I have just posted on LinkedIn, “Does AI actually impact the bottom line in a good way?”. I look at an article from the Register based on a Gartner report which reports that in their survey AI projects “sucess rates were “only 28 percent of use cases fully succeed and offer return on investment (ROI).”

I look at at arguments from Perez’s Technological Revolutions and Financial Capital and remember a late 20th century paradox that while many IS projects had poor and even negative ROIs, firms that didn’t invest failed.

I was informed by the European Movement on threads, that the EU Council has approved talks between the EU & UK on electricity market integration and cohesion. While electricity was on the cards and was signposted in last years May Summit, the cohesion talks are a major departure. Whether this is the EU ensuring that the UK pays its way into the single market, or a genuine attempt to broaden the conversation about what the UK adopts/rejoins is to me unclear.

It may be some surprising good news, perhaps more evidence that Labour’s tanker is turning.

I was surprised at the cohesion fund announcement and so asked Gemini if the UK would be a net contributor to the fund. They suggest that it is unlikely that the UK would be able to claim from the fund as the UK’s GDP per capita is too high and its purpose is now targeted at poorer member states and not smaller localities. Gemini’s full reply is at https://share.google/aimode/R99jBkDkHT8Qd5Y2E

It seems they think the UK paying into the cohesion fund is to contribute to single market costs of joining the electricity single market. Under current rules the UK is unlikely to claim against the cohesion fund, despite having numerous European poverty areas.

I wrote a medium length blog on linkedin and medium about three US court cases on internet system service provider liability to consumers and non-consenting suppliers. The big tech companies lost two, on harm caused which they’ll appeal, and won one on carrier immunity.

I also look at Russia’s recent measures to cut Russian users from the world, and mention the UK’s expressed concern about internet harms.

On the Great Reset with the EU, things continue to move, if not between the EU & UK, at least inside the Labour Government.

At the end of February, the EU & UK signed a “cooperation deal on competition”. I find it hard to discover what this actually means but it gave Peter Kyle the opportunity to say that people want better, but the Government is not going very far. He is also quoted as saying that the British public are “not nostalgic” for the pre-Brexit past.

This was followed by a devastating and frank report from the House of Commons Foreign Affairs committee, published on a web page entitled, ‘UK-EU reset lacks “direction, definition and drive”’. It’s chairperson, Dame Emily Thornbury, is quoted as saying

“Sadly, we found that despite progress in some areas, the Government’s reset is languishing, suffering from a lack of direction, definition and drive. It feels as though we are on a journey with no clear destination. In many areas, the Government has failed to provide timelines, milestones, or priorities and it does not appear to have an ambitious, strategic vision for the UK’s new relationship with the EU.”

I was surprised to find, this report, of Maroš Šefčovič^[1]’s speech, presumably to the March meeting of the EU-UK Parliamentary Partnership Assembly^[2] where he warns that closing the Erasmus deal is in danger, because the UK won’t agree sufficiently favourable financial terms for EU students to study at UK universities. This is symptomatic of the mean spirit in which HMG is negotiating the reset with every line item to be in the black inked “national interest”. Stella Creasy MP issued a short video, stating that the real prize is signle market compliance.

To succeed the UK needs to put more on the table.

On March 16^th, inews reports, echoing the Times, that Tracy Brabin, an ex-MP and West Yorkshire’s Mayor, calls for a closer, frictionless trading relationship with the EU after having participated in a trade delegation to Europe. Two days later, Sadiq Khan, Mayor of London, in an interview in Republica, reported in the Guardian calls for Labour to rejoin tha single market, and fight the next general election pledging to rejoin the EU.

Rachel Reeves returned to the City Business School to deliver the Mais lecture, the text is posted on gov.uk and it is reported in the FT, in an article entitled “Rachel Reeves to make new push for greater single-market access”. Having read the speech, this should be seen as the unique centre piece of the speech, but she certainly identifies a better relationship with the single market as a key desirable driver of growth. Reviewing what she said, she retains the rhetoric of Starmer, Simmons-Thomas & Kyle, she says,

“…  alignment should be forward looking and durable, providing the certainty that businesses on both sides need to invest and grow. … There is also a strategic imperative for deeper integration between the UK and EU – in our shared need for greater economic resilience.  So my choice, the choice of this government, is not to turn back the clock but to look towards a new and stable, future relationship. 

One of the first replies to Reeves, was Anand Menon in the New Statesman, who says,

So Rachel Reeves wants more alignment with the European Union. Or so she announced in her Mais lecture yesterday (17 March). Cue commentators here going off on one, wondering if the Brexiteers will react, whether Leave voters will be concerned. Pro-EU voices retort that public opinion has moved on since the referendum and point to the increasingly clear economic impact of Brexit. What no one does is stop to wonder what the EU might think. This, unfortunately, is how we do Brexit.

It’s an important question to ask and answer.

The following week, Chris Bryant, the UK Trade minister made a speech, also reported in the Guardian calling for more ambition, and it reports that Sefcovic says the EU are still willing to offer a “Swiss Deal”, but I suspect the EU’s redlines drawn up by the reset agreement in May 2025 will not waver. The single market four freedoms are indivisible, the Court is the final arbiter, and the UK has to co-fund its agreements.

Sir john Curtice in an article, entitled, Sir John Curtice: Why Labour’s Brexit focus has shifted from Leavers to Remainers, writes of the electoral implications which is what we i.e. Labour Europhiles have always been told is the key reason for turning their backs on the EU and the party.

Will the pursuit of a closer relationship with the EU risk courting electoral disaster by alienating Brexit-backing voters? Or has the political front line fundamentally shifted so that it now makes political sense for Labour to change tack on Brexit?

He discuss polled switchers and concludes,

So, although Labour’s vote is currently down by nine points since 2024 among those who voted Leave, it has fallen by 19 points among those who supported Remain.

Over four weeks, a number of senior labour MPs and Mayors have reopened the debate, perhaps with the fear and influence of McSweeney diminished, this explains the new loquacity but it remains economistic and nationally selfish. We need to do more, the Govt needs to put more on the table, recognise that the May 25 Reset agreement together with the 2020 treaties are the start point of any and every new agreement. In my article, Brexit: reset or stall, I stated that

The EU have ensured the current treaties are confirmed and that any entrance to the single market includes dynamic alignment, CJEU judicial authority and financial contributions, in exchange, the UK have obtained agreement that the Commission will engage in pre-legislative consultation. 

