Economy

Anders Borg: Europe’s best finance minister

In the current issue of The Spectator I interview Sweden’s Anders Borg, perhaps the most successful conservative finance minister in the world — both in his economic track record, and the accompanying electoral success. His response to the crash was a permanent tax cut to speed the recovery. At the time, everyone told him it was madness. But Borg is unusual amongst finance ministers, in that he is a trained economist. To him, madness lay in repeating the formula of the 1970s and expecting different results. Last year, Sweden celebrated the elimination of its deficit. It’s perhaps worth mentioning a few other points which I didn’t fit into the interview.

The trade mission delusion

David Cameron has returned from what was a bit of a war-and-peace tour of East Asia. Taking arms dealers to Indonesia one day, posing with Aung San Suu Kyi the next. In today’s Sunday Telegraph he writes an almost-defensive piece about it all: ‘With the eurozone producing sluggish growth, we simply can’t rely on trade with Europe to generate the jobs and growth we need. We need to look south and east and do a much better job of winning business in places such as China, India, the Gulf, Africa and South America. That’s why I have been leading trade missions to some of the fastest growing parts of the world, including

Planet London

In his cover piece for this week’s magazine, Neil O’Brien describes the great divide between London and the rest of the UK. One of the main differences he highlights is in their economies. He says: ‘In inner west London, economic output per head is £110,000 a year. In an important sense, these people are not living in the same country as the inhabitants of Gwent or the Wirral, whose output is just a tenth of this.’ In fact, London is set apart not just from those two poorest areas, but every other area in the country. You see, the second richest area — Edinburgh — has an output per head

More poll woes for the coalition

You certainly don’t need polls to tell you that it’s been a bad couple of weeks for the coalition – but we’ve got them anyway. Pete noted on Sunday that the government’s approval rating was at its lowest since the start of this Parliament, and it’s actually dropped another three points since. Today’s YouGov poll finds just 21 per cent giving the coalition the thumbs up, against 64 per cent who disapprove. That’s almost identical to the 20-64 split YouGov found for Gordon Brown’s Labour government back in January 2010. The below graph shows how public opinion has turned against the coalition over the past two years: Today’s poll also

A question of motivation

Flitting through the opinion pages this morning, there’s one headline that stands out far more than any other. It’s on Charles Moore’s column for the Telegraph, and it reads, ‘Even I’m starting to wonder: what do this lot know about anything?’ What follows underneath is effectively a catalogue of the ‘small things’ that may accumulate and cause voters to question both the coalition’s motives and its ability. I’d recommend that you read the article in full, but here is one passage from it that deserves highlighting. It concerns Francis Maude’s jerry can line: ‘But now that I have heard the Conservatives’ private explanation, which is being handed down to constituency

Fuel for the political bonfire

Pasties and jerry cans — who’d have thought that yesterday’s politics would descend into a roaring debate about two such innocuous items? And still the hullabaloo goes on. Most of today’s front pages lead with one or both of the stories, although I’d say it’s the jerry cans that win out overall. Thanks to Francis Maude’s suggestion that ‘a bit of extra fuel in a jerry can in the garage is a sensible precaution to take,’ we’re seeing headlines such as ‘Pumps go dry as ministers provoke panic’. As with the pasty row, which James discussed yesterday evening, the political dangers of this stretch far beyond the actual matter at

The politics of pasties

The row over the so-called pasty tax is a proxy. It is really a row about whether David Cameron and George Osborne get what it is like to worry about the family budget each week.   In truth, I suspect that they don’t. But I think the same probably goes for Ed Miliband, Nick Clegg and the vast majority of journalists. Most of the politics of class in Westminster, as opposed to the country, is the narcissism of small difference.   The best thing the coalition could do now is hold its nerve. The Budget did reveal that support for it is shallow. But, as one leading pollster said to

Fraser Nelson

Revealed: the grey recovery

Are pensioners doing their bit for the recovery? The agenda of ‘intergenerational fairness’ has arisen in response to the idea that they are not, and ought to be taxed more. Daniel Knowles has made the case, in our cover story this week. Carol Sarler responds to him. In the leader, we reveal some data hitherto undisclosed: the way the oldies are responding to the recession. They’re working as never before — the below graph shows (stripping out foreign-born workers) the change over the past decade: Between 2001 and 2011, all the employment increase for UK-born people was from pension-aged workers, while working-age employment dropped. This challenges the idea of the

The borrowing behind Osborne’s Budget

Will George Osborne’s refusal to look again at high levels of state spending become the greatest risk to Britain’s economic stability? There have been plenty of rude comments about the Chancellor’s supposed tactical ineptitude in the weekend press, but he has still managed to keep on borrowing and have almost no one notice. Osborne’s iron commitment is to spending, and a programme of cuts which total just under 1 per cent a year. His commitment to deficit reduction is flexible, as his three Budgets have demonstrated: Osborne spent the election campaign berating Labour for its lack of ambition in halving the deficit in four years. He’s now doing it in

