Economy

Now that negotiations have broken down in Athens, and there will be another election, we face the prospect of an almighty staring contest. On one side, the Eurocracy, who will be urging Greek political parties — and particularly the left-wing coalition Syriza, which is ahead in the polls at the moment — to soften their anti-austerity stance. On the other, the Greek politicians, who might be hoping that the eurozone relents to some extent, and allows the cuts to be decelerated. The question is: who will blink first? As it stands, it’s difficult to come up with an answer.

The government is desperate for economic growth but where can it find it? This was the question posed to Eric Pickles on the Sunday Politics today, but sadly he was unable to provide much of an answer. The Communities and Local Government secretary gave a blustering interview, where he reaffirmed William Hague’s view that ‘growth will come from government creating conditions for us to work a little bit harder.’ But when pushed by Andrew Neil on what this (slightly condescending) idea actually means, Pickles jumped on the chance to blame Labour for the ‘something for nothing culture’. Pickles did add that the government’s chosen sources of prosperity are business investment and, relatedly, the stripping back of regulation.

Does it matter if the Prime Minister and his deputy mislead the country about what they are doing to the national debt? Neither of them seem to think so, if today’s Essex Relaunch today is anything to go by. First, Cameron: ‘The problems of over-spending and too much debt can’t be solved by even more spending and even more debt.’ He chose his words for consumption by the ordinary voter, the factory workers who formed his backdrop. Who, listening to that, would guess what Cameron and Clegg are doing with the national debt? Clegg, I’m afraid, went far further and suggested that the debt was being eliminated.

The newspapers and internet today are full of headlines about Mervyn King admitting the Bank of England was ‘late to the game’, and that central bankers should have ‘shouted from the rooftops’ regarding the financial blow-up. It’s true, the BoE governor did make these ‘mea culpa’ remarks — but they came rather half-heartedly, and couched within a radio lecture that seemed to point even more fingers at other parties.   King was giving the Today Programme Lecture 2012, which he addressed to a Radio 4 theatre audience yesterday evening. Early in the half-hour speech, he gave an anecdote from 1997, in which then-governor Eddie George and him, Merv, celebrated Gordon Brown’s proposal for Bank independence.

One line jumped out at me in David Cameron’s Marr interview this morning. When Andrew Marr asked him if he thought we were halfway through the Euro crisis or nearing the end of it, Cameron replied: ‘I don’t think we're anywhere near half way through it.’ Cameron clearly does not believe that any resolution to the crisis is in sight. Given that, as long as the Eurozone crisis rumbles on it is hard to see how the British economy returns to robust growth, this is immensely significant. It does, though, make me wonder if the government’s approach to the crisis should now change.

As Paul Goodman suggests, there is something significant about Liam Fox's article for the Daily Telegraph this morning. It's not that we haven't heard similar from the former Defence Secretary before — we have. It's more that his economic prescriptions are being made, we learn from the Sun, with the ‘explicit approval’ of his buddy George Osborne. And what are those prescriptions? Well, the main one is for further spending cuts, and Fox also waxes enthusastic about greater deregulation and about protecting the defence budget (at the expense of international aid). He also has some firm advice for the Lib Dems.