Sorry Jeanette Winterson but in lobbying against a business rates hike you’re asking the poor to subsidise the rich

Are you rich and influential? Are you interested in lobbying ministers to water down or even abandon a tax change that will make you worse off? Then the first thing you need to do is find a human shield.

Whenever a long overdue overhaul of council tax is floated it is never long before a penurious little old lady rattling around in a giant house in the Home Counties pops up in the media as a compelling reason not to change anything. And now the business rates regime is being updated we have small independent retailers in well-off areas thrust in our faces.

One retailer in particular has featured prominently in this lobbying campaign. The novelist Jeanette Winterson has written that her luxury grocer-cum-deli, Verde & Company in east London, which started life during the Napoleonic Wars selling "oranges the size of cannonballs", will have to close because of the revaluation of rates due in April.

Who could be in favour of poverty-stricken old ladies paying more council tax? What kind of monster wants to drive small shopkeepers like Winterson to the wall? But don't be fooled. These are human shields, emotive propaganda case studies whose function is to sway public opinion, intimidate ministers afraid of losing votes, and, ultimately, protect the well-off from paying their fair share of tax.

The big losers from a revaluation of council tax would be the richest households in the country. And the main beneficiaries of the watering down of the business rates revaluation, which now seems to be in train after ministers have shown signs of losing their nerve, will be large firms and landlords in prosperous parts of the country.

Firms in well-off areas facing higher business rates, even large firms, do deserve our sympathy to some extent. It was cowardly for the Conservative ministers George Osborne and Eric Pickles to delay this revaluation, which had been due to fall in 2015, just before the election.

The last revaluation was in 2010. Seven years is far too long to wait between revaluations and relative rents have changed significantly in that time meaning startlingly large shifts in some firms' ratable values.

Businesses of all sizes are entitled to better guidance than this over their future tax bills.

While it's true as some have pointed out that over time the cost of business rate increases is borne by landlords rather than firms as rents adjust, it bears repeating: over time. And heaven knows this is a financial problem many firms do not need while they are also struggling with a sharp spike in imports due to the plunge in the pound in the wake of the Brexit vote.

Nevertheless the complaints are overblown. Winterson says the rateable value of her shop will rise from £ 21,500 to over £54,000. This implies she's paying around £10,000 in business rates. But looking at the detail of the transitional relief scheme put in place by the Government this suggests her business rates bill will increase by 12 per cent from April to some £11,200.

A £1,200 tax increase is certainly not nothing (and her rates would continue to rise sharply over the next few years) but it's hardly the obscenely punitive reparations bills presented by the Allies to Germany in 1921 either.

Moreover, it's vital to grasp that Winterson's loss is the gain of other firms in less prosperous areas since this is a revenue neutral revaluation for the Government. The total business rates tax take will not rise.

Indeed because of the delay in the revaluation, although she doesn't acknowledge it, Winterson has been already been gaining financially in recent years at their expense.

The trouble with the coverage of this subject is that we do not hear from those firms who stand to benefit from the reform - and who stand to lose if the revaluation is delayed further or watered down. Why do we not see media case studies of a medium-size insurance company in the West Midlands, whose bills are supposed to fall by some 16 per cent? What about a manufacturer in the North-east which is due a 9 per cent fall in its business rates? Why are they any less deserving of our compassion? Regrettably, this represents a journalistic failing.

Yes, it's tough being a modestly-sized retailer. But it's easier in more prosperous areas. Winterson's shop benefits from close proximity to some of the wealthiest workers in the world in the City of London; and hordes of tourists. That means more well-heeled passing footfall and, if she stocks fine products and runs her business well, higher sales. That's why her rent is higher; other firms would be willing to pay top dollar to rent her prime retail premises.

By lobbying against the revaluation she's effectively demanding that she pay a lower rate of tax than an equivalent grocer in a less prosperous town. This is Robin Hood in reverse: the poor being robbed to pay for the rich.

But perhaps no firms should pay business rates. Some argue that the tax should be cut for everyone, or even scrapped entirely. Yet let's follow this logic through. Business rates bring in around £29bn a year.

