Saturday, September 21, 2019
Let's get fiscal, but avoid the mistakes of the past
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

This has been a busy month for central banks. A few days ago America’s Federal Reserve cut official interest rates by a quarter of a point, citing weaker business investment and exports. A few days before that, the European Central Bank (ECB) announced what its chief economist described as a comprehensive package of measures, which included a cut in one of its rates, the deposit rate, from -0.4% to -0.5% and the resumption of quantitative easing (QE) at €20bn (£17.7bn) a month from November.

Neither decision was without controversy. The Fed split three ways, with one member of its decision-making committee favouring a bigger rate cut and two none at all. The ECB’s moves produced much tut-tutting, particularly from Germany and the Netherlands, with the head of the Dutch central bank, Klaas Knot, saying they were “disproportionate to the present economic situation”.

On one thing, however, central bankers can agree, and this also applies to the Bank of England though it, as expected, did not join in with the others in changing interest rates on Thursday, though its tone was noticeably more “dovish” than before.

It is that there is a limit to what central banks can do. Monetary policy had its moment a decade ago, when the financial crisis hit, and it has continued to have its moments since then, with ultra low interest rates and very large dollops of quantitative easing (QE). But the fact of that action, which leaves little room for rates to be cut further, and amid convincing evidence that QE has lost the potency it once had, means the focus is shifting and, according to some central bankers, should shift further. Fiscal policy – public spending increases and tax cuts – needs to play a bigger role.

Mario Draghi, the outgoing ECB president, has been most vocal on this. “It’s high time fiscal policy took charge,” he said last week. “If fiscal policy had been in place, or would be put in place, the side effects of our monetary policy would be much less.”

This is a particular issue in Europe, where a debate is raging in Germany about fiscal po0licy and the country’s balanced budget rule. Its finance minister Olaf Scholz has said that Germany is ready to provide a stimulus of “many billions” should recession make it necessary.

The argument, however, goes beyond Europe. The Organisation for Economic Co-operation and Development (OECD), in a new interim economic outlook which was downbeat about UK growth prospects – 1% this year, 0.9% next, and much worse if there is a no-deal Brexit – also made the fiscal point.

Loose monetary policy, it said, should be accompanied by fiscal policy, it said, adding: “Fiscal policy needs to assume a bigger role in supporting growth in the advanced economies. Exceptionally low interest rates provide an opportunity to invest in infrastructure that supports near term demand and offers benefits for the future.”

For the Federal Reserve and the Bank, the point barely needs making. Though Mark Carney, the Bank governor, has made the point that there are limits to what the Bank can do, particularly in the event of a no-deal Brexit, a significant fiscal relaxation is already taking place. Bank economists estimate that Sajid Javid’s spending review this month, which boosted public spending next year by more than £13bn compared with previous plans, will add 0.4% to Britain’s gross domestic product over the next three years.

As an aside about the Bank, I had in my diary November 7 for Carney’s final inflation report press conference but now it seems as if that date could come and go without his successor being announced. Political uncertainty, it appears, means governor uncertainty, with the appointment of a new one possibly delayed by the prospects of a late autumn general election. I don’t imagine that he wants to extend his stay for any longer than necessary, but the chances of his still being there when the Bank publishes its February inflation report (he was due to leave at the end of January) have increased.

Sunday, September 15, 2019
Some good news - but we're not out of the woods yet
Posted by David Smith at 09:00 AM

My regular column is available to subscribers on This is an excerpt.

Many things might be going wrong for the government at the moment but, so far at least, it appears to be being spared the prospect of an immediate recession. We will not know for sure until November whether the economy has avoided two successive quarters of falling gross domestic product (GDP), the usual definition of recession, and who knows who will be in power then. But so far, so good.

So far, so good, for the Bank of England too, which is now unlikely to be called into action this week, following Mario Draghi's parting shot at the European Central Bank on Thursday. The highlights of his stimulus package were a 0.1 point cut in the deposit rate to -0.5% and the resumption of quantitative easing, at 20bn euros a month from November, for as long as it takes. The Bank can wait.

The chances of avoiding recession, which the arithmetic always made unlikely after the second quarter fall in GDP, improved further with the latest monthly figures. Not only that but the headline numbers from the latest labour market statistics, including a 3.8% unemployment rate, the lowest since 1974, and a joint record employment rate of 76.1%, were, not for the first time, encouraging.

