Economy

Thursday

Tim Morgan

Cuts or spin?

Writing here on Tuesday, I made two accusations regarding the government’s deficit reduction plan. First, I said that cuts so far had been minimal. Second, I argued that higher taxation, rather than cuts in spending, was being used to reduce the deficit. On this basis, I said, government and opposition alike are being mendacious when they speak of ‘savage cuts’ in public spending. In reply, Matthew Hancock said that I was using the wrong periods for comparison. The government, which took office in May 2010, could not be held responsible for spending in 2010-11, so it was misleading for me to use Labour’s last year in office (2009-10) as my

Wednesday

Clarissa Tan

Metaphorical Merv

Mervyn King unfurled a mast of metaphors this morning. ‘We are navigating through turbulent waters, with the risk of a storm heading our way from the continent,’ he said. ‘We don’t know when the storm clouds will move away.’ The eurozone, he said, is ‘tearing itself apart’.   So poetic was his language — a rare gift in a central banker — that it almost made one forget the painfully prosaic nature of his facts and figures. Inflation, already at target-busting levels, will be much stronger than the Bank initially envisaged, remaining above 2.5 per cent for the rest of the year. That’s almost a whole percentage point higher than

Jonathan Jones

A part-time recovery

Today’s jobs figures show a 105,000 rise in employment and a 45,000 fall in unemployment, from the final quarter of 2011 to the first quarter of 2012. Welcome news, although both figures are within the margin of error, meaning we can’t say with confidence that employment is indeed higher or that unemployment is lower. But even taking the figures at face value, there’s another cause for concern: the rise in employment is coming in part-time, rather than full-time, jobs. First, let’s take a look at that total employment figure, which has risen 105,000 since the last quarter and 219,000 since the general election: Second, the number of full-time workers: As

Lloyd Evans Lloyd Evans

Cameron injects some anger into a playful PMQs

Strange mood at PMQs today. Rather good-natured. Like a staff awayday with both sides joshing each other for fun. A Tory from the shires, Pauline Latham (Con, Mid-Derbyshire), stood up in her best garden-party dress and made this lament: ‘My constituents are having a very difficult time at the moment.’ Labour MPs cheered like mad. They wouldn’t have done that before the local elections. Cameron and Miliband were in a similarly playful mood. After an enforced separation of two weeks they seemed almost glad to see one other. Ed Miliband charmingly conceded that today’s drop in unemployment was welcome. And Cameron welcomed this welcome from his opponent. Miliband then teased

James Forsyth James Forsyth

Cameron gets tough with the eurozone

Today’s PMQs will be remembered for one thing, Cameron saying that the eurozone had to ‘make up or it is looking at a potential break-up’. This is a distinct hardening of the government’s line on the single currency. Cameron’s comment was particularly striking coming just days after George Osborne said that ‘open speculation’ about whether or not Greece would leave the euro was ‘doing real damage across the whole European economy’. However those close to Cameron are not resiling from the remark. Instead, I understand that we can expect more from the Prime Minister on this subject when he makes a speech on the economy tomorrow. The break-up of the

Matthew Hancock-Mp

Let’s get real about the fiscal situation

Recently on Coffee House, and elsewhere, some people have been arguing that the deficit reduction isn’t happening fast enough. The latest, a paper from Tullet Prebon, argues that it’s wrong to say there are cuts. Its author, Dr Tim Morgan, reiterated its points on the Today Programme this morning. But it isn’t true — and the analysis itself proves it.   When this Government entered office, there was no credible plan to convince the bond markets that Britain was serious about dealing with its debts. So the new Coalition accelerated the pace at which the structural deficit was to be eliminated.   Some on the right and left disagree with

Tuesday

Clarissa Tan

Basel III and the EU’s strange desire not to compete

Greece is the centre of European attention, but as George Osborne met with other EU finance ministers today there was another issue bubbling in the background — Basel III. This had been brewing for a while and is yet one of those matters that threatened to isolate Britain from the rest of the EU (though some would argue this is a good place to be). The Chancellor this morning appears to have agreed to the Basel III accord, which stipulates the amount and quality of capital that banks are required to keep. But this was after much haggling — and an Osborne outburst where he said signing on to the

