Economy

Monday

Clarissa Tan

Euro-zonked

Well, so much for that. The FTSE 100 fell as much as 1.7 per cent this morning, while overnight the euro and Asian stock markets tumbled, after Europe’s leaders announced their grand 2-trillion-euro plan over the weekend to drag the Eurozone out of the mire. It appears the markets are well past the point of believing that political leaders can get us out of this mess. The consensus is that the plan is not concrete enough. Of course, equities may recover a bit later, as they have been prone to do in past days. But the whipsawing itself is the worst sign of all; stock investors and retail-end funds are

Fraser Nelson Fraser Nelson

New Balls?

Given that Ed Balls’ strategy has backfired on his party so far, with Labour ten points behind the Tories on economic credibility, something has to change. Either the policies, or the shadow chancellor. Read between the lines of Balls’ speech today, and you can see a man backtracking – and trying to hold on to his job. Even when Balls tells porkies, he does so with imagination and élan. He is always worth listening to. He had the 8.10am slot on Today this morning. Here’s what jumped out at me: 1) Mea Culpa, kinda. The other day in the Commons, Balls said sorry – you could tell then that it’s

Sunday

Fraser Nelson

Miliband: cuts are okay now

I’ve just caught up with Ed Miliband on Marr this morning (transcript here) and his aim seemed to be burying Ed Balls’ complaint about cuts being too fast and too deep. In its place, he called for more growth. Here’s my take on his interview: 1) He doesn’t complain about cuts.  “The basic message is this: we’ve got to cut the deficit, but the best and most important way of doing that is to grow our economy… A year ago there was a contested argument whether the government strategy should work. It’s not working.” You don’t hear him talk about Ed Balls’ “too hard, too fast” cuts, just a reference

James Forsyth James Forsyth

Miliband’s growing argument

Ed Miliband turned in a crisp performance on the Andrew Marr show this morning. If he is having media training, it is paying off. In a clear sign of where Labour’s economic policy is heading, he constantly stressed that growth was the key to getting the deficit down. But he was far less clear on how he would stimulate the economy beyond a proposed cut in VAT. Miliband was also asked about his proposal to cut tuition fees to £6,000. I’m not convinced by the politics of this move. It leaves fees in place and raises them from where they were under the last government which is hardly a radical change or

David Blackburn

Leadership at last?

Most of today’s papers carry reports of a deal to relieve the European sovereign debt crisis. The details are varied, but it seems that 50 per cent of Greek debt will written off and the currency will be allowed to remain within the single currency. This means that banks that are exposed to Greek debt will incur potentially ruinous losses. The EFSF mechanism will probably be extended to cover those losses and guard against contagion. Estimates vary, but it seems the fund will have to increase to somewhere around 2 trillion euros if the mounting crises in Italy and Spain are to be contained. Britain’s exposure remains unclear at this

Saturday

David Blackburn

Searching for an alternative

The Labour conference has started badly for Ed Miliband, with David Blunkett criticising the party for allowing the Tories to define the national economic debate. Blunkett was concurring with shadow foreign secretary Douglas Alexander’s view that the Tories had been successful in “framing a public language that made more sense of the economic crisis”. To be fair to Miliband, he made the same point in his recent interview with the New Statesman, but he is yet to provide a coherent or credible alternative to the government’s policies. So, inquiring eyes turn on Ed Balls (and today’s Mail relates another alleged tale of his part in our economic downfall). The shadow

Clarissa Tan

Obama’s new best buddy – Warren Buffett

The politics of ‘get the rich’ is going global and even the rich are joining in. While few countries have adopted the equivalent of Britain’s 50p tax, many are baring their teeth at the very well-off. In America, this is now being done by an unlikely alliance between Barack Obama and Warren Buffet. The billionaire investor is allowing his name to be appended to Barack Obama’s new tax-the-rich-more policy, which apparently follows the ‘Buffett Rule’. The Buffett Rule, which draws its basic principle from an op-ed Buffett wrote for the New York Times, is this: people making more than $1 million a year should pay a tax rate that’s at

