Wednesday, January 25, 2012

Chancellor Zero

Even if the GDP numbers are not entirely unexpected, they are still a failure, a failure to grow the economy. The deficit can only be paid down if the economy grows, we can’t borrow our way out of a debt crisis. It is time for a supply-side revolution, why is the government implementing a policy of selected regional enterprise zones, why not make the whole economy an enterprise zone? It was a mistake to hike VAT and it is a strategic error to burden industry with crushingly high green taxes and penal marginal income tax rates of over 50% discourage entrepreneurs from coming to invest in Britain.

If the government is going to miss the deficit target, and it is, miss it because the government slashed taxes to grow the economy. The international bond markets will forgive a finance minister with a growing economy who misses his deficit target, they won’t forgive a finance minister with a contracting economy in any circumstances. Chancellor Zero knows that with no growth there is no hope for the deficit.

Wednesday, January 18, 2012

Boris Island is More Than an Airport

Despite the protestations from Nick Clegg, Cameron has given the go ahead for a full blown consultation on Boris Island – the airport plan in the Thames Estuary. The Telegraph says Clegg has been fussing so much that the announcement was delayed from the beginning of the year. Clues that it was coming have been emerging since last summer when Steve Hilton and Osborne backed the idea. It’s Clegg that is being accused of playing politics in the Mayoral election year, but in even longer terms, if the £40bn plan gets the go ahead, it’s Boris who has the most to gain politically. Especially as has he won George Osborne over…

Friday, December 30, 2011

Toffs Taxing the Poor More

Minimum alcohol pricing won’t affect champagne drinkers, it will hit those on lower incomes. Again.

Regressive taxes aren’t just about forcing up the price of supermarket booze, it was putting up VAT – a mistake that boosted inflation which was already above target and hit consumer spending when it was already weak. Unquestionably that was a regressive tax. Even the usually austerity friendly IMF cautioned against the VAT hike.

The squeezed middle aren’t spared either. Air Passenger Duty means that a family of four flying to America for their annual holiday can pay up to £587 in taxes. The Fawkes family fly back and forth to Ireland regularly spending more on air taxes than on air tickets. UK subjects pay more in air taxes than all the rest of the EU’s citizens – combined. It won’t bother the Chancellor on his £10,000 skiing holiday weeks, but those of us in the private sector, not on benefits, reckon he could do more to cut spending and the tax burden. It is called a growth strategy…

Tuesday, December 20, 2011

Naked Truth is Osborne Will Back IMF Bailout

Last night Guido tweeted

Guido reckons the spin coming from the Treasury about them saying “No” is bluster. Guido suspects they mean they are not ready to send billions to the IMF just yet…

If by St Patrick’s day Osborne has kept his promise, made to MPs on October 27, that “Britain will not be putting money into the bail-out fund either directly or through the IMF” Guido will keep his promise* and run naked around Smith Square from the EU offices right past Transport House and back. Don’t count on seeing Guido’s bare arse streaking past the daffodils on March 17…

*Iain Dale has yet to “run naked down Whitehall” as promised on election night.

Wednesday, December 14, 2011

Chancellor’s Christmas Card

Tuesday, November 29, 2011

Autumn Statement

Monday, November 28, 2011

Grow Faster, Go Further

Growth is anaemic, that much of the Balls critique is true, the cause is not the government’s spending cuts, they are a mere 1% of GDP. Osborne has made mistakes, hiking VAT hit the High Street by taking money out of the real economy whereas QE at the moment only puts money into high finance money markets. Back in June the IMF issued a report recommending

“…tax cuts are faster to implement and more credibly temporary than expenditure shifts and should be targeted to investment, low-income households, or job creation to increase their multipliers… Simultaneous adoption of deeper long-run entitlement reform would be desirable to safeguard fiscal sustainability and market confidence…”

It also pointed out that

“The level of public spending as a percentage of GDP in our forecast has reduced by about half a per cent of GDP as compared to the previous fiscal year. However, it remains very far above the pre-crisis levels of spending and represents a long-term high in spending. It’s important to maintain that perspective”

Plan B, the Balls plan for bankruptcy and bond market collapse, is for higher taxes and more spending, this can be dismissed. Osborne is right when he says the international bond markets would crucify Britain if he switched to Plan B, for as Jeff Randall points out this morning

“At the moment, the Chancellor is pulling off a brilliant confidence trick: persuading the markets that Britain remains a triple-A credit, able to borrow on the same terms as Germany, while managing an economy with an inflation rate 66% higher than the eurozone’s average, and a national debt that is forecast to hit £1.32 trillion in 2015, nearly 40% greater than today.”

