Economy

Saturday

Peter Hoskin

Rising costs: a problem for the public and the coalition in 2011

Ne’er mistake correlation with cause, I know. But, during the Brown premiership, the correlation between petrol prices and poll ratings was still pretty striking. Mike Smithson graphed it early last year, but the basic story was this: the Tories enjoyed their biggest poll lead over Labour when petrol prices were at their highest, and Labour closed the gap to only 1 percent when petrol prices were at their lowest. At the very least, it gives us a hypothesis to work from: prices up, the government suffers; prices down, the government recovers. And it looks as though we’ll be able to test that hypothesis soon enough. Today’s Express reports that – thanks to rising VAT, fuel duty and oil prices – petrol may soon soar to £1.40 a litre.

Thursday

Fraser Nelson

A debt-filled New Year

The Spectator is out today, with a cover story that I would commend to CoffeeHousers. Failure to learn from history usually condemns a nation to repeating its mistakes. That's why we should be nervous that no one seems to have worked out what caused the crash. Little wonder: the guys doing the analysis are the same guys who failed to spot the crisis building up, so it suits everyone to blame the banks. "How was I to know," says everyone from Gordon Brown to Joe the Pundit, "that they were doing all these complex debt swap thingies? They deceived everyone, the bounders." There is another analysis – and it's our cover story, written by Johan Norberg.

Monday

Peter Hoskin

Going for growth in 2011

Just as at the turn of 2010, economic growth is going to be big news in 2011. Back then, the question was when we would return to any growth at all. Now, it's more about how fast our recovery can be. So just how fast can it be? If you notice, Labour have fallen very quiet about the possibility of a double dip recession. But they'll still leap clamourously upon any sign that coalition policies are stalling growth and jobs. In this, they might even be joined by those on the right who are sceptical of the coming VAT hike. To put some sort of perspective on proceedings – albeit an incomplete one – I thought CoffeeHousers might appreciate a couple of graphs (see UPDATE below for larger versions).

Wednesday

James Forsyth

Paid to deliver

Payments by results is the key to innovation in the public sector. It will help transform public services from something delivered by a state monopoly into being provided by a variety of suppliers who compete for state funding with best practice rewarded. The work programme to move the unemployed off benefits and back into work – outlined by Chris Grayling today –  is the biggest move to payments by results we have seen in this country. Groups can be paid up to £14,000 for moving the long-term unemployed permanently back into work. This should ensure that groups have an incentive to tailor their programmes to the individual rather than relying on a top-down, centralised model.

Sunday

James Forsyth

‘The end of men’ debate

Hanna Rosin’s ‘the end of men’ thesis is one of the more interesting socio-economic and cultural arguments out of there. Rosin’s view is that women are simply better suited than men to the new economic environment and thus will increasingly pull ahead of men, reversing old gender dynamics. Rosin points out that, in the US, 13 of the 15 professions expected to grow the most over the next decade are female dominated, that around 60 percent of bachelors and masters degrees are earned by women and that young women earn more than young men. Intriguingly, where parents in US fertility clinics are trying to determine the gender of their child, they are aiming for a girl three quarters of the time.

Friday

James Forsyth

Clegg: Sheffield Forgemasters decision could be revisited

In an interview with Prospect Magazine, Nick Clegg has suggested that the decision not to loan government money to Sheffield Forgemasters ‘could be revisited.’ When pressed on whether the decision to cancel the loan was an odd decision given the coalition’s stated aim of rebalancing the economy and encouraging manufacturing. Clegg replied, “I agree. The trouble is the money that Labour had provided came from a budget in the business department that was running on empty. The treasury and Vince Cable felt it wrong to take money from somewhere else. But the whole issue could be revisited.” This strikes me as a dangerous thing to suggest. If the issue is not revisited, then Clegg will be accussed of a double-betrayal.

Thursday

James Forsyth

Johnson’s economic education

When he took on being shadow Chancellor, Alan Johnson said that he would need to get hold of an economics primer. Judging by his comments in yesterday’s debate about the bi-lateral loan to Ireland, he hasn’t got that far into it. Johnson told the House, ‘The euro had nothing to do with the [Irish] property boom and bust’. This is a bizarre statement. If Ireland had been able to set its own interest rates, they would have been far higher and thus dampened down the property boom.

