Economy

Tuesday

David Blackburn

Another coalition compromise, this time on immigration

From our UK edition

Agreement has been reached on the troublesome immigration cap. The BBC reports that skilled non-EU migration will be limited to 43,000. This is just a 13 percent reduction from this year’s cap and there are numerous exemptions to be made; notably, inter-company transfers will not be included when workers earn more than £40,000 per annum. This is a considerable moment for the coalition because the cap was thought unworkable. The Conservatives have their cap, a pep pill for the embattled Home Secretary.  But this is also a victory for Vince, who is being feted by businessmen across the airwaves this morning. Cable and May have also been praised by Migration Watch’s Andrew Green for formulating policy to tackle Britain’s net migration.

Monday

David Blackburn

Cowen will seek a dissolution next year

From our UK edition

There has been much consternation and intrigue swirling around both Dublin and Westminster this afternoon about the near-collapse of the governing coalition in Ireland. The Greens, who support Brian Cowen’s Fianna Fáil-led government, pulled out; seeking a dissolution in the hope that it might save their skins from the fate that is likely (though not certain) to befall Fianna Fáil. If the government had collapsed, then IMF would have postponed the bailout. At least now Cowen can formulate a monetary plan, hopefully under the oversight of Ireland's international creditors, to free the country from its current extremis.

David Blackburn

Ireland’s crisis is the fault of Fianna Fáil, not just the euro

From our UK edition

In all likelihood, George Osborne will rise this afternoon to groans if not jeers. Britain looks set to lend Ireland £7bn as part of multilateral and bilateral bailouts. Many, particularly the Eurosceptic right, question our involvement, given our straitened financial circumstances and the apparent fact that Britain is sustaining the eurozone’s monetary and debt union, and will have to borrow to do so.     George Osborne has been adamant throughout: Ireland is too important to Britain’s recovery to risk collapse – British and Irish banks are closely linked, debts and borrowing are often co-dependent, trade is very profitable. That the bailout should strengthen the euro is a natural consequence of Ireland being a member of the euro.

Friday

Fraser Nelson

The kiss of death | 19 November 2010

From our UK edition

Oh dear. On Wednesday night, we at The Spectator saw David Cameron handing Lord Young his Spectator/Threadneedle Parliamentarian of the Year in the category of Peer of the Year. “Over the decades,” said yours truly, “Prime Ministers have come to value his advice. As Thatcher put it: ‘other people bring me problems, David brings me solutions.'” Not any more - David has brought him a problem, followed by a resignation. Less than 48 hours after picking-up our award, his political career appears to be at an end.   It is true that there are some people who have had a “good recession”. That is: faced no danger of losing their job and saw the cost of their mortgage collapse as part of the monetary stimulus.

David Blackburn

You’ve never had it so good

From our UK edition

As Michael Gove said at the launch of the Conservative Party manifesto: “Britain in 2010 is a great place to live in many ways” (4:12 in on this video). Lord Young, The Spectator’s Peer of the Year, agrees: for many of us, we’ve never had it so good. He told the Telegraph: ‘For the vast majority of people in the country today, they have never had it so good ever since this recession - this so-called recession - started…Most people with a mortgage who were paying a lot of money each month, suddenly started paying very little each month. That could make three, four, five, six hundred pounds a month difference, free of tax. That is why the retail sales have kept very good all the way through.

Thursday

Mats Persson

Britain may not be able to avoid bailing out the Irish

From our UK edition

This morning, it sounds as though Ireland has finally buckled to demands that they accept a bailout from the EU. Their central bank governor, Patrick Honohan, has said that he expects a "very substantal loan" from Europe – although the details, and debtees, are yet to be clarified. In the UK, of course, backbench MPs and others have been quick to condemn any move which would force British taxpayers to cough up cash under the EU’s various bail-out arrangements. Only problem is: the UK may not have a choice. The part of the eurozone bail-out package which Britain could be underwriting to the tune of £6-7 billion - the so-called European Financial Stability Mechanism – is not protected by a UK veto.

Wednesday

Matthew Sinclair

The British taxpayer should not be bailing out Ireland

From our UK edition

Everyone is talking about the royal wedding today.  It will be a great occasion but the public finances are tight and people are already asking about the cost.  There is a bigger issue for British taxpayers, though.  Our politicians have arranged for them to get hitched to the bride from hell: the ongoing fiscal disaster in the eurozone.   Under current plans it is reported that we could be liable for up to £7 billion in any Irish bailout.  At the TaxPayers’ Alliance, we have just this morning started a petition against British taxpayers’ money being put at risk for a euro-bailout of Ireland; you can sign it here.   The eurozone is fundamentally broken.

