Foreign Direct Investment both in Cornwall and elsewhere, is frequently championed on the basis that ‘the government has no money’ beyond what tax and borrowing can afford. This ignores the fact that the UK government is the monopoly issuer of its own currency, the British Pound. It cannot run out of money but it can run out of physical brick, mortar, labour, energy and natural resources. This is why the focus should be on real resources that the UK has (the Resource Budget), not on how much money it can lay its hands on (the financial budget). As the famous economist John Maynard Keynes said in his pamphlet How to Pay for The War, “Anything we can do, we can afford.”
The covid pandemic demonstrated the immense financial power of the state when the Bank of England electronically created over £400 billion of new money to fund the Furlough scheme, business loans, and health spending. The real question then, is not ‘do we have the money?” but “what can that money buy?”
A frequent objection to government spending is inflation but this makes no sense when public services and infrastructure are desperately under-resourced. The key point to hold on to is this:
When Resources Are Idle you can spend safely without causing inflation
Think about what happened during the 2008 financial crisis, or the early months of a recession. Suddenly you have:
- Construction workers sitting at home, no sites to go to
- NHS wards that could be opened but aren’t staffed
- Factories running at half capacity
- Graduates stacking shelves because there are no graduate jobs
In that situation, if the government steps in and spends — hiring those construction workers to build social housing, funding more NHS nurses, commissioning domestic manufacturers — what happens to prices? Very little. Why? Because you’re not competing with anyone for those resources. The workers were already idle. The factory capacity was already sitting there. You’re simply activating what was wasted.
By contrast: when resources are fully employed, then Inflation becomes real
Now flip the picture. Imagine the economy is running hot:
- Every bricklayer is already on a job
- Steel and timber are fully committed to existing projects
- Energy grids are at capacity
Now the government decides to commission a massive new infrastructure programme. What happens? It has to outbid the private sector for those same bricklayers, that same steel and timber. Wages get bid up, material costs rise, and you get genuine inflationary pressure. Not because the government “printed too much money” in some abstract sense — but because there aren’t enough real things to buy.
The problem is physical scarcity, not monetary excess.
Cornwall as a renewable energy powerhouse: but who benefits?
This brings us back to Cornwall where inward investment, particularly foreign direct investment(FDI) is closely tied to the use of tax havens and where profits and wealth will likely be extracted out of Cornwall (and the UK) over the longer term. Interestingly, the National Wealth Fund, a public body answerable to the government, has made a step in the right direction by investing nearly £84 million in lithium and tin. No one is shouting ‘inflation!’ here; yet by investment standards is a paltry sum.
And then there are the offshore wind projects in the Celtic Sea – specifically the expanse of sea between the south west coast and Wales. Of the seven offshore wind energy projects in the Celtic Sea, and the one proposed off the south coast of Devon and Dorset, all were foreign owned and six were found to have links to tax havens
At present the National Wealth Fund appears to have no investment stake and the typical sum ranges between £3.5 billion and £5 billion per site. Again the government as the monopoly issuer of its own currency, could easily afford an investment stake without the need to borrow money from the money markets or raise additional taxes; it would simply instruct the Bank of England to electronically create the money needed and it could do so without causing inflation.
This last point needs clarifying. Despite the size of the investment there is no inflationary element when what is proposed is the substitution of public pounds in place of private pounds: it is the same amount of money being injected into the economy and the risks of inflation – if at all – hold true for both.
The New Kows 
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