To get further politicians need to think beyond our wallets and begin to listen to our EU member allies and the solidarity, security and cultural benefits that membership of an ever closer union brings. I would also add that in debating this in the party, too many take the leadership line without recognising the number of times people have been put up to defend a line that’s already changing.

[1] The Commissioner responsible for Trade & Economic Security.

[2] I have not reviewed the documentation of this meeting as it took me by surprise unlike the December meeting. At the same/similar time, Stella Creasy has also issued a video clip arguing that the benefits of a Swiss style single market agreement are more important than customs union synergies and that the time required for complete adoption is not available and too hard. I am not sure I agree.

I have represented Another Europe within Citizens takeover Europe for five years and recently wrote a report back on our joint work. This has been posted on the Another Europe’s web site. I talked about tracking the Conference on the Future of Europe, the political denouement of CoFoE, the 2024 EP elections, the growing strength of the nationalist and far-right in the EP, citizens assemblies, the EU democracy plan and opportunities for & threats to improvement.

I review the continued use of citizens’ assemblies and CTOE’s attempts to institutionalise them and its continued work on democratising the EU. I look at the recent batch of ECI petitions that have reached the threshold mandating a Commission response.

I look at the EU’s democracy action plan, for free and fair elections, zero foreign interference and disinformation and a free and independent press and media. I mention Eastern european’s distaste for state backed fact checking sites and note that,

Combatting disinformation requires comprehensive cyber-security capabilities and laws. The Digital Services Act gives the enforcement authorities the power and places obligations on the, mainly US, companies to report and react. Much of the political focus remains on the Russian state. It must be recognised that European and British democracy is vulnerable to attacks from both East and West as shown by the Brexit referendum.

I look at the US’s new digital colonialism and its extension into export sanctions on the ICC and visa refusals for European politicians and civil servants involved in the digital services act. I repeat my argument that AEIP must continue to argue that the government should be seeking to join the European Union single digital market and implement the DSA in the UK. It should also argue for membership of the customs union and single market now, and call on the political parties to commit to rejoining at the next election.

I note that the growing need for co-ordination in defence and foreign policy exposes an EU, its member states and British democratic deficit which is an opportunity and threat for establishing more democracy.

I sort of conclude, on the topic of what sort of constitution the EU needs. Copying the US constitution would mean copying its weaknesses such as the Senate, tax collecting laws and the singular executive. Within the coalition, AEIP argues for broadening the principle of subsidiarity to become a citizen right, not a member state right, and for a more democratic Committee of Regions.

These are my notes from Political Tech Summit 26. I have focused on those sessions I attended. The technology support presents what looks like AI written summaries of the sessions which were mainly panel sessions. I have quoted from these summaries and in one case sought to re-summarise using another LLM. I have tried to humanise the text so that the article remains in my voice but also informs you of what happened.

The first session I attended was entitled, “Protecting our Future: Cybersecurity for Society, State and Public Administration”. The panellists were Marie-Agnes Strack-Zimmermann MEP, Chair of the European Parliament’s defence committee and Wieland Holfelder, Vice President and Regional CTO for Google. The conference preview promised the argument that society has transitioned from a state of peace into a perpetual “cyber war” where digital attacks precede physical conflict and would conclude by agreeing that Europe must shift from mere regulation to “operational resilience” by leveraging AI to counter scale-based threats from global adversaries like China and Russia.

MSZ was clear that Europe need to own its solutions while not explicitly stating that US was a source of threat. She cited the recent Davos conference as a source of European concern and unity. Hofelder was explicitly asked, how, in a world of the US Cloud Act, Google could be expected to keep European citizens’ & governments’ private data private. He argued that their solution of third-party key holders under contract, who would need European incorporation and ownership, should be sufficient and they have made a lot of effort to present their solution set as fit for purpose. One problem is that while measures to encrypt data on the wire and at rest exist, data is unencrypted while being processed.

The panel did not spend much time examining the EU’s legislative defences, but the US consider the Digital Services Act to be against the interests of the big-tech companies. This is because if enforced it’s an essential part of European citizens’ defences against both hate speech and AI generated nonsense and lies.

The conference summary includes the paragraph,

Holfelder presented AI not just as a risk, but as the primary engine of defense. He noted that AI has revolutionized threat detection, stating, “In the past, you would need to find the needle in the haystack. Now, we just burn the haystack and find the needles.” Highlighting Google’s “CyberShield” technology, which increased defensive capabilities by over 300% and kept Ukrainian government websites operational, Holfelder argued that cloud-based solutions offer superior security to localized systems. However, this sparked a debate on sovereignty; while Holfelder pointed to Ukraine’s reliance on the cloud, Strack-Zimmermann cautioned that Europe must find its own path to avoid over-reliance on a U.S. administration that may no longer be a guaranteed ally, stressing the need for technical verification without blind trust.

I like Holfelder’s metaphor and for many/most of us relying on the talent of Google’s cybersecurity staff is a better answer than rolling our own. There remain questions about US companies needs to meet US compliance laws before those of their EU or host countries; this remains a risk for non-US companies and people.

Another thing that I was curious about, is that while the session was advertised as beyond the firewall, there was no mention of our historic ideas on cyber defence, cyber-security nor the international standards defining good practice, such as COBIT & ISO27001. We know a lot about keeping data secret & truthful, we shouldn’t forget it.

On the 2^nd Day, I attended a session entitled, “Beyond the Firewall: Online Safety, Regulation, and Why Defense Alone Is No Longer Enough”.  This was chaired by Damien Collins, who has an admirable record in UK Tech regulation; he is an ex-UK MP. He was joined by Alexandra Geese MEP,  Zoe McKenzie MP [Australia] and Lisa Steigertahl from Deloitte.

Participants have access to summaries of the session, and the summary for this includes the paragraphs,

… [They] highlighted a fundamental tension between “engagement-based ranking” and liberal democracy. Geese argued that algorithms designed to exploit rage and fear are “systemic risks to democracy” because they prioritize our “animal brains” over rational discourse. While Lisa Steigertahl from Deloitte … advocated for “AI sandboxes” to test safety by design, the political speakers emphasized that the issue is primarily one of political will.

