Economy

Tuesday

Peter Hoskin

Russia looms significant across 2012

The Christmas weekend was, I’m sure you noticed, rich with political incident. And yet, from continued turbulence in the Middle East to continued turbulence in Chris Huhne’s career, few things stood out as much as the protests against Vladimir Putin in Russia. They were, by most reasonable estimates, the largest in that country since the fall of the Soviet Union. And they add to the wave of disgruntlement that has been swelling since even before this month’s disputed parliamentary elections. The wave, of course, hasn’t broken yet. But few seem sure about how far it will travel and how much change it will wreak. The best article I’ve read on

Thursday

Jonathan Jones

The rising cost of Christmas dinner

While we’re talking Christmas, how about this release from the Office for National Statistics today? It reveals how the cost of certain ‘Christmas shopping basket’ items has risen over the past year. We’ve put them into a table below — but let’s just say, you might want to start stocking up on carrots.

Tuesday

James Forsyth

Why ‘starving the beast’ may not work

Steven F. Hayward’s audit of the state of American conservatism, which David Brooks judges to be one of the best magazine articles of the year, argues that the Reaganite ‘starve the beast strategy’ has failed to halt the growth of government. Hayward writes: ‘Thirty years after the arrival of the Reagan Revolution, government is bigger than ever. The Reagan years appear to have been little more than a mild speed bump in the progress of ever-larger government. The regulatory state advances relentlessly on every front. The soaring national debt threatens economic oblivion sooner or later. In short, the Reagan era, for all that was accomplished, was not an analogue to

Peter Hoskin

Another fine mess at HMRC

Today’s report by the Public Accounts Committee hasn’t so much been released as detonated onto the Westminster scene. The Exchequer is owed around £25 billion, it suggests, from major companies that have been handled too leniently, or just plain wrongly, by HM Revenue & Customs. And much of the blame is attached to Dave Hartnett, the outgoing civil servant in charge of revenue collection. Interviewed on the Today Programme earlier, the chair of the committee, Margaret Hodge, implied that Hartnett had too ‘cosy’ a relationship with big business. She went on to add that, ‘you’re left feeling that the sort of deals that are made with big business — “sweetheart”

Monday

James Forsyth

The latest act in Europe’s comic opera

If it was not all so serious, the efforts to save the single currency would be worthy of a comic opera: the Germans could compose the score, the Italians could write the libretto, and the French could take care of the stage directions. The latest IMF-related effort is, perhaps, best described by the website ZeroHedge, which is required reading during these troubled times: “Germany will be responsible for €41.5 bn, France at €31.4 billion, and Italy will need to provide €23.5 billion and Spain another €15 billion. To, you know, bailout Italy and Spain” What is becoming increasingly clear, when you take this news combined with the comments of the

Ed Holmes

Obsorne’s banking reforms are only the start of a solution

‘The most far-reaching reforms of British banking in modern history.’ That’s how George Osborne called it in Parliament this afternoon, in a statement that contained few surprises. What the government’s doing, in large part, is to follow exactly the recommendations contained in September’s Vickers Report. But is that really as far-reaching, or as radical, as the Chancellor would have us believe?   Certainly, many of these reforms are encouraging: measures such as ‘bail-ins’ and ‘living wills’ should facilitate the orderly winding-up of insolvent institutions, and reduce the necessity for taxpayer bailouts. But other parts of the government’s reform package are less convincing. For instance, additional capital buffers and reductions in

Mats Persson

Rudd’s straw man argument about our EU membership

As the isolation hysteria over Cameron’s EU veto starts to fade, attention is now shifting to the more existential question of what kind of relationship the UK should have with Europe. In a piece for today’s Times (£), the chairman of Business for New Europe, Roland Rudd — who, incidentally, used to argue passionately in favour of the UK joining the euro — takes aim at those who want Britain to replicate a Norway-style model of European cooperation. Arguing that Norway endures so-called ‘fax machine diplomacy’ — no influence over EU laws that it must nonetheless accept — Rudd says that ‘the choice now is to do what Norway does,

