I’m So Bored With the USA: “Arbeit macht frei”

 

 

“You had one eye in the mirror, as you watched yourself gavotte”

It’s funny how former PM’s think. Gordon Brown worries over inequality and poverty, whilst, his old boss, “call me Tony” Blair, its quantum computing.

 

Blair said, “history won’t forgive us” if the UK falls behind in the race to harness quantum computing, a frontier technology predicted to trigger the next wave of breakthroughs in everything from drug design to climate modelling.

Quelle surprise; the former PMs thinktank and consultancy, the Tony Blair Institute, is backed by tech industry leaders including the Oracle founder, Larry Ellison!

The warning comes after the Cambridge-educated Briton John Clarke won the 2025 Nobel prize in physics for his work into quantum computing science, and as UK quantum firms continue to be bought up by US companies.

In June, a spinout quantum company from Oxford University, Oxford Ionics, was sold for $1.1bn to the US company IonQ. Meanwhile, PsiQuantum, a spinout from Bristol University and Imperial College London, found investors in California, and its first large-scale quantum computer will be built in Brisbane, Australia.

This comes as no surprise. For several years we have worked with businesses seeking to raise finance, including my own, and without fail, the funds comes from overseas. There appears to be no appetite for capital investment of any substance in the City and its environs.

Staying with famine, poverty is an embarrassingly large issue in this country, and it is something government seems oblivious to. Circa 31% of children in the UK live below the poverty line (household income after housing costs below 60 per cent of the median), making us one of the worst in Europe.

 

‘31% of children in the UK live below the poverty line’

 

For these people, growth and investment doesn’t matter, whilst their children are going to school without breakfast or a shower, after sleeping X to a bed, and hoping for dinner.

Labour loss is proving to be Reforms gain, as the party continues to attract support in areas with higher rates of child poverty, underlining the party’s ability to connect with disillusioned voters in Labour’s heartlands.

FT analysis of a poll by More in Common projected that Reform would win 180 seats in a general election, of which 135 have poverty rates above the national average of 31%.

Labour currently holds 121 of these seats, reflecting Reform’s growing support among left-leaning voters who do not think the government is doing enough to support working-class families and tackle poverty.

Luke Tryl, director of More in Common, said Reform is appealing to people who are “disillusioned” with government and socially conservative, but left-leaning on economic issues. He added that Labour had failed to deliver on what voters saw as their core missions, including supporting working people, improving public services and reducing poverty.

This week, Farage continues to promise Reform will remove the two-child limit, although this will only apply to low-paid British couples who were both working.

In response, Labour have announced plans to expand eligibility for free school meals, which it estimates will lift about 100,000 children in England out of poverty.

Alex Clegg, economist at the Resolution Foundation, said this would not be sufficient to achieve the governments’ target of significantly reducing child poverty by the end of this parliament.

Scrapping the cap was the “most cost-effective solution”, he said, costing £3.5bn a year by 2029-30 but delivering an almost immediate reduction in poverty and significant long-term economic benefits.

The fact that child poverty rates are projected to rise to 34% by the end of this parliament, — the highest level since Labour was last elected in 1998, highlights how warped the governments priorities are.

Proof of the electorates priorities was proven last year when Trump triumphed in the US presidential elections, which was addressed in “Darklands.”

The economy played a key role in the election, despite the Democrats were defending a sound economic legacy. Mark Zandi, the respected chief economist at Moody’s, wrote “But … there is no denying it: this is among the best performing economies in my 35+ years as an economist.” Growth: up. Jobs: up. Wages: rising. The value of your home: up. Share prices: booming. Inflation: falling. Borrowing rates: dropping.”

Despite this, most Americans didn’t feel better off. And they were right; for teachers, clerical workers, sales reps and the great bulk of US employees, whether white or blue collar, wages have flatlined for most of the past half century. Strip out inflation and average hourly earnings for 70% of 10 US employees have barely risen since Richard Nixon was in the White House.

It is little different here.

The lesson is simple listen don’t tell. Chancellor Reeves clearly isn’t listening; her priorities included growth and the national debt.

Putting aside the fact that every time she speaks Rachel only serves to highlight that she is out of her depth, in her defence she wasn’t dealt a great hand. What she hasn’t realised is that the electorate don’t care, its results not excuses, actions not words.

 

‘every time she speaks Rachel only serves to highlight that she is out of her depth’

 

When “call me Tony” became PM in 1997, he had the good fortune to inherit an economy on the up post- the Tory’s ERM folly. It was boomtime, cool Brittania, and all that.

By comparison, chancellor Reeves has the misfortune to inherit an economy in distress, ruined by years of Tory misgovernment with an added dose of spite leading up to the election from chancellor Hunt.

