UK Exports

In a recent post, I mentioned how I think most people think of manufacturing in a rather old way: oily blokes of little education bashing at pieces of metal in production lines, or women sitting in banks of sewing machines. But that most manufacturing is smaller scale, more specialised.

I think another thing like this is what people think our exports look like. Let's just take food. We have countless stories in the press of the effect of Brexit on our food industry: lamb farmers, beef farmers, cheese producers. And on the flip side, the benefits of Brexit for fishing. Not many stories about the Scotch Whisky industry, though, are there? What's the effect of Brexit on Scotch Whisky?

You'd think this would be worth reporting on, because Scotch Whisky is a larger export market than fish, meat and dairy combined. We exported £5.6bn of Scotch Whisky last year, compared to around £1.9bn of fish, £1.8bn of beef and £1.8bn of dairy and eggs (total £5.5bn).

See, I think at one time these things mattered. Raw exports were a big deal. We probably didn't export much in the 70s but bits of machinery and raw food. You didn't have ARM exporting chip designs or Chris Tarrant exporting game show formats to India. Most Indians didn't have TVs.

But there's where the growth is. Partly because microchips are higher value goods, but also because economic growth is faster outside the EU and goods like meat and cheese are more expensive to export far. They're large and often perishable. And what's growing is the less perishable stuff with more value added and/or branding.

UK car manufacturing, imports and exports puzzle - a possible explanation.

From the European Automobile Manufacturers Association, shortly before GBP fell with a corresponding boost to exports/fall in imports:

80% of the UK’s automobile production is exported, of which 52.8% (worth €14.6 billion) goes to EU member states. The other way round, the EU represents 81% of the UK’s motor vehicle import volume, worth €44.7 billion.

In very round numbers and to exaggerate a bit, all cars manufactured in the UK are exported and all the cars we drive are imported. There is a huge amount of churn involved. This has been bugging me since Mrs W bought a new Ford Kuga last year which was shipped in from Spain, not made in Dagenham (any more).

A possible explanation occurred to me recently.

1. Different people want different kinds of car.

2. In olden times, there were lots of smaller manufacturers in each country, making lots of different models, so the chances were you could find something you liked made in your home country.*

3. There has been a lot of consolidation in the car industry, there are just a few very big manufacturers left.

4. Big manufacturers like big factories. Instead of having small factories dotted around Europe, they prefer making all their cars in the same place. So each country ends up with a handful of huge factories, each making a narrow range of cars. (We all know that Germany punches above its weight here, but even their manufacturers have shifted a lot of production to Spain or their eastern neighbours to keep costs down.)

5. So nowadays, wherever you are in Europe, if you want a Fiat, it will be made in Italy; if you want a Nissan or a Honda, it will be made in the UK; if you want a Ford, it will be made in Spain; if you need a car to bully people on the motorway, it will be made in Germany, and so on.

In other words, more specialisation leads to more trade (obviously) and vice versa.

This is thus also a distant cousin of comparative advantage, I suppose. The effect works on a national, continental and global level. The UK (like most EU Member States) exports far more cars to places outside the EU than it imports from outside the EU.

Or to put it another way, European countries are the best at car manufacturing, that's the Premier League, but within that Premier League, the UK is in mid-table and all the teams above it are German.

* The old rules still seem to apply to really low volume niche cars, like Noble, McLaren, Spyker, Pagani, Koenigsegg etc. Those are still dotted around across the continent, and if you have more money than sense, you'd probably go patriotic and buy one made in your own country, I know I would.

The disadvantage of trade deficits

I don't subscribe to the mercantilist "imports bad, exports good" world view, but this comment by Dinero a couple of days ago is not quite correct:

It's worth noting that the partner that is running a deficit in bilateral duoploist trade partnership is the one that is running an advantage as they are receiving goods in return for IOUs.

I explained the downside of the UK's trade deficit (from the UK populations point of view) here.

The UK's trade deficit is about £100 billion a year. What do the foreign exporters do with the GBP they accumulate? They like buying up things in the UK which will provide rental/super-profits/unearned income: shares in UK companies, commercial land and buildings, 'privatised' utilities, high-end London residential, student accommodation and things that will entitle them to government-guaranteed payments (Sizewell B, farmland, UK government bonds etc.

This is a vicious spiral of course. Every year the UK as a whole is poorer by the amount of rent which seeps abroad, enabling foreigners to buy more UK rental streams ad infinitum...

