January 25th, 2011

Double Dip Fears Grow

The half-point fall in GDP has serious political ramifications. If we get a second quarter of what Gordon Brown would call “negative growth” we will be in recession. Ed Balls will have been proved right and George Osborne’s credibility will be shattered. One policy change could prevent that happening. Suspend the VAT hike.

The short-term political hit of executing a u-turn versus the wrecking of the long-term mission to cut the deficit is a calculation that George Osborne won’t like to make. He is touring the studios saying that he “won’t be blown off course by bad weather”. The trouble is he is making the bad weather with this VAT hike.

The VAT hike depresses GDP growth, adds to already rampant inflation and hits the poorest hardest. If GDP in this forthcoming quarter is slightly negative, he’ll have only himself to blame. Why maintain a tax hike that suppresses the very consumer spending necessary for growth?


285 Comments

  1. 1
    Oy Vey says:

    S’ok – once us bankers get our bonuses the spending can start

    Like

    • 10
      Ted says:

      To be honnest I have not noticed much difference in prices pre and post VAT rise. Except for Fuel which has risen due to many other factors as well.

      Like

      • 44

        Because most retailers have only factored the VAT hike onto new products, which come out in Feb. Too much hassle to mess about with old stock.
        Food is the exception, but about 1/3 of supermarket products are zero rated.

        Vat noticable in Feb/March .. but still it won’t be a big rise. 5p here ..20p there.
        Its the fuel and energy that are causing the problem.

        Like

        • 144
          Great Granddad says:

          When you get to my age you might get to understand that VAT is the most unjust and wicked tax ever devised. It is also the most economically destructive. If we had a Conservative party worthy of the name, its declared long term aim would be to rid us entirely of this monstrous tax at the earliest opportunity. The one and only thing that Broon and Darling did between them that made any economic sense at all, was to reduce VAT and for that they got damned by one and all. Good governmental decisions are not always lauded.

          Like

          • Anonymous says:

            What you mean is that you don’t pay much income tax anymore and therefore want to shift tax onto those who do. It’s nothing to do with being a conservative. Most conservative governments favour indirect taxation based on consumption rather than taxing hard work and entrepreneurship.

            Like

          • Osama the Nazarene says:

            +1 anon.

            Like

          • Audemus Dicere says:

            “Great Granddad” and you still haven’t grown up!

            Like

          • Archer Karcher says:

            Conservative governments used to favour low spending and low taxes. The current bunch of fabians, are conservative in name only.

            Like

          • Stop fucking consuming then Gramps. Buy off Ebay, buy 2nd hand or simply pay cash.

            Like

          • Norman Arse says:

            Yeah, when Gideon was younger he was in favour of flat taxes. That’s what he should be doing now, cutting every sort of tax. Income tax is feudal, the new slavery.

            Like

      • 54
        Scary Biscuits says:

        Is that because you’re not one of the people who have to count their pennies at the end of the week? Lucky you. Tax always hurts the poor the most and usually represents a tranfer of wealth from poor to rich (whatever socialists claim). This is why historically the rich generally support big government, from the Cavaliers of Charles I to the aristocrats of Regency England to the elite of the City today.

        Like

        • 133
          Jimbo says:

          As far as the poor are concerned VAT is progressive. A luxury tax is a taxation on people who buy luxuries. Then again The poor seem to have a fascination with large screen plasma TVs, 4x4s and enormous touring caravans, walk around a council estate (not the city ghetto one) to see what I mean

          Like

          • Kitler says:

            You are correct. The poor should know their place. 4x4s and entertainment systems should not be affordable to all but the richest 2% of the country. I say increase VAT to 1000% if thats what it takes to stop the poor buying anything past a small fraction of the turnips they should be farming.

            Like

          • Anonymous says:

            Jimbo is right.

            Like

          • Anonymous says:

            Working class “hero” Bob Crow is sunning himself on the Caribbean island of Aruba, while my family will soon be enjoying the dubious delights of a Yorkshire camping holiday in February.

            Like

          • Osama the Nazarene says:

            Luxury VAT tax – I like the sound of that. Bring in a 30% rate for all items costing more than £15,000 pounds.

            Like

    • 29
      'British' Banker says:

      I don’t see the problem. It’s all gong as per the 2008 Corfu Yacht Drinks Party Plan, as agreed with the inbred cabal, er, peoples’ democratic representatives.

      Like

    • 60
      Cassandra says:

      Guido – tthat is why you are writing a political blog rather than running the country.

      I think the Government has made many mistakes but I certainly hope we do not face a double dip. I do not think it would be wise to do a U turn on VAT now. George has plotted our course and we now have to stick with him – unless he is proven to have cocked it up. And one month’s preliminary figures is not sufficient evidence.

      Like

      • 141
        Anonymous says:

        Virtually the whole country was snow bound for part of the last quarter- of course the figures are going to be depressed.

        Like

      • 142
        Anonymous says:

        i think they actually need to start cutting spending. where is the canadian style ‘we will withdraw from whole areas of current government activity’ that was floated before the election?

        Like

        • 244
          Archer Karcher says:

          Was floated and now drifted right out of sight.
          DfID spending UP, EU funding UP, Welfare spending UP, spending in support of the EUrozone UP, borrowing UP, taxes UP.
          The socialist party has left office, the socialist B team, still run the show though.

          Like

      • 227
        Osama the Nazarene says:

        Double dip so f…ing what! Just something Economists like to make up by providing weird definitions. You can’t make an omlette without breaking eggs. Keep right on track Georgie boy.

        Like

        • 249
          Archer Karcher says:

          Yep, let’s raise taxes in a recession, that’s the way to do it! Your man is hopeless, clueless and useless….

          Like

          • lola says:

            Well, yes and no. Maggi did it and it worked, but… This time it is different. the only way out of the shite New Labour dropped us in is to slash taxes and state payroll aka gummint spending. Sooner or later it’ll have to come to that, or, it’ll come to totalitarianism.

            Like

    • 154

      I think that some care is needed here.We have just had some bad figures but in addition to the bad weather there are other reasons to wonder about how accurate these figures may be.Remember we never know if we get them right in the ned and preliminary estimates are often revised a fair bit. Also as I wrote in my blog today.

      “Another potentially ameliorating point is the fact that if we look further back into 2010 we saw “upward surprises” to growth in the second and third quarters. The numbers then were unexpectedly strong being initially reported at 1.2% and 0.8% respectively. I wonder if some of the growth unexpectedly reported then has dropped out of the figures in some way giving us a surprise in the reverse direction.”

      So whilst caution was needed on the upside so should it be used on the downside. I write on such matters under the name notayesmanseconomics on wordpress for those interested.

      Like

    • 189
      Neil Bowls Balls says:

      Good to see andrew Neil catch ed balls out, time after time. Even though Neil was reading directly from a speech that Balls had written Balls still kept denying that he had said what he said. Neil also pointed out that December 2010 was the highest ever public service spending in the country’s history, so why is he blaming government spending Cuts for the decline?

      Neil is a good man.

      Like

    • 269
      5op a litre in the USA says:

      I’d scrap the leap in fuel duty before the VAT rise. VAT only affects purchasing, whereas fuel prices hit production and transport.

      Fuel duty actually needs cutting right back. Don’t let the Greeno-commutards fool you.

      Like

  2. 2
    Tipton Slasher says:

    this is what you get from putting your trust in Public School Wankers (I voted Tory (maybe no longer)but still think these blokes are no better than the bankers, no fucking idea, never had a proper job)

    Like

    • 3
      Anonymous says:

      The last 13 years never happened?

      Like

      • 6
        Tipton Slasher says:

        The VAT hike is fucking stupid, it is someones wages in my company

        Like

        • 40
          Ed² says:

          Your company not VAT registered Tipton?

          Like

        • 128
          jabbathecat says:

          Explain how this is someone’s wages when a business passes on VAT and it is only the retail end user that actually pays?

          Like

          • theProle says:

            Probably because to sustain sales, margins have had to be cut, to hold to a price point.

