Friday, 20 July 2012

Rise in borrowing deals blow to Osborne

There are fewer corners to hide for Mr Osborne.  The eternal EU excuse is being crushed under the massive weight of evidence that he has no solution.  His government is preserving the wealth of the very rich and selling it as an austerity strategy.  Cut spending, privatise what's left of the government and hope for the confused consumers to add on debt and spend a tiny bit more.  The result is we boost our profits, they see a "stabilisation" in unemployment, deficit and GDP so we can claim our plan A is working.  If it weren't for this Eurozone!  So let's leave the EU altogether, and be left to our devices.

When comparing to Switzerland for "independence" from the EU there is always a risk of actually demonstrating one's own incompetence and exposing one to arguments for policy change, rather than successfully demonstrating EU's ills (or the curse of immigration for that matter).

Trading Economics gives us the following picture:

Government budget: CH has been in surplus since 2007 (had a deficit of 0.6% in 2006).  UK has only had 3 years in surplus (2000-02) since 1995.

Debt to GDP: in 2005-2012 CH went from 72 to 55%, UK from 40 to 86%

GDP per cap: CH $37k, UK $27k (the average Swiss produces 37% more wealth than the average Brit)

Exports: some $16bn / month, UK $38bn / month, on a per cap basis more than 3 times more than Britain.  
The dreadful European Union is by far its largest trading partner accounting for about 62% of exports and 79% of imports for CH, considerably more trade-dependent on the EU than Britain.

Unemployment: in 2005-2012 in CH it hovered between 2.5 and 4% (below 3% in recent past), and it climbed from 5% to over 8% in Britain

Finally, the national output went from $370bn to $635bn in CH and from $2.2trn to $2.4trn in UK. 

By the way, Switzerland is among the countries in Europe with the highest percentage quota of foreigners in comparison with its permanent population: 21.9 per cent of the overall population are foreigners (IOM).  The figure is half that in the UK.

How about the government sticking its nose in the way of free enterprise?
Heritage website: CH - Taxation is more burdensome at the cantonal levels than at the federal level. The top federal income tax rate is 11.5 percent, with the combined tax rate as high as 41.5 percent. The federal corporate tax rate is 8.5 percent, but the joint rate can be up to 24 percent. The overall tax burden amounts to 30.3 percent of total domestic income. Government spending is equivalent to 33.7 percent of GDP, with small budget surpluses still in place.  

For most indicators, including government spending, the UK was much closer to CH than the Eurosceptics would like to admit until 2004.  The situation went belly up for the UK after 2007 when the unprecedented taxpayer effort was imposed by the financial industry onto the rest of us, to rescue the banks under the threat of economic collapse and social Armageddon.

I would draw two conclusions: 1) UK's fate is not due to the EU, but to its City and 2) a new economic model is needed in Britain.  The question is who is going to deliver it?

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