George osborne

There was a spat at Davos this morning between George Osborne, the Chancellor, and Larry Summers, ex-US Treasury Secretary (and very occasional Ed Balls adviser). The gist of it was that Summers is not a fan of Osborne's austerity, and implied America's stimulus had allowed it to get back to peak GDP more quickly that austerity-struck Britain. Osborne was too polite to tell him what nonsense this is, but I’d like to show Coffee Housers two graphs that make the case. First, the stimulus. It was an abject failure, as readers of Nate Silver’s book, The Signal and the Noise, will know. US unemployment was running at 7.3 per cent at the time and White House economists said that, without a stimulus, it would go to 9 per cent. But with the stimulus, it would peak at 8 per cent.

What is Ed Miliband going to ask David Cameron about at Prime Minister's Questions today now that the latest employment figures show the biggest quarterly increase since records began, and the biggest quarterly fall in unemployment since 1997? Actually, there is quite a lot that he can talk about that means he can entirely avoid the subject - Nicky Morgan's warning to the Tories about 'hate', Aidan Burley, the row between Number 10 and Home Office about stop-and-search and Syria - but the Prime Minister will make jolly well sure that he shoehorns it into any question that's asked of him, even if it's a backbench one about the welfare of horses in Cumbria. Here are the figures. Unemployment fell by 167,000 between September and November to 2.32m (7.1%).

I have this theory that the reason why the British public is so hugely in favour of cutting welfare to the bone, and the British media so hostile, is that many (maybe most) journalists still depend on financial support from their parents well into their 30s. Since most media folk come from the sort of backgrounds where home ownership is expected, and yet work in an industry where the typical salary makes living anywhere near London extremely difficult, they feel too ashamed to opine on ‘scroungers’ because, well, they are scroungers. Anyway, maybe that’s what’s called projection. Most people in politics, like those in the media, tend to come from fairly privileged backgrounds, and this seems to be the crux of Labour’s counter-attack on welfare.

The Chancellor’s announcement that he’s recommending an above average increase in the minimum wage is very welcome news. It’s something Renewal has been campaigning for since our launch in July. Wages have fallen behind prices for almost a decade now. The prosperity of Blair’s boom didn’t reach the low paid and it was the working poor who were hardest hit by the recession, meaning that the minimum wage is worth £1,000 less now than it was in 2008. Now that the economy is firmly on the road to recovery it’s the right time to raise the minimum wage. We have to ensure that prosperity and the benefits of the free market reach everybody in society and this increase is an important step towards that goal.

George Osborne’s decision to back an above inflation increase in the national minimum wage is his most politically significant decision since his decision to cut the 50p rate. It also makes that decision far less harmful politically. Reducing the top rate of tax might have been the right thing to do economically but it hurt the Tories politically. It enabled Labour to claim that this was a government for the rich and that the recovery was only benefitting the few. By contrast, this decision allows the Tories to emphasise that, in Osborne’s phrase, this is ‘a recovery for all.’ There will be those on the dry right who don’t like this policy. They’ll argue that it’ll cost jobs.

George Osborne's speech to the Open Europe conference this morning was billed as the Chancellor taking a tough guy stance with European leaders, demanding that they reform or see their project crumble. It sounded, from the overnight briefings, as though Osborne was trying to cheer up his backbenchers during their current round of banging on about Europe as much as he was trying to make the case for European reform. But when he delivered the full address, it had as much pro-European thinking in it as it did threats. Osborne was focusing on making the case for the whole of Europe to reform, for Europe to create better conditions for and to not discriminate against non-eurozone members, and for Britain's continued membership of the European Union.

George Osborne's speech on the need for £25 billion more cuts has opened up some strange dividing lines in Westminster. Labour has done exactly what the Chancellor wanted and questioned the need for the cuts. Nick Clegg has also fallen into place as Osborne hoped and moaned about them being unfair. But Clegg has found an unlikely ally in Iain Duncan Smith, who has let it be known that he does not much like the idea that Osborne could cut a further £1 billion from the welfare bill. So who did Boris Johnson cosy up to this morning when he had his say?

Today, George Osborne used a speech to administer what he called ‘hard truths’ about the economy. But in some cases, the truth was even harder than he let on. Here is a Fisk of his speech... 1. Size matters — ‘Government is going to have to be permanently smaller – and so too is the welfare system.’  This phrase — 'permanently smaller' — is designed to appeal to Conservatives. But in isolation, it's pretty meaningless: smaller than what? The Brown peak? The below graph tells the story. The size of the British government (in red) used to be around average for a developed country (in blue).