            A lot of the stuff made where I work (100ish person family run manufacturing business) is sold at fixed price points (e.g. £4.99, £9.99). The retailers obviously don’t want to shift prices off these. Retailers being big firms (e.g. Kingfisher group), they ring us up and tell us we cut our price to accommodate the VAT rise, or lose our contracts. End result is we make less money, can’t invest as much in the business, can’t employ as many people, us plebs get no wage rises (3rd year on the trot now my wage hasn’t risen) etc etc.

            Like

    • 8
      smoggie says:

      The elite of the Labour Party are also public school wankers. More so.

      Like

      • 100
        Anonymous says:

        That maybe so but the essential difference is that they would create the conditions for others to join the elite, if they are are up to the job. The Tories, and sadly now the Lib Dems too, would much rather the upper strata was reserved for them and others like them who are, of course, the entitled ruling class.
        There is no basic problem with Socialists obtaining an education and being successful as long as they continue to provide the means for others, from whatever background, to follow. Simples no?

        Like

        • 125
          Cameron Is A Cunt says:

          Not simples, just plain wrong.

          The Tories under Cameron are awful, 13 years of incompetent Labour government were worse and also led to the greatest decline in social mobility since WW2 as well as the greatest increase in the number of people living in poverty.

          Labour don’t want to help people get on in life, they want to keep as many client voters in borderline poverty as possible in order to kid them that they need Labour to protect their interests despite the fact that it is Labour who have deliberately kept them in that borderline poverty.

          Oh and all three main political parties are dominated by Public School wankers with no experience of real life. They are all c*nts!

          Like

    • 11
      13eastie says:

      Public school wankers?

      Like Red Balls and Hattie Harperson?

      Like

  3. 4
    sconzey says:

    Better idea: deregulate.

    Unlike taxes, which redistribute (with some deadweight loss), regulation is a double-cost; it costs the business to adhere to the regulation and it costs the government to administrate it.

    By trashing some of the more asinine red tape they could easily save money for both businesses and the government.

    Like

  4. 5
    Nick Clegg says:

    I’d like to see VAT go down. Who wouldn’t? But it’s the only way to raise the £13bn we need to secure vital front line services.

    How else can we plug the hole? What else can we do? We could raise NI. But penalising people for employing people would be even worse for our economy.

    The highest rate of income tax is still at 50%. We can’t seriously put that up! Even Ed Miliband has ruled that out.

    Like

    • 14
      Calamity Clegg says:

      Like

    • 28
    • 35
      elbapo says:

      Simply put – £13 million tax reiceipt from VAT is a NET LOSS in the short/medium term. It dampen will demand – which costs jobs – which produce the biggest tax reciepts in the form of income tax.
      The easiest way to pay the deficit down is to have a growing economy. We all know this – even lib dems. To see lib dems evangelising for this monetarism for dummies nonsense is a laugh/cry moment.

      Like

    • 39
      BoE's intensely relaxed about hyper-inflation says:

      More QE – £400 billion this time round.

      Like

    • 58
      gay usher says:

      Official figures show that, under Private Finance Initiative [PFI] schemes, British taxpayers are committed to pay £229 billion for new hospitals, schools and other projects with a capital value of just £56 billion. Several contracts are due to run for 60 years, documents released under freedom of information requests show, meaning taxpayers will be paying for the projects for generations to come.

      Private contractors who agreed PFI deals with Labour are set to make billions of pounds in profit, with some due to see returns of up to 71 per cent.

      Like

      • 114
        Mike Hunt says:

        But aren’t they shiny and lovely.

        That’s the real test of value for money: people look at the lovely new buildings and say ‘I am so glad that Liebour had these built’.

        This stuff should be shouted from the rooftops.

        Like

      • 121
        The Bottle Fed Triplet says:

        Why not nationalise the PFI schemes. Pay the companies what the project costs, buy them out, if you will, and save the many millions we are commited to over the next 25 years.

        Simples!

        Like

        • 200
          Stop funding Labour with my licence fee says:

          A wonderful piece of BBC reporting on Midlands News last night about how Sandwell Council are taking the Government to court over the cancellation of the wonderful Building Schools for the Future programme. Cue pictures of broken windows and crumbling brickwork. Followed by an interview with a fat councillor spouting such balanced views as “why do the Tories hate Sandwell”. Back to presenter with a brief comment from the Dept of Education and on to someones lost cat or something equally exciting.

          Like

          • Anonymous says:

            So they didn’t mention Ed Ball’s flagship £25 million state of the art school in Huyton, Liverpool that is closing down then???

            Like

          • Number 10's Cat says:

            BBC London did a similar piece on Waltham Forest yesterday, complete with a shot of the fountain in front of town hall being turned off. Presumably as a visual representation of the cuts to hammer the point home.
            I despair!

            Like

          • Archer Karcher says:

            Cameron’s biggest mistake was not bringing the BBC to heel within days of taking office. The senior management should have had an immediate shot across the bows and heads should have rolled. You have to ask, just what are the tories dithering for? The BBC will never change as long as it exists in it’s current funding format.

            Like

          • Anonymous says:

            Labour had 13 long years and unlimited funds to sort out crumbling schools when they were in power.
            Why is it being blamed on their successors?

            Like

          • Anonymous says:

            Because their predecessors spent 18 years neglecting them, along with everything thing else that offended their sense or what is valuable.

            Like

          • nuLabour Historian says:

            The ancient Britons’ record of building new hospitals was abysmal!

            Like

    • 59
      Eeu to me says:

      Of course vital front line services,get rid of the ambulance crews,the fire crews and front line plod and,binmen,road sweepers etc but leave the overpaid,high pension, overmanned, underused,box driven,microsoft using managers alone,just in case the cuts reach too close to the top overpaid echelons .

      Like

      • 143
        Down With Brown! says:

        If left the EU we wouldn’t need to VAT rise.

        Like

        • 179
          A real Conservative who despises Camoron says:

          Quit right. ‘Clegg’ asks, “How else can we plug the hole? ”

          Leave EU, save £8bn annual membership fee and the £1bn we’ve been fined for not implementing EU spending plans.

          Cancel foreign aid, save a further £11bn p/a.

          That’s £20bn. No need for a VAT rise.

          Like

          • Number 10's Cat says:

            Am I the only one wondering how much money the poles and other migrants are leaching out of our economy, and sending home. I know of one guy who sends £800 pounds a month home.

            Like

          • The Golem says:

            Seconded, real Conservative, although I don’t think Cameron and his cronies work for us any more. We may still be paying them but I reckon that’s considered an irrelevance in Downing Street.

            Like

  5. 7
    Tipton Slasher says:

    front line services?

    fat cow meet and greeters in public sector buildings?

    Like

  6. 9
    Shire Tory says:

    Sounds like Guido is denying the deficit.
    More taxation on spending please, less on earnings and savings.

    Like

    • 33

      More cuts on government waste and over-spending.

      Like

    • 149
      Audemus Dicere says:

      Agreed. Reversing the VAT increase would be political and economic suicide. I am anyway sure that some “growth” can easily be magicked out of the figures next quarter if that is really necessary. Others here have suggested various ways in which that will no doubt be made to happen.

      The sensible thing for the Chancellor to do would be to cut NI tax rates dramatically. NI is simply a payroll tax when levied on the employer and an additional layer of income tax when levied on the employee. Reduce both significantly and this will by itself create employment opportunities as well as counteracting any decrease in available income of those in work resulting from VAT rises.

      This should be accompanied by meaningful reductions in income tax rates. The concomitant is a further signficant reduction in government spending/waste but that is of course always and everywhere a good and necessary course of action!

      Like

      • 155
        Philip says:

        Cutting payroll taxes — Agree completely – its exactly what has been done in the US to good effect and best possible way for Osborne to gain some credibility with small and medium businesses who are still waiting for the much vaunted reduction in burden

        Like

      • 255
        Archer Karcher says:

        +1, why have the tories not been more positive, with regard to such obvious options?

        Like

  7. 13
    Government-By-Cluster-Fuck says:

    He could achieve the same boost to the economy by lowering fuel taxes instead.

    Either way, we have reached a critical point of taxation.

    Like

  8. 15
    Hellboy says:

    Was it different snow under a Tory-led government? Labour snow last winter saw the recovery beginning. We must be told.

    Like

    • 23
      jgm2 says:

      I rather suspect the 300bn quid of borrowed money rather than the snow last winter was what made the difference. Don’t you?