That's around 4.5 per cent of the entire tax take. If you get rid of that what else should be cut to make up the shortfall? The NHS? Education? Foreign aid? It would be nice to be able to reduce taxes on firms, especially small retailers like Verde. Yet one only has to look around to see that there are also other demands on our scarce public resources: more funding for mental health services, more money for social care, more support for refugees. And on and on the list goes.

Apologies Jeanette, but cannonball-sized oranges are not the only fruit.

If we want an adequate health service we will need to pay more tax

Imagine a large barrel that we pull apart, reconstruct and expand (at considerable expense) every year. Imagine we need to store a certain amount of precious liquid in that barrel. Now imagine that the amount of liquid we need to store each year is rising faster than the volume of the renovated barrel. The result is overspill and flooding, which makes everyone unhappy. Here we have a description of the NHS crisis.

Politicians have "protected" public spending on health since 2010. That means public spending on health has been rising in line with economy-wide inflation (unlike most other government departments, which have had to bear significant real-terms cuts). We spend more than £145bn of taxpayers' money on health, around 7.5 per cent of our GDP. That's up from just 3 per cent in the 1950s. NHS spending as a share of overall public spending is approaching 20 per cent, double the proportion of 30 years ago.

And yet there are reports of record A& E waiting times, warnings of "permanent winter" in the provision of health services and new plans for cuts. According to a BBC analysis, NHS managers around England are proposing to scale back hospital services in nearly two-thirds of areas.

What is going on? Why are we spending so much but still seeing such pressures? The answer is that the demand for services is rising faster than the new capacity of the NHS.

The UK population is ageing and older people, on average, have greater healthcare demands than younger generations. The proportion of residents aged over 90 has almost tripled since the early 1980s. The ratio of pensioners to the working-age population is projected to rise from around 30 per cent today to 37 per cent by 2040. By the way, this dependency ratio will go even higher if the number of new EU immigrants (who overwhelmingly tend to be of working age) falls sharply due to Brexit.

On top of this, heathcare inflation has outstripped general inflation since the NHS was founded and is likely to continue to do so as new drugs and high-tech medical equipment come onto the market. In short, the volume of liquid is growing faster than the size of our barrel.

Now imagine there's a house next door. The volumes of liquid the neighbours need to deal with are rising too. They too have fast ageing populations. But they have built barrels which are much larger than ours. Germany spends 9.4 per cent of its GDP on public healthcare, France 8.6 per cent.

There are various ways we in Britain can address the problem of overspill. We can try and reduce the amount of liquid we have to deal with. We can take try to encourage people to adopt healthier lifestyles so they require less healthcare when they reach old age. Yet that's not going to help much in the immediate term.

We can try to make the barrel bigger through driving productivity increases in the health service, making existing resources stretch further. But that's easier said than done. And productivity increases are often unpopular. Nothing unites a community more effectively than a threat to close a local hospital.

Finally, we can, collectively, pay more in taxes to fund bigger increases in the overall size of the barrel each year. In next month's Budget, Chancellor Philip Hammond is likely to increase public resources available to fund elderly social care, helping to relieve some pressure on the NHS. There may even be more money pledged for the NHS directly. But no one expects the Chancellor to outline the kind of structural upward shift in the national tax take that would be necessary to get us out of this bind.

To some extent this is a failure of political leadership. Conservative ministers have trumpeted real-terms protection for the NHS budget, while presiding over a severe de facto squeeze on funding. But the blame goes wider. As a society we're in denial about this necessary trade-off between meeting a rising demand for healthcare and keeping tax rates at their current levels. And until this changes, expect the NHS crisis to continue lapping around our ankles.

The Bank of England was right not to bow to the veggie lobby over five pound notes

"When he warned of the economic downsides of a Brexit vote last year Mark Carney will have braced himself for a shower of abuse. But it's unlikely the Bank of England's Governor anticipated being castigated, like Falstaff, as a "whoreson greasy tallow-catch" by a coalition of vegans, vegetarians, Hindus and Sikhs, all united in anger at the fact that the new polymer five pound note contains minute traces of animal fat.

