Friday, April 11, 2014

Osborne to IMF: I Told You So
Third Year of Expansionary Fiscal Contraction

osborne7

Chancellor Zero is no more. Growth is back, even the neo-Keynesians at the FT and the wonks at the IMF can’t deny that the UK expanded faster than the rest of the G7 last year and will probably do the same this year. George Osborne is in Washington today to gloat that

“despite warnings from some that our determined pursuit of our economic plan made that impossible. All of this demonstrates that fiscal consolidation and economic recovery go together, and undermines the pessimistic prognosis that only further fiscal stimulus can drive sustainable growth. Indeed that is precisely the wrong prescription for our economies…”

Ed Balls got it wrong is the core message. Labour will point to per capita GDP which is still 10% lower than it was in 2007 – that will be a second term objective for the Chancellor. Balls will less convincingly say George has missed his deficit target, less convincing because Labour would have missed it by more and opposed almost every measure needed to reduce the deficit. The neo-Keynesian argument that higher unemployment would increase the welfare bill and thus the deficit has been proven to be wrong. Unemployment is down from what it was under Gordon Brown, with the warnings from the likes of David Blanchflower of 4 to 5 million unemployed having turned out to be political hyperbole that has fatally damaged his career as a sage. That “expansionary fiscal contraction” that left-wing wonks and economists said would never come is entering a third year…

Leading left-wing wonk and wannabe Labour MP Will Straw argued in 2011 that Britain’s economy faced the risk of a Japanese-style “lost decade” and that “expansionary fiscal contraction” was a “voodoo theory”, and even that there was no such thing as an expansionary fiscal contraction. In 2011 Guido argued the point at length with Will on the BBC’s Daily Politics:

Having failed at the time to get an on-air apology from Will for his role in Gordon Brown’s Treasury, three years later he must now accept that he was wrong about a lost decade and wrong that there was no such thing as an expansionary fiscal contraction. Over to you Will – as growth is expected to hit 3% you have a second chance to offer an apology…

 

Thursday, April 10, 2014

Osborne’s Strict Discipline Leaves You Satisfied

As the Times reported on its front page today and Guido pointed out at the time, Osborne had the most obvious motive to want Maria Miller out. Today’s Evening Standard poll taken at the height of the Miller scandal shows Osborne does have still a strong approval rating and as a No. 11 source notes, the Miller distraction was “highly annoying”. Let’s see if that lasts when the cuts actually start…

The Standard / Ipsos Mori poll also has Farage as the only leader with a positive net satisfaction rate. That LibDem spin that the debates were good for Clegg unravels too, he is down 4% since last month…

Wednesday, April 9, 2014

When Osborne’s New Minister Told Him to “F**k Off”

Andrea Leadsom is Osborne’s new Economic Secretary to the Treasury. Which causes Guido to wonder just how sore the Chancellor still is about his polite chat with the then free-thinking backbencher back in 2011, when he tried to convince her not to join the Tory rebellion on Europe. Leadsom will be hoping her new boss forgave her polite instruction to him to “f**k off”…

Tuesday, April 8, 2014

Miller Drowns Out Osborne’s Good Economic News

George Osborne must be furious that because of Maria Miller no one is talking about the IMF’s forecast that Britain will be the fastest growing leading economy this year. They have today announced their prediction that UK growth will reach 2.9%, the fastest in the G7, and then 2.5% in 2015. Also endorsing Osborne’s strategy for future growth:

“the government’s efforts to raise capital spending while staying within the medium-term fiscal envelope should help bolster recovery and long-term growth”

Yet because of one Cabinet minister grabbing all the headlines, this will go unnoticed by the vast majority of the public. As ConHome’s Mark Wallace points out:

“Ministers need to be able to get on with communicating the central messages that have the potential to deliver victory in 2015. If their interviews are constantly sidetracked into the question of Miller’s expenses, or their arguments are undermined by the presence in the cabinet of someone who demonstrably didn’t deliver the best value for the taxpayer, that becomes a serious problem.”

If Number 10 let this go on into recess it’ll be the only talking point on the doorstep for weeks…

UPDATE: Interestingly, Guido understands the IMF are refusing to let Olivier Blanchard, their chief economist who famously warned Osborne was playing with fire“, be interviewed by Sky News. Surely they aren’t worried about him putting his foot in it again…

Friday, March 21, 2014

Osborne Delivers Rapid Growth

Ephraim Hardcastle reckon the Chancellor has been reduced to extraordinary measures to hide his bald spot, reporting this morning that Osborne is now using hair loss treatments on a daily basis. The brown shoots of a recovery are beginning to show though it is clear George must not waver from his long term plan:

1p off the price of Alpecin at the next budget?

