Economy

Friday

David Blackburn

EU bans Syrian oil imports

The EU has banned imports of crude oil from Syria. This is being touted as a major success for the EU, displaying the ability of governments to act collectively. Oil sanctions on Syria should, theoretically, impede President Assad: 95 per cent of Syria’s oil is exported to Europe, worth roughly £3bn a year. Germany and Italy are the premier destinations. This is a welcome move against a brutal tyranny, but the embargo is not the total success that it might have been. Italy was stalling earlier in the week, trying to defer the deal’s implementation until 30th November 2011, when existing contracts expired. Other European countries were pushing for a more

James Forsyth James Forsyth

Lagarde sets about the Eurozone

When Christine Lagarde took over the IMF top job, it was widely assumed that she would simply continue her predecessor’s policy of almost unconditional support for Eurozone bailouts. But Ken Rogoff, the IMF’s former chief economist, has detected a hardening in the IMF’s approach. He thinks that Lagarde’s call for, as he puts it, “forced recapitalization of Europe’s bankrupt banking system” signals a new, tougher approach towards the euro-zone. As Rogoff says, the IMF’s previous approach to the euro-zone simply wasn’t credible. The idea that Spain was really at no more risk of a default than Germany was risible. But, as Rogoff argues, there won’t be a full restoration of

Justin Marozzi

Libya’s next battle

Tripoli Two months ago Mazin Ramadan, senior advisor to Ali Tarhuni, the oil and finance minister recently promoted to deputy prime minister, was, in his own words, fire-fighting a liquidity crisis in Benghazi. Today, after the first tranche of the £1.8 billion frozen Libyan dinars sitting in Britain finally reached Libya after five months, he’s feeling more relaxed. It arrived in the nick of time. Another reason for his bonhomie? He says he’s just received $300 million in frozen assets released by the US. The most immediate challenge is tomorrow. Literally. The million dinar question is whether Tripoli goes back to work on Saturday. On paper it’s the first day

Thursday

Jonathan Portes

Right to reply: The impact of immigration on the labour market

Yesterday, we introduced our new “Right to reply” series, where outside writers take on some of the ideas and arguments raised on Coffee House. In that case, it was the IPPR’s Matt Cavanagh replying to Fraser’s recent post on immigration and the labour market. Here’s another reply to the same post, this time by Jonathan Portes of the National Institute of Economic and Social Research: Myths abound when it comes to the effect of immigration on the labour market — and the most damaging of these is that most or all “new jobs” go to migrants. Although I agree with Fraser Nelson’s general views on immigration, he is misleading on this one point.

Dennis Sewell

Punish the rich, hurt everybody | 1 September 2011

This week’s issue of The Spectator, out today (and available for only £1 an issue here), dwells on the new anti-rich mood in Westminster. James will have more on his cover piece later, but here’s the accompanying article by Dennis Sewell to get the debate flowing: The Bible tells us that the poor will always be with us, but there is no good reason, and certainly no scriptural authority, to support the widespread belief that the rich will be too. As capital has become more mobile, slipping across fiscal boundaries at the snap of an enter-key, so too have its owners, who are today only a Gulfstream ride away from

Wednesday

James Forsyth

Cameron and Osborne wary of Vickers’ banking reforms

Banking reform has always been one of those issues that was going to test the unity of the coalition. Indeed, it was the subject of the very first inter-coalition wrangle when back in May 2010 George Osborne and Vince Cable tussled over who would chair the Cabinet committee on banking reform.   To date, these differences have been held in check by the fact that the coalition is waiting for the recommendations of the John Vickers-led Independent Commission on Banking. But with the final draft of the Vickers Report being published on 12 September, these splits are starting to open up again.   Cable and the Liberal Democrats would like,

Peter Hoskin

The quiet man barks

Almost exactly a year ago, Tony Blair’s memoirs wafted into bookshops to cause a stir ahead of conference season. Now it it seems that Alistair Darling’s, due out next Wednesday, will do exactly the same. Judging by the extracts published over at Labour Uncut, the quiet man of the last Labour government will splash his simmering frustrations and enmities right across the page. Gordon Brown, he will say, became increasingly “brutal and volcanic”. Mervyn King was “amazingly stubborn and exasperating”. And Ed Balls and Shriti Vadhera will be accused of “running what amounted to a shadow treasury operation within government”. But the most eyecatching revelation, and perhaps the one with

