Economy

The house price slide continues

Hidden behind today’s gushing Olympic headlines lies more disappointing economic news. Nationwide’s latest House Price Index release today shows that house prices are continuing to fall, with a 0.7 per cent decline in July. As the graph below shows, the fall in prices is a continuation of a trend that began when the country re-entered recession earlier this year: The latest figures put prices down 13 per cent on their 2007 peak and 2.6 per cent lower than this time last year. Last year the average house price was £168,731: now it is £164,389. But if you look at these trends in an international context, Britain’s prices appear relatively resilient.

Planning reform is an easy way of helping the economy

‘Desperate Treasury to water down planning laws,’ blasts the Telegraph today, making it quite clear that it’ll oppose any effort by the government to return to planning reform. Those Tories who were uncomfortable with the original proposals are also making clear that they haven’t changed their position. The new national planning policy framework was announced this spring. Those who helped craft this compromise are privately stressing that it is simply too early to tell whether further changes are needed. But I still think there is a good chance that the Treasury will push for more planning reform this autumn. First, it is something that it genuinely believes would help the

France shows up Labour’s economic plan

Yesterday’s economic news reminds us of the need for the Government to continue to focus relentlessly on getting our economy moving – dealing with the debt crisis, boosting bank lending to the real economy, and ensuring sustainable long-term prosperity through radical economic reform. One of the key planks of the Government’s reforms is to make Britain’s tax system more competitive, ensuring that Britain is open for business, that we are a dynamic and an attractive place to invest in and to work in. Cutting corporation tax to the lowest rate in the G7 is one element of this plan. Cutting the top rate of income tax to level the playing

Osborne’s grim morning

‘Unfortunately, it’s not enough.’ That is, broadly, the conclusion of John Longworth, the director of the British Chamber of Commerce, who has penned a visceral critique of the government’s economic policy in the Observer. Nothing, it seems, is sufficient: half-hearted infrastructure investment, non-existent aviation policy, lethargic borrowing to business, and regulatory reform that leaves businesses ‘mired in a thicket of red tape’. Longworth laments economic policy being determined by ‘political short-termism, electoral calculation and presentation’. This swipe at George Osborne adds to the sense that professional and international bodies are turning on the chancellor, after the IMF’s warning last week (rather callous of it, considering that Osborne has been following

Public finance statistics point to a miserable autumn statement

Today’s round of public finance statistics bring mixed news for the government. The headlines have focused on the fact that borrowing last month — at £14.4 billion — was £0.5 billion higher than in June 2011. But considering that the monthly borrowing figures end up being revised by an average of £1.7 billion (usually downwards), we shouldn’t get too fixated on a difference of a few hundred million. What is perhaps more worrying is the trend in the financial year so far. Superficially, the numbers look pretty good: a total of £14.9 billion in borrowing since April, compared to £38.4 billion in the same three months of last year. But this year’s

When should George Osborne switch to Plan B?

Announcements from the International Monetary Fund are worded in such a way that everyone reading them comes away with something slightly different. So shortly after today’s report on the UK economy was released, Ed Balls put out a statement saying the report was a ‘very serious warning to the Chancellor that urgent action to boost jobs and growth is needed’. He concluded his press release by asking ‘how much worse do things have to get before the Chancellor finally changes course?’. Now, today’s report from the IMF is not cheery reading for George Osborne. It passes this bleak judgement on the economy: ‘Recovery has stalled. Post-crisis repair and rebalancing of the UK

Osborne’s ‘hideous choice’ if growth downgrades continue

So the IMF has revised its forecasts for the UK’s GDP growth downwards — to 0.2 in 2012 and 1.4 in 2013 from the 0.8 per cent and 2.0 respectively it predicted in April. It’s bad news, certainly — not least because we’ve been downgraded more than most other countries, and we’re now forecast to grow more slowly than Germany and (this year) France. But it’s worth bearing in mind that the IMF — for all its ability to drive headlines — is just one of many organisations playing the forecasting game, and these downgrades actually just bring them into line with the average. What’s worrying for George Osborne — and his fiscal

