Economy

Thursday

Peter Hoskin

Introducing Britain’s skills crisis

From our UK edition

Did you know: Britain trails well behind other countries such as the US, Germany and Poland when it comes to educating its workforce? Did you know: the number of young people not in employment, education or training has risen by around 40 per cent over the last decade? Did you know ... oh, you get the idea. All the statistics, and more, are in the booklet on Britain's Skills Crisis that is included in this week's Spectator. For CoffeeHousers who don't buy the magazine (although you should, etc – purchasing options here), you can read the supplement for free via this snazzy, page-turning whatsit. We'll also put one or two of its articles up on Coffee House in due course.

Wednesday

James Forsyth

Rooting out the cause of the crisis

From our UK edition

David Frum is doing a great series on the Financial Crisis Inquiry Commission report. The report is, obviously, US-centric but its argument that the problem was not with the regulation but the regulators strikes me as highly important: “[W]e do not accept the view that regulators lacked the power to protect the financial system. They had ample power in many arenas and they chose not to use it. To give just three examples: the Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not. The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup’s excesses in the run-up to the crisis. They did not.

Matthew Hancock-Mp

IFS say Labour’s policy would mean higher interest rates

From our UK edition

From the start of the financial crisis, the Conservatives have argued that when a country¹s finances are in a mess, the best way to manage demand is through monetary activism and fiscal responsibility. Going into this crisis, Britain¹s finances were indeed in a mess. We had the biggest structural deficit among major developed economies (according to the IMF, OECD, oh, and Alistair Darling). To claim there was no structural deficit is to oppose the truth. The principles of monetary activism and fiscal responsibility underpin the approach to the recovery too. By dealing with the fiscal mess, we can keep interest rates lower for longer, and avoid the sorts of financial meltdown seen in Ireland and elsewhere.

Tuesday

Fraser Nelson

Treading the road to recovery

From our UK edition

It will have been a quiet morning in the Balls household. Fresh economic indicators suggest that the British economy is not in some cuts-induced recession but, instead, doing rather nicely, thank-you. As I said last week, economic health is assessed by all manner of indices – and the ONS (which is forever having to tear up its GDP forecasts) might just have boobed last week with its preliminary Q4 GDP figures. Today we have the Manufacturing PMI surging to heights not even reached in the early 1990s:   Now, this might be a flash in the pan, you say. But then consider corporate liquidity – that is, how much debt Britain’s companies have lurking on their balance sheets. The figures out today are not too bad either.

Monday

Peter Hoskin

What are Osborne’s options?

From our UK edition

One of the most eyecatching political reports of the weekend was squirrelled away on page 16 (£) of the Sunday Times. It's worth clipping out for the scrapbook, even now. In it, Marie Woolf reveals some of the fiscal sweeteners that Osborne might sprinkle into the Budget. There are two particularly noteworthy passages: i) Raising the personal allowance. "The income tax threshold is already set to increase by £1,000 to £7,457 from April 1. However, Osborne is expected to raise it by about a further £500. Details of the additional concession are still being worked on, but it marks a victory for the Liberal Democrats, who have been arguing within government for tax cuts for the poor." ii) Holding off on 50p.

Thursday

David Blackburn

Spelman’s a lumberjack and she’s ok

From our UK edition

The coalition’s plans to privatise Britain’s woodlands have received what is euphemistically termed ‘a mixed reception’. Caroline Spelman’s consultation document and accompanying article in today’s Times (£) may change that fact. Both are historically conscious and upholstered with reassuring pastoral interludes – an elegant departure from most ministerial rambles.   But, this government's politics breaks well clear from the literary immersion. There is a dose of Thatcherism. Spelman is adamant that the state should not be managing forests, and she wants private companies to exploit commercially valuable forests.

James Forsyth

Deregulation is the path to growth

From our UK edition

The government’s decision to increase the period which employees have to serve before they can bring a case of unfair dismissal from one to two years is welcome. But if it wants to encourage small and medium sized enterprises, the engine of the economy, to hire more people then they need to take the shears — not nail scissors — to regulation and employee protection laws. Camilla Cavendish has a cracking example of the absurdity of the current system in her column (£) today: 'A London neighbour of mine, Mr B, runs a small business that is doing well. Last year he took over an insolvent company where the staff were about to lose their jobs.

