Politics Archives

Tuesday

29 Nov 2011

Growth has upset Osborne’s plans — and it’s likely to get worse

The real story, as everyone expected, wasn’t in the Pre-Budget Report ‘Green Book’ — but in the supplementary document produced by the Office for Budgetary Responsibility. Growth forecasts have taken a dive. And while that is both unsurprising and not all that revealing, it carries grim implications for so much else. I mean, just look at the graphs we produced in our last post: forecasts for debt, unemployment and borrowing are all up. It is not a pretty picture. But despite the dreariness of it all, I suspect that the numbers are far too optimistic. The clue comes at the start of the OBR report: ‘The central economic and fiscal

Alex Massie

In the Bleak Midwinter; Some Republican Entertainment

British politics is pretty depressing at the moment so thank god for the entertainment provided by the Republican candidates squabbling to become their party’s Presidential nominee. Dark times demand dark comedy leavened by appropriate measures of farce. Hurrah for Newt Gingrich, then. We are advised that he must be taken seriously now that he’s been endorsed by the Manchester Union-Leader even though that paper has in the past supported the likes of Steve Forbes, Pat Buchanan, Pete DuPont (1988) and Richard Ashbrook (1972). What’s more, the Union-Leader’s publisher thinks it sensible to say Newt “resembles” Winston Churchill. Yes, all this is supposed to be an important symbol and the kind

Jonathan Jones

The Autumn Statement: What you need to know

We’ve been posting some of these charts on Twitter, but here they are, collected, for CoffeeHousers. You can expect more as we mine deeper into the OBR’s supplementary document. Do shout out, also, if you spot anything yourself. 1. Weaker growth — except for a very optimistic figure for 2015 2. Higher debt — both in real terms and as percentage of GDP 3. Osborne borrowing more than he’d hoped 4. More persistent — and deeper — ILO unemployment 5. The squeeze continues until 2013

Peter Hoskin

On the road to break-up?

Before we plunge into the Autumn Statement, we really ought to mention the poison cloud hanging over Brussels today. European finance ministers, including George Osborne, are meeting there later — and it’s certainly not going to be good for their collective health. Klaus Regling, the head of the European Financial Stability Facility (EFSF), is expected to tell them that there’s basically no chance of them boosting the bailout fund to €1 trillion in the near future, as was promised at the end of last month. Back then, David Cameron urged eurozone leaders to bring a ‘big bazooka’ to the fight. They have barely managed a cap gun. This is far

Fraser Nelson

Your Autumn Statement check-list

I very much doubt today’s Pre-Budget Report will be memorable; a shame, given the circumstances. The supplementary Office for Budget Responsibility document will be more interesting — and relevant to people’s lives — than the Budget itself. Sure, everyone focuses their attention on the Red Book (or Green Book, as it is for the PBR) and GDP projections. But even GDP isn’t really useful. You can manipulate GDP by printing money, or by borrowing money. Gets you nowhere. GDP is only useful insofar as it’s a proxy for national prosperity. And thanks to the OBR we’ll have other, more useful metrics today. Here’s my guide to them: 1. Net

Monday

28 Nov 2011

James Forsyth

Osborne has a few cards up his sleeve, but no aces

In some ways, George Osborne will always be haunted by his 2007 Tory conference speech. That speech and the reaction to his commitment to raise all estates worth less than £1 million out of inheritance tax contributed to Gordon Brown not calling an early election. It has a claim to be one of the most important speeches in modern British politics — it is certainly the one that saved the Cameron project. But it has also created an expectation that Osborne has a set of aces up his sleeve every time he stands up to give a big speech. Tomorrow’s speech won’t see the Chancellor pull out any unexpected trumps.