… the [panel] contrasted Australia’s gradual regulatory path with the more confrontational tone surrounding EU-U.S. digital relations. McKenzie noted that Australia established its e-safety framework early, giving platforms time to adapt, whereas the EU now finds itself negotiating digital regulation amid broader disputes over security and trade.

Mckenzie also noted that the tension between Australia and the US Tech companies is almost certainly less than that between them and the EU due to the smaller population (and thus profitability). She also noted that the pre-teen ban on social media is popular amongst voters.

Geese’s statements about encouraging rage, reminded me of last year’s presentation by Beth Goldberg who also highlighted the strong linkage between profit and rage and the resulting amorality of the platform providers. Geese was particularly forthright on Grok/X’s use of AI to attack and humiliate woman and girls.

Their conclusion was that the EU has the enforcement laws it needs, the problem is the seeming lack of a will to enforce within the Commission, which is  fearful of US retaliation in the trade and defence spheres. They also argued that EU needs to have its own social media infrastructure to replace the profit driven US social media platforms. This and other contributions over the weekend reminded me of the growing calls for European IT sovereignty. See https://davelevy.info/wiki/it-sovereignty/

Damien Collins was an excellent moderator; it was great to see  he hasn’t given up.

Ned Mendez in  a presentation called “Signal Integrity and Audience Insight in the Post-Platform Era Findings” argues that twitter/x in particular, but also facebook have no-one that political activists want to talk to. These platforms are also ‘poisoned’ by amoral players who post for money while the platforms chase for profit at the expense of a decent user experience enables and accelerates this aspect of enshitification.  

Here’s a concise summary by Mistral of Ned Mendez’s argument about the “post-platform” era and its implications for political strategy. He argues,

… that we are entering a “post-platform” era where digital signals—once reliable for political strategy—are now “compromised.” Platforms like X are not neutral; they actively   and shape what is visible, measured, and analyzed[1]. Algorithms create fractured realities: right-leaning users see reinforcing content, while left-leaning users face hostile, competing messages. High engagement metrics often reflect what platforms show, not what people truly believe.

In this world, local grievances can be “supersized” by international actors often working for money, creating “zombie signals”—amplified distortions that appear as national crises but are actually commercial noise. Reacting to these by politicians and the state undermines democratic resilience.

I paraphrase Mistral & Mendez by saying that the answer may be to move away from “elite bubbles” (MPs, journalists, activists) to “non-politically aligned environments” (everyday spaces like hobby forums or local community pages). If a political issue appears in a gaming forum, or on a football terrace, it signals genuine public concern. I describe that to myself as having a control sample.

If the meme’s are not getting traction, we can conclude that not every social media wave deserves a response. Success in the future will depend on distinguishing real signals from noise and ignoring profit seeking big tech nonsense.  This aspect of the talk reminded me of Labour’s nineties instant rebuttal solution, and wonder if their time has passed, certainly no-one is talking about that this year.

The final session I in this report was called, “Is Social Media dead?”. The panel members were Ben Guerin, co-founder of Topham Guerin and Clare O’Donoghue Velikic, Founder of ODV Digital.

They argued that Social Media is changing, it’s losing its intimacy and the platforms are  becoming media presences i.e. it’s losing the “social”. They also argued that there is a move from text to video, and that these need to be short. Tik-tok is now more viewed than Google although I wonder if AI will help restore[2] a balance. On a personal note, and I was the only person admitting to posting to Facebook in the last 24 hours, I prefer text as I can control the time I spend and make my own priorities by skipping the boring bits, but the panel argue that political commentators need to do [short] video first.

Velikic also argues echoing Mendez, see above, that the number of useful correspondents on the platforms is limited. In fact, she argued that it’s so limited that even advertisers should think twice.

From the conference summary, ‘Velikic argues that,

the best response is not to compete in a “race to the bottom” metrics-wise, but to be the “green grocer”—a voice of authenticity, humility, and humanity that provides a “beacon” in a sea of AI slop. There was a consensus that the “TikTokification” of society is leading toward a “post-literate” world where a politician’s entire platform must be condensed into a single, memorable sentence to survive the 30-second attention span.’

They make the point that rage gets clicks but is that what politicians want? Surely they want their ideas to convince.

The algorithms have not gone away and they are still opimised for profit.

Again from the summary,

The bottom-line is that while social media as we knew it is dead, it has been reborn as a multimodal, video-first battlefield where “speed will decide the truth”. To win in 2026, political actors must stop throwing money at Zuckerberg and start harnessing their own “digital civilian patrols”—engaged supporters who act in real-time to defend narratives on messaging platforms. As Velikic concluded, the only way to beat the machines is to show the algorithms that people actually want “real humor, humility, and humanity” over automated slop.

My summary conclusions from the conference are that

• My view that, very few politicians or their technologists or parties know how to persuade, remains true. A lot of the political technology today focuses on GOTV and fund raising.
• European politicians are angry about Grok’s nudification tools and there is some resolve to ensure that US companies don’t make money by proselytising hate.
• The platforms are no longer useful as means of contacting voters, and the arguably no longer useful as an advertising platform.
• Chatterton’s lessons from last year, that velocity and authenticity count more than a high volume/low hit rate communication strategy.
• The conference, or at least the bits I saw, were more technical and less political than 2025.

[1] Oh dear. Mistral writes with US spelling.

[2] No reason why it should, AI’s can make video now.

I came across this cartoon, on linkedin, which reminded me of a comment made at a recent ORG meeting that the UK cannot be an AI powerhouse because our electricity is too expensive.

It’s also possible that this is one reason why the bitcoin miners are now all located in China.

It set me thinking, and I made this chart.

The UK is expensive, and it would seem that this is true of the EU too.

The linkedin article argues that China’s energy investment has been about energy sovereignty. Perhaps its time the EU and UK governments thought about these issues.

So McSweeney is permitted to resign ‘from government’ and in his apology seeks to constrain his downfall to his support for Mandelson as US ambassador. His departure gives Labour the opportunity to find its heart again as McSweeney did so much to remove it, building a party that as Martin Forde predicted, in his inquiry report, where factional loyalty counted for more than public service.

