From our UK edition
There are few more useful addendums to Danny Alexander's comments earlier than YouGov's poll for the Sunday Times today. It asks people about individual policies for growth, and the results will be disheartening for the Tory leadership and encouraging for Ed Balls.
From our UK edition
Danny Alexander is usually the very model of collective responsibility: sober, unfussy and diligent, he sets about the coalition's work without ever causing a scene. Which is what makes his televised comments about the 50p tax rate earlier all the more striking. When pressed on the subject by interviewer Sophie Rayworth, the Chief Secretary to the Treasury was forceful in response. The government doesn't necessarily want to cut the rate, he suggested, and those who thought it would are inhabitants of "cloud cuckoo land". He went on: "We set out in the Coalition agreement, and it's something that we as Liberal Democrats pushed very hard for, that the Government's first priority in tax reductions would be tax cuts for people on low and middle incomes.
From our UK edition
At last, signs that Washington's lawmakers may have scrabbled together a debt deal after all. According to the overnight wires, the White House and Congressional leaders have alighted on a package that would raise the ceiling by $2.4 trillion, so long as the deficit is reduced by at least the same amount over the next ten years. There are more details here, but the key claim is that around $1.2 trillion of immediate spending cuts have already been agreed upon, with a Congressional committee to recommend further deficit reduction measures by the end of November. And although these proposals will still have to pass through the corridors of Congress, leaders from both sides sound increasingly optimistic that it will do just that.
From our UK edition
Momentousness without momentum. That's what we're getting from America at the moment, as this all-crucial debt deal continues to stutter and stall. The main development in Washington yesterday was John Boehner securing enough Republican votes to pass his bill in the House of Representatives — only for it to be summarily tabled by Democrats in the Senate. What will follow over the weekend is yet more frantic negotiation between the Democrats and Republicans in Congress, as each tries to make their various plans more acceptable to the other, while also keeping their own die-hards on side. Meanwhile, the clock keeps on ticking down towards default: three days, 13 hours, 35 minutes...
From our UK edition
The homepage of the Washington Post has a clock ticking down to America's debt-ceiling deadline: four days, 14 hours, and a fast-declining number of minutes and seconds. It also has details of the events, last night, that upset the prospect of a deal being reached yet again. The Republican Speaker of the House of Representatives, John Boehner, had been frantically trying to corral support for a bill that would raise the ceiling in exchange for $billions of extra spending cuts. He only needed 216 of the House's 240 Republicans to vote with him. But it wasn't to be. The vote was called off, postponed until at least later today, as it became clear that Boehner couldn't immediately persuade those in his party who want further cuts still.
From our UK edition
There was much sly amusement earlier this week when George Osborne, responding to the latest growth figures, described Britain as "a safe haven in the storm". The idea that our high inflation, low growth economy might be a "safe" anything seemed, to many, a grotesque idea. But, in truth, the Chancellor may have had a point — and it's a point that he'll want to make again and again as the recovery stumbles on, and as other indicators fluctuate against him. What the Chancellor was referring to, I'm sure CoffeeHousers know, is the interest rates set by the markets on the UK bonds that fund our borrowing. Broadly speaking, the higher the rates, the less certain our creditors are that the Exchequer can meet its debts.
From our UK edition
Remember that merry dance between the government and the unions over public sector pensions, a few weeks ago? Expect a minor reprise today, and much more over the summer. The government today announces how much extra public sector workers will have to pay to maintain their pension levels, and already the Telegraph has the numbers. When it comes to the 40,000 best-paid public sectorees — all on considerably over £100,000 — their contributions will rise by around £3,000 a year. And then it's a sliding scale all the way down to the 750,000 least well-paid workers, who will face no increase at all. The unions, who will rejoin the government in talks soon, are unlikely to respond kindly.
From our UK edition
Growth in the 2nd quarter was an anaemic 0.2 per cent, in line with recent predictions. Another headline is that manufacturing fell by 0.4 per cent, in line with global slowdown in the sector. Also, the ONS says that growth would have been 0.7 per cent if it weren't for the Bank Holidays, the fine weather and external economic factors. Now the political fun starts.
From our UK edition
The release of the Q2 growth figures is still half-an-hour away, but Westminster is already on the boil. Much of the fuss and froth is because it's expected that the economy barely grew at all between April and June, or perhaps even shrank. But some of it is down to this Telegraph story, which suggests not just that "Downing Street aides [have] become increasingly impatient with a lack of growth," but that David Cameron's permanent secretary, Jeremy Heywood, recently held a meeting with Treasury and Business officials, and "read them them Riot Act". So is the longstanding friendship between Dave and George fraying at the edges? Benedict Brogan says not, but adds that things are far from rosy when it comes to their respective teams.
From our UK edition
Terrible events in Norway and the ongoing phone hacking scandal have kept the economy out of the media in the last couple of weeks. Coverage of the latest bail-out of Greece last week was comparatively muted, especially considering how important it is for the eurozone and, by implication, the UK. However, if the soothsayers are correct, it is unlikely that the release of the Q2 GDP figures tomorrow will fail to hit the headlines. When the Office for Budget Responsibility published their forecast for the UK economy in April they had forecast growth of 1.7 per cent this year, but signs are that tomorrow's Q2 data will raise stark questions about the likelihood of that level of growth. Indeed, many commentators have revised their UK GDP forecasts down in recent weeks.