David Blackburn

Miliband’s Oldham dilemma

Joy. It will be a campaigning Christmas, now that the Oldham by-election is likely to be held on 13th January. The Labour party is much exercised. The permanently outraged Chris Bryant says it is a ‘disgrace’ that politics will sully the ‘major Christian festival of the year’ – the lapsed cleric seems to have forgotten the election’s proximity to Easter. More importantly, fewer students will be in Oldham on 13th January to serve ‘judgement’ on the government, as Hilary Benn put it in the Commons this morning before adding that the government is ‘running scared’. By-elections are determined by local issues, as one would expect.

Wednesday

Ted Sumpster

Keeping the financial sector in Britain

The financial services industry in the UK is at a crucial juncture. Our new research report “Not with a Bang but a Whimper” – published tomorrow –  highlights the decline in the UK’s competitiveness as a domicile for this sector, and the increasing likelihood that both companies and workers will take the leap and choose to base themselves elsewhere. Many will see this as a good thing. The economy is still recovering from the financial crisis, the eventual cost to the public purse of the bank bailouts remains unknown, and the yearly round of hated bank bonuses are impending.

Tuesday

Fraser Nelson

Why we must remember the lessons of the Anglo-Scottish Enlightenment

The Adam Smith Institute kindly asked me to speak at their Christmas reception last night, and yesterday I was mulling what to say. When at The Scotsman ten years ago, I would sometimes visit the great man's grave in Edinburgh, and be surprised to see only Chinese tourists paying tribute. It was a pretty good sign of how political power would play out. Edinburgh is, with Prague and Stockholm, among the most beautiful cities in Europe; itself a monument to the Enlightenment. And how tragic that students – even Scottish ones – are taught about the E word only in the context of the French Enlightenment. The likes of Rousseau, Voltaire, Diderot wrote of grandiose ambitions and recasting society using state power.

Saturday

The Spectator

Portrait of the week | 4 December 2010

Home The Office for Budget Responsibility said it thought economic growth for 2010 would be 1.8 per cent, not 1.2 per cent as it had previously predicted. It expected 330,000 public sector workers to lose their jobs over the next four years, not the 490,000 it forecast in June; 1.1 million jobs would be created in the private sector. ‘The bulk of this revision results from the action we have taken to cut welfare bills rather than cut public services,’ George Osborne, the Chancellor of the Exchequer, told the Commons. A lower 10 per cent rate of corporation tax would be levied from April 2013 on the profits of hi-tech firms from newly commercialised patents. Tax on beers stronger than 7.5 per cent is to increase from the autumn of 2011.

Peter Hoskin

How the OBR measures up

There are only so many Labour interviews a blog can take, so I'll skip over Yvette Cooper in the Guardian (sample: "I did think about standing, and Ed said he thought I should stand and if I wanted to stand he would not stand"). Instead, another catch-up on how the Office for Budget Responsibility's growth forecasts are shaping up against those made by other institutions. Since I last did this, two new documents have been processed into the public domain: the OBR's latest economic and fiscal outlook, of course, as well as the the Treasury's round-up of long-term independent forecasts.

Peter Hoskin

Brown struggles on beyond the crash

Today's Guardian calls it his first interview since leaving office, although I think the Independent beat them to that one back in July. But, in any case, Gordon Brown's chat with Larry Elliot is another staging post on his slow path back to public life. Here's my quick summary: 1) Sniping from the moral high ground. A bit late now, but Brown is making a desperate scramble for the moral high ground. Not for him, he says, scurrilous memoirs that sift through the "arguments" of the past. No, he's got far more important things on his mind than muck-raking and innuendo, like the future of financial regulation across the world. Or has he? It's hard not to see barbs mixed in amongst it all. Take this line from the interview: "I am a full-time MP, not a businessman.

Martin Vander Weyer

Any Other Business | 4 December 2010

What Ireland lacks now are statesmen who can make the case that recovery is possible The screen at Manchester airport tells me I’m about to board an Aer Lingus flight to Dublin, but there’s a Lufthansa plane at the gate. ‘Blimey,’ I mutter, ‘this bailout’s moving fast.’ I’m looking at the wrong gate, however, and it’s an Aer Lingus stewardess who becomes the first of many people during my 36-hour visit to wish me ‘the best of luck’. Luck looms large in the Irish psyche and it’s what they long for right now — an oil find would help, I hear one passenger remark — plus a bit less attention from world markets and media.

