Economy

Ed Balls opens a new front in the same old way

There are plenty of pressing issues at the moment, but two in particular stand out: the cost of living and youth unemployment. Ed Balls lost no time in latching onto the first issue. On becoming shadow chancellor, he immediately attacked the government’s VAT rise and benefits changes, which he judged to be the main contributors to rising inflation. It has been a  successful tactic, sustained by rising inflation and determined political pressure. Now Balls seems to be turning his full gaze at youth unemployment. In article for the News of the World, Balls launches his campaign to save “Britain Lost Talent”. At the root of this is a plan to

The green consensus in action

A couple of days ago, I wrote about the deleterious effects of political consensus on energy policy. A good example of this has emerged today. According to Politics Home, Luciana Berger and Caroline Lucas are seeking an amendment to the Green Deal to impose a target for domestic carbon reduction. A number of salient points emerge from this. First, it’s a fine instance of the obsession with targets; itself an indication that this area of policy is largely a top down initiative – driven by targets, taxes and penalties. The Green Deal, as it currently stands, is one of the few areas that put incentive before directive. The idea was

The Euro’s uncertain future

Martin Wolf’s column on the eurozone today does a superb job of summing up its troubles. As Wolf says, “The Eurozone, as designed, has failed.” Keeping its current arrangements is simply not an option for the eurozone. Wolf concludes that: “The eurozone confronts a choice between two intolerable options: either default and partial dissolution or open-ended official support. The existence of this choice proves that an enduring union will at the very least need deeper financial integration and greater fiscal support than was originally envisaged.” The question now is essentially whether Germany and other prosperous eurozone countries are prepared to embark on further integration and a programme of fiscal transfers

The inflation battle heats up

He left with a warning. “I think that there is a big risk emerging to the credibility of the Bank,” said Andrew Sentance last night, on his final day as a member of the Monetary Policy Committee. And he continued, “If inflation does not come down in the way that the Bank is suggesting — and I think there is a big risk that is the case — then that is going to have a big knock on effect on the credibility of the bank’s commitment to its inflation target.” Sentance’s views are unsurprising. He has, after all, been pushing for an interest rate hike for some time, and for

Does the trouble at FIFA really matter?

The news that the votes which ended up with Russia and Qatar winning the rights to host the 2018 and 2022 World Cups might not have been model, clean elections is about as surprising as the news that the faeces discovered in the woods are believed to be of ursine origin. In the Independent today, Dominic Lawson cuts through the seemingly continuous media coverage of the matter to the question of whether it actually matters: “More to the point, given that there are no objective economic benefits to the nations holding such competitions (whatever the kudos to local political dignitaries such as Boris Johnson) shouldn’t we as taxpayers feel grateful

Britain’s other, bigger debt problem

And what about the other sort of debt? We spend so much time harrumphing about the national debt that an important point is obscured: personal debt, the amount owed by individuals, is even higher. I wrote an article on the subject for a recent issue of The Spectator, as well as the Thunderer column (£) for last Saturday’s Times. But, really, a piece in the latest Spectator (subscribers here) by Helen Wood — the former prostitute who transacted with Wayne Rooney, as well as with a “married actor” who has slapped her with a superinjunction — puts voice to the problem in blunter fashion. “My mistake,” she writes, “was to

In England’s green and pleasant land

What do the TUC, heavy industry and the European Commission have in common? This is not the start of a bad joke; the answer is that they all oppose the government’s energy policy. Ten days ago, Tata (formerly British Steel) announced that it was to cut more than 1,500 jobs at plants in Scunthorpe and on Teeside. The directors later confirmed that their decision was influenced, in part, by the introduction of a costly carbon floor price at the last Budget. The floor price, which exists on top of levies imposed by the EU, has increased the burden of taxation on energy consumption to subsidise renewable energy research. In last week’s

Meeting Christine Lagarde

The FT has been speaking to Christine Lagarde, the French finance minister tipped to become managing director of the IMF. A few salient points emerge from it. First, she has more than a dash of hard-nosed Gallic defiance. Responding to the charge of a lack of a qualification in economics, she reiterated the comments she made to the Today programme earlier in the years: “From what I know of the job, I think I can do it. One of the qualities that people recognise in me is my ability to reach out, to try to build a consensus, to bring people to the common interest while still being a very firm

Cable’s punditry could come unstuck

“It’s not imminent. But you can see this happening.” So sayeth Vince Cable about the prospect of another global financial crisis, in interview with the New Statesman today. To be fair, you can see his point: there is a pervasive sense that the contradictions of the banking sector still haven’t been fixed, and — as I have written recently — our economy, and economies worldwide, are still afflicted by debt of all varieties. But that’s not going to calm those Tories who regard Cable as a combustive liability. In the weeks since the Lib Dems’  annihilation at the polls, the Business Secretary has increasingly reverted to his pre-coalition form: a

Grading Obama’s visit

It was a good state visit. Actually, it has been an excellent visit. Much better than George W Bush’s and even Barack Obama’s 2009 trip to London. The US president got his photo with Wills ‘n’ Kate. The Prime Minister got his presidential high-fives. There were some odd points. The personal chemistry between David Cameron and Barack Obama made the ping-pong match better than it would naturally have been. For, let’s be honest, table tennis is not a natural US-UK sport. There were policy differences between the two leaders too, for example on Libya and deficit reduction. In the end, though, the way to judge visits is not to think