China’s economy runs out of gas

Today’s news on the Chinese economy – that growth has slowed for the sixth quarter running – is no big surprise: the question for months now has been whether China’s landing will be hard or soft, not whether there will be a landing. Indeed, some analysts feel that the numbers suggest a recovery in the second half, and both Asian and European markets are buoyed by apparent relief the data isn’t worse.  Official Chinese statistics have to be taken with a large pinch of salt, obviously. Looking at the headline GDP numbers isn’t enough, as we pointed out recently – electricity consumption is probably a better gauge. But wait –

Of bankers and bartenders

It suits a great many people to blame the banks. The ministers (like Ed Balls) who oversaw the debt-fuelled credit bubble; the Tories (like George Osborne) who signed up to Labour’s debt-fuelled spending binge; the regulators who failed so appallingly (a global crisis but how many collapsed banks in Australia and Canada?); and Mervyn King, who oversaw this hideous asset bubble and didn’t sound the alarm. When George Osborne told the Commons that banks ‘brought our economy to its knees’ he suggested that, even now, he has not worked out what caused the crisis. The theory that wicked, greedy bonus-seeking bankers caused the crisis has been repeatedly debunked, but it’s

Why this government is not down with the kids

Hardly a day goes by without more bad news on youth unemployment. The latest figures on NEETs (a horrible de-humanising term for school leavers who are not in education, employment or training) show that the numbers rose between 2010 and 2011 to over eight per cent. The release of these statistics coincided with new polling which showed a near-complete collapse of support for the government among young people. Does this government hate young people? Probably not. Does it belatedly realise it has a massive problem with youth unemployment? Yes it does. The Youth Contract was introduced by Nick Clegg because he and those around him recognised that the Work Programme

Fraser Nelson

Lawson: I would not have U-turned

I’m presenting Radio Four’s Week in Westminster tomorrow at 11am and discuss George Osborne’s U-turn with former chancellors Alistair Darling and Nigel Lawson (the latter pictured above when editor of The Spectator). I put to them that it is unwise for a chancellor to perform a U-turn because it undermines his credibility – a very precious commodity in such turbulent times. Darling said that the great risk is that Osborne doesn’t look like he’s in control. Lawson replied:   ‘That is my concern; that it might be thought that the main thrust of policy is no longer secure. And once the financial markets – let alone anyone else – think

Osborne’s double dose

As Isabel reported earlier, today’s public finance statistics contained a double dose of bad news for George Osborne. Not only did borrowing in May come in higher than expected at £17.9 billion — £2.7 billion higher than May last year — but the borrowing figures for the last two years were revised up as well. Before today, we thought the government had borrowed £136.8 billion in 2010/11 and £124.4 billion in 2011/12. Today, we learn it was in fact £140.6 billion and £127.6 billion respectively. That means we borrowed £3.2 billion more than we thought last year, and £11.6 billion more than the £116 billion Osborne told us we would

Isabel Hardman

Osborne borrows his way out of a debt crisis

This morning’s borrowing figures from the Office for National Statistics are a blow for George Osborne, showing public sector borrowing up £2.7bn on the same time last year. The stats show the government borrowed £17.9bn in May, while the 2011-12 deficit is now £127.6bn, up £3.2bn. Labour have seized on the figures, saying it’s the ‘nail in the coffin of David Cameron and George Osborne’s failed economic plan’. It’s worth remembering, though, that Labour would be borrowing even more in this Parliament than the Coalition is, with the Institute for Fiscal Studies estimating that under Labour, borrowing would be closer to £76bn in 2016-17 than the £26bn forecast in the

Fuel for a duel

Dear commuter, how’s your journey panning out after you were woken by the sound of Ed Balls politicking about fuel duty? The shadow chancellor was a ubiquitous presence on the airwaves earlier (to say nothing of the tabloid press), laying out his opposition to the planned 3.02p fuel duty rise. He was on fine form, playing the caring shadow chancellor with the ease that Andrea Pirlo takes penalties. The rise would be, he said, ‘a real own goal’. Families are struggling. We’re in a recession. The price of oil has fallen by 20 per cent since Christmas but that has not been passed on to the consumer at the pumps.