But the Governor has stood firm not only in the face of the Brexiteers but also the vegetarians. The Bank announced last week, after some reflection, that it will stick with its tallow fivers.

Is this wise? Wouldn't it be better to recall the offending notes and placate the 135,000 or so people who felt strongly enough to sign an online petition last year calling for such a reversal? One of the reasons proffered by the Bank last week is "value for money for the taxpayer". The Bank estimates that it has spent £70m on printing new polymer notes. It would incur these costs all over again to reprint them on new material that did not contain tallow. That's on top of the £50,000 cost of destroying the tallow-contaminated ones.

In other words, it believes a recall would be too expensive. The Bank does say it will look into the feasibility of making future production runs of polymer notes tallow-free.

But that's not placated the vegetarian petition signers who have asked how the Bank is justified in putting a price on their ethical and religious rights.

But our societies generally operate on the principle policymakers are justified in making judgements about how much public money should be spent on meeting certain objectives that are dear to the heart of some groups, whether this is providing prayer rooms in hospitals, or protecting the habitats of certain rare species of plant.

Indeed, even human lives have an implied " value" in public policy.

Many lives could be saved or prolonged every year if the government bought up the niche cancer drugs developed by pharmaceutical companies, or by councils redesigning every potentially unsafe road junction in the country. But they don't do these things because the public cost is deemed prohibitive.

It's true that there are some things that most of us would agree should not be measured by the benchmark of money, such as a human liberty.

Money is not a consideration in the eyes of the government when it comes to protecting our citizens from enslavement.

Similarly, the law doesn't allow people to sell their second kidneys to the highest bidder - even when it would make the buyer and the seller better off - due to the prevailing social conviction that such a trade would undermine human dignity.

It's not about money.

Yet the number of such incommensurable rights and ethical values has, by necessity, to be very limited or the result would be a chaos of clashing principle.

If we deem every ethical or religious assertion a trump card - overriding all else - in public policymaking the system will fall apart; it would be an open invitation to every crank and zealot to demand special and expensive public recognition for their own particular hobby horse.

Should the belief of vegetarians and Hindus that they should not be put in a position by the Bank of England where they have to touch a bank note made with a trivial amount of tallow be among those small number of trump cards?

Should taxpayers' money be no object in the mind of the Governor of the Bank of England when it comes to considering the demands of their conscience?

Or did the Bank of England make a reasonable choice in balancing out the strong concerns of a minority with the broad economic interests of society as a whole?

There is no definitively right or wrong answer here. It's a judgement. We all have the right to make up our own mind about whether a sound decision has been made.

But we surely owe a degree of sympathy to those greasy tallow-catches who are responsible for making the trade-off on our behalf."

We may soon have cause to regret Britain’s repellent national conversation about European immigrants

To warn about the consequences of an exodus of European Union workers from the British economy probably comes across like shouting fire in the midst of Noah's flood. 

Aren't there more than two million EU nationals in the British workforce, double the number a decade ago? Isn't net immigration from the EU running at almost 200,000 a year according to the latest figures? Didn't millions of Britons vote for Brexit precisely to reduce the numbers of workers from the Continent coming to Britain?

Yet if we know that when the flood waters recede there will be an abundance of vulnerable dry kindling and a scorching sun, it's not alarmist to warn of the risk of a conflagration. And we do know that. The size of the UK-born workforce appears to have peaked in 2015 at around 26.5 million. Workforce participation rates are at a record high. This implies that any net increase in demand for employees from firms, over the coming decade at least, will probably have to be met by new migrants.

Think of all those additional care workers to look after the burgeoning population of elderly. Think of those new doctors and nurses to staff packed surgeries and overstretched wards. Think of construction workers to build the new homes pretty much everyone now agrees we desperately need. Think of the software developers, research scientists, engineers and myriad other skilled workers that Britain will require to drive our national productivity and increase our living standards. We can - and should - certainly fill some of these skilled vacancies through retraining the existing UK workforce.