Peter Hoskin

Sovereignty, and the loss of it

From our UK edition

The superb Slugger O'Toole blog highlights what is certainly the most resonant quote if the day: "When you borrow, you lose a little bit of your sovereignty, no matter who you borrow from." Those words were uttered by the Irish finance minister Brian Lenihan this morning, and they capture his country's grisly predicament perfectly. The Irish government has been fighting the European attempt to bail them out because they believe, quite understandably, that it would mean a final handover of control to Brussels and Berlin. But their loose economic policy – built on debt, and structured around a stubborn currency – has already seen them lose control to the point where the IMF is dispatching its observers to the scene.

Monday

Peter Hoskin

Cameron: it’s all about the economy

From our UK edition

A minor landmark for David Cameron tonight, as he delivers his first Mansion House speech as Prime Minister. Like occupants of No.10 before him, he will use the occasion to talk about foreign affairs – although the result may be rather more like the Chancellor's annual speech at the same venue. Judging by the extracts that have been released so far, Cameron's overall emphasis will be on the economy, and on Britain's fiscal standing. As he will say, "we need to sort out the economy if we are to carry weight in the world." Cameron develops this point by claiming that, "whenever I meet foreign leaders, they do not see a Britain shuffling apologetically off the world stage.

Peter Hoskin

General Well-Being is back

From our UK edition

Spectators might smile wryly at the news that the government is to devise a method for tracking the well-being of the nation. This idea of General Well-Being (GWB) was common currency in the early days of the Cameron project, when the Tory leader was going all out to "detoxify the brand". But it soon hit a downturn-sized snag. Any talk of happiness might have sounded a little complacent and New Age-y in the face of job losses and bank bailouts. And so the Tories backed away from GWB, and it was relegated to little more than branding for the coffee stalls at Tory conference. It was quite a surprise to see it mentioned in the party's manifesto in April, although they did keep it on the hush, hush at the time. Yet now it's back at full volume. And the question is – why?

Peter Hoskin

Ireland’s nightmare becomes Europe’s problem

From our UK edition

"We certainly haven't looked to Europe." That was the message spilling from the mouths of Irish Cabinet ministers last night – but, as Alex suggested in a superb post on the matter this morning, their utterances may come to naught. After all, Europe has certainly looked to Ireland – and it doesn't like what it sees. Already, Brussels' moneymen are urging a bailout on the country, and Ireland's moneymen are thought to be in "technical discussions" about how that might work. The upshot is that a financial intervention from Europe is now considerably more likely than not. And with that come European demands over how Ireland should manage its public finances – and raise its taxes. There are plenty of lessons for all sides in this.

Sunday

Fraser Nelson

IDS shows how arguments are won

From our UK edition

For years, I have complained that the Conservatives have timidly stayed within Labour’s intellectual parameters, arguing that they need “permission” to make certain arguments and need to stay within the limits of what the public find acceptable. Such intellectual timidity confined them to opposition: they can never win, playing by Labour rules. Iain Duncan Smith is breaking free of this. It may be rash to predict it now, but I believe he is on the brink of a breakthrough in the way that welfare is regarded in Britain. This victory in a battle of ideas could be the greatest single blow against poverty in a generation. The extent of this was crystallised by Polly Toynbee in the Guardian yesterday.

Saturday

Daniel Korski

The new Cold War?

From our UK edition

In his recent cover story for The Spectator, the Financial Times' Gideon Rachman talked about how, in the United States, China was beginning to take on the appearance of a new Cold War-style foe. Many Americans accuse China of stealing US jobs, of keeping the its currency undervalued, of exporting deflation by selling its products abroad at unfair prices, and of failing to meet its commitments to the World Trade Organisation. Two months ago, a poll from WSJ/CNBC showed that the majority of Tea Party activists oppose free trade – seeing China as the sole beneficiary of a free trade policy. But it is not only the Tea Party that is goading for a US-Chinese clash.

Peter Hoskin

Whatever happened to Labour’s economic message?