      Now that some effort is being made to get borrowing below 180bn quid a year then it’s hardly surprising if GDP goes down.

      In fact borrowing 11% of GDP and proclaiming an end to recession with ‘growth’ of 1.5% is a lot like borrowing to pay off your credit card. Isn’t it?

      Like

      • 43
        13eastie says:

        The £200bn Labour printed would only have needed to be transacted once to effect a >10% increase in GDP.

        How was it for you?

        Like

        • 47
          jgm2 says:

          Temporary. But the effects on the exchange rates and inflation have been more permanent.

          God, if they’d set out to fuck the economy they really could not have done a more thorough job.

          Like

          • 13eastie says:

            Inflation is here to stay.

            M4 is not growing. BoE will not raise rates. When the “temporary” effect of VAT and fuel prices wears off, rate increases will create some more “temporary blips” in the RPI.

            Govt is happy to default on the debt by 4% (and enjoy the real-terms effect on spending) pa while unemployment keeps wages down.

            Dreadful for savers and the elderly who pay a heavy price for the sake of past fecklessness (and – perhaps – a lessening of the tax burden on our children).

            Like

      • 281
        Used to have 8 cards... says:

        Nah – it’s more like using one credit card to pay the monthly bill off another – but not at zero% switching rate – at full interest rate cos you’re close to the limit on BOTH cards

        Like

    • 24
      smoggie says:

      Pumping public funds into the public sector is a fine way to fake a recorvery just before an election. Fortunately the ruse failed as we’d be in an even bigger mess now. Eventually socialists run out of other people’s money – they sure did.

      This recession isn’t the fault of the Coalition, or the bankers. It is the fault of Brown and Balls and all those silent compliant idiots who made up the rest of the freespending disaster that was the Labour government.

      Now you’ve been kicked out, suddenly you are experts.

      Like

      • 27
        Hugh Janus says:

        +1

        Like

      • 41
        jgm2 says:

        +2.

        The problem for the T*ries is that they weren’t spelling this out enough (if at all). There were a few articles about ‘scorched earth economics’ but I don’t think the voters truly understood how devisive Brown and Labour were being. Feather-bedding the public sector with 300bn quid of borrowed money to rig an ‘end to recession’. And leaving zilch, nada, nothing left. And Byrne rubbing the T*ries nose in it.

        Like

      • 45
        Steve Miliband says:

        We knew it was going to be a shitstorm, negative growth is more of a political problem than an economic one

        Like

      • 201
        Sunny Jim says:

        + another

        Joe Public doesn’t understand that, though…

        Like

        • 285
          Redders says:

          Shame though, the Yanks lock up the guys that operate their Ponzi scams, we just let them get on with it, call them silly sausages and buy their very expensive hardback books when they ‘retire’.

          Like

  9. 16
    Lord Young says:

    I have rather enjoyed the last recession,jolly good fun it was.

    Lets all look forward to a Conservative led “double dip”,rather super I’ll wager

    Like

  10. 17
    smoggie says:

    George should hold his ground. Now is no time for a wobble.

    Kneejerk reactions at the end of every month are no way to run an economy. Could you imagine Maggie doing that?

    Fuck Balls. He got us into this mess – he should keep is grinning gob shut.

    Like

  11. 18
    Anonymous says:

    To clarify, you’re suggesting that the answer is more consumer spending and more debt? Why not suggest doing something to create another house price bubble, Greenspan-style? Or bringing Gordon Brown back as Lord Protector?

    GDP dipped in Q2 1992 but the recovery took hold and growth (albeit based on government and consumer spending boom from 1999 onwards plus taxes from the City) continued uninterrupted for 15 years. Main thing for the government is to stay on course. It’s that that’ll give confidence and bring about business investment and deliver sustainable growth. Consumer spending – and not tackling the deficit – won’t.

    As for Tipton Slasher, why put your faith in them if you think they’re wankers?

    Like

    • 37

      More spending as a result of more disposable income because of reduced taxation. Not advocating more debt at all.

      Like

      • 84
        jgm2 says:

        The biggest artificial boost to spending has come with 0.5% interest rates cutting many peoples mortgages by 100’s of pounds a month for the last couple of years and still, even with borrowing 170bn quid we still get a contraction.

        If folk have more money they will just continue to pay down their debts. On average. As has been happening with their mortgage windfall.

        The government should do the same. Fuck double-dip recession. That was nailed on by Brown. It is/was totally unavoidable unless we go down the Weimar economic route. Time to just bite the bullet and pay down the debt.

        Time for the T*ries to take the Really tough decisions – the ones Brown, for political purposes was too wicked malicious to make. They could just borrow more and reverse the VAT hike which might buy them some ‘growth’ but it would be no more real than Brown’s ‘end to recession’.

        Like

      • 196
        Anonymous says:

        UK residents individually and through their institutions, especially Government, are adding to their debt burden because, taken together, we are producing less than we are consuming. If we spend more but produce no more, then reduced taxation will inevitably lead to increased debt. It is worth looking at how the fourth quarter GDP figure is made up. The mining & quarrying sector is now only 79.4% of what it was even 4 years ago. Well, we can’t rely on North Sea oil & gas for ever. Manufacturing is up a bit, which is encouraging but it is still only 90.5% of what it was in 2006. The Government & other services sector is down just a bit but is still higher than it was in 2006. The business services & finance sector is the most robust in relation to its 2006 performance. The weakest sector has been construction, which is surely hardly surprising. All in all, it is hard to see why the fourth quarter figures should be regarded as telling us very much that we did not already know. The Coalition should at least wait for the revised fourth quarter numbers before even considering action, though lifting the weight of the tax and regulation on manufacturing to allow a faster recovery could do no harm and might even do some good.

        Like

      • 236
        Anonymous says:

        All growth is debt. It is either our own debt, however as Gordon Brown maxed out the country’s credit card increased government borrowing looks a non starter and individuals are looking, on the whole, to pay their debt down so that only leaves an export lead recovery financed by overseas debt. But wait a minute, the EU, the USA and just about every other western country has maxed out their own credit card and exported nearly all their manufacturing jobs to China, thus requiring China to use more energy to fuel its new manufacturing base and transport/heat its newly wealthy citizen, which correspondingly forced up the price of oil and made the Gulf States 10x richer, again at the West’s expense. So only China can save us by send the manufacturing jobs back to the West, but since Western employment laws make it prohibitively expensive to employ workers that looks a non starter. Oh, and all the increased debt over the past decade ruined the banks – but not the bankers – so they can’t lend like they used to. Bottom line, we’re fucked. A big thanks Gordon, Ed & Ed for their part in this catastrophe.

        Like

  12. 19
    Hugh Janus says:

    Even allowing for my ignorance of the finer points of GDP figures, as I understand it if we have two quarters of negative growth then we are back in a recession. At that point the world crumbles and the odious Balls and the Balls Broadcasting Corporation will remind us at hourly intervals that he was right all along. Osborne may even have to take an early bath. Alternatively if we are just inside positive territory then the government (sorry, it now has to be the Conservative-led coalition I believe) was right all along and everything will be hunky-dory. Best of all, Blinky will have been proved wrong.

    Strange how perhaps just +0.1% next time may make all the difference politically, but otherwise virtually none at all in the real world.

    Like

    • 31
      jgm2 says:

      Cameron will probably just do what Labour would do. Bring forward some spending from the next financial year. 0.1% isn’t a huge amount. A couple of billion quid squandered up-front on some initiative or other will do the job.

      Pay 5bn quid for some Eurofighters or something up-front. Anything like that.

      I’m not condoning it but that’s most likely what will happen.

      Like

      • 115
        Selohesra says:

        Maybe they decided to manipulate downwards this quarters result so that
        1) next quarter will be measured off a lower start point
        2) some of last qtrs growth ends up reported in next quarters

        Suddenly Spring is here and green shoots all over

        Like

        • 138
          Audemus Dicere says:

          I seem to remember some disgusting bogey-muncher from Fife doing something similar with his “zero percent growth” quarter not so long ago.