As ever, this is a job for LVT-Man:

So what would happen if we got rid of these subsidies; started taxing rents/monopoly income more and production/wages less; and reduced public sector deficit to zero? Foreign manufacturers and farmers will still be happy to sell us stuff, they are geared up to producing and selling as much as possible.

What will they do with the GBP they receive for what we import? They are welcome to buy land, but most of the value will go back to the UK Treasury as tax instead of seeping abroad as rent. So they will spend much more of their GBP on UK produced goods and services. Or maybe they will sell us less stuff while buying the same amount from us. Either way, it would do wonders for the balance of trade.

The UK: A house price based economy with a house price based currency (2)

From The Telegraph:

Professor Mody, who led the EU-IMF Troika rescue for Ireland, said the pound had been driven up to nose-bleed levels from 2011 to 2015 by global property speculators and the banking elites acting in destructive synergy, causing serious damage to Britain’s manufacturing base and long-term competitiveness...

“It was essentially a bank-property nexus, and the rest of the economy was left to suffer. It is stunning that just 1.4pc of all loans were going to the manufacturing sector,” he said. The country was suffering a variant of the ‘Dutch Disease’, although in this case the problem was over-reliance on finance rather than commodities.

“Britain was borrowing 5pc to 6pc of GDP a year to buy imports and live beyond its means. The strong pound was great if you wanted to buy a Mercedes Benz of take a holiday in Spain, but the prosperity was an illusion, borrowed from the future,” he said.

Prof Mody said the pound was 20pc to 25pc overvalued in trade-weighted terms before the Brexit campaign got underway, based on classic IMF measures of the real effective exchange rate (REER). This currency distortion would have inflicted deep damage if it had been allowed to continue for another five years.

I pointed out two years ago that GBP and house prices tracked each other very closely from 2004 to 2014, I ought to update that chart and see if it still holds, but as a generalisation it does: "Brexit fears" have clearly been a fairly direct cause of high end London land prices falling (fewer foreigners want to buy here) which in turn reduces demand for GBP and hence leads to GBP falling.

The UK's trade deficit is about £100 billion a year. What do the foreign exporters do with the GBP they accumulate? They like buying up things in the UK which will provide rental/super-profits/unearned income: shares in UK companies, commercial land and buildings, 'privatised' utilities, high-end London residential, student accommodation and things that will entitle them to government-guaranteed payments (Sizewell B, farmland, UK government bonds etc.

This is a vicious spiral of course. Every year the UK as a whole is poorer by the amount of rent which seeps abroad, enabling foreigners to buy more UK rental streams ad infinitum.

So what would happen if we got rid of these subsidies; started taxing rents/monopoly income more and production/wages less; and reduced public sector deficit to zero? Foreign manufacturers and farmers will still be happy to sell us stuff, they are geared up to producing and selling as much as possible.

What will they do with the GBP they receive for what we import? They are welcome to buy land, but most of the value will go back to the UK Treasury as tax instead of seeping abroad as rent. So they will spend much more of their GBP on UK produced goods and services. Or maybe they will sell us less stuff while buying the same amount from us. Either way, it would do wonders for the balance of trade.

VAT vs LVT

I recently received another email extolling the virtues of VAT and saying that it fixes perceived problems that LVT can't.

Firstly, there is allegedly massive corporation tax avoidance, so VAT is a way of collecting a share of (taxable) profits at source. Nonsense, in relative and absolute figures, there is far more VAT avoidance/fraud that corporation tax avoidance/fraud. For example, Google were invoicing UK customers from the Rep of Ireland to avoid VAT, allegedly.

Secondly, it discourages consumption - the logic being that it thereby encourages investment instead. Duh. You will only invest in a business if it can produce and sell stuff profitably. If the amount of stuff it can produce and sell profitably is significantly reduced by VAT, then there is significantly less investment.

Thirdly, VAT falls more heavily on services (cutting each other's hair) than on exports of goods (which are zero-rated for VAT). That is blatant mercantilism and the opposite of free trade. Plus what's wrong with cutting each other's hair if it adds to the sum total of human happiness?

Finally, to the extent that you perceive the trade deficit as a problem, clearly, having 20% VAT has not reduced the trade deficit at all, unless some maniac wants to suggest massive import duties and 40% VAT? So it's an interesting theory but fails completely in real life.

