Coalition

The FT makes for grim reading this morning (£). The paper claims to have replicated the Office for Budget Responsibility’s methodology and it has found that the structural deficit is £12 billion larger than was thought. If this is true, and coalition ministers are scrambling to deny it, then George Osborne is unlikely to have virtually eliminated the structural deficit by the end of this parliament, his avowed aim. The strategic implications are clear: the 2015 election would become a much tougher prospect for the Conservatives, as Osborne might to struggle to present them as the party that delivered the economy from disaster. There have been clear indications that all

A new rule seems to have been adopted at Lib Dem conference: don’t mention Academies. The coalition’s greatest single success story – something David Laws and Michael Gove agreed on before the election – is being airbrushed out. A favourable reference to Academies taking on kids from deprived backgrounds was proposed for a conference motion, but has been excised by the delegates. Lib Dem activists are heavily drawn from the ranks of local authority councilors, many of whom hate the way that schools have been given the power to break free from council control. Confronting them was a key part of Nick Clegg’s modernization programme. It seems that this has

Sandals are being rattled in Birmingham this morning. The Liberal Democrat conference opens to a chorus celebrating the party’s achievements in government. Nick Clegg tells the Independent that “Liberal Democrat fingerprints” are all over flagship coalition policies on schools, welfare, pensions, banking reform and the NHS reforms. He says of the latter that the Liberal Democrats have tempered the Conservatives. Clegg will reiterate this point at a rally later this afternoon. Despite news that the Liberals seek an electoral accommodation with the Conservatives, senior party figures are at pains to accentuate their differences with the Tories. Danny Alexander informs the Financial Times that he views the new backbench Tory Eurosceptic

It is hard to overstate how serious the crisis in the eurozone is or what it might do to the politics of Europe. The European project is putting in danger the very political stability in Europe that its supporters have always claimed to be its strategic and moral justification. I understand that American banks are now so nervous about the situation on the continent that they have effectively stopped new lending to European banks. The view in Westminster today is that the Greeks will avoid default for a little longer. But few can see them making it to Christmas. Indeed, the expectation seems to be a default sometime in October.

Cameron and Miliband went six rounds on the economy at PMQs. Miliband tried to portray Cameron as just another Tory who thinks that “unemployment is a price worth paying”. Cameron, for his part, wanted to paint the Labour leader as someone whose policies would send Britain tumbling into a sovereign debt crisis. At the end, it felt like a bit of a no-score draw. Interestingly, Cameron stressed that “every week and every month, we’ll be adding to that growth programme”. We’ll have to see whether he’s talking about more small-bore measures, or something bigger on infrastructure investment. Labour had a new tactic today, trying to fact-check all of Cameron’s answers