Ed Balls has just been given a thorough grilling by Andrew Neil on the Daily Politics — particularly on his past assertions that Labour were not running a structural deficit in the years leading up to the financial crisis. Here’s the relevant section of the interview: listen to ‘Ed Balls on the structural deficit, 25 Oct 12’ on Audioboo
The economy is out of recession. It grew by 1 per cent in the third quarter of this year, which is the fastest quarterly growth rate since 2007. This positive number makes it a lot easier for the coalition to claim that the economy is ‘healing’. Expect to see ministers heading to TV studios to talk about how a million more private sector jobs have been created, how there are record number of new start ups and that inflation is down. Being out of recession makes it a lot easier for the coalition to defend its economic record. Today’s number should also serve to boost consumer confidence, to provide a
So it’s official: the UK economy grew by 1 per cent in the third quarter of 2012, according to the ONS’s preliminary estimate. That’s significantly better than the consensus forecasts. As all the politicking and pontificating begins, there are a few caveats worth keeping in mind:- 1. It’s just an estimate. As I showed yesterday, the margin of error in the ONS’s preliminary estimates is +/– 0.7 percentage points. That means Q3 growth could really turn out to have been anything from 0.3 per cent to 1.7 per cent. Still, we can be confident that the economy did return to growth in the quarter, ending the double-dip recession — though
Finally, some good news for the government – the public seems unconcerned by its recent difficulties. In spite of plebgate and George Osborne’s train ticket dominating this weekend’s papers, polling out today shows the Conservatives have managed to reverse their voting share decline in the wake of their party conference. The Populus/Times poll places the Tories on 35 per cent, up five points from September while Labour are down by the same amount. This brings Labour’s lead down to where it was before this year’s budget in March 2012: The Guardian/ICM polling shows a smaller increase, with Labour on 41 per cent and 33 per cent for the Conservatives. This is
David Priestland is worried. Towards the end of his recently published book Merchant, Soldier, Sage, he warns: ‘[The crash of] 2008 has set the world on a course towards potential conflict, and the domestic and international forces that brought us the violence of the 1930s and 1940s are with us today – albeit still in embryonic form.’ It is fashionable, especially in heavily indebted Europe, to compare the uncertainties of the present with those of the 1930s. The Second World War is passing out of living memory and entering popular historical consciousness. Angela Merkel appeals to this when she warns that only the European project can guarantee peace; and Greek protesters
Growth forecast downgrades should come as no surprise these days, but when they come from the IMF they naturally command a fair bit of attention. In fact, the IMF’s downgrades for annual GDP change — to -0.4 per cent in 2012 (from +0.2) and +1.1 per cent in 2013 (from +1.4) — simply bring them into line with the consensus. The below graph shows how the average of independent forecasts for 2012 growth has changed over the last few months: Given that the ONS shows the economy having contracted by 0.7 per cent in the first half of this year, the IMF’s forecast of a 0.4 per cent contraction for
The IMF’s growth downgrades will make tomorrow’s newspaper headlines but the more striking point is its decision to massively rewrite British economic history. As Citi’s Michael Saunders notes (PDF), the IMF now believes that UK economy was massively overheating in the boom. What we had thought was normal growth was, in fact, crazy exuberance. Britain’s economy was more overheated by any in the G7, the IMF now tells us. Things were worse in 2007 than in the ‘Lawson boom’. Had we known about this overheating, of course, it ought to have been remedied by an interest rate rise. The asset bubble might never have been blown and the cheap debt party
Things have come to a pretty pass when the Labour Party is launching a campaign with a deficit clock to expose George Osborne’s shortcomings. But they are about to do today, I understand, highlighting how much extra the government is borrowing over the four days of the Tory conference compared to last year: £277 million, they say. I’ll post the link when it becomes live. Significantly, Labour is shifting from being in a position of deficit denial towards a position where they will (I suspect) sign up to Osborne’s spending plans. As Balls has found out, Osborne’s game is to dress up only-slightly-modified Labour spending plans with Tory language. But
‘Are you better off than you were four years ago?’ That was the question Ronald Reagan told Americans to ask themselves when choosing their President in 1980, and it’s a line Mitt Romney’s campaign has been hoping would work for them this time around. ‘The president can say a lot of things, but he can’t tell you you are better off,’ Paul Ryan told a crowd in North Carolina last month. And it might be one of the ‘zingers’ Romney throws out in tonight’s debate. But the attack isn’t looking nearly as potent against Obama as it did against Jimmy Carter. For one thing, Ryan’s claim might not actually be
One of the more sombre passages in Ed Miliband’s barnstorming speech this afternoon was when he tackled the thorny issue of what a Labour government would actually do about the cuts. While both the Labour leader and Ed Balls are keen to regain the trust of the British public on the economy, they are also trying to introduce a counter-narrative to the ‘are you ready to trust Labour with your money again?‘ line that Nick Clegg produced last week. Just as George Osborne and colleagues have spent the first two and a half years selling the line that they are ‘clearing up the mess’ of the last Labour government, Miliband
