Economy

David Cameron's speech today was, in many respects, the one he needed to make: the clean-break speech, which trashed Labour's record on the economy while also outlining how the coalition would deliver us to the sunny uplands. As it happens, it was also quite effective: a blend of policy specifics and punchy rhetoric.  And while we'd heard many of those specifics before – corporation tax cuts, reduced regulation, carbon capture, etc. – they cohered here as they rarely have done before. The most earcatching apsect of the speech, though, was the emphasis Cameron placed on government intervention.  Yes, there was a solid core of small state fundamentals.

Recent events in the Eurozone have led a number of commentators to suggest that we are nearing some repeat of the financial crisis that followed the nationalisation of Fannie Mae and Freddie Mac in August 2008 and the subsequent (and consequent) bankruptcy of Lehman's. In my view, the current situation is rather different from that in 2008, but matters could turn out much worse.

The sun is filtering through the garden at 22 Old Queen Street, and a brass band is marching around St James's Park: we're getting the light and the pomp in equal measures for today's Queen's Speech.  As for the actual policy, well, we largely know what it's all about.  There will be proposals for scrapping ID cards, strengthening civil liberties, reforming schools, making the police more accountable, and more.  The emphasis from the government is on handing power back to the people. The question is whether the coalition can make today's positives balance out the age of austerity.  The stock market today provides a gloomy reminder that their biggest challenge is, and will remain, the economy.

I've just read through George Osborne's speech to the CBI annual dinner last night, and there's much in there about free markets and tax cuts that will encourage Tory supporters.  But one passsage seemed a little strange to me: "And on the subject of coalitions, let me be absolutely frank. As a member of the negotiating team, we did consider whether we could try to bluff our way into a minority government. But it was David Cameron’s bold vision and Nick Clegg’s great foresight which saw, before anyone else, that that option would be the greatest compromise of all. A weak, unstable government, risking defeat night after night in Parliament.

David Cameron’s first broadcast interview from Downing Street contained two significant pieces of news. First, George Osborne will commission an independent audit of the public finances and state spending on Monday. I suspect that this audit will reveal that things are even worse than the official figures suggest. The political purpose of this audit will be to provide cover for the necessary cuts, to show that they are necessary because of Labour’s economic mismanagement. I also expect that the new Office of Budgetary Responsibility will provide a new, more cautious set of economic forecasts. The other piece of news was Cameron confirming that the vote on the 55 percent clause will be whipped.

Philip Hammond was quietly brilliant as Shadow Chief Secretary to the Treasury and it would have been a travesty if he was excluded from the Cabinet. Having avoided assuming the mantle of ‘the most hated man in England’, Hammond has been handed the poisoned Transport brief. A popular saying about frying and pans and fires comes to mind as he will tasked with renewing Britain’s congested roads, baleful airports and Victorian railways amid austerity. Still, he could have been sent to Northern Ireland. Hammond’s first announcement has been to confirm George Osborne’s pledge that the £16bn Crossrail project will not be cut.

If you read only one thing today, then make a cup of tea, sit in a comfy armchair, and make sure it's Tim Montgomerie's 7,000-word review of the Conservative election campaign.  Tim has opened up his address book and spoken with many of the main players in the Tory operation - and the result isn't all that flattering.  Here's a summary passage which gives a sense of it all: "For a period, the 'Big Society' was put at the heart of the campaign. Amazingly, the Big Society was never tested in focus groups and it failed on the doorstep. One leading adviser to the campaign complained of a 'cavalier' approach to research. 'They latched on to research that backed their views and ignored any research that challenged it.

William Hague has just emerged from the Cabinet Office and spoken of the 'positive, constructive and substantive talks' between the Conservatives and the Liberal Democrats. Discussion has encompassed political reform, reducing the deficit, banking reform, regulation of small businesses, environmental issues and civil liberties. Hague says that a further meeting will take place at some stage in the next 24 hours. 'That meeting,' he added. 'Will concentrate on deficit reduction and economic stability'. The language of the statement suggests that an informal pact is more likely than a formal coalition.

I’m sceptical of the value of newspaper endorsements. Readers are often irritated by being told which way to jump - if you’ve read the letters page of the Times recently you’ll know what I mean. However, the weight of Fleet Street support for the Tories is significant. In addition to the usual suspects, the Sun, the Times, the Financial Times and the Economist have all defected from New Labour since 2005. Today, the Evening Standard joins them, endorsing the Conservatives in a general election for the first time since 1997.