Osborne needs to speed up

Will the Budget make a difference? Nowadays, we have a quick and easy guide: Box 3.1 from the Office for Budget Responsibility — otherwise known as the ‘blind bit of difference’ test. Sure, Budgets can make your hot takeaway lunch 20 per cent more expensive and your cigarettes cost £7.50 a packet, but the question, in a recession, is whether any stardust can be found between its pages. Whether it will be do anything for jobs, the deficit or economic growth. The Budget nowadays is handed to the OBR in advance of publication and assessed for its impact on the economy. The verdict: speeding up the corporation tax cut (another welcome move, and brave

The IFS gives its Budget verdict

The Institute for Fiscal Studies’ briefing is always a good place to pick up a few interesting nuggets of detail about the Budget — and this year’s is no exception. Here are five of the most striking points from their presentation this morning: 1. Beyond the next election. In November, Osborne caused a stir by announcing that — in order to meet his fiscal target — further spending cuts would be needed after 2015. Annex A of the Budget gives some more detail on this, and the IFS has crunched the numbers even further. They calculate that the fiscal consolidation from 2009-10 to 2016-17 will total £123 billion and that

James Forsyth

Osborne hopes business will see past the bad headlines

Today’s front pages concentrate on the so-called ‘granny tax’, the surprise of the Budget. But the real test of this Budget is going to be whether it delivers growth. If it does, then it will make a Tory majority in 2015 more likely. If it doesn’t, then the decision to cut the 50p rate will become even more politically problematic.   Given that the Budget is fiscally neutral, this growth is going to have come from either the couple of supply side measures in the Budget or by finding a way to unleash those elusive animal spirits. Indeed, I think this desire to boost confidence is one of the main

The Spectator’s Budget briefing

What was really in George Osborne’s Budget? Last night we held an event, in association with Aberdeen Asset Management, to discuss just that. Click here for a free pdf copy of the briefing paper produced for the event.

Tory MPs welcome the Budget

George Osborne and David Cameron have just addressed the 1922 Committee of Tory backbenchers. They received the traditional desk banging reception and Tory MPs seemed in good spirits as they left the meeting. Interestingly, they were nearly all relaxed about the increase in the personal allowance, believing that they would get the credit just as much — if not more than — the Liberal Democrats. One told me that ‘the public view this as a Conservative government when things are going well and a coalition one when things are going badly’. Perhaps the biggest piece of news out of the meeting is that Osborne offered Tory MPs considerable encouragement that

Behind Osborne’s 50p tax change

How significant was this Budget? On an economic level, not very. There’s no discernible impact on growth: all of the main forecasts have more or less stayed the same since the Autumn Statement. Borrowing is the tiniest bit lower, mainly thanks to a £23 billion accountancy trick with Royal Mail pensions. And even many of the policies announced today will barely rouse the Exchequer’s attention. That cut in the top rate of income tax to 45p? It will mean only £100 million a year less in direct revenues. That stamp duty increase for properties worth over £2 million? It will net only £300 million a year. The overall effect is

Fraser Nelson

Twelve points about the Budget

There’s much to applaud in this budget, but as ever we in Coffee House are focusing on things jumping out from the small print. Here are a few things I’ve noticed so far. 1. Don’t mention QE. In his Pre-Budget Report, Osborne was candid about his economic policy: ‘fiscal conservatism, but monetary activism’. That is to say, fiddling about on the margins with taxes, while the Bank of England — 100 per cent owned by the Treasury — is midway through the largest QE experiment ever attempted in the developed world. It is impossible to understand Osborne’s economic policy, his Budget and those it affects without also considering the effects

The Budget: What you need to know

1. Growth. The OBR’s forecasts are essentially unchanged from the Autumn Statement, but nevertheless represent a much bleaker outlook than we were given a year ago:  2. Debt. Despite Osborne’s talk of ‘paying down the debt’, he’s actually adding to it — by 59 per cent over this parliament. He is, though, on course to meet his second fiscal rule to see the debt to GDP ratio falling by 2015-16: 3. Deficit. Ignoring the effects of transfering the Royal Mail pension deficit, there’s hardly any change to the borrowing forecasts since November. Progress on deficit reduction will be much slower than announced in Osborne’s first two Budgets: 4. Unemployment. The

Chinese whispers | 21 March 2012

China’s rumour mill, hyperactive even in the calmest of times, has been in overdrive in the past two days. Monday evening and early Tuesday in Beijing, the country’s Twitter-like microblogs were abuzz with speculation there could have been a military coup, possibly linked with the recent demotion of Communist official Bo Xilai. There hasn’t been a coup, nor is there likely to be. Crazy rumours swirl in China every day (though not always of this level of seriousness). It’s said that authorities are now banning the word ‘coup’ on microblogs.   The bigger issue for China is that its policy of controlling information, while trying to catapult itself into the

A fistful of questions on Budget morning

Thanks to Budget purdah, we’re all in the dark about what will be in George Osborne’s Red Book today. Oh, sorry, that’s wrong, don’t know what I was thinking. Truth is that, unless the Chancellor has some monumental surprises lined up, we’ve actually heard about much of the Budget in advance. We know, for instance, not just that he’ll cut the top rate of tax from 50p to 45p, but also — courtesy of Andrew Grice in the Independent today — the internal political slog by which he reached that decision. Thanks to the proclivities of coalition government, this has to be one of the most pre-briefed Budgets ever. There