Economy

Some of what David Smith, author of the essential Economic Outlook column in the Sunday Times, says today will be salve to George Osborne: ‘…the government intended to spend £722bn in the 2013-14 fiscal year. In fact, it spent £714bn. Spending has been lower each year than set out in 2010. Current spending was originally intended to be £679bn in 2013-14. In fact, it was £668bn. Unusually for any government, spending has come in comfortably within budget. There has been no slippage.’ Other parts will not: ‘Where there has been slippage is in tax receipts, which have been weaker than expected.

What were Labour thinking? Against the background of Ukraine and Gaza, the only domestic story likely to cut through is an economic one. The news today is dominated by David Cameron, George Osborne and Nick Clegg wallowing in the success of the British economy. So what did Ed Miliband do? He made a speech about presentation for the Westminster village, of course. The SAS is on standby to land in Ukraine, Gaza crumbles and the IMF gives the UK a gold star for economic performance; but, look over there, Ed's got something to say about the political-media nexus! Miliband's war on photo-ops is utterly laughable given that it came just days after he flew half-way round the world to pose for a picture with President Obama at a pointless meeting.

‘Perhaps I should shift my prediction to 23 July 2014,’ I wrote in April 2012. ‘That’s the opening of the Commonwealth Games in Glasgow, and we must all start thinking positively about it.’ I was talking about the moment when the nation would at last shake off its economic gloom, which I had previously pinned to the opening of the London Olympics. But that spring we fell back into negative GDP territory (avoiding a technical two-quarter ‘double dip’ only when the first-quarter result was revised upwards to zero) and I felt obliged to ‘elasticate my timetable’. Since the beginning of last year we have had 18 months of robust growth — but pundits less cheerful than me have continued to report a persistent absence of feelgood.

If you walk around our great northern cities, you’ll see stunning examples of civic pride. Albert Square in Manchester and Leeds Town Hall reflect resurgent local confidence. Old narratives of northern decline are out of date. When Guardian writer Andy Beckett launched a hatchet job on the north-east a few weeks ago, claiming that the region was the ‘next Detroit’, the response was visceral and immediate. Beckett managed to write an entire article about the north-east without mentioning Nissan – the most productive car plant in Europe. The North is home to new tech hubs, advanced manufacturing, superb universities and world-leading culture, from sport to music to art. The north-east was the fastest growing economic region in the Lloyds index last month.

Fresh from celebrating the Tories' victory in Newark, George Osborne is continuing a very joyful day by celebrating the International Monetary Fund admitting that it got it wrong on austerity. Christine Lagarde today conceded that 'we underestimated the growth of the UK economy in our growth forecast a year ago'. The report the IMF published today contains its usual mix of things that all parties can celebrate: plenty of compliments for the Government such as 'the economy has rebounded strongly and growth is becoming more balanced', along with criticisms that Labour finds useful for its press releases. Osborne has very little to worry about immediately from the main criticism, which unsurprisingly relates to the Help to Buy scheme.

Tax Freedom Day, which falls today, is cause for celebration. It marks the point in the calendar when someone's income stops paying for their tax bill and they start keeping the money they have earned. It is an annual reminder that people who work hard and play by the rules deserve to keep their hard won earnings. It is why cutting tax has always been a priority for Conservatives. Four years ago we inherited a tax system that was designed to be as complicated as possible. Gordon Brown's stealth taxes doubled the revenue the Treasury raised through taxation and National Insurance. In total, Labour put up taxes 178 times, and the myriad of extra charges was as complicated as the methods used by corporate tax avoiders today - and as morally compromising.

Inflation has risen for the first time in ten months, with the consumer prices index growing by 1.8 per cent in the year to April 2014, up from 1.6 per cent in March. [datawrapper chart="http://static.spectator.co.uk/09O5L/index.html"] On the surface, this looks like bad news for the Coalition, which has boasted that falling inflation shows that Ed Miliband's cost-of-living crisis is coming to an end. And certainly Labour has tried to capitalise on the rise already, with Shadow Treasury Minister Catherine McKinnell saying: 'These figures underline why this Tory-led government is wrong to be so complacent about the cost-of-living crisis.

We're four months away from Scotland's day of destiny, with the London-Scottish media fraternity becoming increasingly alarmed, and ironically (considering their total unionism) far more noticeably Scottish. At the Telegraph Graeme Archer made a characteristically elegant appeal to Sir Malcolm Rikfind to step forward, and there would indeed be something touching and rather beautiful about the grandson of Jewish immigrants being the man who saves Britain. The film script would write itself, if someone were to make a film about the Scottish referendum (which I admit is pretty unlikely).

Independence is a fringe issue in Wales. Just 12 per cent of Welsh voters support it, and that figure has been stubbornly consistent. But it is far from implausible that within a decade Wales could find itself standing alone, not through any conviction that independence is the best bet, but because the UK has marginalised Wales. Wales is in a weak negotiating position already, as the Scottish referendum campaign has shown. Take the Barnett Formula, which adjusts the amount of money received from the Treasury by Scotland, Wales and Northern Ireland. An expert commission, led by respected economist Gerald Holtham, pointed out that if Wales were treated on the same basis as an English region it would get some £300million more a year.

What a very long PMQs today, presided over by a very bumptious John Bercow. The Speaker let the exchanges run into what he called 'injury time', made a rather poisonous jibe at Labour MP Fiona Mactaggart over her private schooling, and told the Prime Minister that as far as he was concerned, he had finished an answer when the PM didn't believe he had.

My friend and critic Jonathan Portes obviously took exception to my remarks about Keynesianism having been disproven. His entertaining rebuttal claims to have exposed my misreading of data. That's not quite how I see it. I agree with him that the appalling build-up of out-of-work benefits happened before 1997. The Tories badly miscalculated incapacity benefit; thinking it would be a one-off way to help those affected by deindustrialization. But, in fact, it created a welfare dependency trap, and the 1992 recession caught too many people in it. John Major had an excuse: a recession. Tony Blair had no such excuse. I wasn't joking about a quarter of Liverpool and Glasgow being on the dole at the height of the Labour boom.