I shall return to the job market in a moment. Let me first explain the recession point for the those who missed it. There was a time when ministers, like the rest of us, only had to worry about the GDP figures on a quarterly basis. But the Office for National Statistics has, since May last year, been publishing monthly figures, having watched the National Institute of Economic and Social Research (NIESR), a leading economic think tank, do so for a number of years.

On the face of it, the latest monthly figures, for July, were nothing to write home about. After falling by 0.2% in the second quarter, GDP was merely flat in the three months to July. That suggests, on the face of it, that it is still touch and go whether or not there is a recession.

The significance, however, was what happened to GDP in the month of July alone, when it rose by 0.3% compared with June. That, in turn, put it 0.4% higher than the average for the second quarter. It means that the numbers for August and September would have to show very hefty falls to produce a third quarter fall in GDP.

It could still happen. Uncertainty has been heightened since the change of prime minister in late July and business and consumer confidence have suffered. But, despite downbeat business surveys in recent weeks, it looks at present unlikely.

That is a tribute to the resilience of the economy, suggesting that you can throw a lot at it before it succumbs. There is a lot of truth in the idea that for the overwhelming majority of individuals, and small and medium-sized firms, what happens in Westminster, extraordinary though it has been, stays there. People get on with things.

We should not relax too much. It remains the case that the economy is fragile, and that it would not take too much to push it over the edge. Too many survey measures are at their weakest since 2012, when the eurozone crisis also almost pushed us into recession, or even at their weakest since the dark days since 2009.

Sunday, September 01, 2019
The record pay squeeze is over - but maybe not for long
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

Plenty of crazy and alarming things are happening in British politics but, leaving those to others for now, and turning to a slightly happier story, we are on the cusp of a rather different and significant moment, and it has been a long time coming. Within the next few weeks regular pay in Britain, in real terms, should finally move above pre-crisis levels. The longest pay squeeze in modern times – even exceeding one during the Victorian era - will be over. Bring out the bunting.

Currently, regular pay in Britain, adjusted for inflation. Is just 0.8% below the level established in April 2008, more than 11 years ago. It has been a lost decade and more for pay and, as I say, we have not seen anything like this in modern times. Nobody back then could have imagined that the hangover from the crisis would last so long.

The reason we can expect this milestone to be passed is that we have returned, decisively, to meaningful increases in real wages. Regular pay is currently rising by 3.9% a year in cash, or nominal, terms, against an inflation rate of 2.1%, making for real wage rises of nearly 2% a year.

Though you would not know it from the gloomy noises coming from Britain’s high streets, some of which verge on the suicidal, this is good news for consumer-facing businesses. It helps explain why official retail sales figures show a 3.3% increase on a year earlier while, even in a slow-growing economy, consumer spending in the second quarter was up by 1.8% on a year earlier. Along with government spending, the consumer is what is keeping the economy going. If it were not for weak Brexit-related consumer confidence, lower now than in the immediate aftermath of the referendum according to Gfk, the consumer would be keeping the economy going more.

That 3.9% figure is shared by the public and private sectors, which is also worth noting. Part of the reason for the lost pay decade was the austerity-driven squeeze on the public sector, which included periods both of pay freezes and below-inflation settlements for public employees. Now, partly helped by the timing of the latest National Health Service pay settlement, public sector sector pay is rising at its fastest rate since May 2010, the dawn of the coalition government’s age of austerity under David Cameron and George Osborne.

It has been anything but a tea party for private sector workers during this period, of course. Pay settlements lurched downwards in the wake of the financial crisis and have taken years to recover to anything like pre-crisis norms. People chose the security of a job over above-inflation pay awards, collectively pricing themselves into work, until the labour market became tight enough to force the hand of employers.

Many economists expected that hand to be forced well before this, and that the traditional Phillips curve relationship between unemployment and wage rises would have kicked in before now to give us 4%-plus wage rises. The lower the unemployment rate, the greater the upward pressure on pay, in normal circumstances.

The circumstances of the past decade have not, of course been normal. Apart from unemployment and a tight labour market, the other moving part in this is productivity. Broadly speaking, firms can afford real wages of 2% a year if productivity is rising at a similar rate, which is its historic average. Productivity is the route to rising prosperity.

But productivity, as you will know, has not been rising. The main measure, output per hour, was only 0.5% higher in the first quarter of this year, the latest figure, than at the end of 2007. It has fallen fractionally over the past year and looks to have suffered a bigger drop in the second quarter of this year. It is going nowhere fast.

