Economy

Monday

Jonathan Portes

Another voice: Against austerity

Here's the latest in our Another Voice series of posts, which give prominence to viewpoints outside the normal Coffee House fold: You can't help but notice that the UK economy isn't doing too well. Part of this is down to international developments, sure. But part – as Mervyn King said in "http://www.bankofengland.co.uk/monetarypolicy/pdf/govletter111006.pdf">his letterto George Osborne last week – is the result of "fiscal consolidation", aka spending cuts. The IMF's assessment, published a few days ago, shows both why debt has risen (lower tax revenues) and what is happening now (sharp contraction): And there's much more contraction to come: So why keep on contracting if it is affecting economic growth?

Friday

Peter Hoskin

How bad is it, Mervyn?

Remember when Alistair Darling said that we faced the worst financial crisis for sixty years? Now Mervyn King has trumped that piece of doom-mongery by telling Channel 4 last night that "This is undoubtedly the biggest financial crisis the world economy has ever faced" (see video above, three minutes in). The Governor of the Bank of England saying that this is the worst crisis ever? On the day that he rushed another £75 billion into the economy? As mood music goes, it is a particularly dreadful symphony.       It is also the sort of situation that Ed Balls will relish, especially with the Pre-Budget Report approaching. And it is true: George Osborne is in a tight spot, both politically and economically.

Thursday

Clarissa Tan

Another round of Easing

So the Bank of England has pulled the lever on a second round of Quantitative Easing. Apparently sluggish economic growth, plus more ominous signs from the eurozone, have persuaded the central bank it can’t wait any longer to print more money. But given the evidence from QE1 - only a small boost to GDP accompanied by extra inflation - it's a big gamble. Mervyn King & the rest of the Monetary Policy Committee clearly believe that more money in the system is what’s needed to kick-start growth. But even they admit that QE1 didn’t live up to expectations, so why should QE2?

Will Straw

Another voice: Five lessons from Conservative party conference

Here's the latest in our Another Voice series of posts, which give prominence to viewpoints outside the normal Coffee House fold. This time it's the IPPR's Associate Director, Will Straw, with his five-point take on the fringe events of Tory conference, and the lessons that might be learned from them: 1. The Tories know that winning a working majority in 2015 is no easy task. The most popular fringe event according to Fringelist.com was ConservativeHome’s event on ‘How the Conservatives can win the next election.' Reflecting his remarks from the panel, YouGov’s Stephan Shakespeare wrote yesterday that, “today's electoral maths makes an overall a majority a mountain to climb”.

David Blackburn

What did Fleet Street make of Cameron’s speech?

Not a lot is the short answer. Many commentators argue that the speech failed to match the gravity of this moment in time; that it was safe; that it was not prime ministerial. Steve Richards believes that Cameron was timid, choosing to reassure rather than challenge. He writes: ‘Yesterday in his address David Cameron did Ed Miliband an unlikely favour. He made Miliband's seem deeper and substantial. The Labour leader's address last week was poorly structured and delivered, yet compared with Cameron's it had an argument and was at least an attempt to address the scale of tumultuous change sweeping across Britain.

Wednesday

James Forsyth

Cameron does enough

There were three big themes to David Cameron’s speech. The first was that decline is not inevitable, an attempt to tackle the mood of pessimism that is gripping the nation. The second was an attempt to reassert the Conservatives’ compassionate credentials, hence the emphasis on how the Liberal Democrats would have cut the NHS and the section explaining why conservatives should support gay marriage. The third was leadership, Cameron’s biggest advantage over the other party leaders. The attack on the idea of Britain’s decline being inevitable was powerful in places. But because Cameron has a non-ideological approach to growth it is hard for him to make a stirring argument about how the economy can be revived.

Peter Hoskin

Cameron’s leadership pitch

Leadership, leadership, leadership. You couldn't miss it. Leadership wasn't just the clearest theme of David Cameron's speech to the Tory conference just now, but also one of its most common words. By my count, it popped up around 30 times. "I'm proud to lead this party," he said in the very first paragraph. "It is leadership we need," he continued. The aim, I'm sure, was to paint an even stronger contrast between David Cameron the Prime Minister and Ed Miliband the Sub-Prime Ministerial. But Cameron wasn't just talking about his own leadership. As he put it himself, "success will come: with the right ideas, the right approach, the right leadership. Leadership from government: to set out the direction we must take, and the choices we must make.