Tuesday

Fraser Nelson

The dangers of home ownership

The slump in home ownership is reported today as a bad thing. Many Conservatives, who believe that home ownership releases what the late Shirley Letwin called “vigorous virtues“, may agree. So might Labour, which came to regret its opposition to the Thatcher policy of allowing council tenants to buy their home. Like inflation targeting, home ownership was a solution that worked so well in the 1990s that it was vigorously pursued in the next decade. But here’s the rub: it had disastrous effects. In this case, the disaster was governments pursuing greater home ownership as a policy goal. This meant cheap loans, which meant subprime mortgages, which meant a credit

Monday

David Blackburn

Merkel’s hard game

As James noted earlier, Angela Merkel’s response to the Eurozone crisis is hampered by the awkward arithmetic in the Bundestag. Merkel has been faced with these difficulties throughout the crisis. Her answer has been to oppose initial proposals to solve the Eurozone crisis, only to relent later in the day. This has been the pattern from the first Greek bailout to the expansion of the EFSF, which is currently before the Bundestag. Might her apparently determined opposition to Eurobonds (which, of course, would require a huge transfer of power and cash from Berlin to the Med and Brussels) go the same way? Wolfgang Münchau has a comprehensive piece on the

Saturday

James Forsyth

Why energy bills will be one of the big issues of the autumn

One of the big political issues of the autumn is going to be energy bills. Among Tory MPs, there’s mounting concern that the coalition’s green policies are driving up the price of energy rather than helping to bring it down. They fear that this is both acting as a drag on the economy and adding to the squeeze on family budgets. So, today’s story in The Times about how a carbon trading scheme—started under the last government—has led to households being charged, on average, £120 more than they should have been in utility bills is going to turn up the political heat on this subject. The paper alleges that: “Energy

David Blackburn

Willetts’ musings

Coffee House has already touched on David Willetts’ interview with the Times (£), highlighting his view that the 50p tax rate is important to prove that “we’re all in this together”. Willetts does not limit his words to the top rate of tax. In addition to his universities brief, he discusses equal pay issues, social reform and the recent riots. Willetts confesses to being a “muser”, never happier than when applying his renowned brain to the broad sweep of government policy. “I wouldn’t be able to function properly as a politician unless I was able to range across some of these wider issues. It just wouldn’t be worth it,” he says.

Thursday

David Blackburn

Need Libya be another Iraq?

“It’s not over yet.” That has become the government’s Libyan mantra, delivered with a tone of sombre sobriety. However, James Kirkup reports that, in private, ministers are cock-a-hoop, already dreaming of photo-ops and triumphant flyovers. You wonder what Ed Llewellyn makes of the celebrations. Allegra Stratton has written a revealing profile of David Cameron’s chief-of-staff, ‘the most powerful man you rarely hear about’. Llewellyn is a foreign policy expert, a veteran of tours in the Balkans and the Far East. Stratton says he is: ‘Discreet personally and cautious politically, he will have insisted on megaphone caution from the PM and his cabinet ministers who duly took to the airwaves.’ I’m told that diplomats share

Fraser Nelson Fraser Nelson

Cameron’s immigration problem

Poor David Cameron. He pledged to reduce annual net migration from the current 240,000 to the “tens of thousands” and what happens? Net migration in 2010 was up by 21 per cent from 2009. In a way, he deserves the flak he’ll get because this was a daft target that could only have been set by someone poorly-advised about the nature of immigration. And the target allows success to be presented as failure. The inflow to Britain has stayed steady (see graph below), but the number emigrating from Britain has fallen. This is a compliment to Cameron: the most sincere vote people can make is with their feet. And in