But not all of them can be filled in this way. Moreover, this is to cut the labour force cake differently. To make the cake bigger, we will almost certainly need to import labour from abroad. But what if the labour doesn't want to come? The latest figures from the Office for National Statistics this week suggested the number of EU-born workers in the UK workforce may also have now peaked at 2.3 million. There are other signs that net immigration from the EU is now in decline. Employers are starting to complain of labour shortages.

The migration expert from King's College London, Jonathan Portes, has predicted a sharp fall in EU migration rates in the coming years for a variety reasons. The assumption among British politicians is that EU migration post-Brexit will be like a tap that can be turned on and off. They will import any new workers we genuinely need, they will "manage" migration, they will "take back control".

But what if the tap is turned and no water comes out? What if there is a supply problem? The UK atmosphere towards immigrants has hardly been welcoming over the past year. There was spike in violence directed at European migrants in the wake of the Brexit vote. The uncertainty over the future rights and status of EU nationals who have made their home here has created anxiety, heartache and anger.

The tone in the most influential organs of the national print media is unrelentingly hysterical and hostile.

Senior politicians have misrepresented the scientific evidence on immigration's impact on living standards. Others have ignored it out of sheer cowardice, scared of making themselves targets of the right-wing press or of going against what they perceive to be the popular mood.

Would it really be surprising if a skilled European worker, or even an unskilled one, faced with a choice about taking a job in Britain and somewhere else on the Continent or around the world, gave us a miss given the repellent tone of our public discourse on migration and the insouciant attitude of our politicians? 

The assumption is that Britain can choose immigrants. But one day, and possibly quite soon, we might wake up to the hard reality that immigrants can also choose Britain. And then we may have cause for deep regret over the way that we have allowed the national conversation about immigrants to unfold."

It's time for the gig economy to give workers some rights as well as obligations

You might have imagined that an advantage of being self-employed would be that after a major health trauma - a heart attack, say - you would be able to reduce your hours without having to beg for the boss's permission. After all, the boss is you, right? But the case of Gary Smith reveals how outdated such assumptions are in today's workforce. As the Court of Appeal's ruling last week confirmed, the economic reality of Smith's relationship with Pimlico Plumbers (working five days a week for a single firm from whom he leased a branded van) was that he was a worker rather than a self-employed contractor.

This is not the first case where the courts have found for the "self-employed" over employers in such disputes. But Pimlico's behaviour towards Smith feels like a watershed moment since it stands out in its unreasonableness. It would not be surprising if many gig economy toilers who feel they have all the obligations of full-time workers but none of the employment rights responded to the Smith ruling by calling their lawyers.

Even after this latest legal setback, firms are unlikely to roll over. Some have business models that appear to be essentially based on avoiding the costs of conventional employment, such as paid holiday leave and the necessity of paying the minimum wage, rather than any other kind of genuine competitive edge. Yet the smarter ones, and the ones who genuinely do things better than the competition, could do themselves a big favour by recognising which way the wind is blowing and facing up to the fact that they have obligations to their workforce, even if that workforce is not technically made up of regular employees.

The Government is preparing to act in any case. An independent review into modern employment practices - specifically the burgeoning gig economy - will report in the summer and will likely make a range of policy recommendations for new regulation.

However, tax may be as important as regulation. As the Institute for Fiscal Studies pointed out last week in its Green Budget, the national insurance system makes it less costly for firms to take on self-employed contractors than new regular employees. In that sense it's not terribly surprising that almost half of all the jobs created since the financial crisis a decade ago have been self-employed. Faced with a marginal hire in a still uncertain wider market, most firms will naturally play it safe (or rather cheap), particularly if competitors are doing the same.

This story has a macroeconomic dimension. As the gig economy employers frequently point out, no one is forced to work for the likes of Uber, Deliveroo, CitySprint or even Pimlico Plumbers. The fact that many do so, while apparently being unhappy with their pay and harsh conditions, suggest they have little choice; that there is not, in fact, somewhere else for them to go.