David Blackburn

Cameron wants to offer the “right” leadership

As flat as flat champagne — that’s the verdict on this year’s Tory conference, which is ironic given that the two year ban on champagne was lifted this year. Bruce Anderson argues that the dour atmosphere is intentional. These are serious times for sombre politics, not the frivolity occasioned by a conference at a seaside resort. David Cameron’s first objective, Bruce says, is to reassure the country and present himself as a leader for a crisis. Cameron’s conference speech has been widely trailed by most news outlets this morning. Tim Montgomerie has a comprehensive overview of the speech. Cameron’s first challenge is to emote: these are "anxious times” for ordinary people, he will say.

Tuesday

Fraser Nelson

Good Boris

Boris Johnson must be one of the very few politicians in the world to make the audience laugh before they even start their speech. Just by walking on stage, he has the effect of a good comedian: the punters start to smile, in anticipation of some good one-liners. In today’s case, Boris got a standing ovation before he opened his mouth. Here is the man judged by Ladbrokes as the most likely next Conservative leader, but he had not come to stir. The Prime Minister – who lavished praise on the Mayor last night – was in the hall. It was all Big Society (BoJo division): affordable housing and a reprise of his January speech about restoring London’s identity as a union of villages.   But, he sounded several clear notes of defiance.

David Blackburn

What Fleet Street made of Osborne’s speech

The abiding image of this conference may be the sight of Steve Hilton apparently shepherding the turbulent Andrew Tyrie into a booth, from which Tyrie emerged singing George Osborne's praises. "A huge step forward…you can some consistencies," he said, which was an endorsement of sorts. What did everyone else make of it? As you can see, David Cameron looked morose at times, but the mood in the hall oscillated between sobriety and quiet optimism, matching Osborne's blend of austerity and promise for the future. Fleet Street is similarly conflicted: no paper gives him an unqualified endorsement, but no paper entirely rubbishes him either. The Times concludes (£), as Tyrie did on Saturday, that Osborne is strong on austerity and weaker on growth.

Monday

Fraser Nelson

What Osborne got right

After being mean about Osborne’s sub-prime corporate debt policy, I should say that he got a lot right in his speech earlier today. His delivery was the best I’ve seen: he looked relaxed, and sounded conversational. This suits him: he’s not a hell-and-brimstone kind of politician. He dealt with the dire subject matter in a confident way and was not in the least defensive. And he showed a glimpse of the sunlit uplands, so conspicuously absent from Vince Cable’s doom-laden speech a fortnight ago. That said, it seemed apparent from the rest of his speech that he is bracing himself – and us – for a downward surge on the economic rollercoaster.   “Leadership for a better future,” said the words on the podium.

David Blackburn

Osborne’s serenade

As James said, Osborne’s speech was a potent blend of economics and politics. One passage in particular stood out politically: when Osborne referred to those who booed when Ed Miliband mentioned Tony Blair during his speech. He said: ‘You know, there was a time when Labour seemed briefly to realise that to win elections it had to accommodate itself to the real world, stop being anti-business, make peace with middle Britain. Not now. It's over. Once they cheered Tony Blair, now they boo him. I fought three elections against Tony Blair, and I know the damage he did to our country. But it wasn’t just him they were booing last week. They were booing the millions of voters who once turned to Labour because they thought Labour had changed.

James Forsyth

Explaining credit easing

Having had a few more discussions, I’m a bit clearer about the government’s plan to do credit easing. The full details of the scheme will be released on the 29th of November as part of the autumn statement. But I hear that the scheme is intended to be worth between the high billions and the low tens of billions and it will be aimed specifically at small and medium sized enterprises, although it could be extended to all companies and expanded up to somewhere in the region of £50bn if the credit markets were to seize up.  I also understand that major supply side measures are being saved up for the autumn statement.

