Remember that the core mission of the coalition in 2010 was to deal with the deficit? We were repeatedly warned by George Osborne that after Gordon Brown’s financial splurge, Britain risked having a bigger deficit than Greece. After 5 years of Osborne’s deficit cutting rhetoric, Britain really does have a deficit that is bigger than Greece’s, in fact as a proportion of GDP the IMF expects the UK deficit to be quadruple that of Greece [chart above]. Next year the IMF expects Greece to be in surplus, the IMF does not expect this government to ever run a surplus…
In this context is it really sensible for Osborne to be promising a Keynesian splurge on infrastructure? Where is the value-for-borrowed-money in HS2, which will save businessman half-an-hour on the London to Birmingham trip? £50 billion is a big chunk of the deficit.
Some may argue that the deficit is big enough to look after itself. We still have Quantitative Easing to unwind, the international economic outlook is not secure and the government is already overspending by £87 billion-a-year – adding £1,000 to the national debt for every man, woman and child in the land. If the British economy is doing as well as the Chancellor claims, he should be living up to his rhetoric and focusing on paying down the debt by running a surplus, rather than outspending Gordon Brown in his pomp. It has come to something when a socialist Greek finance minister is more of a deficit hawk than a Conservative British Chancellor…
See also: George Osborne Skewered By Kay Burley On Deficit Failure
The spat between George Osborne and Fraser Nelson over whether or not the deficit has been halved is very much a Westminster bubble affair of little consequence to anyone outside SW1. Interested voters who even understand the difference between the deficit and the debt know that the government’s target to balance the budget in 2015 has been missed by £100 billion or so. As Jonathan Portes over at the Keynesian redoubt of the National Institute of Economic and Social Research gleefully points out, George Osborne has succeeded in implementing the Darling plan, which his own Financial Secretary to the Treasury condemned, for being endorsed only by The Guardian. The Chancellor deserves a degree of Fraser’s ridicule for only managing to execute the very Plan B that Osborne himself once ridiculed as ruinous.
The Tories are arguing, whilst simultaneously carrying the goalposts, that they have managed to halve the deficit in relative terms, relative to GDP. Professional economists seem to think that is a fair method of measuring the deficit. So how are they doing, in relative terms, on other key indicators?
The national debt relative to GDP is up, from 78.4% under Gordon Brown in 2010 to 90.6% last year. It is still rising, which is in the government’s own self-defined terms a big economic failure.
The Tories like to boast that employment is higher now than ever before, as indeed it was every year under the last Labour government, because the population grows. The unemployment rate is relative to the population. That is down impressively from 8% to 6% thanks to IDS, better still the youth unemployment and long term unemployment rates are also down. A trump card in the economic argument.
Per capita GDP was, as Danny Blanchflower and Ed Balls kept pointing out sombrely with smirks on their faces, falling. We were getting, on average, poorer. According to World Bank figures, the answer to Reagan’s famous question for voters “Are you better off than you were four years ago?” is a “yes”, just about. After inflation voters are on average 1.8% better off now than they were in 2010.*
Quantitative Easing on a scary scale has rigged other economic indicators like inflation and interest rates whilst pumping up asset prices. Great if you already owned financial assets or prime London property…
It seems a long-time since The Spectator was eulogising George Osborne as “the true Tory leader“, the enmity towards the Treasury from the Speccie is near constant nowadays. Guido notes that in a Tory leadership election it is almost certain that the magazine will back Boris, a former editor, against Osborne…
*Although for higher income earners – the income bracket usually well disposed towards voting Conservative – Osborne’s Guardianista pleasing fetishising of the Gini coefficient will mean they are probably worse off. Only a genius political strategist like Osborne would bash his core vote hardest.
First it was value of your home that would plummet if you vote UKIP, and now it’s the markets that will crash should a small coastal town return the same MP the have had for the last four years:
“UKIP gains are changing the political landscape in Britain and these shifts have wider effects than shaking-up British politics; they are likely to spark short-term volatility in financial markets,” claims someone called Nigel Green, who claims to be the founder and chief executive of the deVere Group.
What a load of old bollocks. And a sneak peek of the nonsense that will be peddled if we ever get that referendum…
Alex Belardinelli, the marauding SpAd for Ed Balls, is up early this morning tweeting about the Forex Fixing scandal;
We called for regulation of financial benchmarks like forex but Ministers dismissed it out of hand – @ChrisLeslieMP: http://t.co/SOPQI8lOEY
— Alex Belardinelli (@abelardinelli) November 12, 2014
According to the Bank of England the scandal dates back to 2006, the LIBOR scandal dates back to 2005, when Belardinelli’s master Ed Balls was Economic Secretary to the Treasury. In other words it happened under Labour’s watch – specifically under Brown and Balls – and was only uncovered under Osborne’s watch. You have got to admire Belardinelli’s chutzpah..
UPDATE: Neglected to record that the Parliamentary Adviser to the Economic Secretary to the Treasury at the time of the market rigging was… Alex Belardinelli.
CEBR’s Douglas McWilliams says “the London housing market is being hit by a double whammy of reduced domestic and overseas demand. Sterling appreciation since the start of 2013 means that London property is no longer as attractive an investment as it was a few years ago. In addition, fears of a future mansion tax are eroding the UK’s international safe haven status. This will bring down prices at the top end of the capital’s housing market.” House price apocalypse? Not really, the forecast 2.6% drop will be a pause for breath before the demographics reassert themselves…
Paul Krugman, the Nobel-prize-winning economist is in Oxford until mid-June as the Sanjaya Lall Visiting Professor in Development and Business.
The liberal Princeton/NY Times professor just delivered his inaugural lecture asking the question (the almost-rhetorical question) Do We Face Secular Stagnation?
It follows on from his books The Age of Diminished Expectation, the Return of Depression Economics and articles like Is Capitalism Too Productive? The Myth of Asia’s Miracle and – suggested title – What Are You Laughing At, Can’t You See the State We’re In?
His proposition is that the glory days are behind us, that each recession has been harder to get out of than the last, that we will have extended periods of low-to-no growth, and that under-employment will create “dreary lives” for large numbers of people – because politicians will not listen to him and his $300bn job-creation schemes.
If Labour can get him onto a stage with Ed Miliband, the election will be in the bag. For the Tories.
He talked about the impulses to “austerity” saying that it’s as though governments want to engineer a gratuitous recession in order to have a pre-election year boom, “like the Government has done here” (cosy laughter from the full-to-overflow hall).
Small, bearded, charming, Prof Krugman looks like the oceanographer in Jaws. Remember, that clever fellow, expert in his field, ran up and down the beach warning the pleasure-seekers there was a giant shark out there waiting to devour them.