The headline unemployment rate might be close to a record low, but the rise of gigging, the explosion of zero hours contracts and chronically weak pay growth, gives this the feel of a market still very much skewed towards the buyer of labour rather than the worker. And this, in turn, suggests that there remains disinflationary slack in the economy.

Libertarian evangelisers for the gig economy pour scorn on the idea that we are witnessing the creation a new "precariat" class of exploited workers and cite surveys suggesting that most self-employed contractors are content with their status and have no particular desire to be treated any differently. In this view of the world, the complainers, such as Smith, constitute a tiny awkward squad in a sea of happy contractors.

To really test this view what is needed is a high pressure and high demand economy where workers indisputably have the greater market power. If the low pay and ultra flexible gigging boom survives that environment the evangelists will have a strong case. But until then the rest of us can justifiably remain sceptical of the proposition that self-employed gigging really does represent the modern worker's free choice.

This article appeared in The Independent on 12/02/17

Britain is are still deep in the winter of austerity – and Brexit is only making it worse

We are still deep in the winter of austerity. The latest Green Budget from the Institute for Fiscal Studies makes that icily clear. Philip Hammond may have dropped George Osborne's economically reckless target of eradicating the deficit in its entirety by 2019-20, but he didn't reverse any of the spending cuts baked in by his predecessor in the wake of the last election. The freeze on welfare payments will bite all the harder as inflation spikes due to the plunge in the pound since the Brexit vote.

Departmental spending budgets are also set to carry on falling. Taxes overall are on the up too, despite the Conservatives' "tax lock" on income tax and VAT, mainly thanks to a plethora of stealth tax rises such as hikes in the levy on dividend payments and insurance contracts.

The IFS calculates that there will be around £60bn worth of austerity by 2019-20. Of this £12bn (20 per cent) will be raised from cuts to welfare. Some £16bn (25 per cent) will come from tax rises. But almost all the rest - by far the biggest chunk of austerity - will come from slashing spending by Whitehall departments.

By the end of the Parliament the budgets of departments such as justice, business, culture and the environment will be an astonishing 40 per cent lower than they were in 2010, when the programme of cuts began. And even then the pain will not be over. If the Budget, due to be delivered on 8 March, is to be finally brought into balance during the next Parliament the IFS estimates this will require another £34bn of austerity.

Needless to say, none of this is good news. The welfare cuts will pummel the incomes of some of the most financially vulnerable households in the country, and almost certainly push up inequality in the process.

Cuts on this scale to Whitehall departments are inevitably going to erode the quality of public services; some will probably be stretched beyond breaking point. Stealth tax increases will inevitably be passed on to households, squeezing disposable income.

What is going on? Why are on earth are we still knee-deep in austerity almost 10 years after the financial crisis hit? There are two main answers.

The first is that the UK population is ageing. This, naturally, means that the pensions bill is automatically increasing every year. But the situation is exacerbated by the fact that pensions - easily the biggest element of the welfare budget - have been protected in real terms by the Government since 2010.

The ageing population has also put great pressure on the National Health Service since older people tend to consume more health care. NHS spending, the biggest tranche of departmental spending, has also been protected in real terms since 2010 by ministers (although as the chaos in hospitals reminds us, spending is still falling badly short of rising demand). Protected pensions means welfare cuts have been pushed on to working age benefit recipients. And the protected NHS means most other government departments have had to shoulder the lion's share of the cuts.

A bird's-eye view of the public finances shows that taxes are rising as a share of GDP to their highest level since the late 1980s (37 per cent). Yet public spending is set to fall to only its lowest share of GDP since 2003-04 (38 per cent). The latter statistic has prompted some on the right to scoff at the whole concept of austerity. 

"Was public spending really so inadequate in 2004?" they ask. But this is, intentionally or not, badly misleading. The reason for the discrepancy between the bird's eye view and the pain on the ground is that we're being forced to spend more on an older population, which is squeezing down the resources available for just about everything else.

The second main reason we are still in a world of austerity is that the size of the economy is so much smaller than we thought it would be seven years ago. Productivity growth - output per hour - has stalled since the financial crisis, which inevitably translates into weaker GDP growth and a lower tax take.