Wednesday

Peter Hoskin

The Big Society in 1997

From our UK edition

Titter ye might. The Big Society? In 1997? If the idea was of, erm, limited electoral worth in our last general election, then it was certainly of little use when Tony Blair hurtled into power all those years ago. Yet there is was, mostly speaking, in the "Civic Conservatism" espoused chiefly by David Willetts. Danny Finkelstein, writing for the pre-paywall incarnation of Comment Central, has already alluded to the intellectual debt that Steve Hilton et al owe to Willetts' thinking back in the 1990s. Fraser did likewise in an interview with Willetts from four-and-a-half years ago. I mention this now for two conjoined reasons.

Lloyd Evans

This Ed’s no Goliath

From our UK edition

Ed Milliband took up his position at PMQs today flanked by Caroline Flint and Ed Balls. Between a rock and a hard face. His proximity to so many colleagues who wish him ill can hardly have helped his performance. He was like a stale doughnut. Layers of stodge surrounding a hole in the air.   His battle-plan wasn’t entirely useless. He wanted to tempt the prime minister into foolish speculation about the causes of last quarter’s poor growth figures. Cameron stood up and admitted that the numbers were pretty lousy whether the weather were blamed or not. And that whether-the-weather left Miliband completely stuffed.

James Forsyth

Winning in 2015

From our UK edition

Danny Finkelstein’s column in The Times today (£) is well worth reading. Finkelstein sets out two worries, first that the Tories do not have enough of a strategy for winning re-election and second that the NHS reforms might compromise Cameron’s standing as a different kind of Tory. On the latter point, Finkelstein is echoing the views of an increasing number of Tory MPs and ministers. They worry that these poorly understood reforms have put the NHS back on the political table and that, as is so often the case when this happens, the Tories will suffer. Finkelstein’s first worry is that if the government sets out deficit reduction as its raison d’etre then, when that is achieved, as it should be by the next election, it loses its purpose.

Peter Hoskin

A businesslike State of the Union address

From our UK edition

https://www.youtube.com/watch?v=nZ5DMpNznlA Jobs, people, work, new, years, make. You can get a good sense of Obama's State of the Union address purely from its most frequently used words. Yes, this one was all about the future, and – another popular word – "investing" in it. As the President himself put it, sounding like some freakish amalgam of David Cameron and Gordon Brown, "If we make the hard choices now to rein in our deficits, we can make the investments we need to win the future." The President wasn't short of ideas for the investment half of that equation, even if – as others have noted – there was an absence of specifics.

Tuesday

Peter Hoskin

Why our national debt went up by £1,300 billion today

From our UK edition

It's not just the growth figures, you know. Today, the Office for National Statistics also released its latest estimates for the state of the public finances. Among the headline findings was a crumb of consolation for the Treasury: it is on track to meet its borrowing target for the financial year. But that's by the by when compared to this other snippet from the ONS release: our national debt went up by £1,300 billion in December. Don't worry, though – it's not really as terrible as all that sounds. What's happened is that the human calculators have finally worked out how to account for Lloyds and RBS on the public balance sheet. This isn't new debt. It's simply a grand liability that wasn't included in the official statistics until now.

Peter Hoskin

Brown takes the opportunity to peddle his “global growth plan”

From our UK edition

As Iain Martin and Guido have noted, Ed Balls – and, for that matter, Ed Miliband – could probably have done without Gordon Brown hovering from the political graveyard to cast judgement on today's growth figures. But hover he has, as the above video of his appearance on CNBC News testifies. It's almost as though he wants to remind people that his spirit lives on in Labour's rearranged top team. As for the content of his interview, it was stodgy mix of the arguments in his recent book and the attacks that Balls was making earlier. "Europe and America, but particularly Europe," he said, "are now implementing policies that are more reminiscent of the 1930s, than reminiscent of the lessons we should have learnt from previous decades.