          Like

  13. 20
    Alistaircampbellsbike says:

    Some one has stolen Alistair Campbells bikes so funny I hit my head laughing so much – hey cambo Karma means there is a lot more bad coming your way

    Like

    • 38
      Christian Guru Murphy says:

      It was stolen a year ago. The BBC have been giving him free chauffeur driven cars since then so he’s only just noticed. Richard Bacon programme giving him carte blanche this afternoon – again – to slag off Tories.

      Like

    • 152
      Ed Bollox says:

      What job has that huhne got that Al-Beeba think that they should have his comments on every program going. R5’s Your Call with Nicky Cambpell (no pun intended) should be called ‘Your Alistair’, then the Hunt is on with Richard Bacon this aft..WTF!!

      Like

      • 199
        Anonymous says:

        Campbell’s hair has turned that peculiar shade of Andrew Neil brown favoured by vain male “celebrities”.
        Sadly it won’t cover the receding hairline and I suggest he contact Ramsay’s hair transplant clinic.

        Like

  14. 21
    Scary Biscuits says:

    The problem isn’t just VAT; it’s Osborne’s whole, Filkinstein approach to the economy. He could have chosen to raise spending, Brown-style. He could have chosen to cut spending, Tory right-wing style. Instead he’s decided to split the difference and is merely raising taxes less quickly than Labour would have done. As the director of the CBI said yesterday, this politics-led approach to economics isn’t cutting it.

    The trouble is that Brown style-stimulus works (at least temporarily and assuming the money markets allow it) and that cutting taxes works (as Thatcher and Reagan proved). However, there’s no evidence to suggest that Osborne’s half-way house will work.

    Osborne’s proved time and time again that however good he may be at political scraps, he’s got no head for economics. He failed to establish an independent reputation for economics by being one of the few people of the planet that believed Gordon Brown when he said he had abolished boom and bust. He destroyed the Conservative poll lead by his absence of an answer to the banking crisis in 2008. He kept that lead down by holding on to his too-clever-by-half formulation of “sharing the proceeds of growth” long after it was clear there wasn’t going to be much growth. He ensured the Conservatives didn’t win in 2010 by back-pedalling all his popular promises such as cutting such as death tax.

    To get themselves back in the lead politically, it’s not good enough for him to be upping taxes less rapidly than Labour would have done. He must start to cut them. This cannot wait till the last year of this Parliament as an election give-away. It must be done now as it takes two years at least for the effect to be felt fully. He should start, as Guido suggests, by reversing his VAT increase. He might also reconsider his petrol tax rises before he snuffs out any chance of a recovery in time for the next election.

    Like

  15. 22
    Desperate Dan says:

    I hope George Osborne has the sense NOT to accept an invitations from the BBC. If he has anything to say he should agree to a newspaper interview or make a statement in the House. The BBC’s hatred of the Conservatives is made manifest by incoherent ravings on behalf of Labour. They cannot be trusted with anything as important as the economy.

    Like

    • 64
      TheBeebDoesn'tLoveUsConservativesBooHoo says:

      Dan, that is desperate

      Like

      • 77
        Grumpy Old Man says:

        True though.

        Like

      • 107
        this is the bbc says:

        “My interest in climate change grew out of my concern for the failings of BBC journalism in reporting it. In my early and formative days at ITN, I learned that we have an obligation to report both sides of a story. It is not journalism if you don’t. It is close to propaganda.

        The BBC’s editorial policy on ­climate change, however, was spelled out in a report by the BBC Trust — whose job is to oversee the workings of the BBC in the interests of the public — in 2007. This disclosed that the BBC had held ‘a high-level seminar with some of the best scientific experts and has come to the view that the weight of evidence no longer justifies equal space being given to the opponents of the consensus’.

        The error here, of course, was that the BBC never at any stage gave equal space to the opponents of the consensus.”

        Like

      • 123
        gnost says:

        Cry baby.

        Like

    • 150
      Sir Robin says:

      Balls is all over the telly like a rash.
      Just watched him successfully bluster his way through an interview with Dermot on Sky. He failed to answer a basic question and waffled on incessantly repeating his mantra. Sadly Dermot allowed him to get away with it- not his finest hour…

      Like

  16. 30
    Sludge Pump says:

    Again it’s proved that image over substance leads to disaster! The Labour mob proved they had very little talent or financial acumen, hadn’t got the bottle to stand up to the pillocks Blair / Brown. Now we voted for this shower of sh*t who are basically a load of career politicians who have no experience of real life, who now deem themselves experts in all fields so overriding the views of seasoned professionals to the detriment of the country. Let’s get some experience back into government and start putting the English (British) people first for a change. Why should the British tax payer be held to ransom over the failings of those in government who fuc*ed up. They should be held to account!!

    Like

    • 45
      Hugh Janus says:

      To which the cry would normally be “general election now!” However, it really isn’t going to happen, is it? Not only can the Conservatives ill-afford another campaign so soon after the last, to bale out now at what may be close to the bottom of their popularity (unpopularity?) will risk the return of the most loathsome, incompetent and spiteful government in living memory. Even one more term of those cretins will spell disaster for what is left of our economy.

      Like

  17. 32
    Alfiebengal says:

    The VAT rise does not have to affect the poor any more than the rest of us. You forget, conveniently, that there is NO VAT on basics like food and children’s clothing. The reason it hits the poor so hard as they are the heavy smokers and drinkers. Just have a walk round my home town of Hastings to see what I mean.

    Like

    • 48
      costa del doleful says:

      Hastings? You poor soul.

      Like

      • 56
        jgm2 says:

        Don’t. Hasn’t the poor man suffered enough?

        Like

      • 99

        Is Hastings still full of scouse smackheads…?

        Like

        • 203
          Got stuck there on business for a day says:

          Two years ago, I phoned my mum to see how she was. “Your dad and I are just off to Hastings to look at some flats.”

          “NOOOOO!”

          “But it sounds so nice. Hastings, historic, pretty..”

          “NOOOOOOOOOOOOO!”

          They didn’t go, thank feck.

          Like

        • 257
          Archer Karcher says:

          It’s not just scouse smackheads these days. Now Hastings is as culturally diverse as any inner city shithole. Oh the joys of socialism.

          Like

    • 57
      Harold says:

      That’s one in the eye.

      Like

    • 86
      Geoff Diquead says:

      You stupid fool. How do you think food gets to the shops? Bloody grown in the Tesco lavvy?

      VAT rises hit all sorts of ancilliary services that impact upon the price charged to the consumer.

      ‘poor’ people also do more with their lives than eat and buy childrens clothes you moron. As they should do as well – not sit on their arses claiming benefit.

      Go away and learn how the economy and businesses work you turd.

      Like

  18. 36
    Ken Lorp says:

    Guido,
    You touch on an interesting point here. We all know that our taxes are too high. The UK is becoming increasingly unattractive and the govt cannot elucidate a medium-long term strategy for reducing personal taxation.
    How do you think the markets would respond to personal tax cuts, funded by an increased deficit?

    Like

    • 161
      Audemus Dicere says:

      No need to do it that way Ken. Reduce personal tax rates, raise interest rates and cut government spending even further (and therefore the deficit) at the same time. Easily done and an absolute winner. The markets would love it and our standing in the world will actually increase.

      Like

    • 258
      Archer Karcher says:

      Your either / or equation, is dishonest. You do not have to borrow anything to cut taxes. Just cut spending on things that are unaffordable or undesirable. Take control and manage the economy properly. It is not rocket science, though it does require backbone, so Cameron & Co will not embrace such an idea, anytime soon.

      Like

  19. 42
    sockpuppet #4 says:

    OK. So guido wants lower taxes.
    And wants the wet+lib coalition to behave how his vision of a conservative party would behave.

    Like

  20. 49
    Gordon Brown aka Mr Garrison says:

    I saved the economy. Isn’t that right, Mr Hat?

    Like

  21. 50
    MI7 says:

    Peter Sissons admits the BBC is a propaganda machine especialy regarding climate change

    http://www.dailymail.co.uk/news/article-1350206/BBC-propaganda-machine-climate-change-says-Peter-Sissons.html#comments

    Like

    • 62
      this is the bbc says:

      “On one occasion, after the inauguration of Barack Obama as president in 2009, the science correspondent of Newsnight actually informed viewers ‘scientists calculate that he has just four years to save the world’. What she didn’t tell viewers was that only one alarmist scientist, NASA’s James Hansen, had said that.”

