The Podcast of the Lotus Eaters - November 03, 2026


PREVIEW： Brokenomics ｜ The Budget we didn't get

The Podcast of the Lotus Eaters #1540 PREVIEW LIVE： Realpolitik #71 ｜ Europe’s Globalists at War

Episode Stats


Length

22 minutes

Words per minute

177.69

Word count

3,962

Sentence count

134

Harmful content

Toxicity

8

sentences flagged


Transcript

Transcript generated with Whisper (turbo).
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
00:00:00.000 Well, hello again, dear friends, and obviously this is Brokonomics, which you know because
00:00:18.760 you clicked on Brokonomics. Now, I thought we'd talk this week about the budget, because
00:00:24.720 Labour have done a budget, well, they've done a number of budgets, but this is the first
00:00:28.460 time we've had, was it something Healy? Not Dennis Healy, I always get confused. He was a politician
00:00:34.920 in the 70s. Whatever, his name is Healy. And Andy Burnham as Prime Minister as such. And the key
00:00:43.360 question I have here is, why did Andy Burnham want to be Prime Minister? Because he did not appear
00:00:50.240 to have actually done anything. I mean, if you become Prime Minister, presumably it is for a
00:00:54.380 reason, you know, to make some sort of grand change to the institutions of Britain or the
00:00:59.440 social settlement in Britain. And quite a lot of that you do through the budget. But
00:01:05.140 this budget doesn't appear to have really done anything. And when I say it hasn't done
00:01:08.300 anything, what I mean is, it's done a lot of things. I mean, it set a record for, I
00:01:12.840 think it was 98 different measures, which is a new record for a budget, 98 different
00:01:17.660 things done in the budget. If you measure it in terms of pounds and pence, it was actually
00:01:21.980 the smallest budget in like the last 20 years i mean if you go back far enough inflation will
00:01:27.400 will kind of just do its thing it's going to be bigger than a budget in the 1940s or something
00:01:32.360 but effectively it's a it's a record number of things with a record minimum of actual impact
00:01:40.120 on anything so you know when when andy burnham was like mom mom i want to be i want to be prime
00:01:46.760 minister and she said that's nice dear why do you want to be prime minister what what came after
00:01:51.840 that what was the what was the explanation i'm not entirely sure because he doesn't seem to have
00:01:56.540 done much now that that gave me an issue right because yesterday uh well from my perspective
00:02:02.060 you're watching this probably on tuesday when it comes out but from my perspective yesterday i got
00:02:06.320 all geared up to do this uh this this live reaction to the budget on the podcast which
00:02:13.200 is a bit risky because the budget was still going on while i was on the podcast so i was having to
00:02:18.140 sit there and react to Harry and Liz's segments whilst also keeping an eye on the speech scrolling
00:02:25.420 out uh which I kind of do so I turn the chat off because I normally have a chat on so I was keeping
00:02:31.100 an eye on that and um I I got to my segment it was like bugger he hasn't done anything what am I
00:02:37.340 going to talk about so I I just went through um some some basic terms and talked about stuff
00:02:44.200 and then I did breakfast with Bo this morning which was very on point very some people have
00:02:48.820 called my breakfast with Bo's chaotic and I go on lots of tangents that's nonsense I
00:02:53.980 every word is read off a teleprompter it's it's completely tight um on point no leeway
00:03:01.000 um but no they call it chaotic but anyway um you know uh my my breakfast with Bo um again I sort
00:03:08.920 of talked about a reaction to the to the budget because the newspapers were talking about it
00:03:13.600 and then I thought okay well I'm gonna have to do a third thing in which I talk about the budget
00:03:18.820 and frankly I'm getting bored because there wasn't much in it and I don't want to bore you
00:03:24.800 people because you know we've got to keep you um this well I presume this is infotainment
00:03:30.260 we are infotaining you and uh and I thought I know what I'm gonna do I know what I'm gonna do
00:03:36.220 um you know Christopher Nolan and the Odyssey or well basically any Christopher Nolan movie
00:03:41.980 he likes to jump around that that's that that he thinks that is very sophisticated storytelling
00:03:48.100 like you're in the future you're in the past possibly the present if you can establish what
00:03:52.440 that is future past whatever blah blah blah blah blah anyway weaves it all together and then you
00:03:57.900 get a film so i thought i know what i'd do is i'll ask a slightly more interesting question
00:04:03.640 of well let's weave together what will people be saying about this budget in 20 years time
00:04:10.940 2046 because i don't think everything is going to be super in 2046 unless we've been through the
00:04:18.740 crisis and come out the other side but assuming we haven't been through the crisis and come out
