Recession

So where does this leave Brown?

Most people expected this morning’s official GDP statistics to show that the economy has come out of recession.  But they didn’t.  In fact, they had the economy shrinking by 0.4 percent in the third quarter of this year.  So the downturn continues – and it’s the longest on record. We’ve always maintained on Coffee House that coming out of recession won’t do much good for Brown.  But, obviously, staying stuck in one has far more dangerous implications for him (not to mention the country).  Obviously, the government won’t be able to deploy the green shoots strategy now.  But with other major economies already out of recession, they’ll struggle to deploy

Brown’s Northern Ireland settlement is to be commended

Gordon Brown has just told the House of Commons that he is offering Stormont a financial settlement to increase funds for policing and judicial administration in Northern Ireland. Crucially, future emergency security costs in future will be met by the Treasury, and elements of the complicated settlement will stand until at least 2014.  Northern Ireland has been badly hit by the recession. Power sharing became increasingly fraught as arguments escalated over budget allocations and the timing of judicial devolution. It is not an exaggeration to suggest that the recent escalation of violence might be related to rising unemployment and open political tension. Lasting peace and unified government have to be

Tracks through the wasteland

Sex, and plenty of it. That’s certainly what Bunny Munro — the titular protagonist of Nick Cave’s second novel — wants. And, in a roundabout way, he gets it. In the very first chapter, he’s cheating on his wife with a prostitute; in the second, it’s a hotel waitress; in the third, he’s given to fantasies about Kylie Minogue; in the fourth … well, you get the picture. Throw in the fact that Bunny is a travelling cosmetics salesman in Brighton, and it starts to sound like one of those dreadful Robin Askwith comedies from the 1970s — you know, Confessions of a Window Cleaner. But The Death of Bunny

Deconstructing David Blanchflower

What with his new column in the New Statesman and his articles for other outlets, David Blanchflower – a former member of the MPC – really does seem to enjoy laying into the Tories.  Problem is, much of what he says fails to convince – so much so, in fact, that I thought I’d bash out a quick fisk of his Guardian article from last Friday.  Here’s the full article with my comments in bold: We are in the midst of the worst recession most people alive have ever experienced, or will probably ever experience. It is already worse than the 1980s and it isn’t over yet. The only comparison

Brown’s double hit

What is the true price of Gordon Brown’s economic incompetence and inept bank regulation? The soaring national debt is one. And if you own a mortgage, you’ll find that you’re paying another. The gulf between the Bank of England base rate and the average mortgage rate is now at a huge high – as banks rip off their customers, trying to fill the hole in their balance sheets. This is an under-discussed topic. The “action we have taken” (a phrase Brown uses to try to lay claim to the Bank of England’s base rate reduction) would have a far greater effect on the economy if the UK banking system was

Did you know? Gordon Brown’s been talking about strong global regulation for years

Well, that’s what he claims anyway. Brown’s extended interview on the Today programme was an exercise in deflecting blame (and the Sun coming out for Cameron) – ‘none of this would have happened if people had listened to me because, you see, I saw it all coming’ was his refrain. This exchange with Jim Naughtie was particularly telling: “JN: Let me take you back to ‘markets without morality’, which was in your speech and you’ve repeated it now. When did you decide that bankers were being greedy and excessive in their demands? GB: Well Jim, you know, I’ve always been of the view that we needed a better global financial

The Budget bombshells revealed

An interesting spat is just breaking out over cuts. The Conservatives have a leak from the working of the Budget showing detailed projections in government revenue to 2013-14 covered by all the main Sundays. This suggests income tax rising from £140bn this year to £191bn in four years’ time. The Tories say this is not explained by economic growth and that the gap – £15bn – is equivalent to 3p in the basic rate of income tax. Liam Byrne is pushing back, saying Osborne is trying to “mislead the British people” (as if the government would try to do such a thing) and that the increase was accounted for “the

Why Vince Cable is not too sexy for his party

For all his celebrity, Vince Cable is not exactly an economic genius – as those who have read his book, The Storm,  will know all to well (Specator review here). But he is seldom tested on this point, as he encounters broadcasters whose line of questioning is normally “tell us, Sage of Twickenham, what is happening.” For those who don’t regard him as the new Oracle and have wanted  see him put through his paces, Andrew Neil – Cable’s former student – gives his old master a grilling on the BBC News Channel. In the interview, Cable gets steadily more irritated (and rumbled) and admits to having flip-flopped. The Cable phenomenon

The Good Old Cause

Paul Waugh’s beaten us to it, but Ed Ball’s New Statesman article is a rallying cry to the left. He writes: ‘As we approach the most important general election for a generation, this is no time for introspection or defeatism. There’s never been a moment when Labour’s values and experience have been more relevant or necessary.’ And what are those values? Well, they’re not Blairite: ‘In public-service reform, we sometimes sounded as though private-sector solutions were always more efficient; and who can now doubt that, despite the tougher measures we brought in, financial regulation was not tough enough?’ The most telling statement is that Balls believes markets to be intrinsically

In defence of Hank Paulson, by Hank Paulson

Did Bush or Paulson have a clue what they were doing? It’s an intriguing question. James flagged up the view of Bush’s speechwriter Matt Latimer that Paulson, not Bush, was to blame. But, in this month’s Vanity Fair, Todd.S. Purdum flips the coin. Based on interviews with Paulson, conducted as the bailout unfolded, the article’s a brilliant piece of long-form journalism: describing the chicanery on Capitol Hill as Paulson, Tim Geithner and Ben Bernancke sought desperately for a deal with Democrats Nancy Pelosi and Barney Frank. Paulson was in no doubt that Congressional Republicans were responsible for the foul up. At the height of the crisis he told Purdum: “Republicans,

Cable: no budget should be ring-fenced

Vince Cable has joined the cuts debate, arguing that the “time for generalities is over” and that “politicians must not shy away from explaining in detail how they will tackle the problem of deficits and debt”. He identified 9 areas for specific savings: public sector pay and pensions, centralised education, family tax credits, defence procurement, quangos, asset sales, ID cards and the NHS super computer. Crucially, he stated that no department should be “ring-fenced”, and proposed cutting fees paid to hospitals and scrapping the strategic health authority, a move backed by Michael Fallon in a Telegraph article last week. Indeed, it’s striking how much common ground there is between the

If Britain hasn’t returned to growth by the end of the year, will it still be ‘no time for a novice’?

