Economy

So are Vince Cable's public spending cuts his own, or are they Lib Dem policy?  In his Straight Talk interview with the Lib Dem treasury spokesman this weekend, Andrew Neil tries to get to the bottom of it all.  The result?  Well, according to Cable, Nick Clegg "approved" his pamphlet for the think tank Reform, and some of its contents could find their way into the party's manifesto: "A lot of it is already Lib Dem policy, a lot of it already is, the rest of it will have to be considered and we’ll go into an election with a manifesto, we have a due process.  Maybe because of who I am a lot of it will be there, but some of it may not be, it has to be agreed with my colleagues of course.

After Michael Fallon's claim last week that the shadow cabinet hasn't got "the faintest idea" of the commitment necessary to tackle the debt crisis, this anecdote from Benedict Brogan's column should act as another warning to David Cameron: "Whitehall is gripped by short-termism, yet in a world dominated by the targets culture introduced by Labour, is this any surprise? When ministers themselves prioritise short-term results that can be ready for the Six O'Clock News or the autumn conference, how can the Civil Service hold out for the long view?

There’s a good article in the New York Times today about how little has changed in the way Wall Street does business since the collapse of Lehman—employment in the sector is only down eight percent, Goldman employees will earn on average $700,000 this year and derivatives are still not being traded on an open exchange. Indeed, the new Tory guru Nassim Taleb, the author of The Black Swan, thinks that the system might be riskier now than it was when Lehmans collapsed: “Mr. Taleb warns that the system has grown riskier since last fall. The extensive government support that began after Lehman collapsed will lead investors to assume that governments will always prevent major banks from collapsing, he said.

Peter Mandelson’s warning of a double-dip recession is in pretty much all the papers today. There’s no doubt that there is a risk the recession could turn into a W shaped one because the underlying problems in the financial sector have not been properly dealt with. But it also plays into Labour’s political strategy which is to argue that the situation is still so serious that it remains no time for a novice. ‘Don’t let the Tories ruin it’ or ‘Don’t let the Tories throw it away’ are both being mooted as possible Labour election lines. Brown apparently believes that Churchill’s fate shows that the people must not think the danger has passed if he is to win re-election.

Well done, Alistair.  After taking on Brown over the crude "Labour investment vs Tory cuts" dividing line - and winning - it sounds as though the Chancellor is challenging another of the PM's lies: that the government's "stimulus" measures have "saved 500,000 jobs" during the recession.  According to the Mail on Sunday, Darling has told the PM to stop repeating this claim because it can't be substantiated, and he's resisting having it put in the Budget, too. As soon as the government started mentioning "500,000 jobs", Westminster's lie detectors started sounding; especially as it gradually morphed from "up to 500,000" to "at least 500,000".

Looking at the OECD’s latest economic forecast it seems that the UK—unlike the US and the Euro-Zone--will not return to growth by the end of this year. (Although, one can’t help but wonder if Brown will start heralding zero percent growth in the fourth growth). Indeed, the OECD projects that the UK economy will shrink by 4.7 percent over this year as a whole—although the worst appears to be behind us with the rate of shrinkage slowing since the last quarter of 2008 and the first quarter of this year.   As Kevin Maguire suggests today, Labour’s election strategy is likely to be that Britain is not out of the woods yet and so it is still no time for a novice.

Most of Fleet Street might have abandoned Gordon Brown but judging by today’s editorial the FT, along with the Mirror, will be with Brown to the end. In its editorial today it praises Brown’s “prudent suggestions” for the G20 meeting. It goes onto say that “the G20’s aim should be to provide political cover so that governments – including the UK’s – have the room to continue running large deficits, if sustainable growth should prove to be further away than hoped.” Then, bizarrely, it goes onto say that the “prime minister faces both ways on bankers’ bonuses” as if this is a good thing.

Alistair Darling has long suggested that the original dividing line between the Tories and Labour concerned Labour spending, which will stimulate growth, versus Tory inaction. And last week, Darling was quoted in the Mail on Sunday setting out a new dividing line between the parties by framing the “debate in terms of our cuts being better than their cuts”. It is a stance that presupposes Britain is returning to growth thanks to the government’s strategy. And that is the message of an opinion piece, titled ‘The cure is working’, penned by Darling in this morning’s Guardian. Here’s the key section: ‘The Tories have opposed our measures every inch of the way, but I make no apology.

In some respects, Theresa May has delivered an effective speech on unemployment and the benefits system today.  It touches on all the tragic indicators - the 6 million people on out-of-work benefits, the high levels of youth worklessness, the shocking consequences of welfare ghettoes etc. - and re-states, in no uncertain terms, the Tories' commitment to welfare reform.  She even partially responds to those critics who thought she'd been drafted into the shadow welfare role to be "softer" on single mums than Labour, by instead attacking the state for encouraging lone parents "not to bother trying to work until their youngest child was sixteen".