00:04:22.180 on the other side people are going to look back at this budget it's like well why the hell didn't
00:04:26.000 you do something because it does appear that the treasury is very good at optimizing within the
00:04:31.180 existing economic settlement within the existing political uh settlement what it doesn't seem to
00:04:37.680 be considering is what if the settlement itself is the thing that needs changing because we know
00:04:42.820 we've got a whole bunch of long-term problems and we can actually reasonably accurate accurately
00:04:48.980 forecast the consequences and we even have the institutional expertise to understand them
00:04:55.040 but the problem is is that every solution threatens some part of the existing settlement
00:05:02.120 And consequently, it does appear that governments are optimising for what exists now rather than what change should be manifest in order to take us out of the long-term problems.
00:05:14.380 And each budget is essentially trying to buy us another few years.
00:05:18.680 And the question really becomes, well, how long can the government keep on doing this because it's a bit mad?
00:05:25.720 So the budget, 96.
00:05:28.780 It was 96 different measures, I remember now.
00:05:31.100 that's an extraordinary amount of activity very modest pounds and pence impact the big highlight
00:05:39.820 was a hundred pounds uh that you get as a sort of energy rebate if you live in a council tax house
00:05:47.160 band a to d or something whatever okay i mean that that was the that was the landmark thing
00:05:52.340 we're going to give out people a hundred pounds why because their their energy bills have gone
00:05:58.040 through the roof in the last few years since the Ukraine war, especially since the Iran war,
00:06:03.920 energy bills just keep going up. So you get a £100 rebate, which is bugger all. Your energy
00:06:09.480 bill would have gone up by considerably more than that. So fair enough, you're going to get this
00:06:14.380 temporary little tax rebate. I suppose you could spend it on something else. You're still going
00:06:18.560 to be spending more on your energy bill. What else? Oh, there was a new investment funds,
00:06:22.480 a bit more devolution.
00:06:23.700 I mean, there's loads,
00:06:24.300 loads of little bitty things.
00:06:26.280 More devolution to regional mayors
00:06:29.360 because of course Burnham
00:06:30.120 was a regional mayor.
00:06:31.580 There was some business incentive stuff 0.99
00:06:33.680 which wasn't, it was rubbish. 0.63
00:06:35.760 I'm sure we get to that.
00:06:37.180 Administrative reforms, a bit of that.
00:06:38.800 But all the difficult stuff,
00:06:40.780 all the, you know, decisions on welfare
00:06:43.180 and defence and departmental spending
00:06:45.500 and anything like that,
00:06:46.680 that's just, that's in the future.
00:06:48.780 I think they said 2027
00:06:50.200 they're going to take those
00:06:51.360 more difficult decisions now that's interesting because i mean first governments do the difficult
00:06:58.860 decision always is always in the future and when you get to the future the future is still
00:07:03.220 the future of the future if you get what i mean in the future when you get to the future you're now
00:07:09.140 from your perspective in the present and so from your perspective the future is still the future
00:07:13.680 so that that is basically how government works is is we will make the difficult decisions in the
00:07:18.060 future but you never actually arrive in the future because from your perspective even if you are in
00:07:22.700 the future from our perspective you're still in the present and the future you get you get where
00:07:26.360 i'm coming from right okay so yeah that all the difficult stuff was kicked into the future 2027
00:07:31.200 they said now maybe they are lining up to do that maybe john he john healy that's it john healy and
00:07:39.600 andy burnham have twigged the state is simply spending too much taxing too much and throttling
00:07:46.440 growth because they're labor you have to doubt that is the case but maybe they've twigged it
00:07:54.620 and maybe they're taking a year because i mean he's only recently become prime minister
00:07:59.760 not that long ago what was it less than a year was it weeks months he's been in a few months
00:08:05.280 right point is maybe he's realized bloody hell this is more difficult than i thought
00:08:09.740 we need to have a proper budget so we're going to do a nothing budget so that we got a year to
00:08:15.560 plan the difficult budget that could be it possibly so this budget is as steady as she goes
00:08:20.640 the problem is if if we continue steadily doing what we're doing now we're going to go straight
00:08:25.240 off the bloody cliff and even though i'm talking you may be you may be watching this and thinking
00:08:29.260 well that's jolly good sir but i'm not british um you know you may be i don't know a swede or an 0.82