Looking at the OECD’s latest economic forecast it seems that the UK—unlike the US and the Euro-Zone–will not return to growth by the end of this year. (Although, one can’t help but wonder if Brown will start heralding zero percent growth in the fourth growth). Indeed, the OECD projects that the UK economy will shrink by 4.7 percent over this year as a whole—although the worst appears to be behind us with the rate of shrinkage slowing since the last quarter of 2008 and the first quarter of this year.   As Kevin Maguire suggests today, Labour’s election strategy is likely to be that Britain is not out of the

Brown’s misplaced hope

In his insightful article on Brown and the forthcoming G20 summit, Francis Elliot writes a sentence which should terrify Labour supporters: “[Gordon Brown] has already decided that his only hope of a comeback in the polls lies with the economy.” Sure, we all know that Team Brown has been putting a lot of hope in a green shoots strategy.  But, as we’ve pointed out on Coffee House before, there’s little reason to believe that an economic recovery will deliver a significant boost for the Government.  If that’s all that the PM has, then his situation is looking more hopeless than ever.

Labour’s new dividing line is a gamble

Alistair Darling has long suggested that the original dividing line between the Tories and Labour concerned Labour spending, which will stimulate growth, versus Tory inaction. And last week, Darling was quoted in the Mail on Sunday setting out a new dividing line between the parties by framing the “debate in terms of our cuts being better than their cuts”. It is a stance that presupposes Britain is returning to growth thanks to the government’s strategy. And that is the message of an opinion piece, titled ‘The cure is working’, penned by Darling in this morning’s Guardian. Here’s the key section: ‘The Tories have opposed our measures every inch of the

Is Theresa May priming a second Freud Review?

In some respects, Theresa May has delivered an effective speech on unemployment and the benefits system today.  It touches on all the tragic indicators – the 6 million people on out-of-work benefits, the high levels of youth worklessness, the shocking consequences of welfare ghettoes etc. – and re-states, in no uncertain terms, the Tories’ commitment to welfare reform.  She even partially responds to those critics who thought she’d been drafted into the shadow welfare role to be “softer” on single mums than Labour, by instead attacking the state for encouraging lone parents “not to bother trying to work until their youngest child was sixteen”.  But perhaps the most crucial passage

A very risky strategy

Labour’s attempt to create a new dividing line on cuts is intriguing because it suggests that the government reckons we are pulling out of recession – a message Alistair Darling has been stressing recently. Central to Labour’s argument is that their initial interventions, opposed by the Tories, preserved public services through the recession. By claiming that now is the time to make extensive cuts, beyond mere efficiency savings, suggests that they think the economy is robust enough to survive sweeping public spending cuts. If an economic boom couldn’t save John Major, I doubt a modest recovery will save Brown from defeat. But, if the economy does recover and Brown initiates

Confidence returns

One of the most significant news stories of the day comes courtesy of the Institute of Chartered Accountants: “Confidence among business professionals has surged, suggesting the recession is at an end, a survey has said. The Institute of Chartered Accountants’ index of business confidence rose to 4.8 at the end of June, from -28.2 in March, the biggest rise for two years.” Economically speaking, this is encouraging stuff – it’s the view from the frontline of the real economy, after all.  And these types of surveys always tend to have a self-fulfilling quality, as more confident companies adopt the measures – spending, hiring etc. – which are likely to drive

Visions of Life Under a Tory Government

A fascinating post on the Interns Anonymous website. This brilliant organisation is devoted to exposing the pernicious growth in the use of free labour. It shares many of the aims of my new outfit, New Deal of the Mind. Philip Hammond, the well-respected shadow Chief Secretary to the Treasury has been tipped to leapfrog George Osborne into No 11 Downing Street.  According to the IA website, Hammond recently advertised for an intern post for which the terms were less than generous. When challenged by a member of the public about his failure to pay the national minimum wage he emailed back: “I would regard it as an abuse of taxpayer

The next government will have to help this lost generation

It’s noteworthy enough when David Blanchflower – a member of the Bank of England’s MPC until May this year – says that the government “isn’t doing enough” to stem the unemployment crisis, as he does in an article for today’s Guardian.  But his more specific points about the “lost generation” of unemployed young people are also worth highlighting. As Fraser blogged yesterday, this recession is taking a particular toll on those aged under 25.  Partially, this is down to school and university leavers being unable to find work.  But, as Blachflower points out, there’s another effect at play – young people with jobs are the first in line to lose

The race to recovery is looking bad for Brown

Oh dear.  Another blow to Brown’s economic credibility this morning, as France and Germany announce that they’ve come out of recession already.  Both economies grew by 0.3 percent in the second quarter of the year – in contrast to the UK economy, which shrank by 0.8 percent. Whatever the factors behind it, this spells trouble for Brown.  A poor performance in the race to recovery not only calls his management of the economy into question, but it also undermines his anticipated “green shoots strategy”.  The PM will find it hard to brag about our “green shoots” when other countries already have full-grown plants. You can expect the Tories to pounce