      Read more: http://www.dailymail.co.uk/news/article-1350206/BBC-propaganda-machine-climate-change-says-Peter-Sissons.html#ixzz1C2rBpnOP

      Like

      • 148
        dellingticles says:

        So he was going against the scientific consensus.

        Like

      • 271
        Cynical Old Man says:

        It makes me wonder why NASA haven’t sacked James Hansen well before now for bringing the organisation into disrepute. He’s been caught out fiddling his statistics on numerous occasions.

        Al Gore’s climate change guru, Hansen is an alarmist par excellance. In January 2010, Hansen claimed his figures showed that temperatures for October 2009 were the highest on record. It later transpired that he had added the temperatures for September and August. When a sceptic made this public, Hansen was forced to backtrack. He’s had to backtrack on a number of other occasions when his figures have been challenged.

        No wonder, when before a senate committee on “climate change” he called for sceptics to be imprisoned.

        Remember also that Hansen appeared as defence witness for the eco-nazis who caused damage to one of the major power stations in this country. He told the court the protestors were justified in causing millions of poundsworth of damage in “self defence”. Yes he reckons the emissions from the power station were going to kill people and so they had a right to defend themselves. The idiot judge hearing the case accepted this line of argument and acquitted the eco loons. Un-fuckin-believable!

        Like

    • 68
      Hugh Janus says:

      Yes, these revealing articles just confirm how bad the Beeb really is now, and the overwhelming need for it to be dismantled as soon as possible. Well DC? What’s the cunning plan to put a stop their left-wing and PC nonsense at our vast expense then?

      Sod-all I imagine.

      Like

      • 98
        Grumpy Old Man says:

        Windmill Dave Cameron and his clique are too involved in the CAGW fraud to act against the BBC for this reason.

        Like

        • 260
          Archer Karcher says:

          There are an awful lot of Lords and MP’s from all sides of the House, with a huge financial interest in banks and companies, that will do extremely well out of the fraud. The rats are legislating for their own financial wellbeing, rather than the country or it’s people.

          Like

  22. 51
    Gordon Brown says:

    The party opposite does nothing but talk down the economy!

    Oh that’s us now is it? When did that happen?

    Like

  23. 53
    Andy Coulson says:

    Stop talking the economy down,Guido.

    You’re ruining your chances of succeeding me as “Fat ” Dave’s Director of Communications.

    Like

  24. 63

    On Radio 5 today at 10am..

    “Does the weak economic growth, negative GDP and sharp spending cuts signify a double dip recession..?
    Well I fu#ing hope so! You Tory slags should all be massacred in your beds..Tony back.Tony back! Tony Back!”

    That’s the economic review show with Victoria Drearyshire.

    Like

    • 71
      Steve Miliband says:

      The same BBC that was gleefully saying that the bad weatehr was costing the economy £1bn per day

      Like

      • 80
        TheBeebDoesn'tLoveUsConservativesBooHoo says:

        That’s it blame the Beeb.

        Like

        • 95
          this is the bbc says:

          “Meanwhile, Al Gore, the former U.S. Vice-President and climate change campaigner, entertained the BBC’s editorial elite in his suite at the Dorchester and was given a free run to make his case to an admiring internal audience at Television Centre.

          His views were never subjected to journalistic scrutiny, even when a British High Court judge ruled that his film, An Inconvenient Truth, ­contained at least nine scientific errors, and that ministers must send new guidance to teachers before it was screened in schools. From the BBC’s standpoint, the judgment was the real inconvenience, and its ­environment correspondents downplayed its significance.”

          Like

    • 72
      Tankboy says:

      Tony was just a Tory who put on a polyester suit to fit in with the labour hoons

      Like

  25. 65
    cheesy knob says:

    need another WAR to deflect mass unemployment

    IRAN will do

    Like

  26. 66
    Ed says:

    Only Labour can thave the economy. I am a prime minithter in waiting.

    Like

  27. 67
    bbitgu says:

    disagree Guido , the poor will only be hit if they by new iphones, 50 inch flatscreen tv etc .

    Is this the end of Gordons plaster over econmy ? Qe ? we have to get the books balanced

    Like

    • 73
      Hugh Janus says:

      Billy, ‘getting the books balanced’ just isn’t going to happen in our lifetime, or anything like it, when you take into account the enormous PFI debt that Balls and McBust saddled us with, and then there’s the public sector pension problem…

      Like

  28. 70
    Ed Balls says:

    Good Morning you ‘orrible load of right wing political bloggers

    Britain’s economic recovery has ground to a halt | LabourList.org 2.0.2 | LabourList.org http://bit.ly/fLFLoq

    Like

    • 127
      Grumpy Old Man says:

      How’s Neo-Classical Endogenous Growth Theory going to get us out of this one then? Print another £300 billion and fund another million public sector non-jobs?
      And will you be providing every OAP with a wheel-burrow to put their pension in when they go shopping for a loaf of bread under the next Labour government?

      Like

    • 184
      Audemus Dicere says:

      I’m not “right wing political”, ‘orrible Ed. Like most around here, I believe in individual freedom and responsibility.

      What do you believe in, you disgusting little oik?

      Like

  29. 74
    Sir William Waad says:

    Apparently the best way to avoid a hangover is to keep drinking.

    Like

  30. 75
    Steve Miliband says:

    Still, at least we don’t have out of control, badly negotiated PFI contracts to worry about.

    Like

  31. 76
    Oldest profession could cut the deficit says:

    The sex industry never goes out of business no matter how bad the economy gets. If people didn’t have such ridiculous moral objections, the government could regulate and tax the industry and bring in billions of extra revenue that would make a VAT rise unnecessary. The eternal irony is that the types who object are the very ones who make use of the industry the most. MPs and old farts love hiring escorts to do the things their wives won’t.

    Like

    • 91
      jgm2 says:

      That would make an interesting campaign poster.

      ‘Fuck Britain Out of Recession’.

      Like

    • 131
      Grumpy Old Man says:

      ….Like cleaning up after the dogs, mowing the lawn and darning socks: that sort of thing?

      Like

    • 185
      smoggie says:

      Have you seen the average British minger? Who’d pay for that, to fight your way through four folds of lard, only to find a half eaten Big Mac she lost there last Saturday?

      This ain’t Australia mate. It works down there for a reason.

      Like

    • 243
      The Bottle Fed Triplet says:

      Yeah Right, the money raised should just about cover the knock on effects (geddit!) of knocking shops. There would be regulation, council inspections, security, medical inspections, registration and we mustn’t forget the disease/drugs/organised crime involvement.

      Your best bet is a tax on breathing.

      Like

  32. 83
    Hopeless Hague says:

    Like to Cambo be his usual flippant self now

    Like

  33. 85
    Tom Baldwin says:

    Here’s George Osborne in 2006 saying he wants to make Britain’s economy just like Ireland’s: http://tinyurl.com/3xfr5wu One Tory pledge kept

    Like

  34. 86
    Hopeless Hague says:

    Sorry

    Like to “see” Cambo be his usual flippant self now !!!!!.

    He is just soooooo arrogant

    Like

  35. 89
    Cato Street Conspirator says:

    Exactly Mr Fawkes. And Dave agrees with you: April 2010 – ‘”We have absolutely no plans to raise VAT.’ That bloody Osborne, eh, forcing him to go back on it.

    Like

    • 97
      bbitgu says:

      As opposed to Gordon “investment v cuts” Brown ?

      Like

      • 126
        Cato Street Conspirator says:

        Don’t be a twerp. Do you really think being anti-Tory means being pro-Brown (pro-Labour come to that). Come out in the sunshine and you’ll find there’s a lot more to politics than the old teams.

        Like

        • 135
          bbitgu says:

          I hate all politicions , As i have said before we got the lesser of to evils at the election , They are all EU arse lickers so nothing will change

          Like

          • Cato Street Conspirator says:

            There is no lesser of two evils. That is the philosophy of despair. None of them is the only way to vote.

            Like

  36. 90

    Referee referee your old lady is a whore… your old laaaydeee is a whore!

    remember that chat?

    But now that wimmin are refereeing and running the line what will the songs be. Much worse of course!!!