00:08:34.700 american or nigerian or something i don't know whatever you are the stuff i'm going to talk
00:08:39.220 about generally applies to most of our governments actually i've got no idea what the finances of
00:08:44.320 Nigeria are, but certainly American. And what was the other one? Swiss. All of them, really.
00:08:48.980 So what was the situation? So next year, apparently growth, they decided, government has mandated,
00:08:56.460 that growth next year is going to be 1%. Now, these growth forecasts are always optimistic,
00:09:02.440 and I doubt it. But even so, the optimistic version being 1% is a pretty woeful ambition.
00:09:11.200 Borrowing for the coming financial year, which is, I suppose,
00:09:14.500 what the budget is supposed to do.
00:09:16.160 The borrowing for the coming financial year, they think,
00:09:18.400 is going to be $133 billion, which is actually a lot of money.
00:09:23.020 And their fiscal headroom – oh, I should explain fiscal headroom.
00:09:26.980 This is a nightmare, this one.
00:09:28.300 So three years in the future, if you reorganise the budget
00:09:32.440 so you take off all the investment-type stuff,
00:09:35.120 then we should be in a surplus.
00:09:36.960 all right and because in the future the finances get better remember what i said about the future
00:09:44.560 never arrives governments for like 20 years have done this in the future it will be better and then
00:09:49.900 you get to the future and it's like oh yeah but the future is still the right you get what i'm
00:09:53.480 saying the future is still the future but on the current set of models the future arrives in three
00:09:59.100 years 2030 that number comes up a lot and in the future we have a surplus of 15 billion
00:10:07.220 therefore I've got a fiscal headroom of 15 billion which I can you know get get busy spending today
00:10:13.820 because otherwise you might actually end up in the future with some money so yeah so the fiscal
00:10:20.540 headroom which is they talk about a lot you if you if you watch anything on the news about the
00:10:24.920 budget, they're going to be talking about fiscal hedge, and that's what it is. If we take where we
00:10:29.360 are in the future and we subtract a whole bunch of spending from it, we get to a surplus. Brilliant.
00:10:36.100 Marvellous stuff. Debt to GDP will be about 95.5%, they said. The debt interest, so just how much
00:10:43.000 we're paying on debt interest is going to be 124 billion, which is a lot. And state spending
00:10:50.540 as a proportion of GDP is going to be 45.6%,
00:10:54.560 so pretty much half.
00:10:56.480 Half of our GDP is just the state doing spending, 0.96
00:11:02.420 which is a bit rubbish.
00:11:05.020 Oh, and then we got the budget also mentioned
00:11:08.680 that real household incomes have shrunk by 0.8%,
00:11:15.680 so almost a percent.
00:11:17.080 So in real terms, they can give you all these speeches,
00:11:19.020 But in real terms, your income has gone down just like it does every year
00:11:22.660 and they're probably understating it.
00:11:24.740 So again, where are we in – I'm doing my Christopher Nolan bit here.
00:11:30.560 Where are we in 2046?
00:11:33.240 Nobody is going to remember a £100 rebate.
00:11:36.000 I don't think that's going to come.
00:11:38.180 Nobody is going to remember the sort of minor business rate rebate stuff
00:11:42.340 that they've got.
00:11:43.080 What they will remember is what Britain failed to do
00:11:46.920 when the danger was obviously quite visible.
00:11:50.240 Now, in July of this year, the OBR had already warned unchanged policies,
00:11:57.040 policies it already had.
00:11:58.520 If you don't change them, it could put government debt
00:12:02.340 on a pretty steep upward path by the 2040s.
00:12:05.860 And the OBR went further and said, well, look, if you correct it now,
00:12:10.560 it will be considerably less costly than fixing it when you get into the 2030s or, God forbid,
00:12:20.240 the 2040s. The sooner you fix this, the less severe the pain is going to be. So that report
00:12:27.360 came out in July. So it doesn't really matter if this is a good budget for 2026. I mean,
00:12:32.580 it's kind of beside the point, really. The point is, is it putting us on the right trajectory
00:12:37.600 for the 2040s, right?
00:12:40.420 No, no, it doesn't seem to have tackled that at all.
00:12:43.480 But anyway, fine.
00:12:44.200 Let's come back to the centrepiece of the budget,
00:12:47.020 the £100 illusion.
00:12:50.640 So apparently 20 million households,
00:12:52.400 they're going to get this £100 for council tax bans A to D.
00:12:55.400 Yeah, yeah, yeah, fantastic.
00:12:57.680 Cost that out, £2.6 billion.
00:12:59.820 Okay, I mean, it's not...
00:13:02.020 I mean, I appreciate £2.6...
00:13:03.600 If I had £2.6 billion, I'd be bloody pleased about it.
00:13:07.600 But in terms of national finances, $2.6 billion, okay, right, fine.
00:13:12.460 It's not vast.
00:13:14.100 It's not vast in today's money, that kind of thing.