Peter Hoskin

The coalition tees up its banking reforms

That was easy. Only a few months after Sir John Vickers released his final recommendations for reforming the banking sector — and after much less intra-coalition struggle than we might have expected — the government is set to announce that it will adopt them ‘in full’. Vince Cable revealed yesterday that he and George Osborne have reached common agreement on the matter. And, for his part, Osborne will appear before MPs today with further details.  As Robert Peston has already explained, ‘in full’, in this case, doesn’t quite mean 100 per cent — but it’s close. The main proposal to ringfence retail banking off from riskier investment banking will be

Friday

James Forsyth

Clegg rebukes French PM

Normally, ‘read-outs’ on telephone calls between members of the British government and their counterparts overseas are fairly bland affairs. But today’s one on a conversation between Nick Clegg and the French Prime Minister Francois Fillon is an exception to this rule. Clegg, we are told, informed the French PM that ‘that recent remarks from members of the French Government about the UK economy were simply unacceptable and that steps should be taken to calm the rhetoric.’ To be sure, there is some more diplomatic language before and after this (the full text is at the bottom of this post) but the willingness of the deputy Prime Minister to be quite

Peter Hoskin

Miliband is trapped in his own foggy argument

With one well-timed jab in PMQs, David Cameron turned much of this week’s political debate – in domestic terms, at least – into a debate about Ed Miliband’s leadership. And how is Miliband responding? Predictably, for the most part. His celebratory speech in Feltham and Heston this morning reduced down to the claim that the result ‘offers a verdict on the Government’s failed economic plan’. And his interview in today’s FT covers much of the same territory. But the FT interview is also revealing in one particular regard: it demonstrates, once again, how Miliband is caught in a strange, undefinable strategy somewhere between attack and defence. This was, if you

Thursday

Fraser Nelson

The growth script still needs writing

The Times is being a bit harsh on Cameron in its leader this morning. ‘On the economy’, it says, ‘Cameron has contracted out policy to George Osborne and then followed the usual (although not invariable) practice of postwar prime ministers of supporting his Chancellor’s decisions. But he has not added to this a convincing contribution of his own.’ Yes, Cameron has not done very well articulating his government’s growth policy. I’ve also noticed that he is not much good at describing the Loch Ness Monster and for the same reason. Unconfirmed rumours of its existence whirl around now and again. Grainy photos of something supposed to be a UK growth

Wednesday

Mats Persson

26 versus 1 — really?

Judging from much of the coverage in UK media, you would be forgiven for thinking that Britain is on the fast track to becoming the North Korea of Europe — eccentric and completely isolated from the rest of the world. Indeed, the media narrative over the past couple of days has largely treated the agreement reached at the summit as concrete, supported in full by everyone apart from Britain. Or ‘27-minus’, as Commission President Jose Manuel Barroso put it. The reality, of course, is quite different. Leaving aside whether Cameron could have played his cards better (he could have), as Gideon Rachman pointed out in yesterday’s FT, ‘the picture of

Tuesday

Peter Hoskin

Inflation down, but the squeeze goes on

Has Mervyn King’s downwards trend in inflation, promised for over a year now, finally arrived? After all, going by today’s figures, inflation has now dropped for two months running. CPI inflation is at 4.8 per cent, and RPI is at 5.2 per cent. What’s more, we can expect them to fall even further once the effect the VAT rise is removed in January: But I wouldn’t get too excited just yet, CoffeeHousers. Sure, most forecasters have inflation going down from here into the foreseeable future — but, don’t forgot, we’re still being subjected to pretty high inflation, with CPI over double its target level. And, crucially, even by the OBR’s

Sunday

Daniel Korski

The government’s Sarkozy problem (and other euro dilemmas)

