Why isn't the economy growing any more - because it can't

FranP

I remember the Head of the Bank of Canada (who came here, I think) aiming for very low growth to stabilise the Canadian economy. It had mixed results because of massive immigration, but I believe they do not have the same deficits as us or the US

Deficits are not bad. Deficits are needed. If the state didn't have deficits no-one would have any spare money. Deficits are what is currently being spent or saved in the country.

Barry is a nice boy for sure but no growth does not pay for services because nobody can be taxed, those with the cash keep it to themselves the rest survive as best they can. He thinks it will be just like one big happy family - we all know families are not like that

Our society is a world away from that, nobody is going to invest nobody will trust others, the most powerful will exploit the weak

Such a good video. Resources are finite and there comes a point when you cannot grow - but you can work out the best and fairest way to use the resources you have. I am told there are quite a lot of empty blocks of flats , for instance, bought by the rich as investments. This puts up prices of homes and meanwhile there are homeless families. I saw in the news recently a group of billionaires saying publicly that they should be taxed more - rich people with consciences.

“I saw in the news recently a group of billionaires saying publicly that they should be taxed more - rich people with consciences.”

Yes, tongue in cheek because they do everything to avoid tax in practice. Jeff Bezos of Amazon openly brags that he pays virtually no tax, any other international business can do the same if it wishes. International business choose where they pay tax, most choose a low tax state, Ireland, Luxembourg any other tax haven. If there was a global taxation unification fairness would be possible, any such policy is dreamland.

The wealthiest Bill Gates, Warren Buffet, along with many other philanthropists end up giving all the money away - to projects which they approve of

I think Gary Stevenson belongs to Patriotic Millionaires.

Patriotic Millionaires is a group of wealthy individuals advocating for higher taxes on the super-rich to tackle inequality, including members like Abigail Disney, Morris Pearl, Dale Vince (Ecotricity), musician Brian Eno, former trader Gary Stevenson, and UK figures like James Perry (Cook), Julia Davies, and Graham Hobson (Photobox). They believe extreme wealth threatens democracy and the economy, pushing for progressive taxes and fair pay to fund public services and a more just society.

Some people might find this pertinent.

www.taxresearch.org.uk/Blog/2025/12/12/the-end-of-growth/

We may have reached our growth limits in a finite planet, but I would feel more confident about this assertion, if data was provided.

I know that emerging economies are doing ok and I think those countries rich in resources, but maybe not so much the mature western economies. China is still growing.

It would give the U.K. an immediate boost if we had closer union with Europe. - but hey- let’s not go any faster that a slow snails pace in case we frighten the horses!

Mind you Murphy has been catastrophizing a lot lately.

I think it is the current zeitgeist tbh. We are heading for (a) war (b) economic collapse or both🙁

Murphys conclusion what happens without growth.

“And then what? Then we have to build the politics of care.

It's that or cruel and brutish fascism, making life miserable, painfully short and decidedly toxic for everyone.

Those are the choices.

That is what we have to decide upon, and all because we assumed growth would last forever, when it was glaringly obvious it could not, as is now becoming apparent.”

That’s entirely plausible but who pays for “Care”, we can increase taxation or borrow more because the money is not being generated by growth. As we have seen the bulk of tax increases in the last 2 budgets have burdened the middle income, because £10s of billions are going to be needed.

I think it’s quite likely that for idealogical reasons a wealth tax will be introduced but taxing only 1% of the population is not likely to yield much, even if it makes you feel better

I think it’s quite likely that for idealogical reasons a wealth tax will be introduced but taxing only 1% of the population is not likely to yield much, even if it makes you feel better

It's only not likely to yield much if you are thinking solely of income tax. Which most people seem to think is the only wealth tax in existence (and which most of the 1% have ways of avoiding)

The other usual proposal is taxing assets, which would be equally well avoided and not particularly productive.

But, there are plenty of ways in which wealth can be taxed without avoidance. I'll refer you once again to Murphy's Taxing Wealth Report.

There are three versions of the report, of varying length, to choose from.

taxingwealth.uk/

“Income tax” taxes income

“Wealth tax” taxes wealth held, the total value of your assets, currently assets are taxed when they are sold, until they are sold the value varies continually. For example, many assets are shares in companies fluctuating up and down daily

France has a wealth tax on individuals real estate but there are many exemptions including agriculture and private residences, it yields in UK terms £2 billion, so it’s purely idealogical,there are much easier ways of raising £2bn.

You've never bothered to read that report, have you, David😕?

MaizieD

You've never bothered to read that report, have you, David😕?

I did read the report, but the reality is that where there is a wealth tax it does yield a significant amount, I don’t object to raising more tax from the wealthy. I just believe that changing other taxes is more efficient and just as effective. A wealth tax aimed at the ultra rich - say over £100m will just result in individuals domiciling elsewhere as many do now, so unless a global agreement is made it’s all for nothing.