That is one reason to be cautious about the extent to which the current pay revival can be maintained. Pay rises that are not matched by productivity gains are unlikely to be sustainable, and have already got the Bank of England twitchy about their inflationary consequences. At some stage there will be a productivity revival and, as far as the outlook for pay is concerned, it cannot come soon enough. But it is not there yet, and is not in sight.

It is only fair, too, to point out that while regular pay is closing in on pre-crisis levels, there is some way to go before that is true of total pay, including bonuses. Average total pay still has some way to go before it catches up with the previous peak, achieved in February 2008. It is still 5% below what it was then and the clue to why it is still lagging may be in the name. Total pay includes bonuses and they are a lot lower than they were in the heady days leading up to the worst of the financial crisis, and not just in financial services.

Going back to regular pay, where there is a much smaller gap to make up, the concern about whether this is a steady march towards the sunlit uplands, and years ahead of near-normal real wage rises, lies with that familiar elephant in the room, the threat of a no-deal Brexit.

Sunday, August 25, 2019
Scrapping HS2 would derail Javid's infrastructure plan
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

Sajid Javid is a man with a plan, and he is not keeping it secret. The chancellor may only have been in office for a month, but a month can be a very long time in politics, and he has already made clear when asked that his ambition is to undertake a big increase in infrastructure spending, irrespective of the Brexit outcome.

During the Tory leadership contest he talked of creating a £100bn national infrastructure fund, probably to be spent over five years and, while he did not win that contest, he has taken that ambition to the Treasury with him.

Nor is this a sudden burst of thinking from Javid. When he was communities’ secretary two years ago he argued for a £50bn fund for housing and housing infrastructure, to deliver on the government’s pledge of 300,000 new homes a year but was rebuffed by Theresa May and Philip Hammond.

The logic is compelling. Britain badly needs more infrastructure spending, nationally and in the left-behind regions, for transport, energy, new technologies such as electric vehicles, social housing, broadband and so on. The days when the UK could attract foreign direct investment on the basis of a flexible workforce, low taxes and membership of the single market, in spite of poor infrastructure, are on the way out. In future we will need better infrastructure.

From an economic perspective, it is also compelling. The excitement over the so-called inversion of the yield curve this month has provided a reminder of just how low yields, or market interest rates, are on government bonds, gilts. 10-year gilts are yielding less than 0.5%, 30-year just over 1%.

And while the government might expect to pay a slightly higher rate than this on the issuance of new gilts, long-term interest rates remain significant below 2%, the long-run expected rate of inflation. The real cost of borrowing is negative. Markets are almost pleading with the government to borrow, particularly borrowing that improves the economy’s productive potential.

Javid can also argue that other avenues have been exhausted, most notably that of trying to get the private sector to take up the infrastructure burden. George Osborne’s ambition was to align the desire of pension funds and insurance companies for stable long-term returns with the need to spend more on infrastructure during a time of austerity. The results were disappointing, partly because the institutions did not want to be landed with project risk. The new chancellor can say that he is cutting out the middleman.

£100bn more infrastructure spending over five years would raise public sector net investment by around 1% of gross domestic product and would make a meaningful difference to this country’s record. And, while the rewards of better infrastructure on, for example, productivity, accrue over the long-term, this is one area where you cannot put off until tomorrow what can be done, cheaply, today.

So is it all plain sailing? No, for these things never are. The fiscal timetable is already looking crowded for this autumn. There will be a short-term spending review, possibly next month, to give year-ahead allocations for government departments.

Sunday, August 11, 2019
The top 1% pay a lot of tax - will they stay or go?
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

Today I want to lift my sights high. So high, in fact, that it takes me to the very top of the income distribution. These are the people who earn many times the average salary, are mainly not Premier League footballers (though they clearly do), and who are endlessly fascinating.

I do so for three reasons. The very well-off, the top 1%, and even more so the top 0.1% will become even more important as a source of income tax revenues if Boris Johnson carries out his leadership pledge to reduce the tax burden on those slightly lower down the income scale.

That pledge, you may recall, was to increase the threshold at which people pay the higher, 40%, rate of income tax from £50.000 to £80,000. I don’t get the sense that the government is yet moving heaven and earth to deliver on that pledge but, when it does, the proportion of income tax revenues paid by those on incomes above £80,000 will rise.