David Blackburn

Medvedev clears the way for Putin

President Dmitri Medvedev has named his successor: one Vladimir Putin. Reports from Moscow say that Medvedev will step aside and support the man he succeeded in elections next March. This turn of events is not particularly surprising and Putin is a certain victor: as Pavel Stroilov revealed on Coffee House last week, Putin has been practicing that singularly Russian art of eliminating the opposition. Stroilov also warned Western governments against falling into Putin’s embrace. Russia is forecast to grow very quickly in the next 30-odd years, retaining its spot in the G7 according to PwC’s recent research paper, The World in 2050. Developed countries will covet those burgeoning resources; but,

James Forsyth James Forsyth

Hard Labour

The sense of unreality that hangs over party conference seems particularly heightened this year. As events outside roll on at a dramatic pace, the conferences try to proceed as normal. A new law on stalking may be necessary but it is small beer compared to the economic crisis gripping the Western world at the moment. Ed Miliband’s challenge in the next few days is two-fold. First, he has to work to restore Labour’s economic credibility—something that will be made even harder by today’s allegations about the role of his shadow Chancellor in the last government. Second, he has to show that the party gets the seriousness of this moment. Miliband,

Fraser Nelson Fraser Nelson

Read my lips: no new tax cuts

There are still rumours in Westminster that David Cameron will cut taxes to stimulate the economy, but the speech he gave to the Canadian parliament on Thursday rather scotches this idea. Here’s what jumped out at me 1) No Obama-style deficit-financed tax cuts, please, we’re British. “The economic situation is much more dangerous and the solution for most countries can not be simply to borrow more. Because if the government doesn’t have the room to borrow more in order to cut taxes or increase spending, people and markets start worrying about whether a government can actually pay back its debt. And when this happens confidence ebbs away and interest rates

Friday

Fraser Nelson

Is Osborne ready for the next crisis?

There is a strange pre-Lehman feeling in the air right now: the idea that something awful is going to happen, but no one knows what or when. This is laden with political ramifications. The problem for the Tories last time was not that George Osborne had been caught aboard HMS Deripaska. The greater problem was that a crash had arrived and the Shadow Chancellor had nothing to say. Brown, at least, seemed to have an agenda, and the Tory poll lead was reduced to one vulnerable point. I admire Osborne, but he can do far better in making the case for the government’s economic strategy. If there is a second

David Blackburn

Corporatism, comms and civil servants

David Cameron renewed his calls for global action for growth last night and it seems that the work begins at home. The Times reports (£) that 50 of Britain’s largest companies will be given direct access to ministers and officials. Corporate bodies will be designated an “account director”, who, despite what that title might suggest, is a cabinet minister rather than a junior advertising exec. The scheme is not yet finalised, but it seems that the labour will be divided thus: ‘Vince Cable, the Business Secretary, will act as what officials are calling “an account director” to Britain’s oil and gas giants Shell, BP and BG. David Willetts, the Universities and

Thursday

David Blackburn

Cameron’s foreign frustrations

David Cameron’s much trailed speech to the UN is tinged with frustration. He will say, “You can sign every human rights declaration in the world but if you stand by and watch people being slaughtered in their own country, when you could act then what are those signatures really worth? The UN has to show that we can be – not just united in condemnation, but – united in action acting in a way that lives up to the UNs founding principles and meets the needs of people everywhere.” That seems to be a fairly thinly veiled reference to the global community’s indifference to oppression in Syria. The lack of action

Wednesday

James Forsyth

The Lib Dems’ long-term assault on Labour

Listening to Nick Clegg’s speech today, there was little doubt which party he’d rather be in coalition with. There were some coded slights at the Tories’ expense—the emphasis on how the Lib Dems had been ‘fighting to keep the NHS safe’ and his commitment that the Human Rights Act was here to stay—but they were nothing compared to the full frontal attacks on Labour. Clegg derided Miliband and Balls as the ‘backroom boys’ before warning the country to ‘never, ever trust Labour with the economy again.’ This line reveals something very important, the Lib Dem leadership believes that the more the economy is in trouble the more important it is