Tricky. Gordon Brown inherited an economy in a sweet spot and left an economy drowning in debt, Osborne believes he must bear down on the deficit to keep the confidence of the bond markets. Yet a paper produced by Dr Tim Morgan of bond brokers Tullett Prebon argues that if the government is going to miss its deficit reduction target anyway, what option would placate the bond markets more?

  1. “Britain has missed its deficit target because growth hasn’t happened”
  2. “Britain has missed its deficit target because the government failed to cut spending sufficiently”
  3. “Britain has missed its deficit target because taxes have been cut in pursuit of growth”

We’re currently in the first situation, the second situation is unpalatable to the government, the LibDems don’t have the stomach for a shock doctrine style short term austerity programme. Balls advocates stimulus in the form of higher spending, no one in government is advocating the alternative, which is to stimulate the economy by cutting taxes instead. Of course if we also rolled back government spending there would be more room for tax cuts to boost consumer confidence and the economy, without matching spending cuts the deficit will rise. Osborne is going to miss his deficit target regardless of which option he takes, it wouldn’t scare the bond market so much if cut taxes in pursuit of growth…

Wednesday, November 9, 2011

Osborne Swings His Thatcherite Handbag

Monday, November 7, 2011

Spooky IMF Warning for George

Halloween may have been last week, but take Danny Alexander’s proposed £40bn €uro/IMF splurge and divide it by the UK’s population: £666 per head. A foreboding premonition for George if ever there was one. As Kelvin MacKenzie said on the Daily Politics“If they want to become the most unpopular government in history…”

Thursday, November 3, 2011

Here’s the Fear for Osborne

Back in July the government won a vote to send £9 billion to the IMF by just 28 votes, the tightest margin yet for the Coalition government. Despite the best efforts of the whips some thirty-two Tory MPs rebelled against the government. With Osborne’s pledge today to increase British contributions to the IMF before the cash is sent on its way to Greece, an even trickier vote lies ahead:


Labour voted against the government last time and Guido can see no reason why they would change their vote next time. If you add the 81 EU rebels on the Tory benches to Labour’s vote the government will be defeated. There is some obvious panic in the Treasury as the realisation has dawned that if Ed Balls marches Labour through the no-bailout door followed by the Tory rebels, the government will lose. Excluding minor parties it will be 339 votes to 282 against more bailout cash.

There are more Tory €uro-rebels than LibDem MPs, yet it’s Clegg and the swivel-eyed Europhiles with their hands on the tiller…


Seen Elsewhere

Hunt Told Off By Former Head | TES
Scrap Tax on Family Flights | ConHome
Has May Declared War on Downing Street? | James Kirkup
The Nasty Left | Dan Hodges
Men Flock to UKIP | Andrew Cadman
London-Britain Divide | Alex Wickham
Pickles Puts Prezza’s Surplus Stationary to Use | Speccie
How Capitalists Can Win the Argument | CapX
Theresa May, or Maybe Not | Spectator Life
YouGov: Working Class Prefers UKIP to Labour | Times
Sainsbury’s Disowns Left-Wing Blogger | Mail


Find out more about PLMR AD-MS


A ‘senior Conservative party official’ passes judgement on Theresa May:

“She is boring. A technocrat. She is Philip Hammond with a fanny. Not interesting, but rendered interesting by circumstance. And that circumstance is that she is a woman. And in an age when the Prime Minister gets it in the neck for refusing to wear a fucking T-shirt that says he is a feminist, that is a rocket boost right underneath you.”



Left on Left says:

The lefties are attacking because the panellist is a millionaire and lives in a London home worth upwards of two million. Someone had best tell them he’s called Ed Miliband.


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