Economy

Friday

Fraser Nelson

It’s China’s world. We just live in it.

Yesterday was momentous, but we should not lose sight of the head of the IMF saying that the Chinese renminbi could take steps to becoming a global reserve currency. To be specific: Dominique Strauss-Kahn has in mind adding renminbi to the IMF’s Special Drawing Rights system. In itself, no big deal – but a notable kiss being blown to Beijing. It fits a trend. The Chinese, notoriously, manipulate the value of their currency to keep their goods cheap, so they can’t have their currency treated with reserve status. But power is shifting – and America’s fiscal misbehaviour has unsettled international investors. John Peace, chairman of UK bank Standard Chartered, put

Thursday

Eamonn Butler

Lost in the woods

The government’s plans for state forestry are so weak and feeble that it is hard to understand why there is so much fuss about them. Maybe people do not realise that three-quarters of the English woodland that they love so much is already privately owned. And those private owners face strict standards on public access and recreation, environmental quality, and conservation. So why is there so much fuss about selling the rest? People forget that broadleaf woodlands comprise just 8 percent of the Forestry Commission’s estate. The other 92 percent is farmland and conifer plantations, and it is hard to get worked up about who owns either of those. But

Wednesday

Jonathan Jones

Clash of the wonks

Last night the Southbank Centre hosted its second “Think Tank Clash”.  As last year, it was a sell out event, and saw representatives of six of the country’s top think tanks take each other on in three debates.  These debates were ably and wittily compared by writer John O’Farrell and the winners determined by audience vote.  The winners of each “clash” then competed in a three-way discussion to determine the overall top tank. Round 1: “Revenge” – Res Publica v Demos Res Publica founder and director Phillip Blond commenced by making the case for breaking up the banks. He argued that the current system does not distribute capital, but rather

David Blackburn

Osborne’s conjuring trick

Earlier today, the government unveiled Project Merlin, its attempt to link executive pay in banks to institutional lending, whilst driving down bonuses and increasing the Treasury’s revenue take. Here are its key components: Osborne welcomed ‘the most transparent pay regime in the world.  Executive pay will be linked to targets for gross lending; remuneration for the top ten highest paid staff in each financial institution will be subject to the approval their board’s remuneration committee; in 2012, all large banks will have to publish payment details for members of their board and the 8 most high paid staff members. He then promised a new deal for small business lending. There

David Blackburn

More bad economic news for the government

Presently, the waves of bad news are as relentless as biblical plagues. The latest trade figures show that Britain’s trade gap opened in December; the seasonally adjusted deficit stood at £9.2bn, a rise from £8.5bn in November. There are plenty of explanations as to why the export-led recovery failed to jump customs, despite the comparatively weak pound. The various acts of God couldn’t have helped and the continuing financial crisis on the continent will have further eroded demand.   However, the government will realise that these figures indict its growth strategy. As the ONS graph below indicates, the trade deficit is a persistent problem and one feared by the British

Tuesday

Fraser Nelson

Osborne bests the Man With A Past

Balls is a bit like a vampire – he has bite, but he works best in the darkness. In the House of Commons, with those lights shining on him, his powers drain. George Osborne had the better of him in their brief exchanges at Treasury Questions. Balls led on the snow joke. But Osborne had pre-empted that earlier, when he first stood up. Balls teased him about going to Klosters in the winter, but these things only work in newspapers where you can run a picture of Osborne in ski gear. It leaves the House cold.   The key Osborne line was that Balls is “the man with a past”

Fraser Nelson Fraser Nelson

What has Osborne done today?

In October last year, Osborne announced a new levy on banks’ balance sheets. It was 0.05 percent for this calendar year, before rising to 0.075 percent from 2012 onwards. But, today, the Chancellor has announced that the ‘introductory’ rate has been abolished – so banks will be charged the 0.075 percent rate on all liabilities. Here’s my nine-point Q&A, by way of delivering my take: 1) So, a retrospective tax? Not quite. He’s imposing a 0.05 per cent rate on balance sheets in January and February. But he’ll up the charge to 0.1 percent for March and April to compensate. It will go back to 0.075 percent in May. This

Daniel Korski

Irish to block EU integration

In continental lore, it is Britain that is often seen as the greatest impediment to EU integration. The government’s EU Bill initially caused horror in the rest of Europe. Would Britain have to vote for each treaty change, even those needed to enlarge the Union? Before the text of the bill became clear, every self-respecting eurocrat spat the name ‘Britain’ over their lait russe. Even now, they are not best pleased. But in future it may not be Britain, but Ireland that will block any further EU integration. For Ireland is turning a lot more eurosceptic. The role of the euro in Ireland’s decline remains a subject of debate. In

David Blackburn

Osborne quells some dissent with his latest ruse

This morning’s newspapers would have made grim reading for the government. The Department for Transport has been forced to reverse its helicopter privatisation plan, there are doubts that the baccalaureate will suit Michael Gove’s education reforms and diverse packs of hounds have converged on the Big Society fox – and this is a cruel bloodsport.  But, the master tactician has struck again. George Osborne’s sudden decision to raise an extra £800m through this year’s banking levy has relieved some pressure from the government. This is a minor operation by the standards of Osborne’s previous political coups, but it diverts attention and illustrates that the government is making some progress in the

Monday

James Forsyth

Osborne v Balls at Treasury questions

Tomorrow is the first Osborne Balls Treasury Questions clash. It should be a fiery encounter. There’s little love lost between the two men, they are both aggressive despatch box performers  and the two of them know that their clash over the economy is likely to be the major factor in determining the next election result. Balls has a fair amount of material to work with: the disappointing growth—or, more accurately, non-growth—figures for the final quarter of last year, the limited success of the national insurance holiday for new small companies and the failure to publish a growth plan. Set against that is that Osborne will be able to accuse Balls