Peter Hoskin

The staring contest over Greece

Now that negotiations have broken down in Athens, and there will be another election, we face the prospect of an almighty staring contest. On one side, the Eurocracy, who will be urging Greek political parties — and particularly the left-wing coalition Syriza, which is ahead in the polls at the moment — to soften their anti-austerity stance. On the other, the Greek politicians, who might be hoping that the eurozone relents to some extent, and allows the cuts to be decelerated. The question is: who will blink first? As it stands, it’s difficult to come up with an answer. The leader of Syriza, Alexis Tsipras, is unlikely to blink over

Tim Morgan

How Britain is using spin to con the bond markets

Austerity, austerity, austerity. The A-word is cropping up everywhere at the moment, whether in France or Greece or Germany. And the UK isn’t immune from it either. If there is anything on which Britain’s political factions agree, it is the reality of fiscal austerity. Whether it’s Ed Balls banging on about ‘too far and too fast’, or the coalition saying that their programme of painful austerity is essential if the UK is to defend its triple-A ‘safe haven’ status, this is something on which our political class has reached consensus.   But, as we at Tullett Prebon argued in a briefing paper yesterday (available here as a pdf), the tale

Peter Hoskin

Greece is still the word

Remember when Europe’s leaders were basically saying, ‘Don’t worry, it’s all sorted’? Remember when they were putting out communiqués that started ‘The euro continues to rest on solid fundamentals’? No doubt they’ll do so again, but those past shows of certainty still look kinda funny this morning. Despite some last-minute concessionary efforts by Europe’s beancounters, it still appears that Greece’s main parties will be unable to form a coalition, and are heading for another election. And we know what that could mean: victory for the left-wing Syriza coalition, a severe swing against austerity, Greece’s exit from the euro, etc. etc. Were Greece to leave the currency, two questions would present

Monday

Ken Tindell

The Chinese lantern is dimming

Does anyone believe Chinese GDP figures? Officially, the economy is roaring at 9 per cent a year. But thanks to WikiLeaks we know that Chinese Politburo member Li Keqiang thinks that the official GDP data is ‘for reference only’ — and that if you want to know how fast China is growing you should look at electricity consumption, rail cargo volume and bank lending etc. So today’s announcement of China’s electricity consumption figures for April showing a year-on-year growth of 3.7 per cent is quite significant. This is growth beyond George Osborne’s wildest dreams, but by recent Chinese standards is pretty paltry. Last year China’s electricity consumption grew 12 per

Sunday

Sebastian Payne

Pickles struggles for an answer on growth

The government is desperate for economic growth but where can it find it? This was the question posed to Eric Pickles on the Sunday Politics today, but sadly he was unable to provide much of an answer. The Communities and Local Government secretary gave a blustering interview, where he reaffirmed William Hague’s view that ‘growth will come from government creating conditions for us to work a little bit harder.’ But when pushed by Andrew Neil on what this (slightly condescending) idea actually means, Pickles jumped on the chance to blame Labour for the ‘something for nothing culture’. Pickles did add that the government’s chosen sources of prosperity are business investment

Tuesday

Fraser Nelson

Lies, damned lies, debt and Nick Clegg

Does it matter if the Prime Minister and his deputy mislead the country about what they are doing to the national debt? Neither of them seem to think so, if today’s Essex Relaunch today is anything to go by. First, Cameron: ‘The problems of over-spending and too much debt can’t be solved by even more spending and even more debt.’ He chose his words for consumption by the ordinary voter, the factory workers who formed his backdrop. Who, listening to that, would guess what Cameron and Clegg are doing with the national debt? Clegg, I’m afraid, went far further and suggested that the debt was being eliminated. ‘I think we

Monday

Peter Hoskin

Can Merkel and Hollande meet in the middle?

