Economy

The economy is booming, says the Bank of England. So why won’t it raise rates?

Yet another survey suggests that Britain is booming – this time, it’s from the Bank of England’s Monetary Policy Committee. They’re the guys who kept interest rates too low for too long – creating the last boom. It sees another boom now.”For the first time in a long time you don’t have to be an optimist to see the glass is half full,” said Mark Carney, the new BoE Governor. “The recovery has finally taken hold.” Citi has crunched latest BoE figures (pdf) and says this envisages real GDP growth of a stonking 3.4 per cent next year and 2.8 per cent the year after, which it says is one

Why do the Tories lead on the economy and leadership but trail overall?

One of the odd things about the polls at the moment is that the Tories lead on economic competence and leadership, traditionally the two most important issues, yet trail overall. There are, I argue in the column this week, three possible explanations for this polling paradox. The first possibility is that Ed Miliband is right, that the link between GDP growth and voters’ living standards is broken. A consequence of this is that voters put less emphasis on economic management in the round. Instead, they want to know which party will do most to help them with their cost of living. Then, there’s the possibility that the traditional political rules

European Council statement: Leaders seize opportunity for economic ding dong

Why did the Prime Minister give a statement in the Commons on the outcome of last week’s European Council summit? Though he is expected to report back to MPs each time one of these jamborees takes place, David Cameron didn’t really have a great deal to tell them other than the tantalising suggestion that the leaders had made progress on cutting red tape and the declaration that ‘the EU is changing’. It was hardly one of those statements where Cameron can wave a budget cut or some other great policy victory at MPs. listen to ‘David Cameron’s statement on the European Council summit’ on Audioboo

When it comes to postage stamps, you’re always dealing with a monopoly

Well, the whole Royal Mail privatisation is going terrifically well, isn’t it? I’m not talking about the pricing of the issue which has obsessed most of the pundits. I’m talking about users. The latest exciting new development from this privatised company with the Queen’s head on the product is that it is to use new technology to let companies know that their promotional material – junk mail as it’s affectionately known to its recipients – has been safely put through the door, so they are now free to cold call households to follow up the delivery. Nice! But it’s the impact on the price of stamps that really gets me

Who feels grumpier about the recovery?

The Tories were expecting Ed Balls to be a little grumpy today after the ONS’ latest figures showed the economy was growing at its fastest rate in three years. And the Shadow Chancellor didn’t sound his cheeriest when he popped up to respond. In his official response, Balls said: ‘After three damaging years of flatlining, it’s both welcome and long overdue that our economy is growing again. But for millions of people across the country still seeing prices rising faster than their wages this is no recovery at all.’ And on the World at One, he said: ‘For people who are seeing their living standards falling, being told that somehow

The ‘gangbusters’ economy

Tomorrow’s GDP figures are expected to show that the economy is no longer bouncing along the bottom but is now in steady recovery with a second successive quarter of robust growth. It is all very different from the start of the year when the country appeared to be on the verge of a triple dip recession. As I say in this week’s magazine, when in early February the Chancellor’s chief economic adviser Rupert Harrison told a crunch Downing Street meeting that the economy would be going ‘gangbusters’ by late summer, early autumn, the Prime Minister’s chief of staff Ed Llewellyn was so taken aback by the confidence of the prediction

James Forsyth

Growth is not enough — the Tories must show they’re not the party of the rich

The mood was grim when David Cameron, George Osborne and their advisers convened for a crunch meeting on 4 February this year. The economy had shrunk in the final three months of last year; the country was on the verge of a triple-dip recession, unprecedented in modern times. The government was in dire political straits. Those present discussed the situation with appropriate solemnity. But the tension was broken when Rupert Harrison, the Chancellor’s chief economic adviser, passionately declared that the economy would be going ‘gangbusters’ by late summer, early autumn. Ed Llewellyn, the Prime Minister’s chief of staff, chuckled and joked that he would take a note of that confident

Arthur Laffer: cuts succeeded where stimulus failed

 Nashville, TN All the drama coming out of Washington in the last few weeks has obscured some seriously good news: federal government spending is falling. And not at a trickle: think the White Cliffs of Dover. Not since the economic boom following 1945 have Americans seen such a rapid decline in the government’s claim on the nation’s resources — falling by a welcome $94 billion over two years. You need to go back to the end of the Korean war to find a time when US government spending has actually declined over two years. If Republicans in the House stick to the sequester and future caps already built into current

Justin Welby and the Downing Street grid

One man who isn’t on message at the start of the government’s economy week is Justin Welby, who has been warning against excessive jubilation at the end of this week when the next tranche of GDP figures are released. He told the Telegraph: ‘A flourishing economy is necessary but not sufficient. A healthy society flourishes and distributes economic resources effectively, but also has a deep spiritual base which gives it its virtue.’ This sounds a little bit like pre-2010 David Cameron, but it doesn’t quite chime with the political offensive that the Tories want to go on this week, accusing Labour of making consistently bad predictions about the economy. The

Is it still the economy, stupid?