Obama re-affirms the special relationship

The speech was not a classic but Barack Obama’s address to both Houses of Parliament covered the bases today. He started with a winning line, remarking that the previous three speakers in Westminster Hall had been the Pope, the Queen and Nelson Mandela which is either “a very high bar or the beginning of a very funny joke.”   As is traditional in these kinds of speeches, Obama paid tribute to the special relationship, lauding it as the embodiment of the values and beliefs of the English-speaking tradition. He went on to say that both the British and the Americans knew that the “longing for human dignity is universal.” Indeed,

An especially businesslike relationship

The ash cloud nearly claimed its first victim last night: Barack Obama had to leave Ireland early in order to fly to Britain. The Palace’s insistence on protocol has been upset and the President’s entourage has been advised not to risk the tap water; other than that, all is well. However, the visit has set sceptical tongues wagging. Some diplomats wonder why the President is here. Afghanistan, the Middle East, joint national security and the world economy are on the agenda, but there is no unifying theme to discussions. Some ideologues fear that the eternal bond between Britain and America is relaxing into a union of convenience. On the other

Fraser Nelson

The austerity hasn’t started yet

Another month, and another all-time record for state spending in Britain. The government splurged £1.8 billion a day in April — of which £332 million a day was borrowed. Up goes the national debt. All of which leaves us with the question: where is this austerity that George Osborne keeps talking about? He’s been in No.11 a year now, and each month state spending has been — on average — 4.9 per cent higher than the same month under Gordon Brown. He seems to be taking the St Augustine approach to fiscal conservatism: Lord, give me spending restraint. But not yet. The below graph shows state spending, per month. The

Cable’s latest warnings and provocations

My favourite part of the Guardian’s interview with Vince Cable today? When the business secretary says that his sermonic prescriptions from during the crash are of “enduring relevance” now. But there’s more to the article than self-aggrandisement, not least Cable’s gloomy overview of the British economy. It’s not quite the same as Alastair Darling’s Guardian interview in August 2008, but there is a touch of that here. “I think it is not understood that the British economy has declined by 6 or 7 per cent — it is now 10 per cent below trend,” says Cable, “Britain is no longer one of the world’s price setters. It is painful. It

Brown hasn’t contacted Cameron or Osborne about IMF job

‘Brown makes pitch for IMF job with plea to rich nations to meet education pledges’ reads the headline on page 3 of The Guardian today. This is all part of a growing body of evidence that Gordon Brown really does think he is in with a chance of succeeding Dominique Strauss-Kahn. Certainly, the usual suspects are out and about talking up his chances. Realistically, Brown is not going to get the job. But if Brown really does want to have a go, it is bizarre that he’s not tried to contact either David Cameron or George Osborne to reassure them about how he’d behave if he got the job; Danny

Clegg adheres to the script on deficit reduction

What a curious speech by Nick Clegg to the CBI last night. Curious, not because it was bad — but because, in straining to give a uniquely “liberal” justification for deficit reduction and the spending cuts, the Deputy Prime Minister actually crafted an address that most Tory ministers should, and would, deliver themselves. Take his “liberal analysis” of the last decade: “On a liberal analysis, the last decade represented the worst of all worlds. On the one hand: unchecked private debt; an unsustainable housing market; an overleveraged banking sector; overreliance on City-based financial services while other regions and sectors suffered neglect. On the other: an inefficient state; central government wasting

DSK resigns from IMF

The IMF has issued three press releases on Dominique Strauss-Kahn since his arrest last week, but none more resonant than the latest. It contains this statement from their now former-Managing Director: Ladies and Gentlemen of the Board, It is with infinite sadness that I feel compelled today to present to the Executive Board my resignation from my post of Managing Director of the IMF. I think at this time first of my wife—whom I love more than anything—of my children, of my family, of my friends. I think also of my colleagues at the Fund; together we have accomplished such great things over the last three years and more. To

Keeping the States interested

David Cameron has a good relationship with Barack Obama, which will be on display when the US president visits Britain shortly. They speak regularly and frankly and their senior advisers are in near-constant contact. The idea that the Lib Dems would foist a more “Love Actually” policy onto the coalition has come to naught. Yet Britain’s influence in Washington has waned. This is no fault of the Prime Minister. In fact, his personal diplomacy has probably slowed-down the process. Instead it has to do with structural changes in the US: the coming to power of a “pacific” President, the importance of US-China ties, the emergence of the Tea Party. As

Inflation bites back

  Good job we didn’t unravel the bunting after last month’s inflation figures. Because today we discover that CPI inflation rose again in April, by 0.5 percentage points, to 4.5 per cent — its highest level since October 2008. That drop in March does look like a blip after all. Even with RPI inflation continuing to fall (by 0.1 percentage points), we seem to have returned to a grim, upwards trajectory. Most forecasters predict that inflation will keep on rising for the rest of this year, outstripping wage growth along the way. The squeeze on living standards continues: We have dwelt on the political problems this creates for Osborne before,

Could a Briton run the IMF?

With Dominique Strauss-Kahn, known as DSK, undertaking scientific and forensic tests to determine if he sexually assaulted a hotel maid, the International Monetary Fund will be run by its No. 2 official, John Lipsky. A former banker, Lipsky was appointed “first” deputy managing director in 2006, and was expected to step down later in the year. But the change at the top will bring the former Permanent Secretary of the Department for International Development, Minouche Shafik, into the limelight. She recently left London to take up a post as deputy managing director at the IMF; she will now take Strauss-Kahn’s place at a meeting with Europe’s finance ministers in Brussels