As I wrote in “Patriotism, Nationalism and Racism”, Labour, in their desperation to show that the economy was safe in their hands, fell for Hunt’s gambit, promising not to raise the three main revenue generating taxes. Then, in a final act of “Harakiri”, the chancellor straightjacketed herself into a self-imposed set of fiscal rules.

Yesterday’s pre-budget borefest was little short of disastrous. Whoever decided to broadcast it live was clearly deluded. Reeves was shambolic, talking for ages and saying little. As a result, the Tories and Reform, along with their adoring media, will be brutal. Whatever Reeves now does will be slaughtered, for example:

 

• A wealth tax will be greeted with claims of chasing out millionaires.
• Any increase in NIC or Corporation tax will be seen as destroying industry and small businesses
• Any increase in income taxes will haunt them in the polls
• Increasing VAT will be described as destroying growth and regressive, impacting most on those with the least.
• Increasing funding to defend the NHS will be likened to pouring more into a blackhole.

 

In addition to the financial position of the country, we are faced with an additional obstacle, often referred s to as “staff wellbeing”; ill-health is impacting workers of all ages, including the young.

 

‘Yesterday’s pre-budget borefest was little short of disastrous’

 

Circa 1m young people are not in education, employment or training (“Neet”). Employers are freezing their hiring plans. Unemployment is at a four-year high and the outlook is getting worse.

Almost 100,000 jobs have been lost in the past year, and the official jobless rate stands at 4.8%, up from 4.1% a year earlier. More than 9m working-age adults are neither in employment nor looking for a job.

Up to 20% of working-age adults are “economically inactive”, either not in employment or currently seeking a job. For almost 3 million, the main reason is long-term ill-health, which is near to its highest level on record.

Most of the increase has been down to the health of young people. Between 2015 and 2024, the number of people with work-limiting conditions rose by 900,000, or 32%, for 50- to 64-year-olds. For those aged 16 to 34, the rise was 1.2 million, or 77%.

More than 25% of 16- 24-year-olds who are Neet, due to disability and ill-health (Source: Resolution Foundation), an increase of > 50% from 2005.

Analysis by the Royal Society of Public Health (“RSPH”) found that an extra 600,000 people, 26%, will leave the workforce in the next decade due to long-term health, meaning that >3.3 million adults are expected to become economically inactive by 2035, costing the UK £36bn a year.

 

‘>3.3 million adults are expected to become economically inactive by 2035, costing the UK £36bn a year’

 

The RSPH is calling for a recalibration in how workplaces are used to support people with conditions such as musculoskeletal disorders, mental health problems and cardiovascular disease.

“The declining health of the working-age population is one of the biggest challenges facing government,” said Sam Atwell, policy and research manager at the Health Foundation.

The report presages the upcoming “Keep Britain Working” review by Sir Charlie Mayfield, due this month. The independent review is expected to make several recommendations on the role of UK employers and the government in tackling health-related inactivity and creating and maintaining healthy and inclusive workplaces.

An alternative to this is the hard-edged, “starve ‘em out” approach favoured by Reform who plan to save £9bn p.a., scrapping Pip payments for those with low-level anxiety.

Whist, it is obvious that getting more people into work would reduce our spending on benefits, it would also benefit the economy: if the UK matched the lowest Neet rate among OECD countries, that could deliver a boost to the economy of £69bn.

 

“The declining health of the working-age population is one of the biggest challenges facing government”

 

Clearly, chancellor Reeves has problems. Whilst she inherited a mess, she appears to have no ideas, direction, or political skills, allied to priorities that are out-of-step with the majority. In addition, as I identified earlier, she faces a rabid, right-wing media ready to pounce on her every utterance.

Turning to the opposition, we will ignore the Tories as they are equally clueless and completely unelectable. Instead, we will consider Reforms new proposals.

Reform always put on a “show”. Whilst it isn’t yet up to Nuremberg Rally standards, they are getting there.

The venue was an old banking hall in the City. Accompanying Farage was his praetorian guard of nodding dogs; Tice, Anderson and Kruger. The warm-up act, and compere was Zia Yusuf, whose chief role was to introduce Farage….”Here comes Johhnnnyyyy…”. Opps, sorry! It’s Nigggelllll………….”. “Come on down…”

Farage glossed-over Brexit as some sort of extraterrestrial event, whose opportunities had been “squandered”. It would have been so much better had he been involved:

“The opportunity to sensibly deregulate, the opportunity to become competitive globally – all of that has been squandered. The worst thing is that regulations and the way regulators behave with British business is now worse than it was at the time of the Brexit referendum vote.”

