Economy

George Osborne has just fired the first shot in the fight over the 2012 Budget. His decision to introduce local pay for the 160,000 civil servants coming off the public sector pay freeze is, as is often the case with Chancellor Osborne, both an economic and a political move. The economic case for local pay is straightforward. National pay rates mean that public sector workers are relatively underpaid in prosperous areas of the country and relatively overpaid in deprived areas. Pay that reflected local conditions would make for a more balanced economy, helping the private sector in those parts of the country where the public sector is currently dominant. But

To mark today’s news that Rowan Williams will be stepping down as Archbishop of Canterbury, here’s a piece he wrote for The Spectator during the financial crash of 2008: Rowan Williams, Face it: Marx was partly right about capitalism, 24 September 2008 Readers of Anthony Trollope will remember how thoughtless and greedy young men in the Victorian professions can be lured into ruin by accepting ‘accommodation bills’ from their shifty acquaintances. They make themselves liable for the debts of others; and only too late do they discover that they are trapped in a web of financial mechanics that forces them to pay hugely inflated sums for obligations or services they

The best of all possible worlds for the pension industry is a buoyant economy. Workers have enough money to save, share prices rise and dividend growth is robust. Interest rates are positive in real terms so annuities are good value. The economy ground to a halt in 2008. The overwhelming priority for everyone is to get growth going again. Without growth the services that pensioners depend on — such as the NHS — will struggle. Traditionally, governments cut interest rates and raise spending to get the economy moving. The Bank of England has cut interest rates as much as possible and the government deficit remains very high. We have exhausted

So, new jobs figures out today. Which do you want first: the bad news, or the kind-of-alright news? The bad news is that employment’s showing no signs of growth: the total number in work has been stuck at 29.1 million since it fell there in the summer. It’s a touch better than the trough of 28.8 million we hit at the end of 2009, but still half a million below where we were when the recession hit. And we’re showing no signs of getting there any time soon: And the not-so-bad news? Unemployment’s slightly down on last month, which was slightly down on the month before. It’s not a big

JEET. That, according to Andrew Grice in the Independent, is the new ‘buzzword’ circling around Libdemville (population: 57 MPs, and a few others). And it stands for the issues that they want to keep mentioning whenever they can: jobs, education, environment and tax. Fair enough. Although it is striking that only one of these issues is unlikely to put them in close combat with the Tories. Both parties of the coalition support free schools and academies, and the Lib Dems are getting their pupil premium too, so education is relatively uncontroversial territory. But as for the others… Jobs. The conflict here focuses on the role of the state. As George

The last three years have been one big transfer of wealth from savers to borrowers. Thanks to record low interest rates, savers have gained little from tucking their money away in bank accounts, whereas borrowers have reaped the benefits. According to data from the Bank of England, mortgage holders paid interest of £1328 billion in the three years from 2008-2011, compared to £1897 billion in the preceding three years. That’s a difference of £569 billion, or just over £50,000 for each of the UK’s 11.2 million mortgage holders. Call it a stimulus if you like. But it’s a stimulus that involves clobbering savers so that borrowers can buy a flatscreen

There’s a huge amount of confusion surrounding the proposals for a ‘mansion tax’ and, more generally, taxation at the top end of the housing market. Old and novel arguments are rolled out by its proponents: that it is easier to tax wealth that can’t be taken offshore, or that the current level of taxation on high value property (generally perceived to be low) isn’t fair on first time buyers struggling to raise a deposit at the other end of the market. In reality, there are three main reasons why a mansion tax is unwarranted and potentially counter-productive, which I discuss in more detail in a Centre for Policy Studies report released

Can you trust someone like Alex Salmond to save Scotland from future crashes? The First Minister appeared on BBC1’s Sunday Politics earlier, where he was challenged about how he sees it. And it seems he may just be a graduate of the Gordon Brown school of Scottish financial mismanagement. In a Times debate on Friday,  SNP deputy leader Nicola Sturgeon said they’d use sterling — whether the Bank of England liked it or not — and would not need the Bank to be a lender of last resort because Scotland would be so sensible it wouldn’t need it. An interesting suggestion, given that the 1707 Union between Scotland and England