The monthly ICM poll for the Guardian is out today and has topline figures of CON 38%, LAB 34%, LDEM 7%, UKIP 11%, GRN 3%. The four point Conservative lead is the smallest since the election – while Jeremy Corbyn maybe getting some mediocre personal poll ratings, it does not yet appear to be doing Labour’s voting intention figures any harm. Full tabs are here.


245 Responses to “ICM/Guardian – CON 38, LAB 34, LD 7, UKIP 11, GRN 3”

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  1. @lurkinggherkin

    You have misunderstood the analogy I have drawn which concerns the practical nature of the act and not its morality. You might be interested to read the post to which I was responding.

    @Carfrew

    I am sorry if I am not been clear enough – do you believe that private currency counterfeiters don’t reduce the spending power of everyone elses’s money? If so, why don’t we just legalise counterfeiting money, instantly eliminating poverty forever?

  2. WATCHIT

    Thanks for that, most people wear blinkers about the NHS I’m g;lad i’m not alone in seeing the obvious. I guess part traxation, part individual insurance is the answer with much more charging, for Doctors appointments and the like.

  3. @Mico

    “I am sorry if I am not been clear enough – do you believe that private currency counterfeiters don’t reduce the spending power of everyone elses’s money? If so, why don’t we just legalise counterfeiting money….”

    ———-

    Yes, somehow you don’t seem keen to explain what you’re claiming and are instead trying to put the matter back onto me…

  4. DrMibbles

    But that’s the new reality!! We have to wait a few years for a surplus, then wait more years to build up enough to invest, while our economic rivals borrow and get the benefits of the investment immediately.

    It’s like saving to buy a house instead of getting a mortgage…

  5. @DrMibbles

    Well, I was kinda exploring the idea that this could just be the first move in a trend over time. They may tighten the borrowing conditions in future…

  6. DRMIBBLES

    “Completely bonkers.” Of course many other people would completely disagree with you. The important thing as far as polling and voting go is what the voters think of the respective econmic policy of government and opposition at the time of the next election. We will see if they think GO’s policy is bonkers then I expect.

  7. @Carfrew

    The mechanism by which others are expropriated is inflation. Their currency holdings reduce in buying power and their nominal fixed-income returns have a lower buying power than expected. There is no creation of new value. QE is a wealth transfer mechanism just like any other tax.

    Since this is (in my opinion) obvious and yet unclear to you, I tried to give you a simpler heuristic so that you could understand the point more easily. I was not trying to mislead you or dodge your question.

  8. @”If you borrow and build roads, railways, broadband infrastructure, etc, then you are making an INVESTMENT in the wider economy which promotes growth and REDUCES the deficit over the long-term through increased economic activity.”

    As indeed you are when you invest in public infrastructure using Tax Revenues, rather than Borrowing.

    You seem to be under the impression that All Tax Revenues must be used for Current Expenditure.

  9. “Britain’s jobless rate has fallen to its lowest level in more than seven years but pay growth was a bit slower than expected, suggesting the labour market is not hot enough to speed up a Bank of England interest rate hike.

    Britain’s unemployment rate fell to 5.4 percent in the three months to August, down from 5.5 percent in the three months to July, the Office for National Statistics said.

    It was the lowest jobless rate since the second quarter of 2008, before the worst of the financial crisis, and below a median forecast of 5.5 percent in a Reuters poll of economists.”

    Reuters

  10. Ah yes… I remember the same being said of EM personal ratings. “Obviously not affecting VI”, except they made a massive difference when they were actually intending to vote!!

  11. @Mico

    But QE doesn’t inevitably result in inflation of any significance. That’s a neolib sound bite that’s trivially debunked.

    If you doubt me, consider that we’ve had hundreds of billions of QE, and people weren’t exactly carrying money round in wheelbarrows were they? In fact currently inflation’s flirting with going negative.

    The reason is that if you shove more money in the economy, then you create more demand, resulting in an inflationary pressure, yes. You have more money chasing the same number of goods as before. BUT…

    …Then that incentivises business to up output to meet demand: there’s more money sloshing about, but now chasing more goods, pulling prices into line again.