Fraser Nelson Fraser Nelson

King’s credibility is faltering

We at The Spectator have not had much company in criticising Mervyn King for the failure of his monetary policy. The Bank of England governor has a status like the Speaker used to: someone whose position must command respect, otherwise the system collapses. And yet there are Octopuses with a better track record in inflation forecasting. People have been repeating that the Bank’s independence is a great success for so long that it has become a truism. Why? We’ve just had a huge crash, the result of a credit bubble – fuelled by dangerously low lending rates. And the recipe for restoration? Even cheaper debt, with resurgent inflation. The British

Friday

Peter Hoskin

Clegg stands up for deficit reduction

Cleggologists will mark down the Deputy PM’s speech today as a typical effort. There was basically nothing in it that was new – but Clegg still put it across with more punch, and more persuasively, than most of his colleagues could manage. All of the slogans and pre-announced policies added up to something that sounded, fleetingly, like a plan for growth. Although we’ll still have to wait for Vince Cable’s review to see the outlines of that plan shaded in. Clegg’s main point was straightforward enough: that the government has to, and will, go beyond deficit reduction to stoke the embers of the British economy. He then ranged across everything

Daniel Korski

General Hague, attack

William Hague must be feeling that the incoming rounds are coming closer and closer. The Spectator, The Daily Telegraph and now The Times (£) have each allowed their pages to be used as Forward Operating Bases from which to launch attacks against the coalition’s foreign policy. Even in the coalition’s own ranks, dissatisfied foot-soldiers (and a even a few senior officers) think that General Hague has lost his appetite for the fight. Tories talk about a man whose defeat in 2001left a permanent wound, and how the Christopher Myers fiasco left another gash. The government’s equivocal response to events in Egypt has provoked fresh criticism, while the army of eurosceptics,

Thursday

Toby Young

Forget Mandarin. Latin is the key to success

As promised, here is an extended version of an article from the skills supplement in this week’s issue of the Spectator. On the face of it, encouraging children to learn Latin doesn’t seem like the solution to our current skills crisis. Why waste valuable curriculum time on a dead language when children could be learning one that’s actually spoken? The prominence of Latin in public schools is a manifestation of the gentleman amateur tradition whereby esoteric subjects are preferred to anything that’s of any practical use. Surely, that’s one of the causes of the crisis in the first place? But dig a little deeper and you’ll find plenty of evidence that this particular

Peter Hoskin

A new golden rule

The last few days have given us enough evidence for a new economic rule: the better the news about the economy, the less we’ll see of Ed Balls. As Tim Montgomerie notes over at ConservativeHome, the shadow chancellor was plastered right across the airwaves when last week’s growth figures were announced. This week – when the economic omens have been more encouraging – not so much. On Tuesday, as Fraser blogged, we had a record rise in manufacturing activity. Yesterday, there were heartening figures for the construction sector. And, today, the services sector has followed suit, with its strongest showing for eight months. Here’s the graph for all three: Sterling

Carole Stone

Much more than a networking event

What’s the point of Davos? This is a question seldom addressed in the reports filed from the five-day “World Economic Forum” which ended on Sunday. Many speeches are made, many issues debated, but it is not a place where decisions are taken. It is not a G20. Manifestos are not launched there. It exists to serve a very particular function: every year for a short period of time it becomes the temporary capital of the globalised world. Top business and political leaders, distinguished academics and journalists – all committed to improving the state of the world – flock there to meet each other, swap ideas and then go home. This

David Blackburn

Council gorillas get on the buses

The cold war in Britain’s localities is warming up. Buried in the Telegraph and the Financial Times is the news that councils are cutting local bus services, and central government is being apportioned blame. An organisation called Better Transport has launched a campaign titled Save Our Buses. It claims that straitened councils have been forced to shed £34 million from the subsidised funding of local buses; 70 percent of routes have been affected so far.   This is a prime example of local government conniving to avoid responsibility for spending contractions. With adroit calculation, councils bastardise vital services to inconvenience those they represent. Local bus routes are a necessity, particularly

Peter Hoskin

Introducing Britain’s skills crisis

Did you know: Britain trails well behind other countries such as the US, Germany and Poland when it comes to educating its workforce? Did you know: the number of young people not in employment, education or training has risen by around 40 per cent over the last decade? Did you know … oh, you get the idea. All the statistics, and more, are in the booklet on Britain’s Skills Crisis that is included in this week’s Spectator. For CoffeeHousers who don’t buy the magazine (although you should, etc – purchasing options here), you can read the supplement for free via this snazzy, page-turning whatsit. We’ll also put one or two

Wednesday

James Forsyth

Rooting out the cause of the crisis

David Frum is doing a great series on the Financial Crisis Inquiry Commission report. The report is, obviously, US-centric but its argument that the problem was not with the regulation but the regulators strikes me as highly important: “[W]e do not accept the view that regulators lacked the power to protect the financial system. They had ample power in many arenas and they chose not to use it. To give just three examples: the Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not. The Federal Reserve Bank of New York and other regulators could have clamped down on

Matthew Hancock-Mp

IFS say Labour’s policy would mean higher interest rates

From the start of the financial crisis, the Conservatives have argued that when a country¹s finances are in a mess, the best way to manage demand is through monetary activism and fiscal responsibility. Going into this crisis, Britain¹s finances were indeed in a mess. We had the biggest structural deficit among major developed economies (according to the IMF, OECD, oh, and Alistair Darling). To claim there was no structural deficit is to oppose the truth. The principles of monetary activism and fiscal responsibility underpin the approach to the recovery too. By dealing with the fiscal mess, we can keep interest rates lower for longer, and avoid the sorts of financial