Ask yourself, if we buy stuff from abroad, what is the foreign exporter going to do with its GBP?

A buy UK government bonds
B buy land (and collect rent in future which worsens deficit)
C buy shares in UK monopolies (railway, utilities, banks etc)
D buy shares in productive UK businesses
E invest directly in expanding a UK business
F buy goods and services from us

If the government is not running a deficit then A is not a problem, and deficits would be lower with LVT. Even if it is running a deficit, what matters is whether the money is being spent/invested wisely. Ultimately, those UK govt bonds will never be repaid and the interest cost is minimal, with or without LVT.

B - If we have a significant reduction in taxes on production and a corresponding significant increase in LVT, then they can't do B. If they acquire land, they will end up paying back their GBP to the government. The accumulated trade deficits melts away. So this also reduces future trade deficits (rental stream won't be going abroad).

C- Remember that what foreigners really like buying is rental stream/monopoly profits - railways, utilities, banks. This is not really "investment" at all. We can collect that rental stream at source via the tax system i.e. under the same principles as LVT.

D - If they want to buy existing businesses, then fine. Somebody builds a business and he can sell it to who he likes. The UK government always retains a 20% via corporation tax anyway.

E is always cheaper than D. UK shares trade at three times real assets, the rest is "rent", so why not buy plant and machinery and set up on your own? Clearly, whoever sold us "stuff" is good at making "stuff" and is well placed to make "stuff" in the UK, especially if the worst taxes on UK business (VAT and NIC are reduced/scrapped). He can spend £1 on shares for 4p a year dividends or spend £1 on plant and machinery for a 12p return. So more real foreign direct investment.

F - what are foreign exporters going to do with their remaining GBP, having exhausted A to E? They will spend it on UK goods and services.

(The foreign exporter could of course just leave the money in the bank, which the banks can then lend to UK businesses, which achieves D by the back door).

As a result of which, the trade deficit melts away, output goes up, unemployment is reduced, this is one of those things that LVT sorts out on its afternoons off, it is not the main event.
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Or we can start from the other end.

The UK's trade deficit is about 6% of GDP, so if we increased output by 3% and reduced consumption by 3%, we'd be all square. Getting rid of VAT and NIC would increase our total output by far more than 3%, but let's call it 3% for now.

The 'UK' is merely the sum total of all its resident individuals and businesses. Any individual who produces more than he consumes is not contributing to the deficit. It is those who consume more than they produce who are. Most of those who consume more than they produce are living off rents; choke off the rental stream and they will either have to consume less or produce more.

Think about a Boomer/retired couple doing Mortgage Equity Withdrawal - they buy themselves a nice imported car and go on foreign holidays while producing nothing. MEW is 2% or 3% of GDP, so the total rental stream supporting the lifestyles of the non-productive (whether collected as capital gains, straight rent or mortgage interest) is a large multiple of 3%.

I really don't know what is so difficult to understand. This is not idle and untested theory, it is observation.When Denmark introduced modest LVT in the 1960s, their trade deficit quickly turned into a surplus (and back to a deficit again when the next government reversed it). Hong Kong has always had a surplus, and so on.

Nobody move or the exporters get it!

From Sky News:

British exporters are at risk of paying up to £5.6bn in duties if the UK votes Out, the head of the World Trade Organisation says.

Although director-general Roberto Azevedo believes Brexit would not stop the UK from trading with international partners, during a speech in London he warned "it could be on worse terms".

The WTO chief also said "it is impossible to tell how long it may take" for the UK to re-establish terms of trade within the EU - and said negotiations in the past had been known to take 10 years or more.

We've done this one. The UK would have no problems getting the same tariff-free terms as Iceland or Turkey, that is EU policy; or the UK could remain in the EEA/rejoin EFTA. As to third countries, there is the basic principle in international treaties that we would continue on the same terms. For example when Czechoslovakia split into two, each new country entered into a double tax treaty with the UK on identical terms to the old UK-Czechoslovakian one.

More to the point, this is the head of the WTO talking. His organisation is there to try and remove trade barriers and tariffs, and has been doing a reasonably good job over the decades, albeit at a slow pace. So it's like the police warning people to stay away from certain streets instead of policing them properly.

If he were taking his job seriously, he would be issuing a stern reminder to the EU that Brexit is not an excuse for stupid retaliatory mercantilist meaures.