This afternoon, it’s even clearer that the French and Greek elections are a significant moment in the life of the Eurozone. It’s not just the nervous market reaction to yesterday’s results, but also the way how the supranational debate has now changed. More so than ever, there are now two clear oppositional fronts. On one side, broadly speaking, are those who say that austerity is a prerequisite for growth. On the other, those who say that austerity must be relaxed for growth to arrive. It’s a situation dripping with black humour. When David Cameron kept Britain out of Europe’s fiscal pact a few months ago, it was portrayed as a

James Forsyth James Forsyth

Cameron faces a political storm

For the Cameroons, the political weather at the moment is about as appealing as the prospect of a Bank Holiday trip to the beach. The Tory party is having a very public debate about its future strategy. The Alternative Queen’s Speech being promoted by David Davis, John Redwood and Tim Montgomerie is a reminder of how vocal the leadership’s internal critics are prepared to be. The worry for Cameron has to be that there is this much sounding off just two years into the coalition. One wonders what it will like be a year from now. If this was not enough, Thursday and Friday promise to bring excruciating details of

Fraser Nelson Fraser Nelson

Hollande, Cameron and the 21st arrondissement

While David Cameron has good cause to be glad of Sarkozy’s defeat, he has even better cause to be nervous about this trend of lefty nerds being elected. Much of the Cameroon’s re-election hopes are pinned on the idea that their boss will trounce the geeky Ed Miliband. Nowadays, the argument goes, these ex-special advisers who have no charisma and alarming leftist policies just don’t win modern elections. But, as Ben Brogan argued in the Telegraph last week, the French may well be about to prove that even dullards can get elected — if the incumbent fails to deliver the change he promised. At least Hollande says he’ll balance the

Sunday

James Forsyth

What Hollande’s victory means

Tonight’s election results mark the next challenge to the euro. In France, the Socialist candidate François Hollande has won. Having campaigned on changes to the fiscal compact, Hollande will have to deliver something on this front. But Angela Merkel, with her own elections next year, will not want to agree to anything that appears to be a watering down of the pact. I doubt, though, that there’ll be that much market reaction to Hollande’s victory. City sources say that it has been priced in for while and that there is an expectation that Hollande will merely accept some window-dressing about growth being added to the agreement. But what could set

Peter Hoskin

Balls wants you to trust him

It’s only ten days or so since Ed Balls was last quizzed by Andrew Neil, but there he was rehashing many of the same lines on the Sunday Politics today. Among the things that stood out was this: the shadow chancellor’s argument on the public finances is ever more cleaving into two halves. First, he accuses George Osborne of borrowing £150 billion more over this Parliament than originally planned. (Although there’s a detail that often, conveniently, gets obscured: namely, that borrowing is still going down year-on-year under Osborne’s plan). Second, that Balls’s plan would decrease borrowing in the medium-term even though it would increase spending and reduce tax revenues in

James Forsyth James Forsyth

Osborne brings it back to the economy

It wasn’t, as expected, Nick Clegg on Marr this morning but George Osborne as the coalition attempted to move the argument back onto the economy. Osborne kept stressing that the government would focus on the things that ‘really matter’ to people; code for we’re not going to spend too long on Lords reform. Indeed, given that Nick Clegg has turned down a compromise on that, we now appear to be heading for — at most — a referendum on the subject. Osborne defended his deficit reduction programme, arguing that the lack of growth was a result of the Eurozone crisis and the oil price spike. But he did concede that

Thursday

Clarissa Tan

Mervyn’s mini mea culpa

The newspapers and internet today are full of headlines about Mervyn King admitting the Bank of England was ‘late to the game’, and that central bankers should have ‘shouted from the rooftops’ regarding the financial blow-up. It’s true, the BoE governor did make these ‘mea culpa’ remarks — but they came rather half-heartedly, and couched within a radio lecture that seemed to point even more fingers at other parties.   King was giving the Today Programme Lecture 2012, which he addressed to a Radio 4 theatre audience yesterday evening. Early in the half-hour speech, he gave an anecdote from 1997, in which then-governor Eddie George and him, Merv, celebrated Gordon