00:13:17.060 So you get your £100 rebate so that you can pay an extra £400 this year
00:13:21.820 on your electricity and gas bill.
00:13:23.840 Splendid.
00:13:25.440 VAT on electricity, I think, was held at zero,
00:13:28.760 so that was sort of an emergency measure because, oh, my goodness,
00:13:32.420 fuel bills are going up so much, so we hold VAT on that.
00:13:36.960 They're going to extend that hold a little bit longer
00:13:39.140 so you don't have to pay BOT on it.
00:13:41.340 Oh, gas standing charges.
00:13:43.780 So in this country, your gas bill...
00:13:47.140 Oh, sorry, I should explain.
00:13:48.480 If you're American, when I say gas bill,
00:13:50.800 I mean literally gas, not petrol.
00:13:54.720 You will notice that when you fill up your car
00:13:56.860 with a little hose thing, that's not gas.
00:14:00.940 That's actually liquid coming out.
00:14:03.240 But Americans just got a bit excited
00:14:04.920 and ended up calling the liquid gas.
00:14:07.240 When we say gas, we mean literally gas.
00:14:11.680 And you get it fed to your house at a pipe
00:14:13.660 and then you can turn the cooker on.
00:14:15.920 Oh, and also you can run your central heating.
00:14:17.760 So there is that.
00:14:18.740 So anyway, and gas, so the way our gas bills work
00:14:21.940 is you get a standing charge every day of a few pence
00:14:25.280 and then a separate charge for however much you use.
00:14:28.860 And Burnham came along, well, Healy, John Healy came along
00:14:32.080 and he said, right, what we're going to do
00:14:33.200 is we're going to scrap that standing charge
00:14:35.780 and save you £108 a year.
00:14:38.540 Whoopee.
00:14:39.000 What he didn't tell you is that the gas company
00:14:40.780 will just transfer that charge onto the usage charge.
00:14:44.840 So it won't actually make any difference whatsoever.
00:14:47.200 But he gets to say that he saved you another £108. 0.97
00:14:50.220 I mean, this really is pathetic, isn't it? 0.82
00:14:52.480 I mean, okay, £100 for this and £100 for that. 0.94
00:14:56.360 It's like what?
00:14:57.600 £100 is like one dinner out for you and your missus
00:15:01.000 if you go somewhere moderate.
00:15:03.200 so anyway fine okay oh and and there was something about industrial firms can get a bit of a rebate
00:15:08.320 on their taxes as well which could could be up to 25 percent of their electricity bill because
00:15:12.560 otherwise they would go bust so a bit more emergency support going on there so anyway um
00:15:17.600 yes so but but that 100 pounds well that's a transfer and the vat reduction that's a genuine
00:15:23.680 reduction in tax i will give them that the standing charge transfer it makes bugger all difference
00:15:31.040 it's just redistributed across the bill. The industrial discount, that is a legitimate reduced
00:15:38.560 cost for eligible businesses, but somebody else is going to have to finance it. So there is a
00:15:43.440 little bit in there. And then when you look at the OBR, you know, you're getting, you know,
00:15:49.360 inflation is expected to average 3.4% in 2027. So the purchasing power, when you go to the shops,
00:15:57.840 or your business as you're trying to buy in suppliers or purchasing power it's going to be
00:16:03.060 down another 3.4 percent now you might think in isolation that's not too bad that is a disastrous
00:16:09.120 rate year on year uh to be going down 3.4 percent you think about that over a few years and and you
00:16:15.940 know you suddenly you're you're down 50 percent in whatever it is bloody quickly i'm gonna do it in
00:16:20.820 my head i'll come back to it will come to me in a minute uh yeah so inflation is high they even
00:16:25.400 say it might peak at about 3.8% which is good enough 4% isn't it so real incomes are declining
00:16:30.580 and they did model a severe energy shock example as well which could trigger an additional 17
00:16:37.600 billion borrowing added to the 133 that we're already at so clearly we have quite severe
00:16:44.280 problems at this point clearly things are bad now anyway so what should they have been doing
00:16:49.800 so because there's two fundamentally different economic activities that the something like a
00:16:55.320 budget can do one it can do redistribution so you can take purchasing power from this guy over here
00:17:02.880 and give it to this guy over here brilliant or you can increase the underlying productivity 0.78
00:17:06.960 so there's more well goods and services and productive assets available there was bugger
00:17:14.020 all of that really it's all about let's just do a bit of distribution if you want to go after
00:17:20.340 production you want to be making sure that there is more electricity generation more houses more
00:17:26.180 factories more infrastructure more more skilled workers uh more private capital whereas you know
00:17:32.980 redistribution is no i'm just gonna i'm just gonna take from that guy over there to give to that guy
00:17:37.660 so that guy doesn't complain more than that guy because that guy's still got something and he's