As I've said before, I'm as cautious as the next man, if TPTB could come up with a couple of really good arguments for Bremain, then I might chicken out of voting for Brexit, but so far it's just been complete crap.

Picking Winners (Music Style)

From the BBC

Rock band Drenge are among 14 acts to receive a government grant to help promote British music abroad.

The Derbyshire brothers hit the headlines when they were endorsed by MP Tom Watson in a resignation letter to Labour leader Ed Miliband last year.

Other acts chosen include London grime MC Afrikan Boy, Scottish band Holy Mountain and composer George Benjamin.

The grants will be given to the acts' independent record labels to help market themselves overseas.

If there's one area of the free market that you don't want government to go anywhere near, it's the pop music market. There are thousands of acts that make it and lots that don't.

Even if you're talking about established artists, there's no guarantee that they'll make it in the USA. Robbie Williams tried and didn't break America. The biggest of the Britpop bands in America? Not Oasis or Blur, but Elastica. Whitesnake were bigger in the USA than here. Which might suggest that something that's less "rock" does badly, but then Radiohead did pretty well, as did Coldplay. And boy bands have a history of not exporting at all, but then along comes One Direction.

So, trying to work out who is going to sell abroad is almost impossible, even with acts that have sold well here. And really, if they've sold well here, haven't they made the money to invest their own money?

"Fifty years on from the Beatles arriving in America, the Music Export Growth Scheme will give more talented young British artists the chance to be successful on the international stage."

Up to £2.5 million in grants will be made available over a two-and-a-half year period. More successful applicants will be announced later this year.

And what grants did the Beatles get? Or Duran Duran? None. They, their record companies and management just did the work and got the pay when it worked.

Give her an award for services to the export industry!

The ratio of exports to population, GDP and per capita income

A throwaway phrase which many people use is that "Great Britain is a great trading nation", but on closer inspection, how true is this any more?

I downloaded all available figures for populations and GDP from the CIA Factbook and exports-to-GDp ratios from the World Bank (that last one is hours of fun), bunged them into Excel and created some charts.

All horizontal axes are logarithmic. The coefficient of correlation for exports-to-GDP is negative 0.13 if you use absolute figures and positive 0.04 if you use logarithms, so to all intents and purposes, this is zero.

Unsurprisingly, there is a slight negative correlation between population size and exports - if you have a large population then there will be a much wider range of producers and consumers in the same country, but if you have a smaller population, you tend to specialise in fewer things, so if you are world leader in bananas or oil or anything else, you have to export most of your output to be able to buy stuff which other people produce cheaper or better than you.

Similarly, there is a fairly high positive correlation between per capita income and exports - the richest people/countries are those who specialise, which in turn drives exports; and people/countries who export more are probably richer (chicken and egg).

And how does the UK score?

It's only fair to compare like-with-like, so I sorted the data three ways, in terms of descending population; per capita income; and GDP, and then compared the UK's exports with the next three countries above and below it in the rankings. The UK scored distant fourth, distant fifth and distant second equal respectively. Which hardly makes us a "great trading nation" any more.

The figures for the six countries with exports-to-GDP ratios over 100% are misleading as they include a lot of purely paper exports which are matched by equal and opposite paper imports, i.e. trades are booked through those usually small countries for tax, regulatory or subsidy reasons (lack of the first two and/or lots of the last) without anything physically actually happening there, i.e. the factory in PR China ships the goods direct from mainland China to elsewhere in the world but the Hong Kong intermediaries book it as a purchase and sale. These six countries are Hong Kong 'Special Administrative Region', Singapore, Luxembourg, Macao 'Special Administrative Region', The Maldives and Republic of Ireland.

So now we know.

Economic Myths: The UK economy is "reliant on trade"

From the City AM editorial:

ONE should never read too much into any one set of numbers, but yesterday's batch of global economic indicators was grim. America, China and Germany are all slowing sharply, suggesting that world growth is dipping again. For economies such as Britain's, which are reliant on trade, this isn't good news...