Matthew Sinclair

Osborne’s carbon conceits

George Osborne told a Conservative Party increasingly wary of expensive climate policies that Britain needs to "cut [its] carbon emissions no slower but also no faster than our fellow countries in Europe. That’s what I’ve insisted on in the recent carbon budget."  What he actually insisted on was what Chris Huhne described as "a review of progress in early 2014 to ensure our own carbon targets are in line with the EU’s".  Even if that review is serious, and energy intensive industries have every reason to be sceptical, it is only going to hold our policy to the same standard as today.  The current targets require us to cut our emissions faster than our European competitors, and the policies we are adopting to meet them are far more draconian.

Fraser Nelson

Osborne’s next trick: sub-prime companies?

About 15 years ago, Bill Clinton wanted to promote home ownership among the low-paid, but was annoyed that banks wouldn’t lend freely or cheaply to that group. So, the federal government intervened with Freddie Mac and Fannie Mae selling government-backed mortgages at knockdown rates. Nothing showed up on the national debt, because the loan would — in theory — be repaid. The seeds for the sub-prime crisis were sewn.   Today, George Osborne wants to promote recovery and is annoyed than banks won’t lend freely or cheaply enough to small businesses. So, the Treasury will intervene by lending money indirectly by backing a new bond market that lends cash to small companies.

James Forsyth

Osborne’s big step

As George Osborne was addressing Tory conference, Standard and Poor reaffirmed Britain’s triple A rating. For the Osborne team, it sent out the perfect message — their deficit strategy is keeping the nation creditworthy. It was their piece of conference theatre for this year. The Chancellor’s address was a sombre affair. But, in some ways, it was his most impressive conference performance. It was a classic Osborne blend of politics and economics, but distinguished by a clear and precise analysis of why the economy was not recovering. Osborne’s big policy announcement was that the Treasury was now exploring credit easing.

David Blackburn

Full text of Osborne’s conference speech

Today, all around our country – indeed, all around the world – people are anxious, worried about their jobs, their families, how they’re going to pay the bills.   I come to you with words of resolve, determination, confidence and belief.   Belief that the British people will overcome this challenge as we have overcome so many before.   Together, we will ride out the storm.     I don’t want anyone to underestimate the gravity of the situation facing the world economy.   But I also don’t want anyone to think that the situation is hopeless; that there is nothing we can do.   Yes the difficulties are great.   But we should be careful not to talk ourselves into something worse.

David Blackburn

Osborne, the caring chancellor

George Osborne is pursuing the Tesco strategy: every little helps. In his conference speech today, he will announce that he has found £805 million to freeze council tax next year, which will save taxpayers £72. Not a lot, you might think – and that’s Labour’s view – but the chancellor is adamant that he won’t “stand on the sidelines” while living standards contract. Substantial tax cuts have been ruled out by Osborne, but he is expected to make further announcements on benefits. Last week, it was rumoured that he would reverse changes to child benefit for a parent who earned around £42,000 per year.

Sunday

David Blackburn

Shapps sharpens the Right to Buy

It’s a day for growth initiatives. In addition to those described earlier, George Osborne has announced that Whitehall’s annual underspend will be reinvested into capital spending projects. The emphasis on infrastructure echoes Danny Alexander’s statements during the Lib Dem conference, when the Treasury secretary disclosed that existing programmes would be brought forward and funded by recalibrating budgets. So there seems to be agreement between the two parties about bolstering the coalition’s growth strategy in a certain way, which may explain why the Tories are so determined to resist pressure to introduce politically awkward tax cuts. Grant Shapps has also been elaborating on the changes to the Right to Buy.

David Blackburn

Hague: No deficit funded tax cuts

William Hague’s just been on Dermot Murnaghan’s Sky show. They shot the breeze for a bit, gabbing about foreign affairs and the recent targeted assassinations on Taliban and al Qaeda leaders, then the conversation moved on to tax cuts as an economic stimulus. Hague laughed off the suggestion, saying that the US is in its current crisis because for years it has concentrated on offering tax cuts rather than controlling its deficits. Britain will not make that mistake, he said. ‘No deficit funded tax cuts’ was a line first pursued by David Cameron ten days ago in a speech to the Canadian parliament (although, as Fraser has noted, it has its roots in the 2005 leadership contest and Oliver Letwin’s opposition to “unfunded tax cuts”).