The Osborne question

There is a simple rule in Tory politics: do not cross Lord Ashcroft. There is little love between the Conservative leadership and Ashcroft, the man who sustained the Tories through the wilderness years but was left high and dry in 2010 during the furore over his tax affairs. Admiration curdled into contempt, epitomised by Ashcroft’s weighty critique of the Tories’ disastrous 2010 election campaign. Tax is back in the news and so, by chance, is his lordship. Ashcroft has written a short but devastating piece on the Tories’ present strategy. He writes: ‘It is depressing to hear that plans are afoot to paint Miliband as the Michael Dukakis of British

The pernicious myth of powerlessness

‘Corruption,’ wrote Edward Gibbon in his peerless Decline and Fall of the Roman Empire, is ‘the most infallible symptom of constitutional liberty.’ I was reminded of this phrase when thinking about the Eurozone crisis. Commentators present a dichotomy between the discipline of northern Europe and the frivolity of southern Europe, which is characterised by bureaucratic, judicial and political corruption. Brussels has already imposed technocratic governments on Italy and Greece, and seeks to force Teutonic virtues on those economies. Constitutional liberty is to be limited in the hope of eradicating corruption (both in a literal and figurative sense) in southern Europe. Unsurprisingly, this new imperium is not universally popular: witness the

A turning point in Greece? Think again

Things in Greece could have been worse after yesterday’s election, but that fact can’t be hailed as a ‘turning point’. Assuming that Greek political leaders form a coalition and push ahead with EU-mandated reforms, which is a very likely outcome given that Greece may only have enough cash in its coffers to soldier on for another month, any such government will inevitably include parties that completely disagree on how to resolve the crisis. The only glue would be the fear of economic catastrophe. This uneasy government would be ill-suited to withstand pressure from Syriza and the rest, who will spare no effort in blaming it for the inevitable economic pain.

Nick Cohen

Why are the unions frightened?

Labour has only ever won a general election from the autumn of 1974 onwards when its leader has been called &”Tony Blair”. Four other leaders tried, but they were not called &”Tony Blair,” and Labour paid the price. I find it hard to credit the left’s failure myself sometimes, and, equally, find it easy to understand how Labour supporters became riddled with self-hatred and self-doubt as they saw ‘their’ Blairite government in action. But it is going a bit far for Paul Kenny of the GMB to deal with the compromises of the past by calling on Labour to declare the Blairte think tank Progress an anti-party organisation and ban

Fisking Peston

How to explain the King-Osborne plan to pump more cheap credit into the economy? Robert Peston gave his explanation of last week’s Mansion House speech. Here, our occasional media correspondent, The Skimmer, gives his thoughts on Peston’s thoughts: Peston: The Bank is saying that, in a business-as-usual way, with no stigma attached and at a cheaper interest rate, it will provide the funds that till now it would only provide through its so-called discount window – which is where banks go to borrow in an embarrassing emergency. The Skimmer: Every other central bank in the world has been doing this as part of normal operations for five years now – this

James Forsyth

The worst of all possible worlds

The Greek election has, in terms of the Eurozone crisis, produced the worst possible result. If the Interior Ministry’s initial projections are accurate, New Democracy has come first. But it is hard to see how they can form a coalition given that PASOK, the party of the establishment left, have said they won’t go into coalition without Syriza, the anti-bailout party. PASOK’s ambivalence is understandable given that any party that goes in with New Democracy is likely to be wiped out at the next election. But the coming Greek stalemate is likely to make life particularly difficult for central bankers: do they act before tomorrow morning or wait for the