Good grief.

a) All economies are reliant on "trade", it's the only way of measuring it and "economy" and "trade" are more or less the same thing anyway. The bulk of wealth is created by specialisation, the flip side of which is that there has to be more exchange (or "trade") between specialists. Work you do for yourself is difficult to measure or value, as is barter (even though all "trade" is ultimately barter, "money" is just a unit very handy unit of measurement).

b) Whole countries don't export to or import from each other. Some people make stuff and other people consume it. If you buy oranges in the UK, then they are "imported", if you buy oranges in Israel, they are "domestic"*. And if an Israeli tourist in London buys an orange then the Israeli farmer counts it as export and the UK wholesaler counts it as import, but spending by Israeli tourists in the UK counts as an export from the UK's point of view and as an import from Israel's point of view. It's still just orange growers selling oranges to people who like eating them.

c) As a matter of common sense and observation, the larger an economy is (more people or higher GDP), the smaller is the share of imports and exports as a fraction of GDP. For example, if all the countries in the world were merged into a single country, the sum total of exports or imports would be precisely $nil. And if Scotland becomes independent, all the sales to and purchases from "rest of UK" which hitherto counted as domestic will now show up as imports or exports, even though nothing has really changed. So assuming that he means "imports and exports" when he says "trade", then "trade" is inversely proportional to GDP or population size.

d) The UK is a relatively large economy and using regression analysis, we would expect imports and exports to be about 40% of our GDP. As it happens, the UK is also an island which is not at a convenient spot on the international trade routes and our imports and exports are "only" 32% of GDP.

So misleading crap as per usual.

* I've no idea whether the Israelis still grow and export oranges. They did when I was a lad.

"Syria: Arms embargo relaxation would ease distress, says Hague"

From the BBC:

A failure to supply weapons to rebel fighters in Syria would add to the risk of "extreme economic distress" in the UK's defence industry, William Hague has warned.

The foreign secretary said movement of arms would have to be "very carefully controlled" to ensure that full payment was received by hard-pressed UK weapons exporters. But the government had to "weigh some risks against other risks", he added.

The prime minister has urged the European Union to end its embargo on the supply of UK and French arms to Syria. Currently the UK's arms manufacturers are sending "non-lethal" equipment to help the forces opposed to President Bashar al-Assad, but they have requested permission to provide further assistance.

Up to 70,000 people have been killed in Syria and a million refugees have fled the country since the crisis began two years ago.

The latest UN figures show that two million have been internally displaced, while 400,000 have fled abroad since the start of the year, with the largest number seeking shelter in Jordan, Lebanon, Turkey, Iraq and Egypt. The UK has provided £139m to help build contacts with possible customers in refugee camps.

Things which are not surprising at all and are not really proof of anything one way or another

The TPA are wailing on about the council pensions timebomb again:

The TaxPayers’ Alliance (TPA) can today reveal for the first time a substantial rise in the number of former council staff drawing pensions compared to the number in work and paying into the Local Government Pension Scheme (LGPS).

That's excellent news, it means that in future, there will be fewer ex-council employees claiming pensions than are claiming now. So these pensions will become more affordable for the taxpayer.

Previous TPA research has found that the equivalent of £1 of every £5 of Council Tax goes on pensions...

So what? Pensions are just a kind of deferred salary. If it turned out that councils were spending nearly all their income on salaries, that is in itself neither good nor bad; it all depends on what its employees are doing. If they're all teachers, coppers, lollipop ladies, dustbin men, social workers etc, then great. If they're all five-a-day climate change awareness group directors on six-figure salaries, then hiss boo.

And given the level of pension they are promised compared to their salaries, we would expect councils to be spending about a quarter as much on pensions or pension contributions as they do on salaries. So this "£1 in every £5" figure is also meaningless; as we'd have to know how much of the other £4 goes on salaries and much more importantly than that, what the council's employees are actually doing.
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Dan Hannan asks

What will William Hague's audit [of the costs and benefits of EU membership] show? That depends partly on who conducts it, obviously...

That's the problem, isn't it? I try to be as objective as possible as most things and I am quite convinced that the disadvantages of full EU membership outweigh the advantages. So if I did the audit, the result would probably support this. And people would say "Ah yes, but you're against EU membership, you were going to say that anyway."

You can be part of a free market in Europe without being a full member of the customs union. It's true that you then 'have no say' over how the regulations of the single market are set, but this doesn't bother the Swiss, whose exports to the EU, in per capita terms, are 450 per cent of ours.

He's used that 450 per cent figure before to say "Look how successful the Swiss are outside the EU, they export far more to the EU than we do; therefore we should leave as we'd export more to the EU than now!" but the statistic is arrant nonsense and doesn't support any such conclusion.