Daniel Korski

Call in a bulldozer for growth

From our UK edition

As the coalition considers how to develop a growth strategy, it would do well to call in Paddy Ashdown and hear about the 'Bulldozer Initiative' he launched while in Bosnia working for the United Nations. Not a highway programme, the Bulldozer Initiative was instead one of the smartest pro-business schemes I have seen. And something like it is now needed here. The brainchild of a French businessmen and based on the ideas of Peruvian economist Hernando de Soto, it involved building a partnership between politicians and businessmen to identify specific legislation and regulations that prevented companies from expanding their businesses and creating more jobs.

Peter Hoskin

Ed Balls: I don’t think a double dip is the most likely outcome

From our UK edition

And this, folks, is a day where Ed Balls is having his cake and eating it too. Not only is he basking in the grim light of the growth figures, but he is using the opportunity to recast his own stance on the economy. Speaking on the Daily Politics just now, he de-emphasised the argument that in-year cuts were to blame for today's numbers, instead claiming that people have "changed their behaviour in anticipation of what's coming in the future." And, more ear-catching still, he added: "I don't think [a double dip] is the most likely outcome." This, as Fraser suggested earlier, is surely necessary caution on Balls's part. He can't go too far with the dread warnings, lest the economy pick up again next quarter.

Fraser Nelson

What to make of the GDP fall?

From our UK edition

"Recession here we come, a snow-dabbed double-dip" tweeted Faisal Islam, Channel Four's economics editor. He summed up much of the hysterical reaction. It may spoil a good story, but here is what I suspect the broadcasters won't tell you today. 1. Erratic GDP swings are common when recovering from a recession. Remember how stunned everyone was with the surging quarter three data? Now, we're all shocked by plunging quarter four figures. I'd advise CoffeeHousers to treat these two imposters just the same. After the 80s recession, quarterly growth rates swung between -0.7 percent and 1.5 percent. Following the ERM-induced recession in the 90s, growth rates swung between -0.2 percent and 0.5 percent. A swallow does not make a summer.

Monday

David Blackburn

Outgoing head of the CBI slams the government on growth

From our UK edition

Richard Lambert has launched an uncompromising but constructive assault on the government’s growth strategy, or lack of it. He said: “The government is…talking about growth in an enthusiastic and thoughtful way… But it’s failed so far to articulate in big picture terms its vision of what the UK economy might become under its stewardship. “What I feel is that a number of their initiatives – I’m thinking of the immigration cap, I’m thinking about their move on the default retirement age, about the carbon reduction commitment - have actually made it harder for companies, or less likely for companies to employ people. And what we want, actually, is a sense of direction, a sense of ambition.

Daniel Korski

The government must continue to liberalise Europe’s market

From our UK edition

For a long time, the terms of Britain's Europe debate has been about the merits - or otherwise - of membership. This has occluded discussion about the need to promote a deregulated and economically liberal single market, for which the Conservatives have fought so successfully since Britain joined the then EEC in 1973.   Now Lord Brittan has shown the way. In a speech to Business for New Europe, he takes aim at the many illiberal practices that hamper economic development across Europe and hurt British business: “Portugal still has rules governing the minimum distance requirements between driving schools; and in Greece, directors of dancing schools need to live within a set distance of the school!

Sunday

David Blackburn

The Irish government folds

From our UK edition

Yesterday, Brian Cowen resigned; today his government has imploded. The Green Party, which was bolstering Cowen’s ruling coalition (if such a phrase is applicable in this instance), have left the government. The Fianna Fail-led coalition is now two votes short of a majority, and therefore the finance bill may not pass in its current form. If that is so, Ireland may return to the precipice on which it found itself a couple of months ago, and its principal creditors and trading partners with it. But there is more to this than balance sheets. In his statement, the leader of the Greens said that the people had lost confidence in the political process. It’s hard to demur.

Fraser Nelson

Exposing the con man

From our UK edition

  To the chagrin of CoffeeHousers, I have long rated Ed Balls and his abilities. He has a degree of brilliance, albeit tragically deployed in the services of a destructive economic agenda. But as we welcome him back, it’s worth reminding ourselves that his abilities are of a specific type. He understands economics (even though he did PPE) but his speciality is in creative accounting. His only tactic is to spend, borrow and cover both up by cooking the books. He is a trickster, not an economist. More Arthur Daley than Arthur Laffer. In my News of the World column today (£) I say he is dangerous to Labour as well as the Tories, perhaps more so. But it’s worth recapping what we’re dealing with.