George osborne

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

James Forsyth

Why I’m sceptical of all the early election talk 

Something has undoubtedly changed in the coalition in the past fortnight. Even those at the centre, who have been most loyal to the concept of coalition, are now happy to complain about the other side and its behaviour. But I’m still sceptical of all the early election speculation which has been sparked by Jackie Ashley’s very clever Guardian column. The main reason why I don’t think it will happen is the Cameron brand. Ever since David Cameron became leader of the Conservative party, the top of the party has believed that the protection of the Cameron brand is essential to electoral success. Cameron has too much personally invested in showing

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

Sunday

James Forsyth

The coalition is shaken to its foundations as the Liberal Democrats rage at Cameron, Osborne and the Conservative party

The Liberal Democrats are mad as hell at their coalition partners—and don’t seem to care who knows it. Their fury has been caused by what they see as the roughhouse tactics of the No campaign and the Tories’ complicity in them. Chris Huhne’s letter to George Osborne has been written to make clear just how betrayed the Liberal Democrats’ feel by the actions of their coalition partners. Huhne writes, “I explicitly warned you that the manner of the AV campaign would be as important as the result, in terms of the effect on the coalition.” Then, he moves onto a particular Lib Dem bugbear—the claim that AV would cost £250

Wednesday

Jonathan Jones

Obama’s budget: faster, but not further, than Osborne’s

Barack Obama’s budget plan has become a political debating point on this side of the Atlantic. Ed Balls set the ball a-rolling in an article for the Guardian this morning, which effectively claimed that the President isn’t planning to cut the deficit as quickly as George Osborne is. “The truth is that it is Osborne himself who is isolated,” is how he pugnaciously put it. But the Tories’ Matthew Hancock has since responded — on Coffee House, as it happens — arguing that, actually, the Obama Plan is simpatico with what Osborne is doing. By way of hovering above the red-on-blue scrap, we thought we’d put together a comparison of

Matthew Hancock-Mp

Labour are drawing the wrong lessons from America

The global debate about how we live within our means is moving fast. I spent a week in Washington while Congress and the President hammered out their deal on this year’s budget. The deal was significant because all sides agreed on the need to cut spending now. After days of brinkmanship, they agreed to £38 billion in-year cuts. Significant, perhaps, because America has now started to tackle its huge deficit. But everyone agreed it is a small downpayment ahead of a much bigger debate to come.   What’s fascinating for us here is that President Obama’s proposals are to cut the deficit slightly faster than we are here. Congress would

Friday

James Forsyth

Balls in fiscal isolation

Ed Balls has long said that America is the right comparison for Britain when it comes to how to deal with the deficit, contrasting the Obama administration’s fiscally loose policies with Osborne’s plan for fiscal tightening. This comparison has always been flawed; the dollar is the world’s reverse currency which gives Washington far more fiscal flexibility than HMG. But, even leaving that aside, the Obama administration is now — albeit under Congressional pressure — about to start cutting.   By 2015, Obama’s plan will have reduced the US deficit by 8 percent of GDP. Osborne’s plan sees Britain reduces its deficit by 8.4 percent by 2015. Indeed, from next year

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?

Wednesday

Peter Hoskin

Osborne enters the fray

Seems that the Tories can be more assertive too. After remaining more or less silent on the matter since the coalition was formed, George Osborne has today given his take on the AV referendum to the Daily Mail — and he’s far from kind towards the Yes campaign. “What really stinks,” says the Chancellor, “is actually one of the ways the Yes campaign is funded.” What he has in mind are the campaign’s ties to an organisation that sells vote counting services, as revealed by Ed Howker in The Spectator. “I think there are some very, very serious questions that have to be answered.” But, rather than just attacking the

Monday

James Forsyth

Why the Vickers Review won’t harm the City’s global competitiveness

The headline measure in the Vickers Review—the need for a ring fence between retail and investment banking—should not harm the City’s global competitiveness as it only applies to banks with a UK retail operation. For everyone else, Vickers would leave London as a relatively good place to do business: far more certain than Hong Kong and less restrictive than New York once the new Dodd-Frank regulations are in place. In Conservatives circles tonight, there is a quiet confidence that the government will be able to accept the Vickers Review in full when it reports in the autumn. Given that the bill to scrap the disastrous tripartite regulatory system is currently

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

Saturday

Peter Hoskin

The Treasury Select Committee gets prescriptive

Andrew Tyrie promised that the Treasury Select Committee would be an assertive, insistent body under his stewardship — and he hasn’t disappointed so far. The committee’s recent evidence sessions have been fiery affairs, particularly by the usual standards of these things. And today they have released the result: an extensive and prescriptive report into last month’s Budget. Several of the report’s observations are worth noting down — not least that advance briefing of the Budget is “corrosive of good government,” and that “almost all the evidence received [about the government’s Enterprise Zones] is unsure about the extent to which they will contribute to UK growth.” But more significant is the