From our UK edition

For some weeks now, Labour have struggled to project a clear voice on the economy. You can see what they've been trying to do: pitch themselves as an alternative to immediate, deeper cuts, whilst also accepting the requirement to deal with the deficit. But, as I've said before, this all too often comes across as nervous equivocation; a kind of "on the one hand, on the other hand" stuttering that won't persuade many observers either way. You sense that Team Miliband have tried to correct this in recent weeks, with a few punchier performances, but, even then, mistakes and deceptions have greased into their offering. Anyway, I mention this because Alan Johnson's interview with the Times (£) today only adds to the confusion.

Friday

Mark Littlewood

Going beyond the IDS reforms

From our UK edition

Iain Duncan Smith deserves credit for fully understanding the nature and scale of the welfare problem. But that’s the easy bit. Finding a solution with the right balance of carrot and stick and making it somehow affordable in these austere times is the tougher part of the equation. And it’s not at all clear that the IDS proposals have either enough carrot or enough stick.   He has certainly gone some way to tackling the lunacy of huge withdrawal rates – if by entering the workforce your new post-tax pay packet is less than the benefits you stand to lose, then don’t be surprised when an entrepreneurial work ethic fails to emerge in some of the country’s poorest areas.

Thursday

Fraser Nelson

50p tax: the coalition’s most expensive policy

From our UK edition

In my cover story for this week’s magazine, I say that the damage of the 50p tax, various bank levies and general banker-bashing is far greater than Osborne realises. Here are the top points I seek to make:   1. We may hate to admit it but the British tax base, and our chances of reducing the deficit, are heavily reliant on a handful of very rich people. The highest-paid 1 percent will generate 23 percent of income tax collected in the UK in the year before the 50p tax (see the table below). And spot the correlation between the top tax rate, and the burden shouldered by the richest and the poorest. Which are the most progressive – the figures on the right, or the figures on the left? 2.

Peter Hoskin

Johnson’s deceptions and out-of-date figures

From our UK edition

Oh, how Labour enjoy misleading the public about their record on the public finances. Ed Miliband did it a couple of weeks ago, with some very loose rhetoric about how the previous government had "paid down the debt". And now Alan Johnson's at it, with a fiery speech at the RSA which reheated many of the themes in his recent New Statesman article. The passage that struck me was this: "In 2007/08 as the crisis hit, we have the second lowest debt level in the G7 reduced by 14 percent in the 10 years we'd been in office... …The year before the crisis hit we were borrowing 2.4 percent of GDP compared to the 3.4 percent we inherited from Ken Clarke." Some points: 1) Second lowest debt level in the G7.

Gideon Rachman

Playing with fire | 11 November 2010

From our UK edition

As the G20 summit begins in Seoul, the emphasis in much of the papers is on the economic hostility between America and China. The FT's Gideon Rachman wrote a cover piece on this matter for The Spectator two weeks ago, which we've reprinted here for the benefit of CoffeeHousers: In a couple of weeks’ time, David Cameron and George Osborne will arrive in China and witness at first hand an economic boom that is shaking the world. The British duo will doubtless receive a polite and outwardly respectful reception. But, as I discovered on a visit to Shanghai last week, Chinese diplomats and academics have noted the deep cuts in British spending — and they are drawing the obvious conclusions about the relative fortunes of the two nations.

Wednesday

Daniel Korski

G-20 in Seoul: Beyond “Camerkelism”

From our UK edition

David Cameron is now in Seoul for the first G-20 summit hosted by a non–G-7 member state. It will be the Prime Minister’s second G-20. But things have changed dramatically since he came to power and had to jet to Toronto for his multilateral baptism. Then the Prime Minister’s arguments for austerity measures were theoretical - and a minority position. Now, they are real and have become the majority view. “Camerkelism”, the idea that short-term fiscal consolidation will induce sufficient private-sector activity to more than fully offset the fiscal drag seems to be in the ascendant. Yet the forced smiles at the traditional G-20 class photo will belie a number of continuing problems. The biggest issue will be about the Chinese exchange rate.

Peter Hoskin

The coalition pins a number on its welfare reforms

From our UK edition

The coalition has few better defenders of its cause than Nick Clegg. And if you need proof, then I'd point you in the direction of his article for the FT when the IFS first called the Budget "regressive"; his article on welfare reform for the Times in September; or his summertime speech on social mobility, which, along with his 2009 conference speech, is perhaps the defining statement of his politics. I mention all this now, because there's another effective Clegg article in the papers this morning – again on welfare reform, and again dripping with punchy arguments in the coalition's defence.