Clive Lewis writes on Facebook, saying, among other things,

… That mindset hollowed Labour out. It replaced a party rooted in working-class life with a professional political caste fluent in donor networks, private dinners and elite reassurance, while communities were told to accept decline as the price of ‘responsible’ government. Politics became about managing optics and markets, not challenging vested interests or redistributing power.

McSweeney’s departure changes none of that on its own. Unless Labour confronts the culture that rewarded closeness to wealth, blurred ethical lines and treated democratic accountability as an inconvenience, this will amount to little more than damage limitation.

Remove one operator and the system that produced him remains. And unless that system is dismantled, Labour will continue to lose its moral authority, its social base, and ultimately its right to govern, leaving the ground clear for forces far worse to exploit the wreckage.

The whole piece is worth reading.

I agree with Clive, this is an opportunity, one that was always coming, to turn the government and the Party round. The Party bureaucracy and elements of the PLP need clearing out, without it, my Party’s future looks very dim.

Richard Burgon, also says, that this is only a necessary first step.

My Union branch has passed a motion for GMB Congress calling for the Labour Government to rejoin the single market and customs union now, and for the Party to ask for a mandate to rejoin at the next election. Is this needed? I am of the view that the speed of the “Reset” is glacial and that without a change in attitude they will not achieve anything of significance or notice before the end of the parliament.

 Of the five point plan, two are stuck, and the refusal to consider ‘freedom of movement’ while seeking a “swiss style” deal are massive inhibitors to concluding agreement in areas that should be simple.

Despite my pessimism, both sides claim some progress has been quietly made over the last month.  This is reported optimistically by google gemini.  However, the Commission statement does not itemise any progress outside the agenda set at the May 25 Summit.

There was also a meeting of the joint specialised committees, between the Government and the Commission, producing a statement. https://bit.ly/4rxLX4T which reviewed the recent past, noting the UK’s agreement to re-enter Erasmus+ and its [possible] resolution of the UK breach of the Withdrawal Agreement terms on citizens’ rights, together with the 9 month old agreement to regularise the fishing arrangements. They have already claimed credit for all this. Its all old news.

On trade, they again note progress and anticipate more, yet much of the focus is GB/NI trade and the EU’s right of inspection. This is another point of diplomatic friction and a source, together with the issue of citizens’ rights, of the infringement proceedings.

When considering the Trade & Co-operation Agreement, the meeting anticipated further work on energy co-operation and finalising the agreements on Youth exchange, SPS and a common emissions trading scheme. They talked about global steel overcapacity, economic and supply chain security, and parties’ respective industrial policy measures. They also discussed the development and implementation of their respective Carbon Border Adjustment Mechanisms. These are reporting of agenda items, not completed actions.

They reference a third UK-EU dialogue on Cyber issues in December 2025 and discussed the next steps towards progressing cooperation on cyber security although the meeting of which they write, seems equally inconclusive.  Also, they looked at the potential implications of the (EU’s) Artificial Intelligence and Cyber Resilience Acts and agreed to continue to talk.

They also anticipated the Treaty reviews, which one might hope will be conducted more quickly than progress on the reset.

In fact, the slow pace of agreement, does not auger well for the treaty review process.

Some say this is the fault of the EU, but mood and good relations are not enough and the UK’s red lines and sector-by-sector approach are provocations for any bad behaviour by the EU.

I did some searching to see if anything had developed from the EU/UK meetings in December. It seems that there have been a couple of inter-governmental meetings. Is progress being made, in the famous words, of Captain Rum, opinion be divided.

I made a note on my wiki, called, Brexit reset winter 2025-26. I look and summarise the documents, and the agenda of the meetings, one of which is on cyber security. I note a report entitled UK-EU Cybersecurity cooperation in the context of the TCA 2024 from the Independent Commission on UKEU relations. This is the landing page for a report but undated. I also note that UKicE identify digital regulation as a point of divergence between the two parties.

I conclude,

This is thin gruel, making the most of what has already been agreed and congratulating themselves on the slow progress of the reset agenda. The immigration reforms are to be welcomed.

Meanwhile, we note UK EU divergence tracker Q4 2025 from UK iCE who note the divergence in the UK, on financial services regulation and by the EU on climate impact reporting and regulation of AI and social media.

In an article, Starmer prepares for parliamentary battles over imminent EU ‘reset’ bill, jessicaelgot suggested that there is movement on the “red lines”. It is clearer on reading that this is an attempt to accelerate UK agreement to the currently on-going trade negotiations by increasing the powers of the relevant ministers.

The article uses the phrase swiss-style agreement which is highly unlikely to succeed and at the best is tone deaf as to the EU’s needs and wants.  

UK in a changing Europe, document what they see as the timetable and goals of the current reset negotiations.I see them as optimistic, and everyone seems to forget that the EU’s starting point is full implementation of the withdrawal agreement and Windsor framework; there remain, even 18 months after the general election, eight infringement proceedings unresolved.

It’s sort of interesting that they think they need new language, but to me, they have not yet changed their mind.

I also see this as a means by which the Government deflects the internal Labour Party pressure towards joining the Customs Union by posing, parts of, the single market as an alternative. It is disappointing to see so many seeing the Customs Union as sufficient advance, but the UK economy and people need and want membership of both, including, reciprocal, free movement of  people.

Labour should join the customs union and single market now and promise to rejoin the EU in its next election manifesto.

Various news sources, including the Brussels Times, report that EU is demanding a “poison pill” clause in further agreements, to make the cost of revoking the new treaties exorbitant. This should have been proposed by the UK side, and without it negotiations would stop.

I predict they won’t until they abandon the strategy of triangulating against reform and that will take significant personnel changes in the Government.

Image: from PIxabay, their licence

Starmer on an interview on the BBC, reported in the Guardian, said he wanted closer alignment with the EU and its single market but no return to freedom of movement nor the customs union. In fact the reports suggest that he is presenting a new language for the current policy to try and stop the momentum towards the customs union. I don’t think this is an advance although he may change his mind; he often does, usually after some poor front bencher has just defended the policy. It’s all very, “The thick of it”.

This story was also reported in the FT, BBC & Independent. The BBC report is much clearer that there has been no change to the “Red Lines”.

The government and Labour MPs seem fascinated by bond yields. They present the fact that UK yields are high is seen as a short cut to arguing that the Government can’t afford the interest rates on bonds and arguing that the last word on the deficit has to be held by the markets.