Both Labour and the Conservatives were dismissed as know-nothings, professional politicians

The previous Panglossian world of £90bn in tax cuts was now impossible. Nothing works, and both Labour and the Tories were guilty of “wrecking the public finances”. As a result, Reform need to get public spending under control first.

 

‘I want as many high-earning people as possible living in this country, and paying as much tax as they legally have to’

 

Out went their 2024 pledge of raising tax-free thresholds to £20,000, explained away as: “They were only ever aspirations. I think what you’re seeing today is us being realistic about the state of the economy.”

Amongst new proposals were changes to public sector pensions. Suggestions that this could cut the future incomes of millions of public sector workers were dismissed, with the party focusing on “exorbitant” management fees paid by pension funds.

There is to be no immediate major tax cuts, instead Farage plans to “relatively modest” savings at first, including reversing IHT on farms and raising tax thresholds.

Reform aims to be the party of working people, although the minimum wage for younger workers is too high, and the government’s workers’ rights bill is damaging small businesses:

“There’s an argument the minimum wage is too high for younger workers, particularly given that we’ve lowered the level at which NIC [national insurance contribution] is paid to £5,000 a year. So do one or the other: either lift the cap at which NI is due, or lower the minimum wage for lower [sic] workers.”

Farage said the UK was suffering a wealth drain, just as it experienced a brain drain in the 1970s, underlining his opposition to the non-dom tax, he said: “These people pay their UK taxes. These people employ a lot of people. These people invest in British businesses and British industries. These people are the biggest spenders in the country.

“I want as many high-earning people as possible living in this country, and paying as much tax as they legally have to. Because if the rich leave and the rich don’t pay tax, then the poorer in society will all have to pay more tax. It’s as simple as that.”

 

We finish with a quick look at the US, where, much to my delight, the Democrat, Zohran Mamdani, was elected mayor of NYC. The city showed its displeasure with all things Trump, with the Republican candidate, Curtis Sliwa, receiving only 7% of the vote.

Trump, predictably is in uproar, threatening the city’s funding: “If Communist Candidate Zohran Mamdani wins the Election for Mayor of New York City, it is highly unlikely that I will be contributing Federal Funds, other than the very minimum as required, to my beloved first home. I don’t want to send, as President, good money after bad.”

As president Trump has no direct control over the funding any city receives, instead it is a constitutional function of Congress. However, control over how money is spent – or withheld in acts of impoundment, which are forbidden under federal law – has become a point of increasing legal contention.

Somehow, nothing ever changes…………

 

 

“Here in the streets of American nights Rise to the bottom of the meaning of life”

 

‘Domestically, aside from releasing prisoners on an ad hoc basis, the big story is the budget.

For the government, the chancellor took the opportunity to waste 20-mins of viewers’ lives on nothing. Her speech was simply pointless, serving only to show how out-of-touch with people she and the government are.

The decision to broadcast it must be up there with Andrew whoever and his equally foolish interview

For the opposition, Reform put on a show to announce their latest economic policies.

Between the two it was a fascinating contrast; Farage, deep down knows he’s consciously incompetent, whilst the chancellor is unconsciously incompetent. A choice between a liar and a fool!

It was interesting to see how Farage demonstrated that there are more strings to his bow than complaining about migrants. He can also complain about the Bank of England (too cautious over cryptocurrencies), the Financial Conduct Authority (captured by a “diversity agenda”), public sector pensions (“a massive liability”) and net zero (a burden on energy bills).

Whilst he can no longer directly scapegoat Europe, the old fiddle can still play a tune as he highlighted post-Brexit opportunities such as deregulation from Brussels red tape which has been “squandered”.

Added to that were regulators who neutered markets, a bureaucratic state that lavishes welfare on work-shy malingerers and banishes enterprising wealth-creators.

The solution lies in slashing disability benefits and using tax breaks to entice self-exiled non-doms back.

The fiscal details of how that might all add up, is still a mystery to everyone including Reform. But don’t worry when the numbers don’t work we can still blame immigrants.

Farage remains a Trump tribute act, but there is one key difference. He can’t use Trumponomics as he will become Liz Truss. Therefore, what’s left?

Stateside, the big story is Mandani being elected mayor of NYC in a landslide victory. Imagine it, a Democrat, and a Muslim, you can hear it now, “Communist”, “terrorist”! this is a story in its infancy

On that note a big shout-out for Robert De Niro, the columns ”hero of the week”

Lyrically, we start with You’re So Vain by Carly Simon for Farage and his continually over-staged productions. We finish with “New York City Cops by the Strokes.

Enjoyment, if only for a short-lived moment !

Philip.’

 

@coldwarsteve

 

 

 
 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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