    As the economy nears full employment, THEN you get inflationary pressures. Because business will now struggle to keep hiring to up output to meet demand. This is why inflation was such a big deal in the post-war period.

    But in that circumstance, you wouldn’t do QE, because unlikely to need to. QE is for special situations like what we have been experiencing, a liquidity trap, when you can’t meaningfully reduce interest rates further.

    This is without considering that sometimes creating an inflationary pressure – to counteract deflation and risk of a deflationary spiral – might be a good thing…

    A final point to really put it to bed, is that private banks magic up money out of thin air every day, but somehow no complaints about that. Only when the government do it to save the economy the banks trashed do the complaints come…

  12. Colin
    “As indeed you are when you invest in public infrastructure using Tax Revenues, rather than Borrowing.
    You seem to be under the impression that All Tax Revenues must be used for Current Expenditure”

    Well at present they are and that will remain so probably for a very long time and the only way to change that is through a massive shrinking of the state which many people (probably the majority) don’t want. The whole reason we have a deficit is because day to day expenditure exceeds tax revenues so where’s the money for investment without borrowing?

    This whole fiscal charter thing though raises another issue, if the government is not allowed to borrow for investment where is the money for Trident renewal coming from? Am I right in thinking that most of the cost is up front in constructing the new subs etc Is this going to be put on hold until Britain can save enough tax revenue to pay the contractors or as I suspect will this not count because “stuff/reasons”

  13. @Rivers

    It’s currently ok to borrow in a recession? Until maybe they tighten it…

    So if we wanna pay for Trident, and we’ve been labouring under a meagre surplus for a while, all we have to do is engineer a recession so we can borrow again. Simples.

  14. “As indeed you are when you invest in public infrastructure using Tax Revenues, rather than Borrowing.”

    ———–

    Good of rich peeps to forego spreading the load via borrowing and instead accepting a greater taxation burden for investment…

  15. @ Mico

    Where do you stand on fractional reserve lending? Should banks only be able to lend out deposits which they’ve taken? Or is fractional reserve lending acceptable to you?

  16. RIVERS10

    @”Well at present they are and that will remain so probably for a very long time ”

    Well not too long I hope. The Deficit elimination is a target for this Parliament-and so it should be.

    States should-in my view-aim to cover all their Expenditure with Tax Revenue. Constantly mortgaging the future is wrong. It will not always be appropriate to avoid deficit funding of course -and circumstances will dictate when they are sensible. But I am an advocate of Balanced Budgets & Sustainable Public Finances.

    Actually I think the biggest hole in GO’s Bill is the failure to indicate what this government’s aiming point is for the proportion of GDP taken in Tax , and the optimum relationship of Total Debt to GDP.

    No Political Party ever comes clean on these two absolutely key parameters for our Public Finances.

  17. @ Colin

    When the government is ‘saving for a rainy day’, where should they put their savings?

  18. @Carfrew

    “But QE doesn’t inevitably result in inflation of any significance. That’s a neolib sound bite that’s trivially debunked.

    “If you doubt me, consider that we’ve had hundreds of billions of QE, and people weren’t exactly carrying money round in wheelbarrows were they? In fact currently inflation’s flirting with going negative. ”

    It’s a scientific statement, not an ideological statement of any kind. You are right that it is possible to do QE and not create hyperinflation, depending on conditions and the extent of the QE, but inflation will still be higher than it would have been without QE. The whole point of the QE performed by the BoE was to increase the rate of inflation, in order to bring it closer to the government’s 2% target.

    “Then that incentivises business to up output to meet demand: there’s more money sloshing about, but now chasing more goods, pulling prices into line again. ”

    Inflation can reduce unemployment that is due to price stickiness, and that in turn can increase output, but inflation in conditions of full employment (like now) will not increase output…

    “As the economy nears full employment, THEN you get inflationary pressures. Because business will now struggle to keep hiring to up output to meet demand. This is why inflation was such a big deal in the post-war period.