We still do not understand why productivity has stalled and it's a phenomenon that can be seen across the Western world. But in Britain's case, it's pretty clear that George Osborne's severe cuts to government infrastructure spending between 2010 and 2012 did unnecessary damage to growth. Now we have Brexit to contend with.

By diminishing Britain's long-term potential productivity growth (an outcome the vast majority of economists expect) leaving the European Union will only make this problem worse. The national economic pie will be smaller and a larger share of it will be eaten by older Britons - the majority of whom, incidentally, voted for and delivered the Brexit vote. They may have "taken back control", but the bill will largely be picked up by the young.

Republicans are doing the right thing on tax reform, albeit accidently

"The greatest treason", suggested TS Eliot in Murder in the Cathedral, is to "do the right deed for the wrong reason". That feels like a description of the corporate tax reform plan being pushed by Republicans in the US Congress, as they hope to win the backing of the freshly-installed President Donald Trump. For the plan's main Republican sponsor, Kevin Brady, the objective seems to be kicking the ass of the rest of the world.

Brady wants to create a system "that doesn't favour foreign products over American products" and has described the reform as a way of levelling the playing field for US exporters who are, he claims, currently being subject to outrageous discrimination through the Value Added Tax systems of foreign countries, including Britain.

Talk about the "wrong reasons". The idea that there is foreign discrimination against American exporters through VAT - something also believed by Trump's economic advisers - is nonsense. This charge is based on a fundamental misunderstanding of how a VAT works. Furthermore, there is also zero reason to expect this particular corporate tax reform to give American firms any kind of lasting advantage when it comes to exports.

Indeed, we find ourselves in the paradoxical situation where a reform being presented by deluded rightwing American politicians as a way of sticking it to cheating foreigners actually represents the world's best chance for lancing the boil of rampant tax evasion by multinational companies.

It is the right thing being pushed for the wrong reasons. To understand why, we need to look at the plan in more detail.

The Republican plan would replace the US corporation tax, an annual levy on a firm's reported profits, with a new levy on a company's domestic cash flow. It means taxing a company's domestic sales at a certain rate, probably 20 per cent, after it has subtracted its domestic costs such as workers' wages and the amount the firm has spent on investment in new factories and equipment.

The objective would be to tax a company's economic activity in America, which means that it would be able to reduce its tax bill by the value of its exports, while imports would be part of its taxable liability via a "border adjustment tax". That probably sounds mind-numbingly complicated, but the principle is actually quite simple: it means taxing the firm's value-adding and substantive economic activity in the country where that activity actually takes place. This is most people's idea of what a tax on corporate income is supposed to do.

Many have objected that US firms that import heavily will be placed at a major tax disadvantage. Yet this impact would be entirely offset by a rise in value of the US dollar, which would follow the implementation of the reform, and which would increase the purchasing power of importers proportionately. And for all Brady's rhetoric and the protectionist-sounding border tax, the effect of the reform would actually be neutral on America's terms of trade with the rest of the world.

But the great advantage of this reform is that it would eliminate the incentive for multinational firms to dodge their US corporate taxes through accounting tricks, such as registering profits at subsidiaries abroad and relocating their corporate headquarters to tax havens. No matter where they based their headquarters, multinationals would be liable for a hefty US tax bill if they sold plenty of products and services in America.

And if America, the world's largest economy, were to institute this reform, there would be a powerful incentive for other countries - including Britain - to implement a similar reform. Everyone who complains about multinationals making massive local sales but paying negligible local corporation tax - everyone from Theresa May to UK Uncut - should be hoping that Congress adopts this legislation, and that our own Parliament emulates it.

There are, it is true, potential transitional snags. Some believe that the unilateral reform of US corporation tax in this way would open America to a potential legal challenge for breaking the rules of the World Trade Organisation. The impact on income inequality is unclear, although there is no compelling reason to believe that it would be any more socially regressive than the existing corporation tax.

