Defence’, a copy of which is available upon request (see past blogs on A new model for Britain's Defence Forces).

Summary

Overall, Britain is making excellent progress but with some glaring omissions that need to be addressed. However, the impending financial crisis whilst presenting major challenges will almost inevitably strengthen Britain’s hand as it becomes a safe haven for capital flight from the EU.

Apologies in advance if my dyslexia defies my spell checker. We would appreciate your help to notify us of any errors.

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