    “But in that circumstance, you wouldn’t do QE, because unlikely to need to. QE is for special situations like what we have been experiencing, a liquidity trap, when you can’t meaningfully reduce interest rates further.

    …as you seem to agree. Your condition for doing QE (inflation is too low) is the “neolib” condition for doing so. We are talking about doing QE in order to raise revenues, not to optimise the rate of inflation. They are partially contradictory justifications, because optimising the rate of inflation caps the amount of revenue that can be raised.

    “A final point to really put it to bed, is that private banks magic up money out of thin air every day, but somehow no complaints about that. Only when the government do it to save the economy the banks trashed do the complaints come…”

    Describing something as a tax and complaining about it are not the same thing. Income tax is uncontroversially a tax but most people are not opposed to income tax.

  19. Another problem using QE for infrastructure is that of imports, the vast majority of construction materials are sourced abroad, cement, sand, steel, glass, timber, cable, machinery, you name it, we ship most of it in, and certainly, here in London, labour is largely foreign and some earnings are remitted abroad. We cannot afford such indulgence, no-one can claim the high ground using economists arguments since they disagree fundamentally, presumably GO’s economists are advising him on current strategy, as are McD’s on his, where’s the common ground? I don’t see the fog of economic theory, clearing.
    IMO shrinking the cost of the state is essential, but there is still a significant amount of waste in the public sector, police, NHS, education, etc., so by introducing efficiencies we can reduce costs without compromising services. GO has the right idea, but whether anyone currently charged with achieving these economies is capable of delivering, well, I doubt it, but then I am sceptical of the quality most public sector management. :-)

  20. Colin
    I too would like to see a balanced budget and most/all of governments day to day expenditure covered by tax revenues but this doesn’t change the fact that….

    1) Not allowing borrowing for investment is economically illiterate, I mean if nothing else we’ll be lumbering behind other nations as we try to save enough revenue for infrastructure projects (probably damaging the economy in the interim period as business moves on or doesn’t invest because of our ailing infrastructure and limited capacity to improve it)

    2) If we work on the presumption that tax should cover all spending might it make just a tiny bit of sense to not repeatedly lower taxes. One can only cut so much before it starts to become counter productive and this endless race to the bottom is only going to repeatedly lower the % of GDP taken in taxes and lower our capacity to modernise and improve the economy with modern infrastructure or stimulate it in times of trouble. If I were a deeply cynical Corbynite (oh wait) I’d hazard a guess that the fiscal charter is more than just a political trap rather its a genuine attempt to legally bind all future governments to a near total laissez faire free market orthodoxy regardless of circumstances, and that I hope you agree is a wee bit foolish.

  21. COLIN
    I know we are all Keynsians now-but putting it into law-I agree thats a bit of a stretch :-)

    Phil’s “So Osborne’s rule that anything above 0% borrowing is verboten amounts to a thinly disguised attempt to enshrine a further permanent shrinking of the state into UK law” raises the issue that “shrinking the state” by enshrining Tory policy into a charter constraining future legislation also constrains the range of instruments available for the governance of a Keynsian social market system. As Callighan, I think, once said “Why have the whole range of clubs in your bag if you can’t use them?”

  22. AMBER

    They will “put the savings” into Debt Reduction-The Debt Management Office spends its time redeeming Gilts at maturity dates, and promptly refinancing the repayments with new Gilts . Given a Bud, some of the maturing Debt will not have to be rolled over into new Gilt Issues.

  23. @Mico

    I’ve linked to the BoE study on here before in which they assessed the contribution of QE to inflation – just a few percentage points spread over several years.

    This very minor inflation has to be set against the losses people would have experienced via letting banking collapse and take down the economy.

  24. @Mico

    “Inflation can reduce unemployment that is due to price stickiness, and that in turn can increase output, but inflation in conditions of full employment (like now) will not increase output…”

    ———–

    You’re misreading what I wrote. I am not talking here about inflation affecting employment or output.