This week’s European Council meeting has been analysed by diplomats and commentators alike, but a number of issues have not been brought out as clearly as they need to be. The first is that Britain will now achieve political advantage, at the cost of economic setback, if the euro collapses. Although the government insists both that it is still wedded to the success of the euro and that it will not be isolated in Europe now or in the future, the simple fact is that eurofailure will ensure that efforts to organise among the 26, rather than the full 27, will finish. The economic costs would be considerable — possibly

Saturday

Mats Persson

Ten myths about Cameron’s EU veto

The EU veto that Cameron pulled in the early hours of Thursday morning has been widely misunderstood on all sides. Here are the 10 most common myths: 1. Because of Cameron’s veto, Britain lost a seat at the negotiating table. Not true. The UK was never itself going to take part in the Merkozy pact (and potentially be subject to EU sanctions), and therefore not in the monthly, parallel EU meetings that will begin in January, either. Even if he had approved the Treaty changes, Cameron still would not have had a seat at the table. Wider political challenges aside, the veto didn’t change anything structurally in terms of UK

Fraser Nelson Fraser Nelson

Britain and isolation

The word ‘isolation’ is used a lot in today’s newspapers, as if Cameron walking away from the ongoing EU implosion were a self-evident disaster. Pick up the Guardian and you see Britain cast as a leper, a status conferred on her thanks to a tragic miscalculation by a Prime Minister whose sole aim was to assuage his swivel-eyed Tory MPs and get back on Bill Cash’s Christmas card list. Orwell would have great fun with the language that accompanies the Euro project: trying to suck up to its tiny elite is seen as a country being outward looking. A PM more focused on the people who sent him to office is

Friday

Fraser Nelson

A dozen questions for after the Brussels summit

Cameron will be depicted in tomorrow’s press as either a Tory Boudicca or an Essex Bulldog (© Tristram Hunt), depending on your point of view. I suspect the truth is somewhere in between. Cameron did not go in swinging a handbag, although it will suit No10 to make out that he did. But Labour’s caricature of him storming off and wasting the veto certainly doesn’t ring true to me. An EU27 deal was never likely, and EU17 deal always was. Cameron, on their account, just seems to be being blamed for what was going to happen all along. In any case, we are still trying to assemble the pieces of

Peter Hoskin

The Merkozy Plan fails to convince

A day or so ago, the markets were rising in anticipation of what might be achieved at this Brussels summit. But this morning they’re mostly either unmoved, or — as in the case of borrowing costs in Italy and Spain — shifting in unpropitious directions. No-one, it seems, has been won over by yet another night of political bargaineering in Brussels. And understandably so. None of the measures mooted this morning are particularly concrete; all have a sogginess about them. More cash will be transferred to the European Financial Stability Facility, but it’s still some distance short of the €1 trillion that was, ahem, ‘announced’ at the end of October.

Wednesday

David Blackburn

Cameron’s plan

Much ado about a Cabinet split over Europe this morning. The Financial Times has interviewed Ken Clarke, whose europhile instincts are well known — something he shares with the senior Lib Dems. Clarke tells his eurosceptic colleagues not to expect powers to be repatriated from the EU at Friday’s summit. Meanwhile, David Cameron has written a piece in today’s Times (£), reiterating that he will veto any treaty that damages British interests. He also says that his ‘requests will be practical and focussed’. And therein, apparently, lays the split. The word ‘requests’ might open the possibility of repatriation. Cameron appears to be hedging his bets ahead of Friday’s summit, lowering his more

Monday

Fraser Nelson

The New York Times’ austerity myth

Yet again, the New York Times fact-checkers seem to have taken the day off. The newspaper yesterday printed an editorial about British economic policy which contained basic errors – identical to those made in a blog which Paul Krugman bashed out last week. It’s worth fisking a little, because Krugman appears to be using the newspaper to create an austerity myth. ‘A year and a half ago, Prime Minister David Cameron of Britain came to office promising to slash deficits and energize economic growth through radical fiscal austerity. It failed dismally.’ This is right, insofar as there was no austerity. The below shows current spending, for every month since the