This article looks at what the ‘yield’ actually is, argues it is the outcome of policy decisions, that rising yields have no effect or at least very little effect on public finances. It also argues that quantitative tightening makes the affordability of the deficit worse and that alternative debt management operations would ease the situation. It also suggests that the credit default swap price is a better indicator of the market assessment of the viability of public finances.

What is a bond?

Firstly, let’s examine what is a government bond also known as Gilts. A government bond is a certificate proving a loan to the government. It is issued with a face value (or principal), a payment schedule (consisting of a payment value, and frequency, usually described as an annual interest rate), and a duration. The payments are often referred to as coupons due to the original paper format of UK government bonds. The government will redeem the bond at the end of its life at its face value. While they have a face value, on issue, the government may receive more or less than the face value of the bond depending on the coupon value, the current market interest rate, itself based on the Bank of England’s interest rate, and the markets expectations of future interest rates.

What is a yield

The yield is a mathematical relationship between the price and the coupon. The coupon is the periodic payment made to the bondholder i.e. the interest on the loan. Changes in bond yields are in fact a reflection of a change in price. As prices fall, because the coupon payment does not change, the yield increases. If prices rise, then the yield falls.

About 75% of UK debt Is a fixed coupon, a change in price of the bonds does not impact the interest payments made by the government to the bond holders. The remaining 25% are index linked to the RPI, the measure of price inflation, so again, the fiscal deficit does not impact interest payments.

Public Debt Management

National Debt & Inflation

 It might be desirable if the government bought back some of these index linked bonds, although they only become a burden during periods of rising inflation. One advantage of having these bonds is that the difference in yield between these inflation-linked gilts and conventional (fixed-rate) gilts of similar maturity provides a market-implied forecast of future RPI inflation. The markets also use interest rate swaps as a means of hedging the inflation risk, and thus exposing the market’s view as to the future rates of inflation.

National Debt and price volatility

It might also be useful to buy back [some of] the foreign held bonds at least to manage the ratio. Foreign held debt is also about 25% of the total and is seen as more price sensitive then domestically held debt. The proportion of foreign held government debt has increased significantly over the last twenty years, under the Tories.  

Savings and domestic demand

The domestic demand for UK Bonds is based on the ability to save. Richer people save proportionately more than the more numerous poorer parts of society, and they save proportionately more of their incremental income. https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/dgd8/ukea

It’s hard to disaggregate savings by household income from the data I can find, but easing the cost-of-living crises to allow more people to save, even if only through pensions, would help in creating a domestic demand for government bonds. This policy goal also suggests restricting the amount of cash that can be held in ISAs is a mistake, as it’s simpler to do and the banks will convert such cash holdings into bonds.

Quantitative Tightening

Another problem with government policy is “quantitative tightening”. They are swapping their QE Assets for bank cash and now paying interest on those deposits. i.e. it’s a reverse tax, which subsidises bank profits and reduces the budget “head room” thus squeezing government current account expenditure because of the Chancellor’s “fiscal rules”. 

Falling Bond Prices

There is an undesirable impact of falling bond prices. Falling prices impact those organisations who use them as collateral for loans or other transactions requiring it. These are, most visibly, Banks and pension funds and the high cost of getting this wrong was illustrated by the potential crisis the Truss administration.

The Bank of Englandf, presumably, under strong encouragement from the Treasury, the Bank of England is going to reduce the mandatory capital adequacy ratios of the biggest six banks and the Nationwide building society. This needs to be done with care. https://www.ft.com/content/4132b041-94de-4850-8151-532f4e8a7ef4 The thresholds and inspection regime were established during the regulatory reforms after the 2008 crash.

Counter inflation measures

Another problem is that the Government believes that increasing interest rates is counter inflationary. There are two theories as to why this might be so, and one has been discredited, and the other is inappropriate for dealing with cost-push inflation. The first is the Friedmanite quantitative theory of money, that an increase in prices was the result of too much money in the economy and so a counter inflation policy was to increase interest rates to reduce it and/or to use credit controls. Today’s iteration of this theory requires inflation to be stoked by demand, and increasing interest rates, reduces consumer demand, by reducing effective residual disposable income. (This could be done by taxation in which case the Government would get the money, whereas by increasing interest rates, the Banks get it, an adverse policy outcome, compounded by a refusal to levy a banking windfall tax. ) I would also argue that the inflation spike in the Autumn of 2022 was a cost-push spike caused by output shortages caused by COVID and profiteering in the energy sector.

Bankruptcy

The Government can’t run out of sterling. The true market threat is denial of funds, which is what occurred in Greece. The UK debt to GDP ratio is, just, under 100%. This is low by international standards. The debt to GDP ratio is exceeded by a number of OECD economies. The best measure of this threat would be the sterling credit default swap price which places the likelihood of UK default at ~0.3%. This is good for the leading western economies, again about standard.

From google gemini, https://gemini.google.com/app/9679972ac86a8ddc , they say, a table showing the approximate 5-year Sovereign CDS spreads (in basis points, where 100 bps = 1%) at the end of each year.

The financial rules

Compounding all this deliberate confusion is the deficit fetishism embedded in Reeves’ financial rules. Simon Wren-Lewis, the economist in Corbyn’s leadership team thought to be the most influential supporter of financial rules argues they were needed to protect investment. Reeves’ rules are designed to “break-even” on a yearly budget by the end of the Parliament. The only way this might happen is by growing the economy and increasing the GDP.  Even within the constraints of monetarist economics, more relaxed rules could be adopted and as I argue above, the fear of default is infinitesimally low.

If growth is the target, then the key tool for delivering growth should be the Industrial Policy to which I offer a critique an article of the Chartist and summarise on this blog.  In that article, I examine the Industrial Policy, praising its comprehensive nature and suggesting that capital mobilisation via the City is unlikely to be successful as it hasn’t been before and that there seems to be a low ability to innovate the economy in the UK. Yet another of the problems with the rules and the failure in the budgets is that GDP growth is dependent on human capital and yet the Government view is that investment in human capital is current account expenditure and is not the focus of education spending. This both embeds a weakness in the policies and illustrates the arbitrary nature of the rules. https://davelevy.info/wiki/universities-funding-growth/

Are the bond markets a problem to the Labour Government?