The coalition wants this week to be all about the GDP figures, out on Friday. As I say in the Mail on Sunday, Downing Street is confident that they’ll show the economy is continuing to grow at a relatively decent clip and is already working out how to make political out of that. They have, as Simon Walters reports, already prepared a video mocking Labour’s claims that the coalition’s polices would lead to a million more people on the dole. Ed Miliband’s circle expects that the GDP numbers will again be positive. But they take the view that as long as prices are increasing faster than wages, squeezing voters’ living

Why EU red tape risks our economic recovery

You know you’ve been in politics too long when you’re onto your tenth ‘Red Tape Challenge’. I remember Neil Hamilton as Deregulation Minister in the Major Government in ’92 promising to slash the jungle of red tape. Every time I cheered. Every time the flood of Regulations and Directives kept pouring out of the Whitehall and Brussels machine. But hardened Red Tape Analysts of all stripes will notice something a bit different about yesterday’s news of the Prime Minister’s commitment to implement the deregulatory proposals of the Business Task Force. He has explicitly linked it to the historic Renegotiation and Referendum strategy launched in his Bloomberg speech. So this time

Tory ‘stick with us’ message boosted by IMF

Poor old Ed Balls. He’s been making predictions of doom that now appear to have gone too far and too fast. The latest blow to the Shadow Chancellor is that the IMF, which he went through a period of definitely liking a lot when its lieutenants started suggesting that austerity was ‘playing with fire’, has upgraded its growth forecasts for the UK by more than any other major economy. This map from the organisation’s latest World Economic Outlook illustrates rather neatly how well the IMF expects the UK to do in comparison to other European economies. Obviously this doesn’t mean that everything is fine and dandy and that everyone in the UK can

America is not facing a debt crisis. Why pretend otherwise?

The maths of America’s financial problems are fairly simple. Every year the federal government spends more than it brings in so must borrow to fill the gap. This is fine when you’re young and healthy, with great prospects and you are borrowing to invest. But one day your lenders look at you and realise you’re not young and growing any more. You’re middle-aged and knackered. You are borrowing simply to spend and time is running out for you to pay back your debts. It’s an ugly moment for anyone, especially the most powerful country in the world. There are economists like Paul Krugman who argue that America is not like

Will David Cameron be sticking his finger up at Ed Balls after the latest service sector figures?

Yesterday David Cameron told the Tory conference that he had a new gesture for Ed Balls – a finger pointing upwards to indicate a stream of positive figures on the economy. You can almost imagine him doing it today at his desk in Downing Street after reading the latest figures on the service sector. Markit/CIPS’ Purchasing Managers Index of activity recorded a level of 60.3, a slight decrease from August’s seven-year high of 60.5, but enough to give the UK’s best quarter for the services sector since 1997. Any number above 50 indicates growth. The level of growth, according to research from Citi’s Michael Saunders, could be consistent with an

View from 22 podcast special: the return of George Osborne

Fraser Nelson thinks it was the ‘language of someone happy with the economy’. James Forsyth saw it as renewed hope for leading the Conservative party. On this special View from 22 podcast, we analyse George Osborne’s speech to Tory conference this morning; whether the economic measures mentioned were sensible and what it says about the Chancellor himself. You can subscribe to our podcast through iTunes and have it delivered to your computer every week, or you can use the embedded player below: listen to ‘Spectator Podcast: @frasernelson and @jamesforsyth discuss Osborne’s speech’ on Audioboo

The ghost of Gordon Brown stalks Ed Miliband’s dangerous business tax plans

Gordon Brown was notorious for complicating our already over-complicated tax system, and it seems that his former aide, Ed Miliband, wants to emulate the master. The danger is that Ed Miliband would do so against the backdrop of a vulnerable economy in a very mobile global market place. His latest idea is to put up corporation tax, arguing that this will “pay” for a freeze in business rates on small firms. In fact, the net burden on business will remain unchanged, so his tinkering would be little help to the small businesses that he allegedly wants to help. There are more devils in Miliband’s detail: the freeze would only apply

Ed Miliband’s seaside start

Ed Miliband’s interview on the Andrew Marr show neatly summed up the Labour leader’s problems in cutting through. Marr started with a series of questions about Miliband’s plans to change Labour’s relationship with the unions. This might be an important issue but it is hardly one of paramount interest to the electorate and every minute Miliband is speaking about this, he can’t be speaking about other things. The next distraction is the whole Damian McBride business. Indeed, Miliband telling Marr that he’d told Brown to sack McBride is the BBC News headline on the interview. Miliband also had to fend off a whole host of questions about why his poll

Lib Dem conference: Clegg isn’t fighting his activists, he’s just fighting a faction of activists

Nick Clegg’s strategy of getting his party to approve his position on a number of contentious issues reaches its most awkward stage today, with the votes on the economy and taxes that are causing the greatest grief with activists. It’s complicated by Vince Cable’s plan to be a no-show at the economy debate in an attempt to hold onto his Jeremiah credentials. The votes are being billed as a clash between the leadership and its activists, but it’s a little more complicated than that. Last night I attended a fringe held by Liberal Reform, a group in the party that campaigns for a market-based approach to policy-making. It’s reasonably young,

Eeyore Cable undermines George Osborne by echoing his comments on the economy

Poor Vince Cable. He just can’t help but brim with joy about the economy. He’s often spotted skipping across Parliament square to the Business department, humming ‘Oh, Happy Day!’ under his breath at the latest set of GDP figures. George Osborne and Cable’s Tory colleagues are always having to tell Vince to calm down a bit: he doesn’t want to seem too complacent about the clouds lifting from the economy. But even such a joyful Lib Dem as Dr Cable must have been a little dispirited to read that everyone has written his speech this morning up as an attempt to undermine George Osborne. ‘I think George Osborne’s comments the