It seems that yet another coalition growth scheme is falling flat on its face: this time, Sir Mervyn King’s ‘Funding for Lending’ brainwave. The theory was that the Bank of England would lend money at below-market rates to the financial institutions: sub-prime loans, in other words. Not without its risks: chiefly, what if the banks just use this cheap cash to lend more to their safest borrowers, rich guys with big deposits? Don’t worry, Sir Mervyn said, the Bank would monitor every month and report back. It just has, and Citi Research has chewed the results (PDF). Rather than ‘get the banks lending’ the first four weeks of Funding for
Today’s public finance statistics are another case of good news/bad news for the government. First, the good news: the ONS revised down its estimate for government borrowing in the last fiscal year (2011/12) from £125 billion to £119.3 billion. That’s £6.7 billion below the OBR’s estimate in March this year, and means that the coalition succeeded in cutting the deficit by 25 per cent in its first two years (29 per cent in real terms). But the bad news comes when you look at the current fiscal year. The ONS estimates government borrowing for August at £14.41 billion — roughly the same as August 2011 (£14.37 billion). These estimates do
The standard joke is that Sir John Major is the ultimate grey man, as if Charles Pooter had been painted by Wilhelm Hammershoi in particularly pallid light. But the pea-eating caricature of yesteryear was not in evidence on the Andrew Marr Show this morning. There was something calm and old-fashioned about Major during his interview; even his platitudes carried an air of wisdom. The former Disability Minister praised the Olympic and Paralympic Games, revelling in the fact that the games had revived aspects of our national character which he had assumed dead. The conversation was about old times: his father’s career in Music Halls during the early years of the
Much is being made today of reports that George Osborne will drop his fiscal target in his autumn statement on 5 December. Isabel reported earlier that, faced with breaking his own rule, Osborne will abandon it rather than implement more cuts to meet it. All the fuss seems to stem from a note by Citi Reasearch last Friday. You can read the whole thing here, but here’s a summary. Like Gordon Brown, Osborne has two fiscal rules. Neither says anything about eliminating the deficit, or even halving it. The first — called the ‘fiscal mandate’ — is ‘to balance the cyclically-adjusted current budget by the end of a rolling, five-year
Employment has almost entirely recovered to its pre-recession peak, according to today’s new figures. Total employment for May to July stood at 29.56 million — up 236,000 on the previous three months and just 12,000 shy of the 29.57 million peak of April 2008. This recovery is thanks to the expansion of the private sector, which has added over a million new jobs in the last two years, and now employs 381,000 more people than it did before the crash. Public sector employment, meanwhile, has been cut by 628,000 since the coalition took over, and is now at its lowest level since 2001. The scale of private jobs growth —
The contents of the coalition’s grand bargain on growth will become clearer this week. On Monday, Michael Fallon will announce plans to scrap half of all existing regulation, and then later in the week Vince Cable will detail the changes the coalition will make to employment law. This combined with the planning reforms announced last week and the expected initiative on mini-jobs is the Tory supply side of the bargain. But there’s also an interventionist Liberal Democrat side to it, with the coalition announcing this week that it is adopting an industrial strategy. This is something that Vince Cable and his Tory deputy David Willetts have been pushing for over
Michael Fallon has given a pugnacious interview to the Sunday Telegraph. He said that Britain must end its obsession with the ‘politics of envy’ and celebrate wealth creators as ‘Olympian’. (I wonder what the minister makes of the Romford Business Awards, which are presented by his colleague Andrew Rosindell, the Conservative MP for Romford.) As well as having venerated wealth, Fallon introduced several policy objectives: a new round of privatisation (Royal Mail being the first target), employment law reform to ease the dismissal of underperforming workers or where working relationships have collapsed, and a sustained attack on 3,000 regulations. The Sunday Telegraph describes Fallon’s ideas as an ‘agenda pursued by Lady
George Osborne gave a speech to a CBI dinner in Glasgow last night. It wasn’t the ideal day to do it: the OECD did downgrade its growth forecasts for Britain to minus 0.7 per cent, having previously predicted a 0.5 per cent rise. But the Chancellor remained upbeat, saying: ‘The economic outlook remains uncertain but there are some positive sings. Our economy is healing – jobs are being created, manufacturing and exports have grown as a share of out economy, our trade with the emerging world is soaring, inflation is down, much of the necessary deleveraging in our banking system has been achieved, and the world is once again investing
Downing Street is very keen to emphasise that the key theme of this reshuffle is ‘implementation’. It’s an exciting word, I know, but the excitement has just ratcheted up a notch with the creation of a new sub-committee called the Growth Implementation Committee. The GIC will sit under the economic affairs committee and will be chaired by the Chancellor (who also chairs the economic affairs committee). His deputy chair will be Vince Cable, which the Business Secretary will probably not appreciate, except when the Chancellor is away and he is able to take over. It will also include some of the faces of the reshuffle: David Laws will be a
The contours of the coalition’s autumn growth offensive are beginning to emerge. The impasse that existed before the summer appears to have at least eased. On Marr this morning, George Osborne announced that the Treasury is now working on plans for a small business bank which will please Vince Cable who has been pushing for this for a long time. At the same time, Osborne also backed more airport and runway capacity in the South East and announced that the government will announce further measures to simplify the planning system. His message: ‘we have to do more and do it faster’. In line with this approach I understand that Vince Cable