Yes and No, but high yields are not a reasonable factor for determining the deficit.

• Yields are an outcome and caused by changes in price; their impact on the funding the deficit is limited and price changes are not caused by a deficit, but in a limited way by the expectation of inflation.
• The cost of government borrowing is mainly fixed and where variable, is based on the inflation.
• The markets do not consider the governments default risk to be particularly high.
• The so-called rules are the toughest since they were invented as an ideological tool to justify austerity. There’s room to rewrite them.
• The industrial programme is insufficiently activist to repair the economy.

Image Credit: CC 2014 BOE BY-ND

The number of senior labour movement figures have argued over the Christmas break that the UK should seek to rejoin the European Union’s customs union. They leave out a call to rejoin the single market.

The customs union relates to tariffs, the single market governs common non tariff import barriers on goods & services. The single market also deals with freedom of movement of capital and labour.

I question whether joining the customs union is sufficient to deliver the increased growth that is proponents and the country seems to want.

Obviously, the single market opens the issues of free movement of people and trade sovereignty (as does the customs union). Now that it’s understood, British people seemed to want to return to the free movement and there is no national sovereignty in international trade.

I believe that the UK should join the customs union and single market now, and that Labour should put a rejoin promise in the next manifesto.

The near-fetishist concentration on in trade and economics suggests that most of our parliamentarians are not yet ready to be good citizens within the European Union. It is necessary that they change their minds, and Labour must play its part bringing this about.

The UK was and will be a better place to live within the European Union.

Are we moving closer to joining the EU? It’s been quite an eventful month, culminating in Wes Streeting’s call for the UK to join the EU’s Customs Union. This article looks at the current state of thinking of HMG on negotiations with the EU, comments on the velocity and direction of travel, contrasting the red lines vs the numerous programme adoptions, recent polling evidence that a majority of people in the UK now want to rejoin, the House of Commons vote on rejoining the customs union, and the announcement of the UK’s rejoining Erasmus+, the EU’s student exchange scheme. It concludes looking at a Guardian EB piece questioning if British Politics is fit to survive the current challenges and the Labour Party’s abysmal response.

What HMG thinks is happening.

I reported and commented on the UK hosted EU-UK Parliamentary Partnership Association meeting with a seemingly imaginative title of “The EU hokey cokey” but it seems many people are now using it to describe the UK approach. The day I watched was on trade & defence, and in reviewing the speeches of NST, the HMG Minister for Europe, and Maros Sefcovic, the EU Commissioner for Trade there is still a way to go to make further agreements, or even get back on the same page.

In my commentary, I said,

One problem is that the UK Government is behaving as if it doesn’t really care. There is no strategy and given a choice between rejecting freedom of movement, and better trade and even defence, it’s clear what this government will choose. i.e they will choose to reject freedom of movement.

I also comment that Defence and Security co-operation is going much more slowly than the UK might hope and the two parties failed to agree for the UK to join the EU’s SAFE programme the following week.

Despite HMG’s headline position of repeating the manifesto red lines at every opportunity, in reality more is happening.  

Velocity and direction of travel

The “Reset”, the results of which are summarised in this EU press communique,  is moving at glacial pace, yet despite the lack of headlines, we are moving closer and closer to the EU, except it seems on defence procurement where, the Government policy remains to buy American and to refuse to pay for a share of the EU’s arms budget.

I commented on the May summit, with articles on my first impressions, where I sum up  the meeting as a draw and explaining the basic compromises, second thoughts where I examine the transatlantic dimension of politics as it impacts EU/UK relations and a 3^rd piece where I quote a number of press sources critical of the ambition and pace of the UK Government.

UK in a Changing Europe, catalogue the negotiating structure and start dates, but the failure to secure membership of SAFE, although counter-balanced by Erasmus+ is a setback. Despite this, UKICE seem remarkably optimistic though.  They forecast success in making agreements on agriculture, and electricity, and note the success on the revised fisheries agreement, to which we can add the extension of the “Adequacy” agreement. The agriculture/SPS agreements will need to address the EU’s contention that the UK has not fully implanted the Withdrawal Agreement and Windsor Framework with respect to GB/NI trade. NI remains in the EU’s single market.

However, most writers and commentators ignore, or park, the issue of the eight infringements of the treaties governing Brexit, all of which would disappear if the UK were to rejoin the single market.

UKICE also publish a tracker, which states that at the end of Q2 2025, the UK had rejoined or realigned with 25 of the EU’s programmes.

I note that the EU had to postpone the rolling over of the data adequacy agreement due to the timing of the passage of the Data (Use & Access) Act, which they needed to review due to its weakening of certain provisions, such as freedom from profiling, and the extension of the datamining exceptions. They also had questions about the increase in powers of the government.

The pace of change remains glacial, and I would argue both that the reset is failing, because mood is not enough and that the mood in continental Europe is not as good as members of the UK government seem to think it is.

I also agree with the wag that states that the May communique is a long agenda to argue about money.

Balance of class forces

Despite this set back for HMG, on Dec 8^th, Peter Kellner of YouGov reported that the polled majority for rejoining the EU had grown to 8m.

Liz Webster (and others) published the results as a Sankey diagram.

Figure 1: from https://x.com/LizWebsterSBF

The chart shows that more leavers have dies and that young people becoming voters, are overwhelmingly pro-rejoin.  This confirms my second reaction to the referendum result, we just have to wait, till the old die and are replaced by their children who will vote to return if only for freedom of movement and the ability to study anywhere in the EU. My first was, wrongly, that we wouldn’t leave without a second referendum to confirm the terms.

The Customs Union Vote

A second event is that the House of Commons voted in favour, albeit by casting vote of the speaker, to mandate that the government negotiate re-entry to the European Union’s customs union. This was supported by 13 Labour MPs.

The Customs Union vote in the House is a morale booster for those of us who want to rejoin the EU, although I am not sure by how much.

Stella Creasy, the President of Labour’s Movement for Europe, seems, now, to agree and published an article in the Guardian supporting closer links with the European Union. I have selectively picked the following quotes,

History shows that simply saying we want something from Europe doesn’t make it happen. The UK can be its own worst enemy – acting as if the challenge is in us deciding our objectives and the easy part is Europe agreeing. …

… the government should approach next year’s negotiations with Europe clear that it is looking for a deal offering “more for more”, with everything up for discussion – not just because we want better trade but because, in a world shaped by Donald Trump, Vladimir Putin and Xi Jinping, Britain and Europe need each other more than ever.

