British Labour’s obsession with fiscal rules is untenable and ignores the reality of the situation

I have been a consistent critic of the way in which the British Labour Party, both in opposition and in government, is obsessed with rigid fiscal rules, thinking it is the only way that it can demonstrate fiscal credibility (whatever that is in their minds). The result is that they get cornered into situations that either lead them to make poor decisions which lose them votes and give the likes of Nigel Farage more fuel for his crusade or they are forced to admit they cannot achieve the (unachievable) fiscal rules. Either way it is a clusterf*)@. In the last week or so, we have witnessed the ludicrous situation of the British Office of Budget Responsibility failing to protect its own file systems and leaking information before the Chancellor presented her official fiscal statement. The leaked information just happened to contradict the messaging of the Chancellor which was a bit inconvenient. But the important issue that all this raises is not whether OBR can run a secure WordPress site (evidently it cannot), but that the information it generates is so inaccurate and systematically biased that it cannot realistically be used as the basis for assessing fiscal policy. Which means that the obsession with the fiscal rules leads to policy changes that damage things that matter – such as employment and services – but those policy changes are based on information (OBR forecasts) that subsequent revelations tell us would not justify those policy shifts. As I said – clusterf8x@.

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Australian national accounts – government spending saves nation from zero growth

The Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, September 2025 – today (December 3, 2025), which shows that the Australian economy slowed to 0.4 per cent (from 0.6 per cent) in the September-quarter 2025. At the current annual growth rate, unemployment is predicted to rise further, given current labour force and productivity growth (see below). Household consumption expenditure growth weakened while public and private investment was stronger. The 0.4 point overall government contribution was the difference between zero growth and the positive result recorded.

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Talk of a Plaza Accord 2.0 should heed the lessons of Plaza Accord 1.0

Pressure is building from the US for a Plaza Accord 2.0 as part of the US President’s attempts to ‘improve’ the US trade situation. I use the term ‘improve’ cautiously because the US President seems think that making it more difficult and expensive for US consumers and businesses to access imports from abroad is a benefit to the same. While Japan is being discussed in this frame, the real US target is China. However, it is unlikely that the US will be able to bully China into agreeing to a similar deal that the US effectively forced on to Japan and other nations under the Plaza Accord 1.0 in 1985. Further, the Plaza Accord 1.0 was extremely disruptive – some say it caused the asset price bubble in Japan, which led to the secular stagnation, after the bubble burst. And, there is little evidence that it led to any significant long-term benefits for the US anyway.

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Panel of Japanese economists mired in erroneous mainstream constructions and logic

Last Friday, I met a journalist in Tokyo and we discussed among other things, the results of the latest Nikkei/JCER ‘Economics Panel’, which was conducted between November 13 and November 18, 2025. The panel involves “questionnaires” being “sent to approximately 50 economists to gather their evaluations of various economic policies. The aim is to promote deeper and more active discussions on economic policy by clearly conveying the consensus and differences of opinion among experts, along with presenting individual comments from each economist.” The results are quite striking and demonstrate that the Japanese academic economics profession is mired in destructive Groupthink that means the profession is failing to contribute in any effective and functional way to advancing the well-being of the Japanese population or providing insights into how the nation can meet its considerable and immediate challenges.

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Kyoto Report 2025 – 9

This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions. Sadly, this is my last Kyoto Report for 2025. My time here has once again come to an end after 9 weeks and I am heading back home. I will return to my work here next September if all is well.

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Corporate welfare is rife in Japan’s banking sector

I am travelling a lot today so I am typing this up in between segments. I met a journalist in Tokyo on Friday and we discussed various matters relating to the current policy debate in Japan. In addition, we discussed the latest situation for the Japanese banking sector and the fact that they are recording record levels of net profits almost across the board, but particularly for the three mega banks, and it might surprise readers when they learn the source of those profits. It is actually quite scandalous but demonstrates the bind that the Bank of Japan now finds itself in – of its own doing, while being cheered on by mainstream economists, several of which are probably receiving lucrative consulting income from the very same banks.

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Japan GDP growth contracts as politicians fight it out over size of fiscal stimulus

I am travelling today to Tokyo and have little time to write here. But with the latest national accounts data coming out on Monday (November 17, 2025), the discussions within the government are about the size of the fiscal stimulus that will be initiated in the next fiscal round. This The Japan Times article (November 18, 2025) – Extra-big extra budget pushed by some Japanese lawmakers – provides some information. The new Prime Minister is proposing to limit the fiscal shift to an extra 17 trillion yen (about $US110 billion) but a small group within the ruling LDP want the package to be around 25 trillion yen. I think the stimulus should be around 50 trillion yen and there are economists in the financial markets who agree with me. More on that another day. But the current debate is being conducted within the context of the latest – National Accounts – for the September-quarter 2025, issued by the Cabinet Office (November 17, 2025). The economy grew by 1.1 per cent over the last 12 months (down from 2 per cent in the June-quarter). In the September-quarter, GDP shrank by 0.4 per cent, the first negative quarter since the March-quarter 2024. The need for stimulus is clear. The debate is over how much.

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Kyoto Report 2025 – 8

This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions.

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The achievement of a degrowth future requires system change not green new deals

When I was just coming into adulthood (1972), the – Club of Rome – published its famous – The Limits to Growth – which focused on the consequences of “exponential economic and population growth with a finite supply of resources”. It was a very influential research document generally, but also very important in shaping the way I would think about the world. The critics were many and the fossil fuel industry lobbying powerful and while the ideas did move policy makers somewhat and motivated new movements or gave impetus to existing bodies, such as the – Zero population growth – organisation, the vital message was largely ignored. Even the more recent green-oriented activism has not seen fit to focus on population growth as the primary problem that has to be addressed, if all the other problems of excessive energy use are to be dealt with effectively. Marxists were also very critical of the Club of Rome report for reasons that always escaped me. They criticised the Club’s focus on overpopulation, claiming it distracted us from the real problem, which was the voracious logic of the Capitalism system of production and accumulation. I always thought those attacks were unhelpful and allowed the progressive (Left) response to climate change to be fractured and, hence, weakened.

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Australian labour market – slight improvement after two bad months

For the last two months, the Australian labour market has gone backwards. The deterioration seems to have stabilised in October. The Australian Bureau of Statistics (ABS) released the latest labour force data today (November 13, 2025) – Labour Force, Australia – for October 2025, which reveals a slight drop in official unemployment and underemployment and a stable employment to population ratio – marking time. The best sign this month is that full-time employment growth was relatively strong. However, there are now 10 per cent of available labour not being used in one form or another, so it is ludicrous to talk about Australia being close to full employment. There is substantial scope for more job creation given the slack that is present.

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