Daniel Korski

Egypt may have voted, but don’t celebrate just yet

Many thought the day would never come. Even as recently as yesterday, some doubted it would happen. But today Egyptians went to the polls in the country’s first parliamentary elections since Hosni Mubarak’s fall, hoping to take a first step toward democracy. Under a complex electoral system, voters picked both party lists and individual candidates. The final results are due by 13 January 2012. As it stands, the Muslim Brotherhood, Egypt’s largest and best organised group, along with Salafists, are expected to do well in the vote — after all, Islamists did prosper in the elections in Morocco and Tunisia. But it is not assured. Voters may feel that the

Mats Persson

Cameron may have more leverage in Europe than he thinks

There’s just over a week to go until the crunch EU summit on 8-9 December, so David Cameron has to decide how best to play his cards — and quick. The problem, as Daniel Korski has pointed out, is that Britain faces the risk of ‘structural isolation’ in Europe in the short-term. To counter this, Cameron effectively has two options. First, work with allies on both sides of the euro divide to seek political assurances — formal or informal — against the formation of a two-tier Europe with a more integrated eurozone in the driving seat. Or, second, press ahead with UK-specific carve-outs from the EU structure. The former would

Daniel Korski

The reasons for Angela Merkel’s popularity

The British government is becoming ever more gloomy about the prospects for the euro, believing that Angela Merkel will not do what she has to if the single currency is to survive: namely, let the ECB intervene massively in the markets. Whether it’s because of Germany’s inflation-scarred history, or the hope that market pressure will force reforms in many European states, the Chancellor is holding back. And, it seems, she is getting more and more popular by sticking to her policy. Mrs Merkel’s popularity is, indeed, related to her handling of the Eurocrisis. In Germany she is seen as having shown the kind of leadership people want, and the

The Spectator

Just in case you missed them… | 28 November 2011

…here are some of the posts made at Spectator.co.uk over the weekend. Fraser Nelson says that Osborne and Balls are like wrestlers, putting on a show but doing no real fighting. And on the Arts Blog, he picks his ten favourite cover versions. James Forsyth reports that the Tories are getting fed up with the Lib Dems’ efforts to show they’re the governing party that cares. Peter Hoskin warns that downgraded growth forecasts will scupper Osborne’s plans, and looks at the battles flaring up ahead of Tuesday’s autumn statement. Daniel Korski suggests how the UK could see off proposals for a Tobin tax in the EU. And on the Book Blog,

Sunday

27 Nov 2011

Daniel Korski

Tobin tactics

The biggest bone of contention between the UK and its EU allies these days is the ‘Tobin tax’, the idea of levying a tax on financial transactions. To the UK this is folly. Unless it is levied globally, a tax will force business to move elsewhere. And there is a greater chance of Silvio Berlusconi being elected ECB chief than the Tobin tax being levied globally. Based on the experiences of Sweden in the 1990s, the tax will achieve none of what its proponents believe it will — and at a considerable cost to Britain’s and Europe’s economy, as companies look to list elsewhere to avoid it. As Ryan

Patrick Nolan

Why infrastructure isn’t a magic tonic for the economy

Growth plans are a high growth industry — with every day bringing yet another set of ideas, from one quarter or another, for how the government can fix the economy. And one suggestion pops up quite frequently in all these plans: bring forward spending on infrastructure. This is often presented as a simple thing to do, with few (if any) downsides. But how realistic is this? We know that infrastructure is important for growth. Economic texts generally suggest that the ‘multiplier effect’ (when government spending leads to more private spending later on) from is higher for infrastructure spending than for spending in other areas, such as health and welfare. We

James Forsyth

The Tories’ latest frustration with the Lib Dems

Nick Clegg’s interview in The Observer today highlights what is fast becoming one of the biggest tensions in the coalition: the Lib Dem desire to show that they are the governing party who cares. Allies of Iain Duncan Smith have been infuriated by Lib Dem suggestions that the government would be doing little about youth unemployment if it was not for them. But Clegg repeats the claim to The Observer: ‘Whether it’s on youth unemployment, whether it’s on youngsters, whether it’s on getting behind advanced manufacturing and not putting all our eggs into the City of London basket, I don’t think that would have happened without the coalition.’ A growing