The repeated efforts by Labour’s factional loyalists to the government in their refusal to articulate the demand to rejoin whether from electoral caution or a narcissistic desire for personal reputation enhancement is becoming a barrier, or in the case of many Labour MPs, cowardice.

For all the Government’s boasting, the reset is not working. Even the so-called trump card of defence co-operation is not opening doors.

While the vote on the Customs Union is very positive, both Nick Symonds-Thomas & Keir Starmer did their Thatcher impersonation, “The Lady’s not for turning” and stated that even a parliamentary vote is not enough to get them to change their minds and modify their “Red Lines”.

After the vote, Starmer announced no change in government policy and while we, in the Labour Party, are used to Labour’s leadership doing this to Labour conference, constitutionally, the Commons should be telling the government what to do not the other way round. Since the vote, the number of governments, anonymous, of course, briefings suggesting that the government, may, despite Starmer and Symonds-Thomas denials, consider joining the customs union.

It was also announced that Symonds-Thomas would now be attending Cabinet; some suggest this is an important signal in favour of movement; I am not so sure. Symonds-Thomas, unlike, say David Lammy, is a persistent repeater of the Red Lines, although perhaps like many he’ll come to realise there’s little payment of gratitude for loyalty.

Erasmus & Youth exchanges

HMG announced that the UK would be rejoining Erasmus+ from 2027. This is another significant step on the journey. It should never have been wound up; it’s absence has damaged much academic pan-european co-operation and denied ½ a generation of young people the opportunity to meet and know each other across the continent.

The EU still want a youth opportunity scheme, which at the moment, the Government are treating with the same alacrity as everything else.

The Geopolitical dimension

Another set of drivers to close relationship with the EU, is high lighted in an article in the Guardian, where in an article, signed by the editorial board, they make it clear that they believe that, given the isolationism, and commercialism of Trump’s USA, that the UK has a choice, between Europe and the USA, and that following the USA is an act of appeasement to Trump’s Maga movement and not in the interests of the UK state or its people.

This appeasement is illustrated through our defence procurement policies, the failing UK-US tech prosperity deal, the agreement on US pricing in the drugs industry, the backsliding on a digital services tax, and on the Chagos Islands.

The Guardian article is a damning indictment of Atlanticism’s hollowing out of the British state, and that the Starmer administration, firstly has now will to change this, and that the policy levers no-longer exist.

Their final paragraph,

Nostalgic appeals to “a special relationship” that no longer exists will not renew Britain. That demands a profound reimagining of the nation’s constitutional, economic and geopolitical identity. The prime minister’s response to US manoeuvres over Ukraine reveals a leader trapped within a fading order. The tragedy is not just that he cannot meet the moment, but that neither can the British state. Until the country’s politics can move on from past glories, it will continue to produce leaders who mirror the state they inherit. Even if they are dutiful and conscientious, they will still be lost.

A change is needed

On Brexit and the EU, the problem is partly because the Labour Government is pursuing a negotiation strategy of topic-by-topic agreements in which each deal must be in the UK national interest. This merely makes the cost to the European Union stunningly obvious. Limiting each agreement to a single topic makes trading the benefits and costs across a portfolio much more difficult, maybe impossible.

It also undermines the good will created towards the UK by the departure of the Tories or more accurately Johnson because it continues the approach, that we only want the bits we like and don’t want to pay for the bit we don’t, and Europe’s answer will be “Non!”.

Creasy in her Guardian article, says,

Anyone pro-European should resist talk of rejoining – not because Brexit was a good idea, but because to rejoin is, right now, an impossibility.

And yet adds,

None of this is a reason not to aim high

I shall continue to aim high, but recognise that while the popular will of the masses seems to suggest that rejoining would be popular and is wanted by a growing number of people, the route remains unclear. Much of this majority are still probably committed to the idea that the EU is and should be a trading bloc, I’d argue that the changing and dangerous state of world politics, and my own personal commitment is that it’s capable of being more than that. One of the reasons the Brexiters wanted out is that it was a democratic anchor for the UK’s politics.

In summary, I believe we need to rejoin the EU, to rejoin the Customs Union and Single Market now, and ask for a mandate at the next election. This cannot be done in good faith (or successfully) until the UK and its leadership are prepared to be good citizens of the Union and this won’t happen until the Labour Party returns to its centre of gravity and becomes part of that current.

There will remain the problem that the Labour Party and Government are enabling Reform UK. With FPTP, and four parties contending for power, a general election becomes a lottery. Reform are leading in the polls; a Reform government will stop movement towards the EU dead, and probably replace it with alignment with the alliance of the plutarchs.

My first call on my Party’s government and election planners, is to stop copying reform.

On renewing the state, maybe they should return to the Brown Commission’s proposals and look at Parliament, and proportional representation rather than focus on creating more Mayors. In my review, I argued that the UK needed a “transfer union” for local government; one of the key weaknesses of local government is that it has no money to even perform the basic functions well, let alone participate in improving people’s lives.

This is done, I was not elected. To see my statement, see below or overleaf. …

I’ve been a member of the LME for many years.

It’s interesting that over the last couple of weeks it seems that even the government recognises that we need a better trade agreement with the European Union and that the “reset” is not going well.

Mood is not enough.

The simplest and most complete relationship is of course full membership which I support. We need to rejoin.

Brexit is a mistake and more and more people realise this.

But the UK cannot rejoin the European Union until it is ready to be good citizens, this will not happen without Labour commitment and leadership.

If elected I will seek to bring the LME to a position where it campaigns to rejoin the single market in preparation for rejoining the European Union and calls on the Party to commit to full membership of the EU and to argue for rejoining as good citizens.

This Labour government has the impossible policy of seeking to Fix Brexit; this is not possible. The Labour Government’s cherry-picking approach is making little headway and the claim that they will not sign deals not in the interests of the British people while pursuing a topic by topic approach makes achieving deals at speed exceedingly hard and provokes resistance in the European Union and its member states.