It is already, as you will know, high. This year, according to Her Majesty’s Revenue and Customs (HMRC), 29.6% of all income tax revenues will be paid by the top 1% of taxpayers, and just over 50%, 50.1% to be precise, by the top 5%. Very soon, it seems, the top 1%, who account for roughly a seventh of incomes, will be paying a third or more of income tax revenues. Their share 20 years ago was 21%.

It is important to note that we are talking about only one tax here, admittedly the important one of income tax, which will bring in £190bn this year, which is skewed in this way. Others by and large are not.

This takes me on to a second reason for writing about the highly-paid. The income tax system is already progressive – the top 50% pay 90.8% of revenues and the bottom 50% just 9.2% - and Labour would want to make it more so. Many at the bottom pay no income tax at all.

Labour’s current plans envisage introducing the 45% tax rate on incomes of £80,000 or more, and 50% on incomes above £123,000. If your earnings are £80,000 or thereabouts and the Johnson government carries out his pledge to raise the threshold, voting Labour would imply a significant personal sacrifice.

Mainly I am writing about the top 1% this week, however, because the Institute for Fiscal Studies has been digging into the data and come up with some fascinating facts about those at the top if the income ladder. The IFS is undertaking a larger review, the Deaton review, into inequalities. That will look at why some people have such high incomes. Are they benefiting from scarce talent, an ability to innovate or being successful wealth creators, or are they exploiting their market power at the expense of others?

That is for later. In the meantime, we know more about the top 1% than we did.
So, as the IFS points out in its report, The characteristics and incomes of the top 1%, by Robert Joyce, Thomas Pope and Barra Roantree, the top 1% are disproportionately male, middle-aged and based in London. Men constitute 83% of the top 1% and 89% of the top 0.1%, which I shall leave here without comment.

The top 1% has become, like the economy as a whole, more geographically concentrated. Though people in the top 1% - some 310,000 in any given year – can be found in most parts of the country, half are in just 65 (out of 650) parliamentary constituencies, predominantly in London and the southeast. In 2000, half of the very rich were spread over 78 constituencies.

Nationally, to get into the top 1%, a taxable income of £160,000 is required, while nearly £650,000 is needed to make it into the stratosphere of the top 0.1%. The higher the income, the more that it is likely to consist of more than just salary. So a quarter of the incomes of the top 1% are in the form of partnership and dividend income. Roughly a third of them are business owners.

Whether it is possible to keep up with the Joneses depends very much on where you live. A middle-aged man (45-54) in London with an income of £160,000 is in the top 1% nationally but not even in the top 5% among his peer group in the capital. To be in the top 1% in London for a middle-aged man would require an income of £700,000. There is always somebody considerably richer than you.

That may be why people in London and the southeast, particularly higher-income people, are in danger of losing touch with how most of the country lives. As Joyce, a deputy director of the IFS, puts it: “The highest-income people are very over-represented in the country’s south east corner, most of them are men, and many are in their 40s and 50s. This geographic and demographic concentration may be one reason why many of those on high incomes don’t realise quite how much higher their incomes are than the average. “

There is another point that emerges from the research which could be important in the future. It is easy to think of those on the highest incomes as both a privileged group but also an unchanging one. That is not the case.

A quarter of those in the top 1% this year will not be in the group next year and only half will still be at the top in five years’ time. Very few will be in the top 1% all their lives. People have good years and bad years, and they move in and out of the top 1%.

Sunday, August 04, 2019
This sterling slide has logic on its side
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

The new government is less than a fortnight old but already we have seen a flurry of announcements and, it seems, cash pouring out of the Treasury as if there is no tomorrow. So, on your behalf, I have been trying to make some sense of this, by reading Boris Johnson’s speeches and pronouncements since he became prime minister. Somebody had to.

He has, as you would expect, a nice rhetorical flourish. Whether that is all he has, we will find out in coming months. So, he suggests, “we will look back on this period as the beginning of a new golden age for our United Kingdom”.

He is willing, he says, to “go the extra thousand miles” to engage with the EU and insists “there is scope to do a new deal” before October 31, defying “the doomsters, the gloomsters”. The chances of a no-deal Brexit, he has repeated, are “a million to one”.

When it comes to splashing the cash, there is so far a little less than meets the eye. Talk of new hospitals and extra money for the National Health Service is not new money but an allocation, perhaps sped up a little, of the 70th birthday present for the NHS announced by Theresa May last year and due to come through over the next few years.

