Economy

Thursday

Fraser Nelson

Renaissance Balls

Balls is back. The author of Gordon Brown’s economic policies for 15 years. The man who bears more responsibility for anyone else – other than Brown – for the asset bubble and the consequent crash. But I suspect that, right now, Theresa May is doing cartwheels and George Osborne cursing. Balls, for all his many drawbacks, is the most ferocious attack dog there is. His brilliance (and I hate using that word) at using numbers as weapons far surprassed anything the Tories could manage in Opposition. His policies are reckless: to borrow, and to hell with the consequences. His modus operandi is to launch around-the-clock attacks. He has powerful media

James Forsyth James Forsyth

Balls replaces Alan Johnson

Ed Miliband has just taken the biggest risk of his leadership in appointing Ed Balls as his shadow Chancellor. Balls’ is not a man who take orders and his view on the deficit is noticeably different from Ed Miliband’s. He is also the person most closely associated with Gordon Brown’s economic record. George Osborne will relish this fight. During the vacuum between Ed Miliband winning the leadership and the shadow Cabinet elections, Osborne prepared for facing Balls. He told friends, ‘we’ve circled around each other long enough. It is time to get on with it now.’  

Wednesday

Daniel Korski

Aussie rules | 19 January 2011

William Hague has been visiting Australia in the last couple of days, alongside half of the National Security Council. But you would not know it. Except for a few comments in the blogosphere, there has been little write-up of the visit in the newspapers. In many ways this encapsulates one of the government’s key foreign policy dilemmas. Many of the world¹s problems require cooperation with the US, Europe and the BRICs ­ but especially the BRICs, who, for all their flaws and faults, are the fast-growing countries on the planet. If you want to force an end to Iran¹s illegal nuclear enrichment programme, then you need China. If you have

Tuesday

Matthew Hancock-Mp

Miliband can’t credibly complain about both inflation and growth

Today’s shocking inflation figures have sparked a fascinating debate. I laid out my take earlier, and I thought CoffeeHousers may appreciate a different perspective. Matthew Hancock MP is a member of the Public Accounts Committee, former economist at the Bank of England and former chief of staff to George Osborne. Fraser Nelson. Last week, growth. This week, inflation. Ed Miliband is complaining about both. But the trouble is: the two can’t be taken in isolation. For the main weapon against inflation is for the Bank of England to raise interest rates. Yet the main weapon to support growth is for the Bank of England to keep interest rates lower for

James Forsyth James Forsyth

Laws: the 50 percent rate should be abolished asap

David Laws has penned a robust defence of the coalition’s economic policies for The Guardian. He points out that the big dividing lines in politics are on the economy and then goes onto say: ‘Ed Miliband is betting that economic recovery will be derailed, and while trying to reconcile many divergent views in his party, he has generally taken the position that cuts should be delayed and that high tax rates (including the 50% tax rate) should be retained. Ed is getting all the big economic decisions wrong, and leading his party into an economic policy cul-de-sac.’ What is striking about this passage is Laws’ mention of the 50p rate

Sunday

Peter Hoskin

Labour may be doing alright, but Miliband is still dodgy on the public finances

Ed Miliband’s leadership may be young, but his trickery on the public finances is already well worn. We got it all in his interview with Andrew Marr earlier – and then some. There was the claim that Labour “paid down the debt” (that I dealt with here). There was the claim that Labour’s spending was responsible (my response here). And there was a straight-up lie about Miliband’s forecast for a double-dip. So far, so Brown. What caught my ear, though, was this exchange: Andrew Marr: I mean Tony Blair said in his memoir that by 2005, he was worried that the party was spending too much. And Alistair Darling said

Gavin Kelly

Breaking the curious silence on upcoming tax changes

This week, Nick Clegg added his name to the fast-growing list of politicians addressing the critical question of living standards. His phrase of choice was ‘alarm clock Britain’, in effect his version of Ed Miliband’s ‘squeezed middle’. It is, of course, a clunking label for what is a serious topic (hardly the first time a politician has achieved such a feat). But quibbles over terminology aside – and as Miliband’s article on Friday confirmed – these are the first serious shots in the political battle to frame the coalition’s crucial March Budget. It is now increasingly clear that at the heart of that struggle will be attempts by party leaders