Wednesday, March 19, 2014

Gove Outrider Attacks Osborne’s Budget

Henry de Zoete, the former DfE SpAd who was Michael Gove’s media man, has founded and runs an energy switching campaign called The Big Deal. It’s pretty clever – essentially a mass lobby organisation for lower energy prices. Interestingly Osborne had barely sat down by the time The Big Deal had sent out a press release “respond[-ing] sceptically” to the Chancellor’s Budget announcement that he would freeze the Carbon Floor Price, saying it “won’t help consumers” because of the Big Six and their nefarious ways. Gove wasn’t on the frontbench today, but lurked behind the Speaker’s chair instead…

Long Term Economic Graph
OBR Forecast 0.2% Surplus in 2018/19

The deficit will be 6.6% this year and 5.5% next year. That’s £108 billion this year, then £95 billion and £75 billion over the next two years. The OBR now forecasts a small surplus of 0.2% in 2018/19. Guido thinks these revised numbers will yet again be revised, but they’re strong enough to dangle in front of the voters in 2015.

What’s in the Box, George?

What Should Be George Osborne’s Budget Drink?

Sponsored Post

call-time

By tradition, the Chancellor, unlike Ministers at the despatch box at any other time of the year, may drink alcohol during the Budget speech. George Osborne has previously chosen to drink mineral water, as did the previous Chancellor Alistair Darling. Now George is running for leader he may want a more populist tipple next week…

Past Chancellors have chosen mineral water (Gordon Brown), whisky (Kenneth Clarke), spritzer (Nigel Lawson), gin and tonic (Geoffrey Howe), brandy and water (Benjamin Disraeli) and sherry and beaten egg (William Ewart Gladstone). The bookies will be giving odds next week, vote on what you reckon George should drink…

Tuesday, March 18, 2014

How Osborne Can Outwit Clegg Tomorrow

osbo-clegg-outwit

It is no secret that the budget is expected to see an announcement of the raising of the income tax threshold. It is no secret because Clegg is boasting at every opportunity that he can that this is a LibDem policy to help the low paid. With some justice, co-conspirators will remember that Daniel Finkelstein argued that raising the threshold was unaffordable and “punk tax cutter” Guido argued it was affordable and politically savvy. Nick Clegg joined the argument about this policy before the election – on Guido’s side. In government the policy was implemented by Osborne as part of the coalition deal. Nevertheless the LibDems get all the credit for the policy from the voters.

So how could the ever political Osborne get the electoral credit for the policy? Let Guido suggest how his speech might play out:

“Mr Speaker I have received many representations, not least from the junior partners in the government coalition, about raising the minimum tax threshold by £500, I have decided to reject these representations.

Mr Speaker it is not in the country’s interest to risk the stability of the economy…

[JEERING FROM OPPOSITION BENCHES]  

…it is for that reason that I have decided that now we are seeing balanced growth, falling unemployment and a stable macroeconomic outlook, to raise the tax threshold by £1,000 to £11,000. The Conservative Party is a tax cutting party and when it is prudent to do so we will cut taxes for everybody. This tax cut removes the tax burden from thousands more people on low pay.”

In one stroke Clegg is outbid on fair taxes, the policy is reclaimed for the Tories, Osborne is cheered by his backbenches and the lowest paid are better off. Even better, most of those on in-work benefits will see their benefits reduced by an equivalent amount. The Brown benefits dependency culture will be undone a little bit more… 


Seen Elsewhere

Guido’s Column | Sun
NUT’s Loony Defence of Status Quo | Jago Pearson
A Dozen Reasons to Be Cheerful | John McTernan
Political Bloggers Are Equal Opportunities Attackers | ConHome
Michael Gove Should Resign | Conservative Women
Sarah Wollaston’s Naming and Shaming of Bloggers | LibDemVoice
Fraser Nelson: Put Your Money on Ed Miliband to Win | Guardian
Guido Fawkes is Too Aggressive | The Times
Ditch Tobacco Plain Packaging | Grassroots Conservatives
What Farage, Boris and Rob Ford Have in Common | William Walter
Labour Spell New Adviser’s Name Wrong | ITV


new-advert
Guido-hot-button (1) Guido-hot-button (1)


Rod Liddle on the loony UN sexism special rapporteur:

“There is more sexism in Britain than in any other country in the world, according to a mad woman who has been sent here by the United Nations.

Rashida Manjoo is a part-time professor of law at Cape Town University in the totally non-sexist country of South Africa (otherwise known as Rape Capital Of The World).

Mrs Magoo has been wandering around with her notebook and is appalled by the sexist “boys’ club” culture here, apparently.

I don’t doubt we still have sexism in the UK. But is it worse than in, say, Saudi Arabia, d’you think, honey-lamb? Or about 175 other countries? Get a grip, you doolally old bat.”



orkneylad says:

What’s he been doing FFS, mining bitcoins?


Tip off Guido
Web Guido's Archives

Subscribe me to:






RSS


AddThis Feed Button
Archive


Labels
Guido Reads