Economy

Friday

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

Tuesday

Peter Hoskin

Will Osborne be vindicated in 2015?

VAT, VAT, VAT – but what’s this? The main headline on today’s FT doesn’t mention the sales tax at all, and the piece below it only does so in passing. Instead, a declaration that “UK austerity measures [are] expected to pay off,” based on a survey of economists conducted by the paper. Although those polled have concerns about inflation and the eurozone, only 13 percent say that George Osborne needs a Plan B for dealing with the public finances. As always, we shouldn’t place too much stock in this kind of thing. Some economists will back the coalition, others will back Labour; some will be right, others will be wrong.

Peter Hoskin

Osborne and Johnson battle over the new tax divide

Now here’s a thing: a radio appearance by Alan Johnson that actually clarified some details about Labour’s economic policy in the Miliband era. Sure, the shadow chancellor spent most of his time on the Today Programme setting about the coalition’s VAT hike, with all the usual arguments about jobs and growth. But there was also confirmation that Labour’s deficit reduction plan would split 60-40 between tax rises and spending cuts, and that they would raise national insurance levels rather than VAT. It repositions the argument some way beyond the simple Do/Don’t divide that was developing around VAT. Now there are two choices for voters to make. Do they prefer a

Monday

David Blackburn

Miliband swings into action by warning of inflation

The seasonal interlude has ended and Ed Miliband is sallying north to Oldham East. He will resuscitate old favourites from 2010: progressive cuts, fairness and a government bent of an ideological mission: but he will illustrate his point with reference to tomorrow’s VAT rise. Miliband will say: ‘Today we start to see the Tory-led agenda move from Downing Street to your street. At midnight VAT goes up, hitting people’s living standards, small businesses and jobs. The VAT rise is the most visible example of what we mean when we say the government is going too far and too fast, because it’s clear that it will slow growth and hit jobs.’

Saturday

The Spectator

Leader: Winter sunshine

Every day of this new year, some 200,000 people are likely to be lifted out of what the United Nations defines as extreme poverty: living on $1.25 a day or less. Every day of this new year, some 200,000 people are likely to be lifted out of what the United Nations defines as extreme poverty: living on $1.25 a day or less. This remarkable pace of improvement will probably quicken over the rest of the decade. This is not due to any government development goal or charity outreach programme. It is driven by global capitalism, just like the transformation of India, China and other emerging markets. We are living in

Peter Hoskin

Rising costs: a problem for the public and the coalition in 2011

Ne’er mistake correlation with cause, I know. But, during the Brown premiership, the correlation between petrol prices and poll ratings was still pretty striking. Mike Smithson graphed it early last year, but the basic story was this: the Tories enjoyed their biggest poll lead over Labour when petrol prices were at their highest, and Labour closed the gap to only 1 percent when petrol prices were at their lowest. At the very least, it gives us a hypothesis to work from: prices up, the government suffers; prices down, the government recovers. And it looks as though we’ll be able to test that hypothesis soon enough. Today’s Express reports that –

Thursday

Fraser Nelson

A debt-filled New Year

The Spectator is out today, with a cover story that I would commend to CoffeeHousers. Failure to learn from history usually condemns a nation to repeating its mistakes. That’s why we should be nervous that no one seems to have worked out what caused the crash. Little wonder: the guys doing the analysis are the same guys who failed to spot the crisis building up, so it suits everyone to blame the banks. “How was I to know,” says everyone from Gordon Brown to Joe the Pundit, “that they were doing all these complex debt swap thingies? They deceived everyone, the bounders.” There is another analysis – and it’s our

Monday

Peter Hoskin

Going for growth in 2011

Just as at the turn of 2010, economic growth is going to be big news in 2011. Back then, the question was when we would return to any growth at all. Now, it’s more about how fast our recovery can be. So just how fast can it be? If you notice, Labour have fallen very quiet about the possibility of a double dip recession. But they’ll still leap clamourously upon any sign that coalition policies are stalling growth and jobs. In this, they might even be joined by those on the right who are sceptical of the coming VAT hike. To put some sort of perspective on proceedings – albeit an incomplete

Wednesday

James Forsyth

Paid to deliver

Payments by results is the key to innovation in the public sector. It will help transform public services from something delivered by a state monopoly into being provided by a variety of suppliers who compete for state funding with best practice rewarded. The work programme to move the unemployed off benefits and back into work – outlined by Chris Grayling today –  is the biggest move to payments by results we have seen in this country. Groups can be paid up to £14,000 for moving the long-term unemployed permanently back into work. This should ensure that groups have an incentive to tailor their programmes to the individual rather than relying

Sunday

James Forsyth

‘The end of men’ debate

Hanna Rosin’s ‘the end of men’ thesis is one of the more interesting socio-economic and cultural arguments out of there. Rosin’s view is that women are simply better suited than men to the new economic environment and thus will increasingly pull ahead of men, reversing old gender dynamics. Rosin points out that, in the US, 13 of the 15 professions expected to grow the most over the next decade are female dominated, that around 60 percent of bachelors and masters degrees are earned by women and that young women earn more than young men. Intriguingly, where parents in US fertility clinics are trying to determine the gender of their child,

