Banking

Courtesy of John Rentoul, Tim Bale, professor of politics at the University of Sussex, offers this appraisal of the 2010 election: ‘For all the talk in opposition of decontaminating the Tory brand, of making the party more tolerant and inclusive and less ‘nasty’, the key task facing Cameron when he took over in late 2005 was reassuring voters that the Conservatives could be trusted on welfare and public services.  All the market research suggested that this was the sine qua non — a necessary if not a sufficient condition — of a return to office. When the global financial crisis hit and Britain’s budget deficit ballooned, however, this task remained

There is a reason why the coalition has used the Lib Dem conference to step up its rhetoric about the bankers and their bonuses. The coalition believes, rightly, that balancing the budget is a matter of political economy. It is acutely aware, and has been for some time, that the sight of banks paying out huge bonuses later this year just as the public sector begins to lay people off and cut services would be disastrous. This view is shared by everyone in the coalition from Cable to Osborne. Bumper bonuses would increase calls for new punitive measures against the banks and produce precisely the kind of political atmosphere that

Trust Bob Crow to turn down the charm. Explaining why he was boycotting Mervyn King’s address to the TUC today, the RMT union boss managed to liken the Governor of the Bank of England to both the “devil” and the “Sheriff of Nottingham”. Unsurprising, perhaps – but it’s yet another reminder of why, for the Labour leadership contenders, marching in lockstep with the unions may not be such a good idea. To Harriet Harman, a Labour Party bound to Crow & Co. might be a “progressive coalition”. But to the rest of the country, it will probably look slightly left of sane. Only David Miliband, to his credit, seems to

The Big Tent just got a little bit bigger with the appointment of Stephen Green as trade minister. As most of the papers point out, landing the HSBC boss is something of a coup for the coalition. David Cameron was struggling to fill the role, but he’s ended up with someone who is widely credited with steering his bank through the worst of the financial storm. Even HSBC’s purchase of a dodgy sub-prime company in 2003 has done little to tarnish Green’s reputation. Now that he’s in government, though, it’s worth pointing out that he is yet another minister who has warned of a double-dip recession. Here’s how the FT

A tough morning for the government at the hands of Tyrie, Fallon and rest of the Treasury Select Committee. Sir Alan Budd apologised for his naivety, Robert Chote described the Budget as ‘regressive’ in the main and the banking levy has been criticised on the grounds that is de-stabilising banks’ capital bases, which will affect lending. The government would prefer silence on these issues but the damage was far from total. Budd was an interim figure and the spat that has developed around him is largely political – there is no question that Budd was ‘nobbled’. Robert Chote deserves his reputation but he is not infallible. And Treasury Chief Economic

As Allister Heath notes in City AM this morning, Mervyn King has had a good war. Well, not so much a good war as a profitable peace. King contributed to the domestic crisis by sustaining very low interest rates whilst ignoring asset prices. Brown may have forced the Governor’s hand, but King was groggily supine until a sovereign debt crisis threatened. George Osborne is dismantling Gordon Brown’s regulatory imperium. King is the major beneficiary as the FSA is subsumed by the Bank of England. How will exercise that power? Obviously, time will tell; but monetary tightening will moderate excess (and spruce up banks’ balance sheets) in the short-term. Heath reports:

By rights, Gordon Brown should fear this debate on the economy more than any other. Here are ten questions I would like to hear him answer:   1. You told Gillian Duffy yesterday that you have a “deficit plan to cut the debt in half over four years.” This was a lie, wasn’t it? Our debt is £771bn now. Your deficit plan ­- ie, to run huge deficits for years – will actually double it to £1,406 billion within four years according to the Treasury. The debt for which Mrs Duffy and other taxpayers are liable would double under your plans ­- yet you told her it would halve. How

Woah. I doubt Brown will endure many tougher twenty-minute spells during this election campaign than his interview with on the Today Programme this morning. You could practically hear the crunching of his teeth, as John Humphrys took him on over Labour’s economic record; practically smell the sweat and fear dripping down his brow. It was compulsive, and compelling, stuff. Humphrys started by putting a grim story to Brown: that his “handling of the economy was not prudent … your record suggests that the economy is not safe in your hands.”  The PM’s mission was to deny all this, and he did so with his usual stubborness and disingenuity.  His pitch

George Osborne has long been in the City’s crosshairs, and criticism peaked last week when less than a quarter of a City panel believe he has the mettle to be Chancellor. Today, Osborne fights back in the FT, with a piece co-penned by Jeffrey Sachs. The pair set out an argument for immediate ‘frugality’, rather than ‘cuts’, and damn Brown’s economic policy as short-term politicking: ‘We are sceptical that a sustainable economic recovery can be based on either reinflating the sectors that have declined or believing future job creation can come simply from the public sector payroll.’ Two thirds of jobs created between 1997 and 2007 were in the public

The City’s elopement with New Labour has ended violently. A poll of leading financiers, conducted by City AM, reveals that 73 percent think that a Tory majority would be best for the economy; a mere 10 percent support Labour. But the City has little enthusiasm for George Osborne: 23 percent believe he has the mettle to be Chancellor, 13 percent behind Ken Clarke. So where is it going wrong for Osborne? James Kirkup observes that the Tories recent collapse in the polls coincided with Osborne and Cameron obscuring their economic message. But the City’s antipathy to Osborne is long established. Disquiet reigned even when Osborne and the Tories were storming

Daniel Hannan breaks the, sadly, not very surprising news that MEPs have voted overwhelmingly in favour of an EU Tobin tax. The margin: 536 to 80. Only the European Conservatives and Reformist group and a handful of radicals opposed the motion. The EPP, which describes itself as ‘centrist’, voted uniformly in favour. Cameron was right to withdraw from a grouping whose interests are at odds not only with British Conservatives but with Britain itself: a tax on all financial transactions would castrate the City. What does this division mean for Britain? On the face of it not a lot: anyone of the member governments could veto it. However, many European

He’ll have to because nobody else will. As Robert Peston says ‘Poor RBS, poor Britain’ – today’s figures are catastrophic. Peston’s been digging and the news gets worse: ‘But perhaps the most chilling numbers are these: we as taxpayers put in £25.5bn of new equity into this bank last autumn, the second instalment of the £45.5bn we have invested in total; but over the past year, the equity of this bank has increased by less than £16bn to £80bn. So almost £10bn of the £25.5bn we’ve only just put into RBS has already been wiped out by losses. Which, I think, is probably the best measure of the degree to