    I hate fat throat Andy Gray so I hope he gets fired.

    Why do wimmin have to poke their noses in every fucking where? I want to be a c unt waxer but seem to be discriminated against in that profession.

    I am definately not sexist but will keep taking the piss out of wimmin because they are great targets and ALWAYS take the bait

    http://www.political-graffiti.blogspot.com
    for my sexy refereess

    Like

  37. 92
    Anonymous says:

    not only alan johnson worried about a double dip now, is it.

    Like

  38. 94

    All Labour’s fault, anyway.

    Like

  39. 96
    Spank Sinatra says:

    Instead of looking one way or the other for an economic policy which could restore growth in an affordable (and sustainable manner) one could simply accept that the situation is now so stratospherically fucked it is beyond the tipping point. Bit bleak I know but perhaps one could allow for this analysis also……..

    Like

    • 104
      apagusta says:

      this scale of reduction in growth is statistically insignificant and given the three weeks of weather disruption in december is it any suprise ?

      Like

      • 122
        Spank Sinatra says:

        It is a surprise – an unpleasant one. I think you may be farting in the wind but there you go……..

        Like

    • 137
      Grumpy Old Man says:

      It’s an analysis that condemns 60 million people to joining the ranks of the immiserata -thereby fulfilling a Looting Party Core Belief. While your analysis should not be denied out of hand, it’s inevitable conclusion should be fiercely resisted.

      Like

      • 218
        Spank Sinatra says:

        I take no pleasure in the outcome (were it to happen). Complete breakdown in social cohesion will result as well as wide-scale misery for the many. I think however that it is worthwhile to consider the following:-

        a) Our politicians are clueless
        b) Our economists are clueless
        c) We have created a financial monster which will never be appeased
        d) As with a ship, if it has begun to list too far to either port or starboard, there is only ever one outcome – it will capsize. You can throw what you want overboard to try and compensate but it is simply too sodding late.
        e) I am probably clueless

        Like

  40. 102
    Name lost due to cache clearing tragedy says:

    Ed Balls will have been proved right

    But had Labour won and the economic situation been broadly similar, Ed Balls would have been denying that it was anything like a Double Dip recession.

    Ed is not right.

    Like

    • 169
      Audemus Dicere says:

      Had Labour won, the entire economy would have collapsed under the weight of its own contradictions by now. A mere half a percent shrinkage in GDP would have seemed like reaching the sunlit economic uplands.

      Like

  41. 103
    Pork Pie Pickles says:

    Poor Guido. The Mainstream is getting further and further away for you.

    How’s Dale, had his 15 minutes and has already slid into obscurity. Tory Bear also had his 15 mins, and is most likely waiting for daddy to get him a job in the city. The days of 600 comments per thread are over Guido. The days of this hopeless government are also numbered.

    The damage is done, all good will lost, and even their media mogul apologist lapdogs are heading to the abyss .

    Like

  42. 108
    streamfisher says:

    The Country could have recovered from 1 term of Labour in say 5 years, 2 terms of Labour in 10 years, 3 terms of Labour in office, no chance…where’s me passport?.

    Like

  43. 112
    Graham says:

    Flat tax 20%.

    Like

  44. 113
    Local Scouse Economist Luciana Berger says:

    We The Labour party had a deficit reduction plan that envisaged cutting more public services in Y1 than the tories would. It is clear from these results that our plan would have worked.

    Like

  45. 116
    English Liberation Front says:

    The VAT rise to 20% makes sense. The problem is in all the other taxes – income tax, NICs and fuel duty – all Brown’s preferred stealth taxes.
    Scrap the stupid 50p band, increase personal allowances as proposed by the LDs and scrap completely the NICS increase in the pipeline.
    We need business and personal taxes to come down to make room for growth, accompanied by the very necessary spending cuts.

    Like

    • 177
      Audemus Dicere says:

      Agreed, ELF.

      I would go further and abolish NICs altogether and harmonise the income tax rate with the consumption tax rate at 20%. Also bring capital gains tax into line at 20% (but with full indexation of the capital base cost, since without it, the government is simply taxing you upon the extent of its own theft from you via inflation). The concomitant reductions in government waste/spending in order to do this and balance the books are easy to achieve and readily demonstable.

      Simple, effective, cheap to administer. Even “fair” if you must use that word. Little opportunity (or, more importantly, incentive) for evasion or even avoidance. allows an instant reduction in the size and self-serving cost of the HMRC behemoth of around 90%.

      What a wonderful place this could become with such simple and easy to achieve changes!

      Like

    • 190
      Rip van Winkle says:

      Exactly!! Put money in people’s pockets. Let them decide if they want to pay down debt, if they want to save it, if they want to spend it.

      The problems is DEBT!! Too much of it, most into pumping up house prices to completely unsustainable levels. And no politician has the guts to let the bubble pop. Until that bubble pops and those that made the wrong financial decisions take the pain and those that made the right decisions can take advantge, nothing changes. It’s called ‘clearing out the system’.

      Just more and more and more debt. The system has broken. Trying to go back to the ‘good old days’ just ain’t gonna work.

      Like

  46. 117
    Charles Smith says:

    A u-turn on VAT would be just as disastrous politically, much better to cut NI to stimulate the economy and reduce unemployment.

    Like

  47. 118
    Yosser Hughes says:

    Stop the VAT increase and sort the cost of bloody fuel out. The added fuel escalator bollox just gone and the next in April will bring about a complete standstill on our roads. No one will be able to afford to trvale (except the rich). What the fuck are the public school boy idiots doing to our economy?

    Like

  48. 130
    Andy Kunteson says:

    I’m alright Jack. I just had a 0.4% payrise. I think I’ll treat myself and celebrate over a meal – by myself.

    Like

  49. 132
    Richard says:

    The shadow cabinet are almost all Brownites so why not bring him back. He and Balls can stimulate the economy by flogging off the rest of the gold at £6 an ounce, tell the banks to lend lots of money to people who can’t pay it back and have another massive housing boom. Consumer debt with mortgages could rise from a low £1.5 trillion up to say a reasonable £3 trillion. Everyone one except me would be over the moon – out spending like drunks. The trade deficit would rise so all of our overseas suppliers would be really happy and in a couple of years we would make the Irish and the Greeks look like total amateurs. Oh and reduce unemployment by adding another 1 000 000 to the public sector work force. Job Done! Now that’s what I call a Labour economic result. Onward and upward Mr Balls.

    Like

  50. 134

    Haven’t you got any backbone Guido?
    We’ve had snow up to our eyeballs, virtually two weeks over the Festive Season when the UK shut down, yet on the basis of these figures you’re calling for a U-turn on the VAT increase?
    That’s peanuts to what the tax increases on energy/fuel is doing to the us and the economy.
    Now that’s an area this Tory-led coalition should concentrate on doing something about.

    Like

  51. 139
    Down With Brown! says:

    Not good news at all. Gids can’t blame the problems on the weather. His caution is the main problem.

    It’s time for tax cuts and lots of them. VAT, fuel, corporation tax, national insurance, stamp duty. Any of the taxes that slow growth must be slashed. It’s time to fire up the Quattro and get this economy moving again.

    In the meantime, it’s no time to end the cuts in excessive state spending. Instead the government need to u-turn on their promise to increase international development and health spending. We could balance the books by ending payments to dictators and cutting waste in our socialist health system.

    Like

  52. 146

    i saw a woman running the line
    her little arse did sure look fine
    and when Drigba scored with a lob
    she ran on the ptich and sucked his knob
    at the end of the game she removed her skirt
    and the winning team fucked her in the dirt (box)
    the crowd roared hip hip hooray
    and on ran super sub Andy Gray

    Like

  53. 147
    Martin Day says:

    Guido Fawkes, right wing political blogger, said it was “beyond belief” that ministers were blaming the weather for “these appalling growth figures”

    “George Osborne sounds like a rail boss trying to blame delays on leaves on the line,” he said.

    “The blame lies squarely on this government’s policy of massive spending cuts with no strategy for growth.”

    Like

  54. 157
    Down With Brown! says:

    I can’t believe that Pravda pretends that Stephanie Flanders’ analysis on a day like today is objective. Ed Milliband used to be her lover and Ed Balls used to be her lover too. Anyone else wonder if they ever had a leftie threesome?