The government’s flagship domestic announcement is 20,000 extra police officers over three years, which will roughly reverse the cuts since 2010, will have extra money attached. Whether there is a political future for this kind of cut-and-spend strategy remains to be seen.

There will be £2bn more for northern infrastructure projects, spread out over a period, and £2.1bn more for no-deal preparations, though at least half of this will be spent after October 31, and some of it may have been announced before. More than £100m will be spent on no-deal advertising; a public and business information campaign.

I have not spotted anything much on tax-cutting plans, which featured a lot in the leadership contest, though perhaps that has to wait for the autumn budget. That itself has become a source of intense Westminster and Whitehall speculation, with suggestions that the budget could come before October 31, potentially opening the way for a defeat of the government and a general election. We shall see.
What you really want to know is whether there is anything that amounts to a coherent Brexit strategy in what we have heard so far.

Currency traders are a practical lot. Many of them, perhaps a majority, probably supported Brexit. But they can recognise bluster when they see it, though they might have a ruder term for it, and they know that that is what they been hearing from the new government. Johnson has erected a giant sell signal over the pound and they have been happy to oblige.

This is the third phase of sterling’s Brexit adjustment. The first came with the referendum itself which, as noted here recently, was the sharpest fall for any major currency in the post Bretton Woods era, which now stretches back for nearly half a century.

The second was in October 2016, and May’s “Brexit means Brexit” phase, when she ruled out future membership of the single market and customs union.

The third phase, which took the pound down to $1.21 and €1.09 last week, was sparked by an article by Michael Gove, the new chancellor of the Duchy of Lancaster, who is in charge of no-deal preparations and who said no deal was now the government’s working assumption. Only when Johnson tried to dial down on the no-deal rhetoric was its fall halted.

Whether this third phase persists, or whether there will be pause until a fourth phase in the autumn, when a no-deal Brexit itself drives the pound below parity with the euro and close to it with the dollar remains to be seen.

We should be clear about why this has been happening. The markets, in pushing the pound lower, are judging that Britain’s economic prospects will be worse as a result of Brexit. And, as a more considerable prime minister Margaret Thatcher once said: “You can’t buck the market.”

Under Johnson we have moved further away from a Brexit deal with the EU, a withdrawal agreement followed by a transition period. For the past three years, detailed negotiations between the two sides came up with a solution which, while far from perfect, was workable.

Now that solution, the withdrawal agreement, is declared dead by the government, and Johnson has demanded that the Irish backstop be removed as a condition for talks on a new deal in the very limited time available.

Saturday, July 27, 2019
Tricky times call for a lucky chancellor
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

There are three ways of viewing Boris Johnson’s first few days as prime minister, and in particular his “fire and hire” approach to his new cabinet. Apart from demonstrating that no job is as insecure as that of a cabinet minister and their special advisers, it was curious man and woman management from a new leader apparently committed to Tory unity, and needing the loyalty of his MPs in coming weeks.

The smart money in the markets and the view of many in Westminster is that stepping up no-deal preparations and insisting that the Irish backstop be removed from the withdrawal agreement is all about preparing the country for a “blame somebody else” election in the autumn, in which no-deal opponents in the House of Commons and Brussels are the enemies and the patriotic thing is to support Johnson’s Tories. Risky, particularly with the Brexit Party still around.

The second possibility is that, having filled the cabinet with Brexiteers, they will be obliged to support even modest reassurances offered by the EU in the political declaration, and an orderly Brexit can proceed. Risky too, given that any of them could resign, and the fact that hardline ERG (European Research Group) Tory MPs do not appear to have been bought off by some of their number making it to the cabinet.

The third possibility, a no-deal Brexit, would see the Dunkirk and Blitz spirit being invoked, and the Johnson government taking the rap for the short and long-term consequences, which a few weeks of preparation will not prevent. No doubt Europe would also be blamed.

We shall see. There is no easy way of attaching probabilities to these possibilities, but in broad terms they would run in the order I have set them out, with an election most likely and no-deal Brexit least.

Let me, however, lift my gaze above the short-term uncertainties. We have a new chancellor, Sajid Javid who, unlike some of the other cabinet appointments last week, appears eminently suited to the job. Will he be a good chancellor and, perhaps as importantly, will he be a lucky one?

In some respects he is already lucky. As a result of the combined efforts of George Osborne and Philip Hammond, he inherits a budget deficit which, at £23.5bn or 1.1% of gross domestic product in 2018-19, was the lowest for 17 years. The new administration has to decide what its fiscal rules will be, including whether to stick with the vague target of eliminating the budget deficit by the mid-2020s, but the starting position is a good one.

