Economy

The myth that George Osborne has held firm on his deficit reduction plan persists. When I was on Question Time last month, Alan Duncan said that Osborne may have changed some policies but he had not budged an inch from the deficit reduction programme. This was not a porkie; he genuinely believes this to be true. And even in today’s FT, economics editor Chris Giles describes the government’s strategy as ‘maxing out on stimulus measures, short of relaxing deficit reduction.’  In fact, Osborne tore up his deficit reduction plan ages ago, but to minimum press comment.   The single largest decision Osborne has taken since his first Budget was to

George Osborne has much to ponder this morning. First, there is the small matter of his evidence to the Leveson Inquiry later today (assuming that someone can check Gordon Brown’s loquacity), which will prove diverting for those who remain gripped by those proceedings. Then there is the larger matter of the £80bn Spanish bank bailout. Osborne has welcomed the rescue, arguing that the Eurozone must survive and thrive if Britain is to prosper. His analysis is that the crisis on the continent is impeding domestic recovery. Fraser argued yesterday that this is a half-truth which verges on being a conceit. A number of Conservative backbenchers share Fraser’s scepticism and they

The expectation in both Brussels and Whitehall is that this weekend will see a bailout for Spain agreed. It appears that a compromise which would not impose harsh external conditions, which is why Madrid has been rejecting offers of help to date, but would satisfy German concerns about bailouts simply encouraging reckless behaviour, is close to being reached.   But this does not mean that the Eurozone governments will be doing anything to get properly ahead of the crisis. Instead, they have decided to wait until after the results of the Greek elections before deciding what to do next.   The increasingly agitated statements coming out of Washington reflect a

Two bits of interesting news yesterday: 1. France – while the eurozone is in financial meltdown – is allowing some of its workers to retire early; 2. China – while the eurozone is in financial meltdown – is on a shopping spree, buying European assets on the cheap. Perhaps there we have, in a nutshell, the pattern of what is to follow in the coming months. Francois Hollande’s lowering of the pension age by two years to 60 applies to only a small class of workers, but it appears to be just the start of a slew of changes to employment laws — today, his government announced it would make

We’re all familiar with the eurozone boom-bust news cycle by now. First, there are reports of more European banks in trouble, then news of governments seeking bailouts, closely followed by speculation over the future of the euro. Then, as if to crown it all, there will be news that global political leaders and finance ministers are about to hop on planes to attend one G-Digit meeting or another. This time, as it happens, it’s the G20, in about a fortnight’s time, in Mexico.   With Spain in deep financial crisis, German banks downgraded by Moody’s, the US economy apparently stuck in a rut and the Chinese growth engine sputtering, are

Even as the Queen’s Diamond Jubilee BBC Concert rocked on outside Buckingham Palace (amid the slightly worrying news that the Duke of Edinburgh is in hospital), some bad economic news came in — rating agency Egan-Jones has cut the UK’s credit rating to AA-minus with a negative outlook, from AA. ‘The over-riding concern is whether the country will be able to continue to cut its deficit in the face of weaker economic conditions and a possible deterioration in the country’s financial sector,’ Egan-Jones said in its statement, according to Reuters. ‘Unfortunately, we expect that the UK’s debt-GDP [ratio] will continue to rise and the country will remain pressed.’ Egan-Jones is

The economy’s not looking terribly good, is it? Manufacturing has sunk to a three year low, rather worse than anyone expected — and the Eurozone crisis is only partly to blame. I note that our manufacturing sector now constitutes just ten per cent of the economy. One reason for this is that it has been starved of investment and the quantitative easing, as these monkeys call it, which will now be sprayed lightly in its general direction will do little to affect the overall trend, which is ever downwards. It seemed unlikely to me that we would ever see a clearer and more self-evident example of a political class being