Friday

James Forsyth

Clegg: Sheffield Forgemasters decision could be revisited

In an interview with Prospect Magazine, Nick Clegg has suggested that the decision not to loan government money to Sheffield Forgemasters ‘could be revisited.’ When pressed on whether the decision to cancel the loan was an odd decision given the coalition’s stated aim of rebalancing the economy and encouraging manufacturing. Clegg replied, “I agree. The trouble is the money that Labour had provided came from a budget in the business department that was running on empty. The treasury and Vince Cable felt it wrong to take money from somewhere else. But the whole issue could be revisited.” This strikes me as a dangerous thing to suggest. If the issue is

Thursday

James Forsyth

Johnson’s economic education

When he took on being shadow Chancellor, Alan Johnson said that he would need to get hold of an economics primer. Judging by his comments in yesterday’s debate about the bi-lateral loan to Ireland, he hasn’t got that far into it. Johnson told the House, ‘The euro had nothing to do with the [Irish] property boom and bust’. This is a bizarre statement. If Ireland had been able to set its own interest rates, they would have been far higher and thus dampened down the property boom. As Johnson’s close friend and the former Chancellor Alistair Darling said later in the debate when asked if he agreed with the Shadow

David Blackburn

Miliband’s Oldham dilemma

Joy. It will be a campaigning Christmas, now that the Oldham by-election is likely to be held on 13th January. The Labour party is much exercised. The permanently outraged Chris Bryant says it is a ‘disgrace’ that politics will sully the ‘major Christian festival of the year’ – the lapsed cleric seems to have forgotten the election’s proximity to Easter. More importantly, fewer students will be in Oldham on 13th January to serve ‘judgement’ on the government, as Hilary Benn put it in the Commons this morning before adding that the government is ‘running scared’. By-elections are determined by local issues, as one would expect. But Benn’s statement perhaps reveals how

Wednesday

Ted Sumpster

Keeping the financial sector in Britain

The financial services industry in the UK is at a crucial juncture. Our new research report “Not with a Bang but a Whimper” – published tomorrow –  highlights the decline in the UK’s competitiveness as a domicile for this sector, and the increasing likelihood that both companies and workers will take the leap and choose to base themselves elsewhere. Many will see this as a good thing. The economy is still recovering from the financial crisis, the eventual cost to the public purse of the bank bailouts remains unknown, and the yearly round of hated bank bonuses are impending. On the other hand, losing such a significant contributor to GDP,

Tuesday

Fraser Nelson

Why we must remember the lessons of the Anglo-Scottish Enlightenment

The Adam Smith Institute kindly asked me to speak at their Christmas reception last night, and yesterday I was mulling what to say. When at The Scotsman ten years ago, I would sometimes visit the great man’s grave in Edinburgh, and be surprised to see only Chinese tourists paying tribute. It was a pretty good sign of how political power would play out. Edinburgh is, with Prague and Stockholm, among the most beautiful cities in Europe; itself a monument to the Enlightenment. And how tragic that students – even Scottish ones – are taught about the E word only in the context of the French Enlightenment. The likes of Rousseau,

Saturday

The Spectator

Portrait of the week | 4 December 2010

Home The Office for Budget Responsibility said it thought economic growth for 2010 would be 1.8 per cent, not 1.2 per cent as it had previously predicted. It expected 330,000 public sector workers to lose their jobs over the next four years, not the 490,000 it forecast in June; 1.1 million jobs would be created in the private sector. ‘The bulk of this revision results from the action we have taken to cut welfare bills rather than cut public services,’ George Osborne, the Chancellor of the Exchequer, told the Commons. A lower 10 per cent rate of corporation tax would be levied from April 2013 on the profits of hi-tech

Peter Hoskin

How the OBR measures up

There are only so many Labour interviews a blog can take, so I’ll skip over Yvette Cooper in the Guardian (sample: “I did think about standing, and Ed said he thought I should stand and if I wanted to stand he would not stand”). Instead, another catch-up on how the Office for Budget Responsibility’s growth forecasts are shaping up against those made by other institutions. Since I last did this, two new documents have been processed into the public domain: the OBR’s latest economic and fiscal outlook, of course, as well as the the Treasury’s round-up of long-term independent forecasts. So here’s how the panorama of forecasts looks now:

Peter Hoskin

Brown struggles on beyond the crash

Today’s Guardian calls it his first interview since leaving office, although I think the Independent beat them to that one back in July. But, in any case, Gordon Brown’s chat with Larry Elliot is another staging post on his slow path back to public life. Here’s my quick summary: 1) Sniping from the moral high ground. A bit late now, but Brown is making a desperate scramble for the moral high ground. Not for him, he says, scurrilous memoirs that sift through the “arguments” of the past. No, he’s got far more important things on his mind than muck-raking and innuendo, like the future of financial regulation across the world.

Martin Vander Weyer Martin Vander Weyer

Any Other Business | 4 December 2010

What Ireland lacks now are statesmen who can make the case that recovery is possible The screen at Manchester airport tells me I’m about to board an Aer Lingus flight to Dublin, but there’s a Lufthansa plane at the gate. ‘Blimey,’ I mutter, ‘this bailout’s moving fast.’ I’m looking at the wrong gate, however, and it’s an Aer Lingus stewardess who becomes the first of many people during my 36-hour visit to wish me ‘the best of luck’. Luck looms large in the Irish psyche and it’s what they long for right now — an oil find would help, I hear one passenger remark — plus a bit less attention