The labour market, meanwhile, is another bright spot. Unemployment is at its lowest since the mid-1970s and the employment rate – the proportion of working-age people in work – is close to record highs. Average earnings growth, at around 3.5%, is above the 2% inflation rate and providing consumer spending support to the economy. The economy has slowed significantly but things could be a lot worse.

If Javid were to be a really lucky chancellor, however, he would enjoy something denied to both his predecessors, the return to normal rates of productivity growth. Osborne had reason to expect productivity to bounce back after the financial crisis. Instead it stagnated, forcing the Office for Budget Responsibility (OBR) to downgrade the outlook for the public finances. Hammond also presided over productivity that was a mere 1% higher when he left office as when he became chancellor.

This matters. Had productivity over the past decade grown in line with its long-run trend, it would be about 20% higher than it is, with most of that translating into a larger economy. And, for those who think productivity only matters for economists, the Office for National Statistics’ recently calculated that private sector wages would be £5,000 a year higher than they are had productivity achieved trend growth and pay increased accordingly. £5,000 a year is equivalent to an 18% boost in full-time private sector average earnings.

Productivity is due a revival. At 3.8%, the unemployment rate cannot fall much further and the growth of employment, constrained by the availability of workers, has begun to slow.

There is also the promise, so far largely unrealised in this country, of a significant boost to productivity for the new technologies of artificial intelligence and robotics. Though there has often been scepticism about the contribution of new technology to productivity growth – three decades ago the US economist Robert Solow said that you see computers everywhere except in the productivity statistics – there is also a sense that we could be on the brink of something big.

Sunday, July 21, 2019
Counting the cost of a Johnson government
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

When a new prime minister is about to take over, there is normally a sense of excitement, even optimism. In the case of Boris Johnson, however, assuming the polls are right and he is duly elected by Tory party members this week, there is also a powerful sense of trepidation.

New prime ministers normally take office as a result of a general election. On the road to victory, their policies, as set out and costed in manifestos, will have been subject to the closest scrutiny, from the opposition and from the media. Before even making it into the manifesto, they will have been subject to a long, behind-the-scenes process of scrutiny, to make sure that they are credible.

Where this does not occur, it often goes wrong. Nobody was more pivotal to the New Labour government of Tony Blair than Gordon Brown. But when he took over as prime minister without an election in 2007, the policy cupboard was bare even before the financial crisis hit, and his premiership did not work out well.

Theresa May, who also succeeded to No.10 without an election, had ideas, but most of them turned out to be unworkable and were quietly dropped after the 2017 election. Her legacy speech, delivered last week, suffered from a distinct lack of material.

Johnson is in a much weaker position than either of them. Both had been at the heart of government over several years, 10 in the case of Brown as chancellor, six for May as home secretary. Johnson, in two undistinguished years as foreign secretary, was a peripheral figure. The wheels of government did not depend on his presence.

Though he has been dreaming of the top job all his life, he is probably the least prepared for it of any recent prime minister, as he has sometimes shown over the past two or three weeks. Instead of carefully-tested and costed policy proposals, ideas have been tossed out, almost daily, to get through the next hustings or interview.

There is a positive element to this. It could suggest that once he is safely ensconced in 10 Downing Street, again assuming not late and successful burst from Jeremy Hunt, many of the most expensive ideas will be either quietly forgotten or put in the filing cabinet marked “long-term ambitions”.

Philip Hammond, who has been enjoying his last few days as chancellor by settling out markers against a no-deal Brexit, is fully expecting to return to the backbenches for the first time in two decades. His successor, and the assumption in Westminster is that it will be Sajid Javid, the current home secretary, will not want to preside over a borrowing binge which, alongside the sterling crash that would result from the wrong kind of Brexit, would mean that the new chancellor’s immediate task would be one of crisis management. Poisoned chalices do not become much more toxic than that.

Fortunately, there is an easy way out of this. It used to be said of currency forecasters never to combine a forecast with a date, because that way you would be right in the end. The same goes for tax and spending promises.

No timeline has been attached to the tax and spending promises that Hammond, with a nervous eye on the public finances, has been getting very jumpy about. The two most eye-catching Johnson promises – increasing the higher rate threshold (the point at which people start paying the 40% tax rate) from £50,000 to £80,000, and raising the National Insurance threshold to £12,500 - do not come with a timeline attached.