    Like

  55. 159
    Stephen Potter says:

    Can somebody tell me any Lib/Lab/Con MP or Peer who isn’t a millionaire? If so they are not trying (troughing) hard enough!

    Like

  56. 162
    Its a Windy City says:

    Blown Away by the Weather
    As soon as the Con Dems conducted the public spending review most of the companies that my business deals with (over 2000 across the UK) set about cutting their growth plans in September for Q4 2010 and Q1&Q3 2011. This is the result, growth had been weakening all through Q3 of 2010 and went off the edge in Q4, the weather had very little to do with it (we ship over 5000 orders a month across the UK and we only lost 20 due to weather in December).

    The Con Dems have no clue whatever on how to stimulate growth, they think cutting public expenditure whilst increasing costs to the consumer & business through tax, utilities costs (which are really monopoly companies fleecing you because they can) is a winner. Cameron and Osborne have never run a real company nor do they have any idea how the vast majority of people struggle on low wages. They need to reduce NI contributions at once, reduce VAT, and look to reduce core taxation asap.

    Yes by all means cut the bloated expenditure of the last lot of Public School idiots, but come up with something to move the cash back to where it came from in the first place the, Tax Payer.

    Like

  57. 165
    Voice of Treason says:

    We haven’t seen anything yet. Just wait and see what the figures will be for the next quarter when most folk will be cutting back severely after the Christmas spree (most of it done on credit). With the rises in VAT plus the obscene rises in fuel costs (mostly tax duty) this country will be on its knees before the summer. I know most posters on this site hate Ed Balls but I have a feeling he will be proved to be right about the amount and speed of the cuts.

    In any event I doubt whether the Tories will be in power next time – and the treacherous LibDems will be completely fooked.

    Like

    • 172
      jgm2 says:

      I know most posters on this site hate Ed Balls but I have a feeling he will be proved to be right about the amount and speed of the cuts.

      Problem is that Neds cuts would have been broadly the same give or take a couple of quid and applied five minutes after the T*ry ‘cuts’. Ned is simply trying to pretend that he wouldn’t have made any cuts at all.

      As it is we haven’t had any cuts yet and the figures are already bad. That shows the folly of squandering 300bn quid just to stumble over the election finish line. That 300bn quid could have been much better spent. Ideally it could have been much better not spent.

      Like

      • 216
        Tessa Tickles says:

        Even more ideally, it could have been transferred into my bank account.

        Like

      • 223
        English Liberation Front says:

        That is true. What is needed is a strategy for growth, which means much bigger spending cuts than those already announced, combined with tax cuts to encourage employment. Welfare reform is also needed to encourage long term stay at homes that it is worth their while finding gainful employment – that is where big increases in personal tax allowances (and I will allow the LDs a plus point for that) com in.

        Like

  58. 168
    thanks Fraser Nelson says:

    3. The cuts haven’t started yet. Balls says today that “cuts which go too far and too fast will damage our economy”. He’s hoping that no one will look up the facts (table PSF3) and see that state spending was up by a staggering 5.2 percent in December year-on-year, and 5.2 percent Q4 2009 vs Q4 2010. Any attempt Balls makes to link cuts to economic contraction will be demonstrably spurious. And, I feel sure, immediately challenged by BBC presenters.

    Like

  59. 173
    Gove The Gimp says:

    Gidders Osborne today “””We will not be blown off course by the bad weather”””

    So he had decided that the crash in the economy is down to snow. This guy is a joke

    Like

  60. 180
    S.B.S. says:

    Get the interest rates up to between 5%—-8%.
    they should have been up two years ago, then problem solved!
    So Fing simple!!!!!

    Like

    • 193
      jgm2 says:

      Even 2 or 3% would do it.

      This ‘double dip’ is starting a full quarter too late. The T*ries need to get the economic pain over with before May 2015 if they’ve to have any hope of re-election and so the sooner they start the better.

      Just get the entire public sector payroll on a memory stick and offer the unions a straight choice. 20% pay-cuts or one in five fired alphabetically – no question of age, gender or racial bias.

      They’ve had three years (actually ten years) of being shielded from economic reality. Their mortgages have been slashed by artificially low interest rates giving (most of) them a several hundred quid a month payrise so they should manage fine with a 20% pay-cut.

      Get it done. Get it over with.

      Like

  61. 182
    I hate New Labour says:

    There were so many people warning Osborne this would be the result of a VAT hike. But no, the Old Etonian with his grasp of ‘real life’ knew best…

    Any fool could predict that an increase in prices (invariably rounded up by retailers) combined with mass job losses would result in loss of confidence and people reigning in their spending.

    He’s an idiot, this is not ‘bad weather’, this was entirely avoidable.

    Like many others I suspect, I will not be voting Tory while we have these two over-privileged, pasty faced, trust fund beneficiaries heading the Conservative party.

    Like

    • 210
      Tessa Tickles says:

      +1

      (except I wouldn’t call the Dave ‘Happy Clappy’ Cameron Appreciation Society the “Conservative Party”)

      Like

    • 215
      Anonymous says:

      The VAT hike would if anything have flattered the fourth quarter numbers, as goods would have been bought earlier to beat the VAT increase. You are wrong, too, about retailers’ reaction to the January increase, if my experiences are anything to go by. I am totally averse to any form of retail therapy, but I have been tempted to buy this January by prices lower than before the VAT increase. I know that anecdotal evidence should be distrusted, so let’s wait for the figures to be added up. Your remarks seem to result from mere assertion rather than even anecdotal evidence.

      Like

      • 241
        I hate New Labour says:

        No, it’s not about the VAT increase increasing spending.

        As any fool knows (except some anonymous posters it seems), the economy is built on confidence.

        Therefore, the prospect of a hike in VAT, combined with job losses made people less confident. So even if the prices hadn’t yet increased, people resticted their spending in anticipation of the worst.

        You want anecdotal evidence? Look how many people have overpaid their mortgage rather than spend. Why do you think that is? Maybe not feeling very secure.

        Like

    • 222
      Voice of Treason says:

      The bad weather bit is a hoot. Osborne and his Etonian cronies will find out what public hatred really is in the next few months.

      Like

  62. 183
    CompuWatch says:

    speaking of scams and plots, there’s a few people phoning households in the west country, west midlands posing as microsoft technicians. They are scaring people into believing their internet is not secure and offering downloads to repair the faults. Some people are falling for this. Local computer businesses are reporting an increased workload due to suspicions about the microsoft callers. Some people have handed over hundreds of pounds. The police have been informed but don’t appear to want to know – maybe they’re too busy trying to infiltrate staff at a local garden centre – watch out for a microsoft caller near you

    Like

    • 274
      Another Engineer says:

      I think that is everywhere – I had one, and I’m neither W Midlands or W Country.

      It lasted about 10 seconds.

      (Indian voice)
      “Hello, this is Windows Support”

      “Really? What makes you think I’ve got a computer?”

      (Slightly confused) “Er, oh, have you not got one?”

      Like

  63. 219
    Paul Marks says:

    Ed Balls has certainly not been “proved right” – the GDP reduction last year was before any overall reduction in government spending took place.

    What is he saying? That the possibility of a cut in government spending this year (which I doubt will happen anyway – after all the government is spending money like a drunken sailor, on the Irish bailout, or the E.U. budget increase and on and on) caused the GDP fall last year?

    However, Guido is correct that the VAT (sales tax) increase was insane – and should be reversed at once. With shops (and so on) closing all over the country they needed this tax increase – in the same way they needed a bullet hole in the back of the head.

    Oh no! VIOLENT RHETORIC – the next time a LEFTIST goes around murderering people I must be to blame.

    Like

  64. 220
    Voice of Treason says:

    Just watch if the hauliers etc start organising against the obscene fuel costs. Remember it reduced Blair to a jibbering idiot and I think it will do the same to Cameron.

    Like

  65. 221
    Lucy says:

    Osborne is a big government statist just like 95% of politicians. Therefore he will always try to keep government spending and taxation high. He talks big about “reducing” the deficit but not about eliminating it and paying off debt. Nor about stopping the unseen tax on us – inflation and devaluation against foreign currencies. Those 2 have had a far bigger effect than VAT, it’s just that they are not obvious to voters.

