Economy

Thursday

Matthew Hancock-Mp

Miliband’s economic immaturity

As an economist working in politics, I’m sometimes shocked at some of the arguments about the economy. But today’s statement on welfare reform is economically shocking.   Miliband argues that you can’t reform welfare until there are more jobs. Set aside the fact that this is another area where Miliband’s argument is Lord make me virtuous, but only tomorrow. Team Brown delayed welfare reform for over a decade under Labour, and their position today is to call for yet more delay.   Let’s look at the economics.   First, Miliband falls for the classic lump of Labour fallacy. It’s as if he thinks there are a set number of jobs

David Blackburn

Cameron fells the forestry consultation

Despite his easy charm, David Cameron is unsentimental. His dismemberment of Caroline Spelman’s sagging forestry policy at yesterday’s PMQs was as ruthless as it was abrupt. The Prime Minister cannot be an enemy of Judy Dench and other doughty dames, so the hapless environment minister had to be shafted. Cameron’s strategic withdrawal did not end there. Several newspapers report that the 12-week consultation will be curtailed by the end of the week, on the simple grounds that the public does not like it. Spelman is expected to pronounce the project dead in the Commons at lunchtime today, and the chamber will ring with the noise of Labour’s braying benches. Ed

Wednesday

David Blackburn

Unemployment rises

It was the snow wot done it. The new unemployment figures have been published and the headline figures are that unemployment increased by 44,000 to 2.49 million between December 2010 and January 2011; the claimant count also went up by 2,400 to reach 1.46 million. It’s disappointing news, especially as figures from Germany are markedly different. Miliband may exploit the news at PMQs. But there are reasons to be positive. The government’s mouthpiece on these issues, Chris Grayling, who is less attack dog more beast of burden these days, argued that Q4’s negative growth figures will have had some effect on employment (and it’s likely to continue to do so

Tuesday

Fraser Nelson

Why we need a rate rise

Now that today’s inflation figures are up, to a predictable and predicted 4.0 percent on CPI and 5.2 percent on RPI, we can expect the usual response. Nothing from the government (even though the declining standard of living will eclipse cuts as the no.1 problem of 2011); plenty of shocked news stories; and, then, the round of commentators saying that Mervyn King should “hold his nerve,” and not increase the absurdly low base rates of 0.5 percent. Inflation is temporary, he says, and should be okay again this time next year (that’s what he said about the start of 2011). The Spectator does not have much company in finding fault

James Forsyth James Forsyth

Inflation up again

CPI inflation running at four percent, twice the bank’s target level is a problem for the Bank of England’s Monetary Policy Committee which remains set against a rate increase. I suspect we’ll hear much about how this rise is partly prompted by the one off effects of the VAT rise and the role of global commodity prices in driving inflation. But it is hard to get away from the fact that inflation has been above the two percent target rate for 14 months now. (Personally, I’d favour the scrapping of inflation targeting). The most immediate political consequence of this inflation is that it is hitting living standards. Wages are not rising

Monday

Daniel Korski

Aid to India to be replaced with pro-growth help

How to manage Britain’s aid to India? The fast-rising country has a space programme, costing nearly the same as Britain gives in annual aid. To many people, that is reason enough to cut all aid. Yet, at the same time, India is one of the world’s poorest countries. 456 million people live on less than $1.25 per day. Annual income per person is only $1,180, compared to $3,650 in China and $41,370 in the UK. That means there are 20 percent more poor people in India than in sub-Saharan Africa. But India receives only $1.50 in aid per person, compared to $28 for Sub-Saharan Africa. A good example of India’s

David Blackburn

China eclipses the Japanese economic miracle

Official figures suggest that China has replaced Japan as the world’s second largest economy, after an estimated 10 percent growth rate left China with an economy worth close to $5.8trillion at the end of quarter four 2010. Japanese growth hovered around the 3 percent mark in 2010 with a total GDP value of $5.47 trillion. Analysts have told the BBC that it is ‘realistic’ that China will overhaul the US’ economy in about a decade, which, as Pete has demonstrated, does not look too outrageous a suggestion.  All of this puts me in mind of the European Union. The CIA World Factbook records that the EU leads the globe in

Sunday

Fraser Nelson

Britain’s coming crunch with Europe

It did not take David Cameron long to realise that there were three parties in his coalition. A few months into government, the Prime Minister worked out that only half of the policies he was enacting came from the shared agenda drawn up when the Tories and LibDems got together. The other half comes from the EU. Or, more specifically, the Civil Service machine, which is busy implementing various EU Directives, often passed many years ago. Cameron is trying to put the brakes on this process. As I say in my News of the World column, this has led to much frustration in Whitehall. And dismay: the Civil Service remembers

Saturday

David Blackburn

Clarke: Middle England hasn’t got a clue

Ken Clarke’s political career has had the resilience of a cockroach, but even he now seems to be cracking. Tim Montgomerie has shot a vicious broadside at Clarke’s dated politics in today’s Mail. And Clarke, for his part, has given an interview to the Telegraph, where he gives a convincing impression of a man completely out of touch. Clarke concedes (just) that the ECHR needs reform, but he defends its supreme jurisdiction: ‘Some people are very angry [about prisoner voting], but we should be able to resolve that. The jurisdiction of the [European] court remains the fraught issue. I don’t see how we can say that we don’t obey courts if we don’t want to.

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