    I was saying that inflation only becomes significant when you near full employment, because hard for business to up output, because harder to hire.

    You’ve flipped cause and effect, lol.

  25. @ Colin

    Why do you think that demand for gilts will be low during the ‘good times’ then conveniently show a big increase during a recession?

  26. ‘ As Callighan, I think, once said “Why have the whole range of clubs in your bag if you can’t use them?”’

    That was Ted Heath .

  27. @Mico

    “…as you seem to agree. Your condition for doing QE (inflation is too low) is the “neolib” condition for doing so. We are talking about doing QE in order to raise revenues, not to optimise the rate of inflation. They are partially contradictory justifications, because optimising the rate of inflation caps the amount of revenue that can be raised.”

    ————

    No, you are hypothesising different reasons for doing QE. I’m sure it’s possible to come up with plenty of thoroughly nonsensical reasons for doing it given enough time and effort!! I’m just talking about the reason we actually did it: to save banking and the economy when in a liquidity trap and can’t use conventional stimuli like lowering rates because already floored.

  28. RIVERS10

    @”Not allowing borrowing for investment is economically illiterate,”

    GO’s Charter says that if growth is less than 1% pa , the Balanced Budget Rule is scrapped protem after an OBR statement. I think Im right in saying this mirrors a system in Sweden.

    I am not as sanguine as you seem to be that “infrastructure investment” is always going to be sensible & productive just because it is implemented by Civil Servants. And I don’t buy the argument that it should always be financed by more Debt.

    I think there is a large element of bear trap in the Charter-I agree. But Labour’s leadership should have thought it through properly.

    Anyway-looking forward to this evenings debate…………..and vote !

  29. On QE

    All money that exists today are results of QE (the means of payment in Marx’s terminology which then goes back to the 1860, and I don’t even want to go into the debate between the banking school and currency school). The only question is the mechanism with which the money supply flucuates (the QE is generated or withdrawn). In all the major economies, with qualifications for Germany where the bills of exchange still plays a significant role, it is the function of treasury borrowing and repayment.

    QE as such is not a tax simply because the government (or the central bank) is not in the position to decide the purchasing value of the currency. As the dominant form of the currency is the means of payments, in reality its value is determined by its ability to produce profits (via production). The advanced economies have had virtually free money for two decades …

    Inflation can, however, be perceived as tax, and for that matter a pretty crude form. However, switching a very large proportion of taxation from income and wealth tax to consumption tax (against which the liberals have fough for centuries, but then conveniently forgot about) undermines the argument, as it is largely a consumption tax.

    I’m still against financing infrastructural investment from QE simply because the consequences are down by about five years, and unless we have the economy of associated producers, it is unpredictable.

  30. KEN
    “Another problem using QE for infrastructure is that of imports, the vast majority of construction materials are sourced abroad, cement, sand, steel, glass, timber, cable, machinery, you name it, we ship most of it in, and certainly, here in London, labour is largely foreign ”

    It’s a problem if you invest all these resources in white elephants; it is not a problem if you invest them in wealth generating infrastructure or production factors, including housing – re the latter, this is already the process taking place in the mortgage sector, paid back by the wealth generation created by combining shelter with individual skills, private production systems and public sector infrastructure.

  31. 5% unemployment is nowhere near Full Employment. I recall the uproar in Parliament in 1972 when unemployment hit 1 million for the first time since World War 2. Dennis Skinner came close to assaulting Heath.
    In the 1960s 2% was considered too high.

  32. @Mico

    “Describing something as a tax and complaining about it are not the same thing. Income tax is uncontroversially a tax but most people are not opposed to income tax.”

    ————-

    This does not appear to address my point, or Amber’s related point about fractional reserve banking in any meaningful way.

    I mean, one can agree that describing something and complaining about it might not be the same thing.

    But that completely bypasses the issue of why complain about QE when private banks continually magic up money they don’t have.

  33. AMBER

    @”Why do you think that demand for gilts will be low during the ‘good times’ then conveniently show a big increase during a recession?”