Fraser Nelson Fraser Nelson

Osborne needs to make his case for growth

The Guardian have an odd story today. “Business chiefs who backed cuts now doubt UK growth,” runs the headline — suggesting that these sinners are now being confronted with the error of their own ideology. Who are the business chiefs? We have Archie Norman, the retired head of Asda, now part-time chairman of ITV. He “said the government’s growth targets were too optimistic”. Set aside the fact that the government doesn’t make growth targets now, and has subcontracted that the Office for Budget Responsibility. Where is the connection between growth downgrades and cuts? In the imagination of The Guardian, I suspect. Next Andy Bond, another former head of Asda, is

Peter Hoskin

Doing the splits

When is a split not a split? When it’s a subsidiary, of course. We learn this morning that the Vickers Banking Commission will not recommend a complete, Glass-Steagall-style separation of retail and investment activities. But it will advise that banks erect some sort of barrier between the two, to ensure that everyday savers’ (and taxpayers’) cash isn’t risked by the Masters of the Universe. Specifically, it will propose that banks create subsidiaries out of their investment arms. Those subsidiaries could then go bust without, in theory, affecting the retail half of the equation. As Robert Peston explains, there are two ways of implementing these subsidiaries — and the Vickers Commission

Friday

Peter Hoskin

A headache made in Lisbon

Developments aplenty on the Portuguese front — the most noteworthy being that Britain is probably in for a €4.8 billion share of the €80 billion tab. Robert Peston explains the numbers here, although it basically comes down to the lending mechanisms that will be deployed. Add up our 13.5 per cent exposure to the European Financial Stabilisation Mechanism (EFSM) with our 4.5 per cent exposure to the IMF’s pot, and it comes to €4.8 billion. Or, rather, £4.2 billion. The politics of the situation are precarious for the coalition. Yet I doubt they’ll be unduly troubled by Ed Balls’s suggestion that “it would be better if this was sorted out

Peter Hoskin

More demands on George Osborne

Is the defence budget the most chaotic in all Whitehall? George Osborne said as much last October — and he’s still dealing with its hellish intricacies now. The main problem, as so often in military matters, is one of overcommitment. Thanks to various accounting ruses on Labour’s part, large parts of the MoD’s costs were hidden in the long grass of the future. It was buy now, pay later — with Brown doing the buying bit, and the coalition doing the paying. The number that William Hague put on it last year was £38 billion. The MoD was spending £38 billion more, over this decade, than had been budgeted. Even

Thursday

Peter Hoskin

Osborne’s credit card fraud

Well, David Cameron is doing his part to boost the Spanish economy — by EasyJetting to the country with SamCam to celebrate her 40th Birthday. But what about Spain’s peninsular cousins, the Portuguese? They were, more or less, the subject of George Osborne’s speech to the British Chambers of Commerce conference earlier — but not how they might have hoped. The chancellor didn’t dwell on the prospect of British help for their stricken economy, but he did cite Portugal as a kind of worst case scenario. “Today of all days we can see the risks that would face Britain,” he said, “if we were not dealing with our debts and

Wednesday

Peter Hoskin

Winners and losers | 6 April 2011

The birds chirruping in the sunlight clearly didn’t get Ed Balls’s memo. Otherwise they’d know that today is “Black Wednesday,” the day when the coalition’s tax and benefit policies swoop in to leave the average household some £200 a year worse off. This is the message that the shadow chancellor is broadcasting this morning, be it on Radio 4 or in a post for Labour Uncut. His claim is that the coalition is — by going “too far, too fast” on the deficit — merely squeezing the “squeezed middle” even more. Only that’s not quite the full picture. The Treasury, for one, is pointing out that today’s measures will actually

Tuesday

James Forsyth

Budget lessons from across the pond for America

In Washington, a budget shutdown is becoming an increasing possibility. The Republican controlled House of Representatives wants deeper cuts than the White House will accept. This has led a growing bi-partisan group of Senators to try and revive the work of the blue-ribbon commission on Fiscal Reform and Responsibility that produced its report late last year. Interestingly, the commission’s proposals are very similar to George Osborne’s plan. UK Treasury analysis shows that the Osborne plan calls for an average tightening of 1.6 percent a year from 2009-10 to 2015-16  while the commission suggests 1.4 percent a year from 2010 t0 2015. The composition is also similar, both work on roughly