DECLINE AND FALL OF BRITAIN / MACLEOD FINANCE

Decline and fall of Britain

It is time the financial world woke up to the economic destruction being perpetrated by the Labour government on the British economy. Both sterling and bonds are bound to crash.

ALASDAIR MACLEOD

 

Last year, in a fit of pique against a government that had lost its political way, the British public elected a Labour government by default. 

As has often been the case in British politics, the incumbent government lost the election rather than the opposition won it.

Let’s look briefly at some of the new government’s ministers’ credentials. 

Starmer is a lawyer clearly ignorant of economics. 

As proof, if it were needed, he recently decided to take advice from government regulators on how to make the economy grow, presuming that they would know better than the private sector actors they regulate. 

Clearly, he spurns free market solutions and is in thrall to Britain’s prewar socialist idealism.

Rachel Reeves, the Chancellor of the Exchequer, was forced to amend her LinkedIn entry removing claims to have worked at the Bank of England as an economist. 

Therefore, she is in office on a false prospectus. 

And Ed Miliband, Energy Secretary, when he previously held that post stopped the dredging of the rivers Parrett and Tone which led to the Somerset Levels (lowlands) being flooded for months. 

Now he wants to carpet England with solar panels, electricity pylons, and wind farms in a vain attempt to replace fossil fuels.

Kier Starmer’s campaigning approach was to copy Tony Blair’s in 1997: to promise capitalist ideals and responsible government. 

Once Starmer became prime minister, that changed rapidly to be replaced with a deeply socialist idealism aimed to promote the state and minimise the private sector. 

It has its roots unashamedly in the Labour and trade union movements of the 1920—1930 era, bolstered by the cocktail party socialism of North London. 

The economic progress under Margaret Thatcher, which took Britain from being the acknowledged sick man of Europe to its greatest success is being reversed.

Freedom of speech is being destroyed in a general replacement of Christian morality and manners by wokeness — another trend foolishly tolerated by the previous government and now being accelerated by Labour. 

The railways are to be renationalised for the appeasement of far-left rail unions. 

Parents privately educating their children are faced with extra taxes imposed on their school fees, crippling for ambitious parents already struggling to make ends meet and designed to put private education out of business to satisfy socialist ideals. 

And history lessons in state schools are to be “de-colonised”.

This class warfare also extends to inheritance of farmland. 

Nothing riles the urban left more than property ownership by farmers who kill foxes and hares on horseback and hounds for sport. 

Inheritance tax at 20% has been introduced on agricultural land, enough to force many farming families at the heart of country traditions to sell up. 

Doubtless, the socialist ideal will be to increase this tax further over time so that the state will end up taking land into public ownership in lieu of taxes.

Further destruction of private sector activities will be brought about by climate change policies. 

Despite his abysmal previous ministerial record in this department, under Ed Miliband his energy policies are set to rapidly deprive the nation of carbon fuel energy, which is the lifeblood of economic progress.

Meanwhile, the state is being advanced as the solution to everything and the profit-seeking private sector to nothing.

Taking railways back into the state sector will almost certainly be followed by the water companies. 

Thames Water faces difficulty refunding its debt and will likely end up being renationalised. 

Its debt problems arose from the Bank of England’s foolish suppression of interest rates which encouraged Thames’s private equity owners to leverage its earnings. 

Subsequently, interest rates began rising — which was entirely predictable but not to the Monetary Policy Committee. 

Thames is now struggling with the refinancing. 

The end result is likely to be state ownership, creating a precedent for further water company nationalisations.

So far, markets seem unaware of the strength of these economically destructive forces. 

Though newspaper editorials criticise Labour’s politics, there has been very little commentary on the consequences for markets in the financial pages of mainstream media. 

But unknown to most, the pound sterling against the US dollar has already entered a dangerous bear market, as the chart below illustrates.

This currently forming death cross tells us that sterling is heading far lower and it is likely to test unity against the dollar, given Labour’s economic policies. 

And it might not stop there. 

Due to London’s position as the major international centre for European time zones, sterling is heavily owned internationally. 

As the economic consequences of the Starmer government’s policies reveal themselves, sterling and sterling credit is therefore likely to be heavily sold down by these actors.

A consequence of a declining currency is for interest rates and bond yields to rise. 

Interest rates may be held back temporarily by a central bank prepared to tolerate further currency weakness. 

But a weakening sterling is bound to lead to yet higher gilt-edged yields, which is already happening and confirmed by the chart below of the UK Treasury 1 5/8% 2071 long gilt.

In this case, a death cross on the price becomes a golden cross for the yield, which from late-October has already propelled yields higher. 

It is now at an all-time high for this bond. 

No more statistical evidence or further argument is needed about the dreadful outlook for the currency and subordinate credit values.

Labour’s political idiocies are hastening the collapse of the economy, its revenues, and therefore government finances. 

The only escape for members of Britain’s public is to sell currency and dependent credit in favour of gold, which still remains the highest form of money in common law.

Sadly, very few Brits know this, and they have yet to seek refuge from the financial storms to come.