RE: UK stocks undervalued?1 Mar 2024 16:07
KK and LT were fools. You can't borrow £65billion extra a year for tax cuts hoping this will generate more growth and therefore pay for itself. They could never prove it would pay for itself so the bond and currency markets acted accordingly.
Unfortunately we now have a Labour Party that is going into an election supporting a Treasury orthodoxy (aka fiscal conservatism) which has delivered low growth, low productivity, low wages, low investment, high asset prices (especially housing) with millions not earning enough to live, hence we're spending £33bn/year to subsidise the private rent.
Gerald Lyons (ex Boris Johnson chief economic adviser when he was Mayor of London) sums up the situation well (I don't agree with him about Brexit) - “The whole period after 2010 was one of major fiscal mistakes. Austerity was wrong and badly executed. The ability to borrow cheaply was staring at us as a huge opportunity but was never taken.” If we'd invested in infrastructure, public buildings, etc when interest rates were so low we'd have delivered more growth, increased tax revenue and reduced government debt as a % of GDP. That's the proper measure of whether debt is sustainable - someone earning £100k a year can obviously afford to borrow more than someone earning £30k a year, same with governments, countries with high GDP per head means higher tax revenue because taxes are levied on what people earn and spend so they can afford to borrow more. Instead all austerity has delivered is government debt approaching 100% of GDP when it was 60% of GDP in 2010, huge hospital waiting lists, crumbling schools, pot holes everywhere, and a housing crisis (which means we all pay because councils are forking out huge amounts of money on emergency accommodation, aka B&Bs, sometimes with families in them for 10 years).
A good summary here - https://www.theguardian.com/uk-news/2024/mar/01/there-is-no-money-jeremy-hunt-own-note-chancellor-budget
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