Saturday

26 Nov 2011

The Spectator

Barometer | 26 November 2011

Cook’s recipe Shares in Thomas Cook fell 60 per cent after the tour operator entered talks with its banks. — The company’s name has been synonymous with package tours since 1841, when Leicester cabinet-maker and temperance campaigner Thomas Cook took 500 supporters on a day trip to Loughborough on the newly opened railway line for a shilling each. — The first Thomas Cook holiday took place four years later: a trip to Liverpool, or for the more active, a steamboat journey on to Caernavon followed by a night ascent of Snowdon. Incapacity crowd One in 14 working-age people is out of work and receiving incapacity benefit. Some common conditions among

Fleur Macdonald

Bookbenchers: Robert Halfon

Robert Halfon, the Conservative MP for Harlow, is our bookbencher this week. He tells us what he would read his unborn children, and which books he would save from destruction. 1) Which book is on your bedside table at the moment? Omega, a Journey Through Time. I collect watches and love mechanical and automatic ones. Many made in Switzerland are still hand-made and contain mechanical movements that are true examples of human genius. Omega is one of the predominant watch companies. The cult Omega speedmaster was the only watch worn on the Moon – JFK also wore an Omega. Unlike some other Swiss watch companies, Omega was on the side of the

Daniel Korski

How can Cameron protect our interests in Europe in the short term?

Chatting to people in Brussels last week, I couldn’t help feeling that David Cameron’s EU problem is one of timing. The PM will probably be able to piece together a repatriation package that includes measures such as a withdrawal from the over-implemented Working Time Directive and a reduction in the EU budget. But none of this is likely to be enough for his party. Indeed, I suspect the budget won’t be finalised until two minutes to midnight during the Lithuanian EU Presidency in 2013. Add to this the Tobin Tax, where there seems to be little leeway for the British government. Barosso, Merkel and Sarkozy are determined to introduce it,

Peter Hoskin

Cameron cross-questioned

A quick post just to add the Guardian’s interview with David Cameron to your Saturday reading list. It takes the unusual approach of fielding questions to the PM from a range of ‘public figures’ — and, although many of those questions reduce down to ‘why aren’t you giving more money to X?’, the results are still generally engaging and occasionally insightful. And so we learn, after an enquiry by The Spectator’s own Toby Young, that Cameron doesn’t keep a diary. And we also have the PM justifiying his stance on Europe to Nigel Farage; skipping over a question about what he may or may not have inhaled during his time

Peter Hoskin

Without growth, Osborne’s best-laid schemes will go awry

Strikes, Olympic boycotts and obesity league tables — it’s a dreary set of newspaper front covers this morning. But none of them are quite so dreary as the Telegraph’s, which speaks of ‘The return of recession’. According to their story, the OECD has told ministers that its latest set of forecasts, released on Monday, will have the UK economy shrinking for the first six months of next year. They’re not the first forecasting organisation to suggest a double-dip — going by the Treasury’s overview of indpendent forecasts, Schroders Investment Management have economic ‘growth’ at -0.4 per cent in 2012 — but they are the most prominent so far. Shudder ye

James Forsyth

Politics: When it comes to the crunch, Cameron will choose his party over Europe

Downing Street’s negotiating team returned from Berlin last Friday afternoon in good spirits. Angela Merkel had accepted that Britain deserved concessions as part of Germany’s plan for a new European treaty. The Prime Minister was delighted, believing this to be a significant moment. This was a first step in David Cameron’s long-term plan: to refashion Britain’s membership of the European Union, but to do so gradually rather than in one big-bang moment. This strategy, however, is based on two huge gambles. If Cameron has miscalculated, his political career will end in failure. The first is that he has started steadily carving powers away from Brussels, and will have further opportunities

James Forsyth

Labour’s new golden girl

When I arrive to interview Stella Creasy in one of the cafés in parliament, she’s sitting in a meeting with two earnest, wonkish types, the coffee mugs having been cleared from the table. As time ticks by, her body language becomes urgent, but she’s too polite to wrap it up. I begin to see why her rather protective assistant insisted that this interview should be no more than 30 minutes. Creasy, though, has a lot to say and we speak for an hour before she goes off to write a speech on this summer’s riots. She’s a politician in demand. MPs enjoy few things more than posing as talent scouts.