    Er-I was commenting on the supply of UK Gilts-which will obviously fall a little in times of Debt reduction.

    As to demand for Gilts at any particular time, as far as I know this is subject to a whole range of factors-national & international.

  34. @ Carefrew and Ken

    Do you know anyone who wants to develop a knowledgable spellcheck for IPad? I’m willing to invest in it and also in Thorium and explosive gas for car fuel.

  35. GRAHAM
    “That was Ted Heath”

    Thanks, Graham. I knew it was some fat, pompous, genial old guy.

  36. @Carfrew

    “I’ve linked to the BoE study on here before in which they assessed the contribution of QE to inflation – just a few percentage points spread over several years.

    “This very minor inflation has to be set against the losses people would have experienced via letting banking collapse and take down the economy.”

    You are wandering from the subject. I have said that QE is a tax on holding currency and fixed-income securities. You have denied this and for evidence you have said that the BoE’s QE has not caused hyperinflation. Those are logically separate claims. It is entirely possible that QE is a tax AND that the BoE’s QE did not cause hyperinflation. If I drink alcohol my reaction times will reduce; it is no disproof that I can have half a glass of wine without becoming catatonic.

    You seem to be attempting a vague political defence of QE. I am not making a political attack on QE. I am making the specific claim that money that the government can spend as a result of QE being used to buy government bonds is money that has been taken – taxed – from private holders of currency and fixed-income securities.

    On the incidental but irrelevant question of whether QE is a good idea, the fact that QE is a tax does not necessarily make it so, if QE has a lot of positive externalities for e.g. the labour market. I believe that QE does have such positive externalities in conditions of low inflation. But if we are considering QE as an alternative to regular consumption and income taxes, it has many disadvantages and no obvious advantage. The possible argument I can think of for doing QE in place of standard taxation is the tactical political consideration that many voters may not recognise that QE is a tax or realise that it is the government, and not private banks or the market in general, that has seized their savings. Which is not a social advantage at all, it is a marketing trick.

  37. @ John Pilgrim

    Not quite (about infrastructure). I’m not really concerned about BoP implications in the UK (by the way, Ken, cement is rarely transported to long distances), but by the simple fact that wages and purchases are paid now, generating demand now, while the benefits may or may not realised in efficiencies later. Thus, the burden of risk is on people who didn’t participate in the decision making.

  38. “This does not appear to address my point, or Amber’s related point about fractional reserve banking in any meaningful way.

    “I mean, one can agree that describing something and complaining about it might not be the same thing.

    “But that completely bypasses the issue of why complain about QE when private banks continually magic up money they don’t have.”

    I am not complaining about QE. I commented that QE is not a non-tax revenue source, because QE revenue is taxed from savers. The BoE has not engaged in QE in order to raise revenue for the government so this observation has no relation at all to the BoE’s QE policy. Amber’s question was irrelevant.

  39. “No, you are hypothesising different reasons for doing QE. I’m sure it’s possible to come up with plenty of thoroughly nonsensical reasons for doing it given enough time and effort!! I’m just talking about the reason we actually did it: to save banking and the economy when in a liquidity trap and can’t use conventional stimuli like lowering rates because already floored.”

    No I am not. The only mandate the Bank of England has for conducting operationally independent monetary policy is to hit the government’s inflation target of 2%. That is the goal of not just QE, but ALL of its actions.

  40. @ Colin

    So the debt reduction part of the equation seems straightforward i.e. don’t issue new gilts when the old ones expire. But it’s more difficult to be sure you can sell the new ones during a recession.

    One strategy which actually works is selling gilts whilst there is demand then, when a recession is caused by a lack of liquidity, buying them back via QE thereby reducing the debt & fixing the liquidity problem at the same time.

  41. That should be “fat, pompous, genial old Keynsians” except that Callighan got the borrowing wrong, and was too deferent to the IMF’s austerity policiies – as were governments all over the Third World, who paid huge costs in delayed development and poverty as a result.