David Blackburn

The strange case of the extra £5bn

Strange things are happening between Whitehall and Birmingham. After the IMF downgraded its growth forecast for Britain yesterday, the BBC reported that some government were considering spending an additional £5bn on capital projects: transport links, broadband, housing and so forth: as a stimulus to ward off possible recession. The implication was that the Liberal Democrats were in favour of changing Britain’s economic course and the Conservatives were not. Chris Huhne appeared on Newsnight and quashed the story (30 mins – 33 mins). He said he didn’t recognise the £5bn figure and said there was “no such plan”, but conceded that the government would have to be “imaginative and creative…to get

Tuesday

Matthew Sinclair

Huhne, the Lib Dems’ black comedian

Today we got the black comedy follow up to Sarah Teather’s stand-up routine.  Chris Huhne is going to drive down our energy bills! For those of us wondering how families and businesses can afford his expensive climate policies, it is a bit of a joke. The basic issue – as I set out in the new book Let them eat carbon – is that we need to invest an absolute fortune to meet the range of environmental targets that the government has put in place. Citigroup estimated last September that we need to invest about €229 billion (about £200 billion) in the energy sector this decade.  That is far more

David Blackburn

Italy in the firing line

Markets sank into negative territory this morning, following Standand&Poor’s downgrade of Italy’s credit rating. (Although they have since recovered.) The agency cut Italy’s rating from A+/A-1+ to A/A-1; it also kept its outlook as negative. The agency’s reasoning is hardly surprising: growth is negligible, debt is unsustainable and Silvio Berlusconi’s inert government appears incapable of arresting the crisis. Frail economics and supine politics, those twinned threats to prosperity, have struck again. The implications to the Eurozone, and the world economy, are obvious. An economist in Nomura’s Sydney office told Reuters, “It only adds to the contagion risk over Greece and has encouraged the flight to safety in markets here.” Over

Monday

David Blackburn

Europe looms its head to threaten the coalition and the Tories

The Telegraph’s splash on Europe indicates that the issue, which proved so toxic to the last Conservative government, has risen again. Writing a stern op-ed for the paper, serial rebel and anti-Cameroon Mark Pritchard calls for a referendum. This will have irritated Downing Street no end, which is understood to have hoped that the whip-sanctioned Eurosceptic grouping that has formed around George Eustice might have contained the party’s factious elements. But some disgruntled MPs on the right privately say that last week’s well attended meeting of Eustice’s group turned into something of a disappointment. The insistence that an exit from the EU was off-limits for the moment was apparently met

Fraser Nelson Fraser Nelson

JFK: a tax-cutting headbanger

Given that Vince Cable was once a lecturer in economics, it’s odd to see him feign ignorance over its basic concepts. Listen to his speech today.”There are politicians on both left and right who don’t [get it]. Some believe government is Father Christmas. They draw up lists of tax cuts and giveaways and assume that Santa will pop down the chimney and leave presents under the tree. This is childish fantasy. Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear.” It’s perhaps worth quoting one such ‘childish’ politician who was articulating this long before Art Laffer doodled on a cocktail napkin. In 1962, John F

James Forsyth James Forsyth

Vince Cable paints the world grey

Even by his own standards Vince Cable’s speech today was noticeably pessimistic. The Business Secretary warned that the post-war cycle of ever-rising living standards has been broken by the crash. There was little in what he said to suggest that he has any optimism about the prospects for growth over the next few years. If Cable’s analysis is correct — and it is shared, at least in part, by several Tory Cabinet ministers — then the politics of the next few years will look very different than we expected. The initial post-election Tory hope of running a ‘It’s morning in Britain again’ campaign in 2015 now seems like a distant