Economy

Today’s new economic data gives a handy piece of ammo to the Conservatives.  It is untrue that, as Gordon Brown says, this recession was somehow milder than others. The economy contracted by 6.3 percent this time – it was 3.8 percent in the 1980s recession and just 2.4 percent in the early 1990s recession. I feel confident that the Conservatives will get this point across clearly, next time that Brown boasts that this recession has been somehow milder, thanks to his decision to “intervene” (ie, double our national debt).

George Osborne put in a fiery and impressive performance in the Chancellor’s debate today, firing off some memorable one-liners as well as unveiling a letter from the former head of the anti-avoidance group at the Treasury questioning the sums on which the Lib Dems’ tax plans depend. Indeed, since the Lib Dems surged, Osborne has found another level to his public performances. Today’s debate win followed a good spot by Osborne on the Politics Show on Sunday.   One striking thing about the debate was how it was Darling who signaled the assault on Cable when he started querying Vince’s numbers. It’ll be fascinating to see if Brown takes any similar swipe at Clegg tomorrow; his interview in the Indyhttp://www.independent.co.

Who would have thunk it? Inflation has again “surprised” on the upside – 3.4 per cent against a 2.0 percent target. Why so high? Even the return of 17.5 percent VAT does not justify this bounce. Might it have something to do with all those bank notes which were being printed by the Bank of England? Might interest rates be going up now to control this inflation – and, if so, what impact would this have on a UK economy which is already the most indebted of any major economy in history? The March figures show Britain has, by some margin, the highest inflation of any major European economy: it’s way higher than that of France (1.7 percent) Spain (1.5 percent) Italy (1.4 percent) or Germany (1.2 percent). And in America, 1.1 percent.

Only 58? Labour's last letter attacking Tory spending cuts this year had 60 economists' signatures attached to it. Their latest, released today, has only 58. Number 10's signature-marshalling skills are clearly on the wane. I sincerely hope that the Tories don't marshal some economists of their own. The last time that happened, back in February, we witnessed the low point of the fiscal debate – with both sides using a bunch of academics as a substitute for a proper conversation with the public. And, lest we forget, Guido's handy graph reminds us just what those economists were and are quibbling over anyway. This is a phoney war, so it's little surprise that Brown has resorted to it once again. Thankfully, signs are that Tories won't pay heed to the bait.

Sorry is the hardest word and Gordon Brown stil hasn’t said it. But, everyday brings surprises. His ‘admission’ about his errors is the first time I’ve ever agreed with his economic analysis. In short, even Brown knows he’s not what he’s cracked up to be. Making such an admission at this stage of the election cycle is extraordinary. The intention may have been to make Brown look human. In which case, he’s succeeded, but to his detriment. Brown looks Biblically fallible. Labour’s campaign rests on one deduction. Gordon Brown built an era of prosperity; then Gordon Brown saved the country from a recession that originated in America; therefore Gordon Brown is the man to lead the country back to prosperity.

Insightful work from the FT's Chris Giles, who has dug out a couple of academic articles - including one co-authored, in 2007, by George Osborne's current chief of staff, Rupert Harrison - to work out how many jobs Labour's national insurance rise might cost the economy.  The results?  Well, according to Giles, one says that 23,000 jobs will be lost, and the other comes up with 22,000. Neither of these are figures that Labour will want to crow about.  But, as Giles points out, they are below the "57,000 jobs in small and medium-sized businesses alone" that the Conservatives predict in their manifesto.

Lying is a politician's occupational hazard. The Independent on Sunday has published a Com Res poll confirming that truism. The majority of voters do not believe that David Cameron and Gordon Brown are being honest about how they will tackle the deficit. We voters resent being taken for fools. If Brown and Cameron are being disingenuous about the economy, the honest Sage of Twickenham benefits - the Liberals are storming the marginals, a hung parliament is odds-on according to some pollsters. Is Vince Cable honest about reducing the deficit? Emphatically not. One minute he’s against a VAT rise, but refuses to rule it out the next. He’s in favour of unilateral charges on banks, but not if they fund a tax break for some married couples.

Labour today has tried to shift the National Insurance debate from whether you should cut waste to prevent a tax rise, to whether the Tories’ sums add up. When the Tories announced their plan to avoid the worst of Labour’s NICs rise by cutting waste they made a conscious decision not to offer details on how they would make these efficiency savings. As one shadow Cabinet minister explained to me, they had no desire to repeat the experience of the James Review when they were going on Newsnight to argue the toss over individual savings. The Tories think that the argument that government can save one pound in every hundred that it spends is credible and that combined with the endorsement of two men who have advised the government on efficiency so recently is enough.