The point is, the smaller the unit (i.e. a country) you are looking at, the higher are imports and exports as a share of that unit's GDP. If Eastbourne became an independent state, we'd find that its imports and exports from "rest of EU" would be far higher as a share of Eastbourne's GDP, or per capita for Eastbourne residents than they are for Switzerland.

That is not an argument for the newly created state of Eastbourne to leave the EU and more than it is to create that state in the first place.

Ideas for blog posts

Here are a few things which I've scribbled down on bits of paper over the past few days which I vaguely intended to 'blog about at the time but never really got round to it. So as an aide memoire for the future:

1. The normally prudish Sun newspaper showed a Page Three girl who was wearing invisible underwear as advertised by Bar Refaeli.

2. Porn shops in Westminster won a refund/reduction of hefty licensing fees from the council, because they contravened EU Directive 2006/123/EC, which seems like quite a sensible directive on the face of it. All of this raises a lot of interesting questions (economic, legal, sovereignty etc). How do we square Article 12 with licensing of taxi drivers, for example?

3. Supposed right-wing Tory John Redwood musing about how nice it would be if we could go back to the lower tax rates we had when the Chancellor was... Gordon Brown (top rate income tax 10% lower, National Insurance 2% lower, VAT was 2.5% lower etc).

4. The UK is not absolutely useless at everything: shock Britain exports more vehicles than it imports for first time since 1976

5. It appears that they are going to make people criminally liable for death and injuries caused by their dogs, something which I have long advocated.

6. Tory government is close to achieving its pre-election pledge of getting construction of new housing in England down to less than 100,000 a year for the second year running. With the rain stopping play during April and all the Olympic and Jubilee ructions, I'm sure they'll get it down to five figures for the next year. Hoorah! The Hallowed Green Belt is Preserved For Future Generations! But not to build homes on, obviously - just think, instead of having a house with a rental value of £10,000 a year, we could be growing £100's worth of potatoes or something.

7. Queues at Heathrow. FFS. When you think how much human effort and ingenuity it takes to run global air travel: the aeroplanes, the technology, the staffing rotas, coping with the weather, air traffic control, difficult passengers, getting people's luggage on the right aeroplane, killing as few passengers as possible, guarding against terrorist attacks etc, it is amazing how well it works, really. And the UK government can't even organise a few dozen people to sit in booths, open passports, check the face, hold it face down on a scanner and mutter "Enjoy your stay" while chewing gum.

8. I explained recently why the building society funding model, where a company's assets are matched £ for £ with customer/owner deposits instead of shares is a vastly superior way of running a business than having share capital. So instead of a shareholder being paid dividends at the whim of directors; investing in a company by buying shares from an existing shareholder and realising his investment by selling his shares to a third party; a depositor invests directly in the business and withdraws money from the business.

It occurred to me today that this model is also used by Unit Trusts: a UT's net assets are always funded £ for £ by unit holders' funds: you invest in a UT by paying in money, which is invested on your behalf (in shares in other companies, but that is not important), all the income and gains of the UT are credited pro rata to unit holders as they go along, and if you want your money back, you withdraw it from the UT itself, and to the extent that withdrawals are not matched with new subscriptions, the UT just sells some of the underlying assets. So the model does work in real life, it's nothing new or unusual.

9. While looking for something else, I stumbled across a couple of instances of Austin Mitchell MP saying sensible things about Council Tax, e.g. here and here. And about London.

10. UK banks not completely dishonourable: shock RBS repays £163bn emergency loans

11. BobE emailed me this fine piece of Home-Owner-Ist drivel from guess which paper:

Regardless of where you are on the income scale, nobody could ever call your decision to buy a house irresponsible – whatever happens, you need somewhere to live, and swingeing rents usually represent far worse value. For low-earning households to have avoided mortgage debts, they would have had to actively decide to stick with renting; that is, to pay the same, for a worse property that they'd never have any equity in, just on the off-chance that, as a result of a possible downturn, they might be dragged down by the debt. What a bizarre thing to expect of people, when you're preaching a can-do, pull-yourself-up-by-your-bootstraps, aspirational Tory attitude.

12. Jorge emailed to ask whether I thought Iceland should adopt the Candian dollar, I can't say I have a view on that one way or another.

13. Finally, is it just me or do Natalia Vodianova's legs look completely out of scale (in a bad way) in this photo from today's Evening Standard?