What did Reeves achieve in China?
Very little for the people, but she wasn't there for them. She was there for the City of London
Published in the January 15th edition of The National, the January 16th edition of The Herald, and the January 24th edition of The Edinburgh Evening News.
Rachel Reeves has come back from her China trip with a trade deal worth £600m over the next five years. That’s £120m per year or, put another way, 1/300,000th of total UK investment.
Why did she go all the way to China for such a pittance? Well, the UK ejected itself from the EU, its largest and nearest market. Brexit has slashed real UK GDP by 5% and trade by 15%.
And why would the Chinese even be interested in investing in the UK? What’s in it for them? The answer is that she didn’t go to Beijing to make trade deals to benefit the people of the UK, but the City of London. Her travelling companion was Bank of England boss (and her former boss) Andrew Bailey. The deal she struck with China is to deepen cooperation in trade and financial services. Read into that what you will.
The City of London is hurting. In December, Reeves was in Brussels begging the EU to give greater access for the City but sticking to her ‘red lines’ of not rejoining the EU, the Single Market or Customs Union or agreeing to the free movement of people. She’s called the City the ‘crown jewel’ in the UK economy, a sector that launders 40% of the world’s dirty money and adds nothing to the productive capacity of the economy. It exists solely to serve the rich and sneers at the hoi polloi. Perhaps she got a commitment for Chinese dirty money to cycle through London’s efficient laundromat.
Not only does Reeves’ jaunt to China make the UK look rather desperate, but it shows how little she and Bailey know about how to stimulate actual economic growth.
Under Bailey’s leadership, interest rates (4.75%) are higher than the inflation rate (3.5%) plus the growth rate (a tepid 0.1%). At the same time, the Bank of England is selling government bonds, in effect removing money from the economy when it should be doing the opposite. And Reeves insists that her fictional fiscal rules are non-negotiable which means she thinks she has to balance the government’s budget because she believes she’s running a household, not a government. So the only thing she can do within her self-imposed straitjacket is to cut spending. That means more austerity, so the already battered economy will take another beating. Does she seriously think this will result in growth?
English Labour no longer believes in investing in the real economy - manufacturing capacity and public services that people want and need - and has chosen to swim in a neoliberal swamp infested with vulture capitalists who are sucking the UK dry. That’s why growth has flatlined, wages have stagnated, and poverty and inequality have soared.
English Labour has forgotten what John Maynard Keynes knew - that only government spending can get an economy out of an economic downturn. He also knew that “anything we can do, we can afford.”
Reeves’ next foreign trip is to the annual neoliberal powwow, the World Economic Forum, in Switzerland in a couple of weeks. She’ll be accompanied by none other than Princess Beatrice. What a team!
While they’re in the Alps, maybe the two of them can hit the slopes… God knows they won’t be accomplishing anything remotely useful for the people.
Seems to me that the real growth industry in the UK today is leeching off of the state to make oneself rich, or richer, e.g. the City of London, the Royals (esp. Charlie and Wullie) and most MP's. The one thing they have in common is they act only for themselves, not the common good. Scammers, all.
We can longer afford to have that class of people which we call politicians. Way, way beyond our means!