Saturday

Matthew Hancock-Mp

Miliband in denial

Did he get cold feet? Or was his new spin-team overenthusiastic in their pre-briefing? We were told we’d get an apology from Ed Miliband in today’s speech, but instead he entrenched himself in his position that Labour did nothing wrong on the deficit. I’m surprised at this decision. Surely Ed Miliband understands, as his Shadow Chancellor understands, the central importance to an opposition party of economic credibility. That credibility will not return while Miliband bases his economic argument on a denial of the facts. First, and critically, he argues that Britain’s deficit was not a problem going into the crisis. Not only is this disputed by an impressive array of

Thursday

Fraser Nelson

King’s inflation nation

If Mervyn King and his team are trying to deal with Britain’s debt crisis by letting inflation rip, I do wish they would just say so – rather than go through this monthly farce. Yet again, base rates have been left at an absurd 0.5 per cent, in an economy expected to grow by a full 2 percent this year but with inflation at 3.3 percent or 4.8 percent depending on how you measure it. Petrol prices are bad, but now they are matched with soaring prices elsewhere – from train travel to groceries. Here’s a list of some price rises confronting shoppers:   Add Osborne’s VAT rise to non-food

Peter Hoskin

Five more things you need to know about the IDS reforms

Last November, I put together a ten-point summary of IDS’s benefit reforms – so why add five more points now? Two reasons. First, it’s worth dwelling on what, I believe, will be one of this government’s defining achievements. Second – and far more prosaic – the Insistute for Fiscal Studies released a report on the matter yesterday. The following points have all been harvested from that document, and represent the IFS’s judgement, so to speak. Only one judgement among many, but one that warrants some attention. Here goes: 1. Who gains and who loses (in financial terms)? This question courses through most of the IFS report, and stands out in

Wednesday

Daniel Korski

The China arms embargo should be discussed – though not lifted

Today’s Times splashed on the spat between Britain and EU foreign policy “czar” Catherine Ashton over the embargo barring arms sales to China. The embargo was put in place after the Tianamen Square massacre and has remained in place, largely at US insistence, ever since. But is it the right policy? The policy has not prevented China from becoming a military power — its annual defense budget officially stands at $70 billion, although the Pentagon believes the real figure to be twice as high. China is developing carrier-killing missiles that even NATO does not have, and will soon sell weapons rather than seek to import them. There is, of course,

Lloyd Evans Lloyd Evans

A shock for Dave

Wow. Dave had a real wobble at the start of PMQs today. Ed Miliband stood up, looking as mild as a puppy, and asked about the ‘tip’ of two million quid recently paid to the boss of Lloyds. ‘In opposition,’ said Ed, ‘the prime minister promised, “where the tax-payer owns a large stake in a bank, no employee should earn a bonus of over £2,000”.  Could he update us on how he’s getting on with that policy?’ He was already seated when the first peals of laughter echoed around the chamber. Dave had stood up but he didn’t speak. Nothing came out. Silence seemed to have mastered him for a

David Blackburn

Clegg: time to air our differences

Why vote Lib Dem? Even Nick Clegg is now asking that question. After 8 months of broken pledges, deep cuts and atrocious polling (due to reach its nadir tomorrow in Oldham East and Saddleworth), Clegg worries that his party is losing its identity. Speaking to the Guardian, Clegg reveals that he hopes to arrest decline by expressing publicly his private differences with David Cameron. This is not defiance from Clegg but a statement of positive intent. Taking brave decisions, he says, has proved that the Liberal Democrats can govern and that coalition works; the government’s strength is sufficient to withstand disagreement. That’s all very well, but Clegg needs more than