The key to fixing lack of growth is a freeing up of land, labour, energy and capital. Many politicians recognise the need for conomic growth but draw back when they realise creative destruction is necessary, that it's necessary for some businesses to perish with all that implies so they simply tinker at the edges rather than taking the difficult but essential decisions that would lead to large scale economic disruption and the emergence of new businesses. Failing to recognise that will ensure the UK economy remains in the doldrums for many years.

Does not yield a significant amount

Grantanow

The key to fixing lack of growth is a freeing up of land, labour, energy and capital. Many politicians recognise the need for conomic growth but draw back when they realise creative destruction is necessary, that it's necessary for some businesses to perish with all that implies so they simply tinker at the edges rather than taking the difficult but essential decisions that would lead to large scale economic disruption and the emergence of new businesses. Failing to recognise that will ensure the UK economy remains in the doldrums for many years.

Businesses have been perishing for decades, replaced by big business, high street shops replaced by supermarkets more recently, by online shopping and direct supply from factories in China.
Not only that but you can have it all on credit, we wanted more and more for less and they gave it to us, but big business has drained the economy. £100 billion a year just in government borrowing interest, much more on personal credit cards and loans. While we remain addicted to credit they have us hooked.

David49

MaizieD

You've never bothered to read that report, have you, David😕?

I did read the report, but the reality is that where there is a wealth tax it does yield a significant amount, I don’t object to raising more tax from the wealthy. I just believe that changing other taxes is more efficient and just as effective. A wealth tax aimed at the ultra rich - say over £100m will just result in individuals domiciling elsewhere as many do now, so unless a global agreement is made it’s all for nothing.

Your reply tells me that you didn’t read the report, or that you have absolutely no comprehension of what it said.

Murphy has never supported the idea of a ‘wealth tax’ and the report is all about changing existing taxes and extending their coverage to those who don’t currently pay them.

Thanks for posting this fascinating video DAR. The parting message that government/s should use their power to redistribute finite resources and make the £millionaires SHARE! (ie. rather than continually chasing growth) resonated with me.

The first part of the video about the 'cargo cult' I found particularly fascinating. How the islanders ( indeed all human beings) interpreted their experience and formed beliefs (that might seem mad to us) from their lived experience of the US military descending during WW2. Beliefs further shaped, spliced and actioned with Bias- i.e. wanting the cargo drops to continue.

That totally explains why we posters on Gransnet have such differing beliefs and opinions as we all have our individual lived experience- shaped and spliced by bias as we are all human.

That's why I love Gransnet so much- thank you all- I love to read your posts....,

Any of the discussions on tax bring us back to the three areas of possible taxation.
Earned Income
Passive Income
Wealth.

Each is treated differently, with different tax rates, reliefs, and philosophies behind them. Tax on earned income, i.e., tax on employment income (salary, wages, bonuses, benefits in kind), self-employment profits and some short-term contractual or gig work, comes from Income tax and National Insurance. Although often described as “contributions”, NICs function largely as an additional tax on earned income, not on investment income. Earned income is the most heavily taxed category overall.

Next we have Passive Income or investment-derived income. This includes Dividends, Interest (savings, bonds), Rental income, Capital gains (on disposal of assets). This tax is on the income earned on invested capital not, as some seem to think, on the already taxes Capital. Although tax in these areas is generally relates to marginal income passive income is generally taxed more lightly than earned income, and NICs do not apply.

Lastly Wealth. The UK does not have a comprehensive wealth tax. Instead tax is triggered at certain points.

To summarise:

Earned Income has the highest relative tax burden - heavily taxed via Tax and NIC
Passive Income has a medium relative tax burden - taxed but on lower rates and no NIC
Wealth has the lowest relative tax burden - taxed only at specific events.

Should add the UK system:

Penalises labour more than capital
Encourages investment and asset accumulation
Relies on transaction-based rather than stock-based wealth taxation
Allows substantial tax planning for those with capital

Good or bad, right or wrong that's what we are all discussing.

The loss of UK businesses to Chinese competition is a good example, David49, that supports my argument. The Chinese firms made goods cheaper and better than UK firms that then failed: cheap credit would have applied to both so irrelevant.

The failure of governments to support the development of new UK industries and propping up old rust belt industries contributed to our being in a mess.

When Intel asked for UK support it was refused so it decamped to the US. Lack of politician understanding of scientific technology.

When Intel asked for UK support it was refused so it decamped to the US. Lack of politician understanding of scientific technology.

I'm puzzled by this. Intel is a US company founded by US citizens in California. Is there some story about its origins that the 'official' accounts aren't disclosing?