Economy

Friday

James Forsyth

Mixed news from the Eurozone

France and Germany’s better than expected growth numbers are making news today. But the divergence within the Eurozone — Estonia grew at 2.1 percent in the first quarter, Portugal shrank by 0.7 per cent — highlights one of the single currency’s biggest problems: how can one interest rate fit all? Economists expect Germany, whose GDP is now larger than before the financial crisis, to continue to outperform the rest of the Eurozone. Given that Germany and France together make up half of the Eurozone economy, interest rates will have to be set with this in mind. But, on the other hand, the Iberian countries and Greece are struggling with austerity

Thursday

Alex Massie

Who cares about immigration? (Or education?)

Who cares about immigration? In theory, everyone. It’s always mentioned as the policy that exercises voters but is ignored by politicians. (Europe generally comes second in this category.) Let’s see what YouGov reports. In one of their tracking polls this week they asked voters to pick the three most important issues. Chart? Fully 66% of Conservative supporters think immigration a vital issue, as do 54% of Londoners and 55% of C2DEs. Other points of interest: only 11% of Tories say Tax is one of the three most important issues, the same percentage as thinks education is in the top three. Europe is mentioned by just 9% of those polled (though

Friday

Clarissa Tan

The Royal Wedding around the world

So we’ve seen the ceremony at Westminster Abbey. How was the Royal Wedding celebrated – by expats and locals alike – around the world? In Afghanistan, British troops celebrated with bunting on the front line. In Australia, foods associated with the ‘Mother Country’ flew off supermarket shelves, with the biggest sellers being Maynards wine gums and Colman’s classic mint sauce. Even Aussie republicans appear to have been inspired to hold parties and wear tiaras. In China, a couple recently had a knock-off Royal Wedding, complete with horse-drawn carriage and archway of swords. And cashing in perhaps on the wedding fervour, McDonald’s in Hong Kong started offering wedding party packages. India

Thursday

Fraser Nelson

Why David Blanchflower has it wrong

Gordon Brown may have gone, but advocates of his calamitous policies remain. David Blanchflower, the chief exponent of borrowing more, has a piece in The Guardian today which is worth examining. Written with his trademark chutzpah, it’s a very clear exposition of the Labour argument — along with its flaws. Here are some extracts, and my comments: “In his budget speech last month, Chancellor George Osborne suggested that he was hoping for ‘an economy where the growth happens across the country and across all sectors. That is our ambition”. Sadly, to judge by Wednesday’s GDP figures, growth under this coalition remains just an ambition, a mere illusion.” And why would

Peter Hoskin

Righting the wrong of sickness benefits

He may no longer be an MP, but the spirit of James Purnell lingers on. It was, after all, the former Work and Pensions Secretary who introduced the Employment Support Allowance as a replacement for Incapacity Benefit in 2008, with the idea of encouraging people – the right people – away from sickness benefits and into the labour market. And now we have one of the strongest indications yet of just how that process is working. According to figures released by the DWP today, 887,300 of the 1,175,700 claimants who applied for ESA between October 2008 and August 2010 failed to qualify for any assistance – with 458,500 of them

Wednesday

James Forsyth

What the GDP figures mean politically

The coalition can breathe a little easier today. The economy returned to growth in the first quarter of this year, avoiding a double-dip recession. It expanded by 0.5 percent which is in the middle of City economists’ forecasts but below the OBR’s prediction of 0.8 percent. Recoveries are generally choppy and particularly so when coming out of a debt-induced recession.  Labour, though, will see these numbers as a further chance to claim that cuts have sucked the confidence out of the economy and that Britain is just bumping along the bottom. This, obviously, isn’t the whole picture. The deficit reduction plan has, crucially, kept the cost of borrowing low and