    Like

  66. 228
    Isambard Brunel says:

    What still puzzles me is why everyone is so fixated on growth.

    Especially consumer market growth. That is, ultimately, what got us into this mess.

    Growth and sustainability do not belong in the same sentence.

    Once you stop investing in infrastructure that works, and educating your brightest very well, and start handing out money and degrees to anyone who asks, (‘investing in people’ as its coyly called) you necessarily end up with a bunch of public sector bureaucrats whose spending power results in a huge amount of high street dross being sold at silly prices by even stupider people.

    Why would anyone want to return to that?

    WE desperately need to change the game and put money onto things – structures and organisations – that will ensure we actually can stay alive at all in the coming years. Even better if we an sell those things overseas. Especially to China.

    At some stage it has to be recognised that a large part of the population will not and cannot take part in that exercise: They are politically powerful but economically parasitical. That is not their fault, necessarily, but they should accept that they are in that condition.

    Ultimately one has to challenge their ‘right’ to enjoy a fully funded consumer oriented lifestyle at the expense of the few – who by dint of being talented and hard working – actually do form the ultimately useful class of people.

    If those people are not rewarded, they will brain drain themselves again to where they are respected.

    And I don’t mean bankers, either.

    Massive income tax and NI mean that the only people who can afford to pay decent salaries were the public sector employees. (Or the banks) . But public sector work is almost 100% at least second tier in terms of actual productivity, if not completely parasitic. The traffic warden who collects enough fines to pay their wages, is completely parasitic. The manager who manages him or her even more so. At best the man who repairs the roads or the doctor who keeps you fit, are servicing the productive worker.

    At least VAT hikes hit the big spenders..who are the public sectors people by and large. Its one way to devalue their inflated earnings. Couple that with tax relief on income tax for lower paid workers, and it all starts to shift the balance towards private sector manufacturing and the like,which is where it needs to be.

    So what if the economy shrinks? It NEEDS to shrink to squeeze of debt funded consumerism, and force people to take up hard unpleasant tasks again. Like picking fruit and packing it.

    If we are not to collapse, as a society and a nation, entirely, people have to reacquaint themselves with what the phrase ‘working, for a living’ actually means.

    Chatting round the coffee machine in a warm office and occasionally having a meeting, is not work.

    Manhandling pipes in a sub zero force seven on an offshore oil rig, is.

    Like

    • 272
      Honest View says:

      Too true, but a message that is too hard for the “Great” British people to take.
      The fact is, we just don’t produce enough to maintain the standard of living we award ourselves, and it’s all going slowly belly-up.

      Like

  67. 230
    Eunuchonomics says:

    Ed Balls will have been proved right? That will be a first. Ed Balls was clearly dithering over Darling’s ideas and his own on the Daily Politics today.

    Like

  68. 235
    Von Mises says:

    Consumer spending is not necessary for growth, nor does it drive growth – big mistake. Please correct.

    Like

  69. 245
    Don Keydik says:

    Just like to say guys, if I am ever feeling a bit down, a visit to this wonderful blog is an assured way of a quick pick me up. Trouble is, I tend to stay on awaiting the next pearls of wisdom and miss appointments.

    Like

    • 273
      Honest View says:

      Don, you are watching a once great nation dying slowly both financially and morally. Go to your appointment.

      Like

  70. 246
    Redonix says:

    Ed was right, is now right and will continue to be right

    Like

  71. 248
    REALLY MAD FRANKIE HADDOCK son of COD says:

    It’s not rocket science regarding a Double dip recession
    if you have your own business you know that nothing has changed over the last couple of years no new work comming in everything else going up
    we are in shit plain and simple deep shit
    and neither labour or the tories have a fucking clue what to do about it
    they dont live in the real world and it shows
    the only “upturn” was very slight and that was March to May 2010
    now we are heading down again

    anyone for an EU Bailout ?

    Like

  72. 254
    jake says:

    GENERAL ELECTION WITHIN 18 MONTHS………………………GET YOUR MONEY ON GUIDO. STRIKES…NHS FAILING..LONG WAITING LISTS….JOBLESS OVER 3 MILLION…NO GROWTH…..INFLATION OVER 5%….I BLAME THE LIB-DEMS ..HEHE

    Like

  73. 265
    Anonymous says:

    I cannot believe that if I had a thousand pounds to spend on an item I really wanted, I would not buy it for the sake of another twenty five pounds in VAT. Essentials such as food and clothing are exempt from VAT.
    European countries have had a VAT rate of 20% for quite some time and they don’t moan and whinge.
    Talking about whingeing and moaning, I never saw an Australian ,in the midst of the raging floods,wring his hands in despair and put the blame on any one. They just accepted and got on with helping each other.
    We must lead the world in our “can’t do, won’t do, blame anyone but ourself”
    attitudes. We are not going down the pan because of a tiny hike in VAT.

    Like

  74. 275
    Andy Coulson's monkey says:

    Gideon was shaking like a leaf when he heard the figures. Dave told him to man up and brazen his way through the day. By ghis evening Gideon had convinced himself all will be well by the next quarter.

    I think Dave may have plans to get rid of him and I’ve stuck s monkey on him going by the end of the year.

    Like

  75. 276
    Anonymous says:

    A one-off blip of a 0.5% contraction due to bad weather is nothing; Brown spent trillions purely to achieve a temporary fake blip of 0.1% growth immediately prior to the election.

    What the BBC and Labour are saying is that we should increase the debt mountain purely in order to achieve a fake temporary growth figure.

    Well, fuck that; I know which side of the argument I’d rather be on. I’d rather pay more vat than have the entire country go bust.

    Do you bankrupt the country purely to avoid temporary pain, or do you pay down the debt and suffer a bit of pain until the economy rebalances?

    I don’t like paying more vat, or having an economy that’s contracted, but it’s much more preferable than the country going bust and having a public sector of 20million people in a situation where their wages can’t physically be paid.

    The alternative (cut spending more) is not something that the BBC propaganda machine will allow to happen. My guess is that Osborne wants to cut spending more but he knows that the BBC will eat him alive if he did.

    If, however, the BBC didn’t exist, then Osborne could easily decrease spending rather than put up taxes. But with the BBC there he has to do both and not cut spending by as much as he’d like.

    The BBC have been headlining with the fact that the evil tory government has taken away their funding (£3.5billion a year isn’t enough to be able to produce news, kids programmes, and a couple of documentaries apparently). Do you honestly think the BBC would let the tories cut any more than they’re already doing?

    The BBC would initiate a national riot situation if more cuts were made.

    The only way out of it would be for the government to physically stop the BBC from broadcasting with immediate effect, take away all their public money from their coffers that they’ve got at the moment, and then say they can continue broadcasting again once they’re commercially viable.

    If the BBC got so much as a whiff of their license fee being taken away, they’d go into war-mode and make sure that the government got kicked out before their license fee was taken away.

    Like

  76. 282
    GDP should not be measured by consumption says:

    VAT is not the problem. VAT is only hurting consumers and those businesses which are servicing consumption. But if it slows down consumption then it slows down the cash leakage from the country because we are importing most of what we consume!!!

    In the short term it hurts but in the long term, transferring the last of our wealth overseas will hurt more.

    So encourage production instead.

    Get rid of Harpy’s equality act. Slash red tape generally. Burn more quangoes. Lets have a real bonfire – not the damp squid we’ve had so far. Get government out of activities it should not be involved in.

    Give tax breaks for investment in new industries. Cut employment taxes (employers NI).

    Then once the real economy (not the bankers) is working properly and the balance of payments is sorted, we can think about reducing VAT.

    Like


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VOTER-RECALL
Find out more about PLMR


Before Miliband spoke, a school choir sang ‘Fix You’ by Coldplay. The first verse of which goes like this:

“When you try your best, but you don’t succeed
When you get what you want, but not what you need
When you feel so tired, but you can’t sleep
Stuck in reverse”



cynic says:

Can anyone help me? I went on holiday a week ago and returned to find someone has pulled out the stake and Gordon Brown is back and acting as Prime Minister. What did I miss? Has there been a snap election?


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