This reform would certainly present some risks, some potentially hazardous financial side effects. Yet there are also risks in trying, in vain, to patch up the current loophole-ridden "source-based" corporate tax system, which Mike Devereux, the UK tax expert whose proposals have heavily influenced the Republican plan, and who first proposed the reform back in 2001, describes as "fundamentally broken". There are political risks in failing to respond effectively to widespread and justified public anger over flagrant multinational tax dodging by the likes of Apple, Google and Amazon.

Back to the paradox. Republicans care little about the iniquities of tax havens. They want firms to pay more in corporation tax in the same way that Donald Trump wants judges in Washington to influence immigration policy. And they seem terribly confused about the reform they are championing and about what it would entail, not least the progressive outcomes. Yet, for all that, what they have ended up pushing is the right thing, not just for the US but the world. Treason or not, we should wish them good speed on this one."

The idiot economics of Donald Trump's 'Muslim ban' will ultimately hit his own people in the wallet

A moral disgrace. An act of wanton cruelty. A legal outrage. An unconstitutional power grab. A work of gross administrative incompetence. A self-inflicted security wound. But economic idiocy too?

It seems almost otiose to mention money in the context of Trump’s arbitrary executive order barring Syrian refugees from America, capping the overall refugee intake for 2017 at 50,000 and stopping all entry to nationals from seven countries from the Muslim world.

But it’s true. Trump’s order not only defiles America’s founding principles, sullies its global reputation and gives comfort to autocrats the world over, but it will, in all likelihood, ultimately lead to the diminishment of the vigour of the world’s dominant economy too.

One doesn’t need to look far in America for examples of refugees and their families who have made a stunning contribution to the country’s prosperity. Steve Jobs, the founder of Apple, was the son of a man who fled violence in Syria. Sergey Brin, the Google co-founder, was a refugee from the Soviet Union.

Donald Trump announces a ban on refugees and all visitors from Muslim-majority countries

But the economic case for being open to refugees does not merely rest on a handful of entrepreneurial superstars. The idea that these people seeking sanctuary in other states represent an endless burden on taxpayers – something we’ve heard so often in Europe in recent years – is nonsense.

Data from Europe shows that, over time, the employment rate of refugees rises from 25 per cent to more than 60 per cent. In Sweden asylum seekers have shown a bigger increase in employment rates than any other migrant group.

Trump’s apologists stress that the ban is only temporary. Others point out that America in the Obama years only admitted an average of 70,000 refugees a year. It’s certainly true that America has not been pulling its weight when it comes to responding to the global refugee emergency.

But this is really to miss the point.

The economic damage from Trump’s order goes far wider than its direct impact. The bulk of the harm is in the message it sends. The barely disguised discrimination against Muslims tells 1.6 billion followers of that faith that “America does not want you”. 

And the fact that those who had been granted green cards (permanent residence) were initially included in the ban will have sent a chill through any non-American citizen worker, regardless of nationality or religion. The message here is: you can no longer rely on the US government to respect your status, to treat you fairly.Their incentive to stay - or the incentive for others with skills and talents to come to America - has taken a terrible blow.

Many informed observers suspect this anti-immigrant signal is the real goal. And listening to the views of Steve Bannon, Trump’s “chief strategist” and reportedly the driving force behind the executive order, this seems all too plausible. 

Bannon has ranted in the past about US engineering schools being “full of people from South Asia and East Asia” and objected to the number of Asian Silicon Valley chief executives. “Twenty per cent of this country is immigrants. Is that not the beating heart of this problem?” he once asked.

This is no finessing this. What we have here from the mouth of Trump’s right hand man is the raw voice of nativist bigotry.

It is also the voice of economic folly. America is a country settled by immigrants and whose spectacular economic success is built upon successive waves of mass immigration from people from all over the world of all faiths and ethnic backgrounds. It has prospered enormously on the back of immigrants’ inventive talents and hard work.

This noxious executive order is likely to be just the beginning. It sets the ugly and profoundly un-American tone. The longer Trump and Bannon control immigration policy in the US, the greater the damage that we can expect to be inflicted on the most productive national economy the planet has ever seen.