Peter Hoskin

Economy grows by 0.5 per cent in the first quarter of 2011

So, we’re not back in recession, and growth of 0.5 per cent in the first quarter of this year is in line with what many forecasters were predicting, but… It is hardly indomitable stuff. As Duncan Weldon explained in a useful post yesterday – in which he rightly picked me up on a loosely worded post of my own (since, cheekily, edited) – 0.5 per cent merely compensates for the shrinkage experienced thanks to the snow last year. Across the last two quarters, economic growth has effectively plateaued. It’s as we were, Q3 2010. The politics of the situation is fissile, even if we are stuck in the murky area

Tuesday

Peter Hoskin

Osborne is on track to rebalance the economy

It may look diminutive in between Easter and the Royal Wedding, but tomorrow is still a big day in the political calendar. It is, after all, the day when we hear the official growth estimate for the first quarter of this year. A negative number, and we shall have experienced two consecutive quarters of shrinkage — which is to say, the country will be back in recession. A positive number, and we shall have avoided that unhappy fate. So what are the forecasters saying? The consensus among bodies such as the NIESR and the CBI is around 0.5 percent, which – as Duncan Weldon explains in a very useful post

Friday

Peter Hoskin

Brown reinforces his presence on the world stage

I’m sorry to do this to you, CoffeeHousers, at the start of a bank holiday weekend — but I thought you might have a morbid sort of interest in Gordon Brown’s latest role. Turns out that, as expected, our former PM is to join the World Economic Forum in an advisory capacity. He won’t be paid for his work, although the Forum will cover his staffing costs. One of his spokespeople has told ITV’s Alex Forrest that his task is to “stop the next financial crisis.” Which is to say, he’ll be saving the world. Again. If nothing else, it’s yet another demonstration of Brown’s peculiar resilience. Our former PM

Daniel Korski

Reasons for optimism in the Middle East | 22 April 2011

As the Libya crisis drags out, and Bashar al-Assad orders a crackdown in Syria, many have begun to doubt whether the changes seen in Tunisia and Egypt will actually spread to the rest of the Middle East. One former British ambassador recently suggested that perhaps the peoples of the Middle East preferred a mixture of authoritarianism and democracy — and that Britain should accept this; not impose its values and views.   But there is plenty of reason for optimism. The first is to look at the countries that have transformed themselves over the course of the last fifty years. Powerhouses like India and Brazil, but also smaller countries such

Monday

David Blackburn

Standard & Poor’s bombshell

A mute, almost disbelieving response (except on the Markets) has met Standard & Poor’s announcement that the US government’s fiscal profile may become ‘measurably weaker’. The credit rating agency has put a ‘negative outlook’ on the US’s AAA rating; the accompanying report said:    “We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013. If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.” Robert Peston tweets, “S&P’s announcement that outlook

Saturday

Fraser Nelson

Andrew Sentance: interest rates must rise

Inflation – the cost of living – is the number one issue in Britain today. It is under-discussed in the House of Commons as MPs have no say in it: the task of controlling inflation lies with Mervyn King and his nine-strong Monetary Policy Committee, and its members are rarely interviewed. Little wonder, as a lot of them should be feeling fairly sheepish. But not Andrew Sentance. He’s been arguing for a rate rise for months, and doesn’t have long left to serve on the MPC, so he can speak quite freely. Inflation has been above target almost all the time he’s been on the MPC, he says, so in

Friday

Alex Massie

Transatlantic Deficits

I don’t know if the Obama administration is as enthused by the idea of deficit reduction as James suggests, not least since the American left has looked at George Osborne’s approach and judged it a failure. Kevin Drum, for instance, says Osborne’s plans are “not likely to work” and Britain “is probably going to be paying the price for this folly for many years to come”. Matt Yglesias agrees, writing that “Austerity’s failure in the United Kingdom should inform the American policy debate.” This is all occasioned by a gloomy New York Times article with the headline British Deficit Defies Advocates of Austerity. But if the economy remains weak, inflation

Fraser Nelson Fraser Nelson

How the banks were framed

A week that started with the Vickers review on banking has closed without another national explosion of banker-bashing. Thank God. Beating up on the banks has lasted almost three years now, and it’s blinding us to the real causes of the financial crisis. The banks are the perfect alibi: blaming them gets everyone off the hook. How, asks Gordon Brown, was a mere Prime Minister to know that banks were doing such fiendishly complicated things? How, asks George Osborne, was an opposition expected to detect what the government could not? How, asks Mervyn King, was the Bank of England governor supposed to know that these bankers had been so wicked?