  42. AMBER

    @” But it’s more difficult to be sure you can sell the new ones during a recession.”

    Is it ?-UK didn’t seem to have that experience. In any event I am not qualified to comment-you need to ask someone at PIMCO about Gilt Market sentiment .

    I agree that in a Keynsian world of counter cyclical public finance management, more gilts will tend to be on offer during recessions , because deficits will need to be funded-conversely in times of growth GO is arguing that less Gilts would be on offer as Debt is reduced.

    With regard to ” buying them back via QE thereby reducing the debt ” we have been around that racecourse many times. I don’t intend to do any more circuits of it repeating that QE does not reduce Debt ** , and is a monetary tool-not a fiscal one.

    ** except for the strange & in my view incorrect , policy of this government in having BoE send interest on its QE holdings of UK Gilts back to the Treasury-in a sense this is QE reducing what would otherwise have been increased Debt-but again, we have agreed on this many times-I just wanted to save you the trouble of reminding me :-)

  43. @ Colin, Mico

    It’s jolly annoying when a theoretically monetarist tool (namely QE) is used as if it’s a fiscal one.

    I’m politically to the left of centre but when it comes to the economy, I think the government should have all the tools available to them; & should be willing to use the ones which work, regardless of ideology.

  44. So much for the right-wing media propaganda that electing Corbyn means that Labour will be unelectable….

    No analysis? I wonder why….

    Though the opinion polls need to be taken with a large pinch of salt, if we’re to look at them at all, one thing strikes you – the 34% support is higher than the 30.4% or thereabouts that Milliband’s Labour received.

  45. @ Michael Siva

    Though the opinion polls need to be taken with a large pinch of salt, if we’re to look at them at all, one thing strikes you – the 34% support is higher than the 30.4% or thereabouts that Milliband’s Labour received.

    I’d be very happy, were that a valid comparison. But Ed Miliband’s Labour were regularly polling >40% for part of the 2010 – 2015 parliament.

    When/ if a Corbyn Labour Party does the same, I will be turning cartwheels. And after I’ve done that, I’ll be crossing my fingers that Labour don’t blow it by shifting from a winning to a losing policy position in the search of a few % more (which is pretty much how Ed Miliband’s Labour managed to snatch defeat from the jaws of victory!).

  46. @Mico

    “A general comment: I am getting the impression that the leftwing posters feel an ideological need to defend both deficit spending and QE. This is confused.”

    ———-

    Just to be clear, who is that aimed at, to avoid confusion, or in case you’re confused about your impression, and to save time in responses…

  47. The thing about QE is that it was a completely bonkers idea that has nevertheless worked. In other times it could have caused a run on the pound a d a complete trashing of the economy, but as the whole world was in trouble, there was no safer currency to dive into. That won’t last forever and it is still a risky thing to do.
    We then come to just one of the long term issues with the technique, if you buy bonds, what do you do with the coupon? All solutions are messy. The BOE could just make it disappear but that would start to reverse the policy and reduce liquidity. They could buy more bonds but that compounds the problem. Giving it back to the government is probably the most sensible thing to do and gets back some of the money that had to be thrown at the banks requiring the bonds to be issued in the first place.

  48. @LASZLO

    “Do you know anyone who wants to develop a knowledgable spellcheck for IPad? I’m willing to invest in it and also in Thorium and explosive gas for car fuel.”

    ————-

    Lol Laszlo, you’ll be giving Ken sleepless nights!! He says they’ve got the gas leakage covered though. I think a knowledgeable spellcheck is like the Holy Grail though, easier to put man in the moon than do reliable auto-correct it seems, and peeps will still complain about grammar and spelling etc. even when it’s correct anyway.

  49. @ RMJ1

    The BOE could just make it disappear but that would start to reverse the policy and reduce liquidity.

    The BoE just ‘making it [it being the gilts which were purchased] disappear’ wouldn’t reverse it.

  50. As ever, this is not a venue for debating whether government or opposition policies are any good or not…

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