Tuesday

Robert Halfon-Mp

Beating fuel poverty

As Tim Montgomerie has noted, a growing priority for voters is the astronomical cost of petrol. In fact, according to a Populous poll conducted outside the Westminster bubble, people are far more concerned about energy prices than almost any other issue, even public sector spending cuts. With prices hitting 150p per litre at some garages, many fear that petrol and diesel is becoming part of the poverty trap. For example, in my constituency of Harlow, figures show that the average motorist is now paying something like £1,700 a year just to fill up the family car. This is a tenth of the average income in our town. Experts have ruled

Saturday

James Forsyth

Arresting the West’s crisis of confidence

What’s the most important geo-political event of this century? Most people would say 9/11. The Foreign Secretary believes that it is the Arab Spring. But in The Times today (£), Emma Duncan makes a persuasive case for it being the collapse of Lehman Brothers. Duncan argues that Lehman Brothers’ fall has three claims to be an epoch-making event. The first is its contribution to the financial crisis and subsequent economic stagnation. The second is the way that it has catalysed China’s economic rise vis-à-vis the US, with China now predicted to become the world’s largest economy within this decade. The third, the fact that that the economic troubles of the

Friday

David Blackburn

From the archives – the great debt deceit

The news that the national debt is even larger than it appears ties a knot in the stomach, limiting, as it does, the state’s ability to cut taxes. Andrew Tyrie has called time on the PFI bonanza, but in many ways this intervention comes too late. Back during the financial tempests in the autumn of 2008, my colleagues Peter Hoskin and Fraser Nelson revealed the scale of Gordon Brown’s deceit over PFI. The great debt deceit, Fraser Nelson and Peter Hoskin, The Spectator, 20 September 2008 A few months before the general election which brought New Labour to power, Geoffrey Robinson had David Davis to dinner in his flat overlooking

Thursday

David Blackburn

The markets rout

The recent rally on the markets is now the most distant memory. Stocks continued to fall today amid concerns about the European sovereign debt crisis, negligible growth figures in the developed world and cooling Asian economies. Robert Peston has an excellent account of the causes and effects of the latest rout. Banking stocks were brutalised, with Barclays and RBS both shedding more than 10 per cent of their value, with Lloyds and HSBC not far behind. Continental banking stocks were similarly mauled, with Soc Gen losing 12.34 per cent and Commerzbank being shorn of 10.42 per cent of its value. But the unease spread across exchanges as investors put their

James Forsyth James Forsyth

Dark days

There’s a pessimistic mood in Westminster at the moment, a sense of gloom about the economic prospects of the West. The government expects there to be another round of the European sovereign debt crisis this autumn and believes that the problems of the eurozone will take at least a decade to resolve. No one I’ve spoken to really believes that the plan Merkel and Sarkozy announced on Tuesday will be enough to keep the markets at bay for long. Looking across the Atlantic doesn’t raise spirits either given the state of both the American economy and political system. But the global economic situation will get an awful lot worse if

Sally Thompson

Tobin’s folly

The Eurozone Tobin tax announced on Tuesday by Merkel and Sarkozy is intended to reduce market volatility. It could have the opposite effect, and, if introduced in Britain, could cripple Britain’s financial sector, a new report by the Adam Smith Institute says. Based on the example of the “pure” Tobin tax that was implemented in Sweden in the 1980s and a large number of studies looking at equity and foreign exchange markets, a clear relationship was revealed between increasing transaction costs and higher levels of volatility. Transaction volumes also decrease as business is driven to lower tax regimes. When Sweden introduced a levy of 0.5 per cent, 60 per cent

Wednesday

David Blackburn

This isn’t just any solution; this is an M&S solution

Banks and financial institutions endured a painful day’s trading, following Angela Merkel and Nicolas Sarkozy’s announcement yesterday that the Eurozone should adopt a ‘Tobin tax’, a charge on financial transactions. Once again, M&S chose piecemeal changes over the grand structural scheme desired by markets. The Tobin tax was just one proposal of three. The other two were: to create “genuine economic governance of the Eurozone” under, for the moment, EU President Herbert van Rompuy. The second: to impose a ‘Golden Rule’ on the budgets of Eurozone members. The ‘Golden Rule’ will bind national parliaments to agree to limits on national debt levels and impose statutory requirements on mastering budget deficits. The