Labour needs to commit to rejoining when the time is right, commit to joining the single market as soon as possible i.e. this parliament and if elected to the National Committee, I will do my best to see that the LME plays a role in bringing Labour to these positions.

That’s what I want to do, and that’s why I want to be on the committee as I think my views will make a difference however I’m a lifelong IT worker having worked in development, operations, and policy, finishing with time in privacy compliance. I also served on committees running the predecessor to the EU’s Horizon Europe programme. These skills and experience might be useful to the committee and organisation.

I am on the national committee of Another Europe, and work with Citizens Takeover Europe. I am a Labour Party member in Lewisham North.

The vote is by a preferential voting system, I’d ask for your first preference and to transfer to anyone else who argues that we need to rejoin.

Image Credit: by me, CC 2017 dfl1955 BY-SA

How damaging is the European union’s rejection of the UK’s attempts to join its SAFE programme; SAFE Is the European Union’s new defence funding programme.

The most succinct report that I can find is on Euroweekly News in an article, entitled, “UK excluded from €150bn EU defence deal” which states that,

On November 28, the UK government announced that negotiations to join the EU’s €150 billion Security Action for Europe (SAFE) defence fund had failed, marking a significant blow to what had been billed as a “reset” of UK‑EU post‑Brexit relations.

However, Euroweekly News, also states that SAFE has a 35% access to 3^rd party countries, which some might consider generous given that the programme is to be funded by ECB bond issue of €150bn. The cap is however per contract which would, almost certainly, for instance, make selling warships ineligible for SAFE funding, not to mention the fact that numerous EU countries can build both warships and warplanes. The EU were asking for a UK contribution, some might say, a large contribution, to the fund, before lifting the cap to 50%. It also interests me that the whole argument is about selling to the EU, and not the UK buying European weapons, although the Euro benefit to this is massively undermined by the UK decision to buy US warplanes and more US nukes.

The UK proving once again that it is “a nation of shopkeepers” walked away from this deal.

Defence co-operation was meant to be the most advanced topic of the EU-UK May reset agreement. Even with defence on the table, cherry-picking is unacceptable to the European Union as is the UK’s insistence that every deal must benefit the UK.

Image Credit: NATO

I wrote a response to the US/UK Technology deal which was eventually published in the Chartist Magazine. They entitled it, “Untimely Atlanticism” with a sub title, “US AI data centres drain power and offer little for UK jobs while in Europe opportunities call “. In the Chartist article I say,

One of the few substantial outcomes from Donald Trump’s second visit to the UK is the announcement of a UK-US Tech deal, also named the UK-US Tech Prosperity Deal. TechUK states that the key areas for co-operation are Artificial Intelligence, civil nuclear technology, quantum technologies and network technology & cyber-security.

The most eye-catching proposals are to enable the US Big Tech companies to build some very large data centres to host nodes in their AI configurations. The Government press release argues that this will help research significant bioscience advances.

The scale of some of these data centre builds is enormous. The proposed Microsoft/Nscale data centre is planned to be 50 megawatts with a burst capability of 90 megawatts; these metrics do not include the power draw necessary to run the cooling systems. Google Gemini reports that 50 megawatts could be expected to power 30,000 homes.

AI systems and their Data Centres aren’t a public good; the rules-bases, i.e. the knowledge is owned by the software company, and the data centres compete with people for power, water, land, and capital. The US corporate domination of the sector also acts as a talent sink.

It is suggested that the deal is worth £31bn of inward investment, but the core IT assets are US-owned and supplied. So these UK-based data centres will be stuffed full of US-manufactured computers. I wonder what the net financial flow is in reality.

While they claim that over 5000 jobs will be created and nominate the North East as a location for the new data centres, it doesn’t take very many people to run a data centre and much of the expertise in designing and building them is located abroad.

A final worry is that, in reality, AI has no value. It’s being used to create memes and low-value artefacts. It’s also important to understand what makes it an AI solution, as opposed to just more distributed computing complexes. AI would seem to be the layering of heuristic neural networks on top of big data storage and processing systems. The industry has been using these IT architectures, doing this for a decade or so without calling it AI. It has also been doing complex modelling of weather and physics on supercomputers for even longer.

Furthermore, given that the outputs of AI systems are based on the captured knowledge, which is current (and popular) today, it remains unclear how AI will innovate. Their protagonists suggest that they can replace labour in white collar work, but this is questionable, and if they do, how will invention occur?

More and more people are suggesting the lack of value means that this is a bubble which Is consuming capital and denying it to other, more potentially worthwhile initiatives. The big-tech monopolies are polluting the necessary creative destruction.

At the end of the day, this looks like yet another of Trump’s shakedowns; much of the investment will be spent in the USA, and most of the profits will also be repatriated there.  

Another option alluded to in the CNBC article is greater European co-operation. The UK has rejoined the European High Performance Computing Joint Undertaking, and coincidentally reversed Reeves’ 2024 cuts in the supercomputing programme. The EU is now talking about an EU IT stack with which the UK could easily cooperate, and both would increase the UK’s cyber-sovereignty.

In IT, as in defence, the UK’s future is becoming a choice between the USA and the European Union; this treaty is just another piece of untimely Atlanticism, just as is the decision to buy more US fighter planes and their tactical nuclear payload.

A quick note on the budget, remembering I wasn’t as critical of last year’s as some, at least not on macro-economic grounds. I was obviously against the failure to abolish the two child cap, but also against the failure to properly fund universities, students, and local government.

So this budget is, to me, a bit meh and I agree with Fisher, why wait for a year? Still nothing on HE or Local Government finance, and the wealth taxation is very weak and poorly focused. No capital gains tax equalisation, no financial transaction tax.

The freezing of tax free allowance amounts is probably more damaging to those on the margin of the upper rate tax band but as I read it, it’s a piece of accounting magic. There were no plans to change it for the next two tax years anyway, and they can change their minds, although some of the impact will occur after the next election.

Also the FT reports that leading business people consider it insufficiently stimulating of growth, which in their case is probably not code for, “We need to rejoin the single market and customs union.”, although there are many, including me and Liz Webster, that are saying so; our macro-economic arguments recently augmented by a report from the US non-partisan National Bureau of Economic Research and by Ryan Bourne’s recanting of his pro-Brexit position.

Image Credit: from freemalaysiatoday cc 2024 by