From our UK edition
By now, George Osborne will have seen tomorrow's GDP figures and I suspect will be having a mid-afternoon whisky. Ed Balls will be warming up for his demands for a Plan B. "Austerity isn't working," he'll say — and will doubtless tour TV studios with his usual bunch of dodgy assumptions which he hopes broadcasters won't challenge. Here, as a counterweight, are a few facts and figures about austerity, how harsh it is, etc. — and the case for a Plan A+. 1. Where are the "deep, harsh" cuts? The Q2 GDP data will complete the economic picture for the first year of George Osborne's time in the Treasury. But where are the cuts? The Treasury produces figures for current spending each month. Here they are below, in cash terms and adjusted for CPI inflation.
From our UK edition
It has mostly been a weekend of terrible and grisly news, especially with the details emerging from Norway about Anders Behring Breivik and his murderous brand of politics. But there was also, behind it all, a slight rebalancing of the British political debate. After weeks of grandmaster-like focus on the phone hacking scandal, our politicians have started talking about the economy again. With the GDP growth figures for the second quarter of this year due out tomorrow, they're all trying to get their spin in early.
From our UK edition
It is fashionable to say that the nation is divided: the North and South, the haves and have nots, the politically engaged and the apathetic. Educational attainment has been added to that list, following yesterday’s apocalyptic report from the University and College Union (UCU), which found that there are more people without qualifications in one impoverished part of the East Midlands than there are in ten other affluent constituencies across the country. The report concludes that those from the poorest backgrounds have been “short-changed for generations”. What’s so striking about this report is that it follows hot on the heels of an OECD investigation into grade inflation under the previous government.
From our UK edition
“I’m very worried, this building [the Treasury] is very worried and this government is very worried,” said George Osborne of the unfolding crisis in the Eurozone. In an interview with the FT, the chancellor goes on to say that he is in constant contact with his continental counterparts and urges them once again to “get a grip”. Eurozone leaders are meeting today to discuss further loans to Greece. Three options are being considered: first, an extension of the European Financial Stability Facility; second, private sector creditors re-lend money for a longer period and at a lower rate; third, impose a tax on banks to secure revenue for Greece.
From our UK edition
No Labour bounce, no drop in approval for Cameron or his government. That's the impact that two weeks of front pages dominated by the phone hacking scandal on the opinion polls: Ed Miliband's numbers have improved, which will come as some relief to the Labour leader who suffered a terrible month of polls in June. But despite a 13 point jump in the last fortnight, his net approval rating has only recovered to where it was six weeks ago, and that was hardly a rosy position. Certainly, Ed's response to the scandal seems to have reflected well on him. 49 per cent of the public think he's handled the affair well, compared to 36 and 33 for Cameron and Clegg respectively. Perhaps most strikingly, even Tory supporters think he's done well, by 44 per cent to 35.
From our UK edition
It was a problem that would be fixed with a snap of the Commissioners' manicured fingers, but now fresh euro-storms are louring in the near distance. As predicted over the weekend, the markets reacted to the European Banking Authority’s deeply flawed stress tests with fevered concern and a clear note of contempt. The FTSE shed 90 points yesterday, with banks among the day’s biggest losers. The performance in Frankfurt and Paris was equally baleful, as investors fled for safe commodity stocks. As Fraser has noted, Allister Heath argues that the Eurozone crisis is responsible for the booming price of gold.
From our UK edition
Addictive though the hacking inquiry is, the average Brit is probably more worried about the slow decimation of his spending power at a time when salaries are flat. Against this backdrop, the price of gold today has broken $1,600 an ounce. With inflation and the Fed's printing presses whirring, faith in paper money is taking a knock – and this is reflected in the price of gold. Fears of a debt crisis in Europe add to it too, with a disaster scenario all too easy to imagine. Over the last decade, the West blew a bubble fuelled by low interest rates and debt-financed consumption. The bubble burst. Solution: even lower interest rates, and even more debt-financed consumption – but this time, with added inflation.
From our UK edition
The Office for Budget Responsibility's 126-page Fiscal Sustainability Report really oughtn't make for electrifying reading. But it does. What Robert Chote and his gang of number-crunchers have done is to gaze into our fiscal abyss, and summon up forecasts so that the abyss can gaze back into us. I mean, look at the graph above. On the OBR's account, our country's debt burden could well rise from around 70 per cent of GDP now to over 100 per cent in 50 years time. It is a perturbing trajectory, to say the least. But, before we go any further, we should slap all kinds of health warnings across this. Long-term forecasting is, by its very nature, an uncertain science — and there are plenty of uncertainties in the OBR's work.
From our UK edition
The UK government is becoming increasingly concerned about the situation in the eurozone and the fact that there does not appear to be the political will to address it. One government source complained to me earlier today that "unless they get their act together the eurozone are in danger of fiddling while Rome burns." Tonight, in a major departure from Britain’s previous softly-softly approach to the issue, George Osborne is issuing a statement calling on the eurozone countries to take "decisive action" to "prevent market uncertainty doing real damage to the world economy." The Chancellor calls on eurozone countries to: "...
From our UK edition
The end might be nigh for the euro. The currency has hit an all-time low against the Swiss franc, as individual eurozone government bond yields vaulted higher due to mounting concerns about the region's debt crisis. To spell out what this means: in Spain, 12 billion euros of interest payments will accrue for every 100 point bond rise in Germany. That is more than Spain's annual public investment in infrastructure (8.6 billion) and its entire defence budget (7.6 billion). At the same time, Greece is heading towards disorderly default or some form of devaluation. Or both. And now Italy looks vulnerable.