Thursday

Matthew Sinclair

Putting a stop to taxpayer funded environmentalism

It’s that time of year again, time for the world to pay attention to climate change policy for a few weeks.  Most of the year, schemes like the EU Emissions Trading System and the Renewables Obligation just wallow in dysfunction and quietly cost us a fortune, adding to our electricity bills in particular.  Manufacturers pay attention, and higher energy costs threaten to drive industrial jobs abroad, and the poor and elderly feel the effects, even if they don’t know why their bills are rising.  But the only people who really have the staff and the organisational clout to pursue this issue all year round are the environmental campaigns.   Many of them, like Friends of the Earth, have multi-million pound budgets and dozens of staff.

Wednesday

Daniel Korski

The Guardian’s Wiki-spin

In today's Wikileaks revelations, it is Mervyn King's turn to be pushed through the mill. Did he act politically when pushing for a deficit reduction plan? Was he critical of David Cameron and George Osborne or just pointing out the obvious: that the Tory leaders had not held power before and - shock horror - were keen to get elected? The Guardian's reading of the cables suggests that the government's Batman and Robin (to keep with US diplomatic style) were unprepared for the task ahead. But re-read the key passages and it is clear that Cameron and Osborne were no different from any other opposition leaders - reliant on a small staff, and unprepared for the special pleading they would face as they entered government and tried to cut the deficit.

Lloyd Evans

Nothing Miliband says can rain on Mr Confident’s parade

Back from Zurich, where he’s been helping FIFA determine the winner of the world’s greatest bribery festival, Cameron was in hearty form at PMQs today. He faced Ed Miliband who looks increasingly like the life and soul of the funeral. His party is riding high in the polls – but only when he’s away. As soon as he pops his head back around the door a groan of misery goes up and his rating collapses. Earlier this week the OBR gave an upbeat assessment of the economy so Ed sent his bad-news beavers to sift through it for signs of toxicity. They couldn’t find much. Jobless totals are to rise. But only a bit. The economy will grow reluctantly. But not that reluctantly. We’re faring worse than some of our rivals, and better than others.

Tuesday

David Blackburn

Palin versus Romney

The GOP is ambling towards the start of the 2012 nominations race. Two probable candidates are busy pitching their media tents. Sarah Palin is on a coast to coast tour, flogging her latest book; she has also been cheering on her daughter on Dancing with the Stars and she recently gutted a halibut on her Alaskan reality TV show. It’s all action and personality from the Mamma Grissly. By contrast, the cerebral Mitt Romney has agreed to appear on…Jay Leno’s Tonight Show. Leno makes Parky look almost vital. As one Democrat strategist observed: “On the hipness scale, this is far from Bristol Palin on ‘Dancing with the Stars.’ It’s more like Richard Nixon on ‘Laugh In’.

Monday

Fraser Nelson

Tax cuts: a Swedish recession remedy

I travelled in from frozen Stockholm this morning. My colleague Mary Wakefield set out from County Durham. No prizes for guessing whose journey took more time due to snow. When my £38 norewgian.com flight arrived at Gatwick, the captain said: “Sorry, we’re going to be delayed. They can’t seem to find people to open the gate, they say they are short staffed.” The Swedes on the flight burst out laughing: welcome to Britain. Mary’s £107 train was two hours late arriving to the station, and spent a further two hours stuck in the snow. That the Swedes do better at us in the snow is no great surprise, but it’s odd to see them do better at supply-side economics.

James Forsyth

Osborne airs the Tories’ election message

George Osborne’s autumn statement previewed what I suspect will be the coalition, or at least the Conservatives, re-election message. ‘This government has taken Britain out of the financial danger zone and set our economy on the path to recovery.’   Today’s OBR forecast was a boon for the Chancellor. It suggests that there won’t be a double-dip recession, as his critics suggested there would be. The improved economic numbers allowed him to come to the House and declare that the deficit reduction ‘plan is working’, and that already the coalition has saved the country £19 billion in debt interest. Alan Johnson was his usual self in response.