Thursday

Peter Hoskin

Brown to the IMF? Not with CoffeeHousers’ blessings…

What to do when you’ve already saved the world? Save it all over again, judging by Gordon Brown’s latest reported manoeuvrings. Today’s Mail claims that our former PM is “clear favourite” to be succeed Dominique Strauss-Kahn as head of the International Monetary Fund. Although, as the paper says, it’s likely that the Coalition would operate against any such appointment. To remind the suits what they might be imposing on themselves, I thought I’d return to this post that we put up on Monday. It asked CoffeeHousers what Brown’s biggest mistake in government was. And we received more than enough responses to vote on a Top Ten, as below. We’ll keep

Peter Hoskin

Nothing new, but much to ponder, in Cameron’s immigration speech

There is, really, little that is new in David Cameron’s speech on immigration today. Besides one or two grace notes, almost all of its policy suggestions appeared in the Coalition Agreement: you know, all the stuff about a cap on immigration and a Border Police Force. Its rhetoric is strikingly similar to Cameron’s last big speech on immigration in October 2007. So if he’s not saying anything particularly groundbreaking, what is he saying? With the local elections only three weeks away — and on the back of the Lib Dems’ newfound assertiveness — it’s hard not to see this as an outreach exercise. This is one for core Tory voters,

Tuesday

Peter Hoskin

Why we should be concerned about debt interest

There’s an interesting post by Éoin Clarke on debt interest doing the rounds. It originally appeared on his blog, but was soon commandeered by LabourList — and little wonder why. Dr Clarke’s point is a perceptive and striking one. Debt interest, he says, is lower now than it was under John Major. The implication is that when George Osborne rattles on about the money blown on just “servicing our debt,” we should take it with an almighty heap of salt. It’s not, perhaps, as bad as all that. Or, rather, that’s one way of looking at it. There are other ways, which I would list thus:   1) Going beyond

Peter Hoskin

Panic over? Perhaps not…

Is the inflation panic over? After rising for five consecutive months, CPI inflation went down by a 0.4 percentage points in March, to 4.0 per cent, taking the City by surprise. RPI inflation also went down, by 0.2 percentage points. The numbercrunchers at the Office for National Statistics put it down, largely, to a fall in food and drink prices. The cost of fruit is 2.7 per cent down on last March. The cost of bread and cereals, 2.6 per cent. Yet we shouldn’t get ahead of ourselves. While this will certainly reduce the short-term pressure on the Bank to increase rates — as well as on the nation’s pocketbooks

Monday

Peter Hoskin

What was Brown’s biggest mistake?

“I have to accept my responsibility.” Who would have thought that Gordon Brown would ever breathe those words, let alone breathe them to a conference in America over the weekend? Our former PM has, it’s true, suggested that his regulatory system was inadequate to the financial crash before now. But here he was much more explicit: “We set up the Financial Services Authority believing the problem would come from the failure of an individual institution. That was the big mistake. We didn’t understand just how entangled things were.” And that’s event before he got onto the “responsibility” bit. I’ll repeat it, just in case it didn’t sink in the first

James Forsyth James Forsyth

The Vickers Review, acceptable to both halves of the coaltion

The Vickers Review into the future of banking appears to have prevented a possible coalition row. The Tories and the Liberal Democrats have had different views on what to do about the banks, with the Lib Dems keener to break up the banks come what may and the Tories more worried about preserving the competitiveness of the City.   At the very start of the coalition there was a rather unseemly turf war between Cable and Osborne about who controlled policy on the banks, and many have expected a row to break out when he review reported. But, as we predicted on Coffee House back in February, the review has