Tuesday

Peter Hoskin

Mixed attitudes towards the cuts

Forget the voting intentions, the real action in YouGov’s latest poll comes in the supplementary results. There, as Anthony Wells suggests, are attitudes towards spending cuts that will both perturb and hearten the coalition. Let’s take the bad stuff first: “Asked if the government’s cuts will be good or bad for the economy only 38% now think they will be good, compared to 47% who think they will be bad. In comparison between October and December last year it was roughly even between people thinking the cuts would be good and those thinking they would be bad. On whether the cuts are being done fairly or unfairly, 57% now think

Monday

Fraser Nelson

The crash from an Austrian perspective

It’s not all politics at Westminster. There’s a pretty good think-tank scene too, with lectures on topics that you’re unlikely to read about in the newspapers. One took place today: the Adam Smith Institute hosted a lecture by Steven G. Horwitz, from St. Lawrence University, entitled “An Austrian perspective on the great recession of 2008-09”. As many CoffeeHousers will know, “Austrian” refers to von Mises, Hayek and the others whose analysis of bubbles and crises certainly seems to fit current events. My colleague Jonathan Jones was there, and took some notes – which I have moulded into a six-point briefing.  It’s not often we do a post based on a

James Forsyth James Forsyth

Johnson running out of his nine lives

Ed Miliband’s press conference today was a classic example of clever opposition politics. He and Alan Johnson said that Labour would continue the bonus tax on the banks for one more year. This policy has the twin advantage of maximising the coalition’s discomfort over the whole issue of bankers’ bonuses and expiring well before the next election. The rest of Miliband’s press conference was devoted to an attempt to defend the record of the previous Labour government. Miliband kept making the valid point that in the years before the crash Cameron and Osborne weren’t saying that Labour was spending too much but were instead committed to matching Labour’s spending plans.

Friday

Daniel Korski

China in a bullshop

As if to illustrate Pete’s post about the rise of China and India, Chinese Vice Premier Li Keqiang has just finished a visit to Spain during which agreements worth 5.7 billion euros were signed. The Chinese delegation is said to have committed itself to buying six billion euros of Spanish debt, which helped calm markets and provided some relief for Spain’s recession-hit economy. Around the time that the Soviet Union collapsed, the Chinese used to say only they could save communism. Twenty years on, it seems only they can save capitalism. The Spanish are certainly in no doubt about the importance of their newfound Chinese friends. The left-leaning Spanish newspaper

Peter Hoskin

From the archives: Protesting the price hikes

The week began with grim projections about petrol prices, and has been coloured by the twin topics of tax and inflation since. So, a decent opportunity to look back on the fuel protests of 2000, in the latest shot from the Spectator archives. Here’s a piece from the time, by Coffee House regular, and Spectator theatre critic, Lloyd Evans:   Do you want a smack in the mouth?, Lloyd Evans, The Spectator, 16 September 2000 As I write this, the gravest crisis in our island story is unfolding before my eyes. The great four-star emergency of September 2000. Where it will lead, no one can tell. Frequent bulletins from BBC

Peter Hoskin

The rise of China and India, by numbers

We’re used to seeing growth forecasts for the next few years, but here’s an altogether rarer beast: forecasts stretching all the way to 2050. They were released by PricewaterhouseCoopers last night, and I thought CoffeeHousers might appreciate seeing them in graph form. Naturally, slap health warnings aplenty across this – economists barely know what will happen this year, let alone decades hence – but some of the trends are still pretty striking. Here’s a round-up: 1. This first graph suggests that – allowing for the relative values of different currencies – China’s GDP will top the US’s around 2020. India’s does likewise just before the 2050 endpoint:   2. The

Fraser Nelson Fraser Nelson

King’s ransom

How much bigger does Britain’s inflation have to become before Mervyn King realises it’s a problem? The VAT rise should have lifted prices by 2.1 percent – but shopkeepers over Britain have been applying far larger rises. Why? Because one of the most important factors in economics – expectation of inflation – is back. People are bracing themselves for another year of rising heat, transport and staff costs – so retailers hike up prices in anticipation, and a vicious spiral of inflation begins. The Retail Price Index was up 4.8 percent last November, and Consumer Price Index 3.3 percent. The price of this failure of monetary policy is paid by