When the Maths don't Work

My wife and I were walking our dog by the river on Sunday when I noticed a rubber dinghy beside us, puttering slowly in the same direction. At first, I wondered why someone would take a boat when you could walk faster, especially when he wasn’t carrying anything. Then my wife pointed out that he was using a cup to bail out the water leaking into his boat. By the time we reached our destination a couple of miles ahead, the dinghy had almost disappeared from view far behind us. Nothing could sum up the state of the UK economy any better.

The result is a Budget that is neither here nor there. Not enough tax cuts to boost growth, not enough spending cuts to fix the deficit. We now spend £319 billion, or 42% of all managed government expenditure on welfare, compared with just 13% in 2010. The NHS absorbs another 19%, and debt interest alone costs more than £50 billion, roughly 5% of spending. It doesn’t take a genius to conclude that none of this is remotely sustainable, which is why Rachel Reeves will almost certainly return next year with more tax rises to feed the 16.8 million people now claiming health-related benefits.

Where does that leave the mere 47.4% of the population who are net taxpayers? Squeezed, fed up, and increasingly Googling “job opportunities in Dubai.” Labour is now left with two hard choices: scale back the handouts and make work pay again or unwind some of the most self-defeating burdens created by the unmitigated disaster that Brexit has proven to be. According to multiple economic studies, leaving Europe is costing the UK as much as £280 billion per year in lost output and lower tax receipts. The likelihood of either happening is probably lower than Nigel Farage becoming our next prime minister.