00:17:42.200 going to grumble but he's not going to kick off like that guy so we're just going to smooth it
00:17:45.460 around. It does nothing to increase the size of the pie. Put it like this, right? Giving you £100
00:17:50.720 to put towards your energy bill is not the same as making electricity generation £100 cheaper
00:17:57.660 per person. The latter would be significantly more valuable to the country. So there is that.
00:18:04.680 And any wealthy country, right, it can afford a considerable amount of redistribution,
00:18:10.700 but redistribution cannot substitute indefinitely for the underlying productivity that is the bit
00:18:19.220 that you've got to get up and the chancellor has basically decided that he can afford a hundred
00:18:23.140 pounds today because he thinks that public finances will eventually balance in the future
00:18:29.060 until we actually get to the future of course then it won't because they never do what else
00:18:34.040 did he promise well the big bit well there's lots of stuff in there but um he talks about
00:18:38.540 financial discipline quite a lot that that came up a lot in the speech oh a stability rule yes
00:18:45.140 talks about a stability rule so so he was saying that day-to-day spending which includes interest
00:18:51.300 that should be covered by revenues in the 23rd yeah 2030 which gives rise to the
00:18:59.300 financial headroom bit which apparently is 15 so he reckons on his current basis he will arrive in
00:19:06.980 2030 the future with a with a 15 billion surplus unless they just spend it all and that 15 billion
00:19:15.080 was 22 billion like a week ago but um but then they spent it so so yeah that's gone so so the
00:19:23.740 headroom is getting smaller let's dip back back into the obr figures so yeah i mean borrowing
00:19:29.240 133 billion they reckon that the borrowing will fall to uh 67 in 2031 now you might be saying
00:19:40.840 well hang on dan you just said there was a surplus now you're saying it's minus 67
00:19:44.100 yeah that's because of capital investment which is something they exclude from the numbers
00:19:48.740 so again it's not like we're ever getting rid of this bloody debt debt to gdp still about 100
00:19:54.540 I think 97.3% was the number he used.
00:19:57.880 He likes to use a different measure of debt to GDP
00:20:01.640 where it comes out as only 80%,
00:20:03.160 but his measure is wrong
00:20:04.360 and therefore we're not going to use it.
00:20:06.060 Oh yes, the OBR, this is important,
00:20:08.820 the OBR said there was only a 50% possibility
00:20:12.480 of hitting the stability rule
00:20:16.980 so that day-to-day expenses would be covered
00:20:19.520 minus investment.
00:20:22.600 So there is that.
00:20:24.480 Borrowing is going up from the already heady level
00:20:27.580 to buy another $6 billion this year.
00:20:30.740 And again, I'm going to do my Nolan bit.
00:20:34.280 What are we going to be asking in 20 years' time
00:20:36.480 when we look back on this budget?
00:20:37.980 We're going to be saying,
00:20:39.060 what you were doing is you were optimising over three years.
00:20:41.820 And the financial problems that the country had
00:20:45.780 manifest over generations.
00:20:48.460 You know that there are people working today
00:20:50.380 or you're immigrating people in today
00:20:53.900 where you're going to need to give them a pension in 20 to 50 years.
00:20:59.600 You know that you're going to have a certain amount of,
00:21:03.360 you get less of a lead time with kids born today
00:21:05.900 as to what the school bill is going to go,
00:21:07.460 but you certainly understand what the retirement bill is going to be.
00:21:11.840 And you can see that you're walking up welfare and all that.
00:21:14.200 So we can see that we've got problems measured in generations,
00:21:18.320 but the budget is optimised for three years' time.
00:21:21.660 And the question you might ask in 20 years' time, looking back at this one, is why did everybody assume that there was going to be some future improvement that came along that would solve all of the present-day problems?
00:21:33.180 Because we're in a situation where we know we're busting the future, in the long future.
00:21:37.620 We imagine that we should more or less balance out in the near future, in 2030.
00:21:44.160 But we've got all these obligations from yesterday because all the past politicians wanted to get elected, so they promised money.
00:21:49.800 that's falling due today and even more so in the future plus we're not getting rid of those
00:21:54.400 promises so so the people around today are also going to be making claims on the state in the
00:21:58.460 future and we're not doing anything about it if you enjoyed that content and of course you did
00:22:03.520 because you are a smart person then why don't you go over to lotus eaters.com where you can
00:22:08.680 watch the whole episode for as little as five pounds a month which really is not much money
00:22:14.420 at all and you get loads of really good content.