George osborne

Curiouser and curiouser. We in Coffee House have been saying for some time now that – whatever Mervyn King thinks – Britain has the worst inflation in the Western World apart from Greece. An OECD report out today shows we’ve got it worse than most eastern countries too. Korea, Turkey and Estonia are the only eastern nations with higher inflation: But what strikes me most about today is that food prices are soaring here, to an extent far worse than the rest of the world. This is what voters notice most: putting food on the table is very expensive. As Micawber might put it: annual food price inflation 6.3 per cent, annual wage inflation 2.5 per cent, result: misery. And plenty of it.

George Osborne's budget, due in two weeks' time, will be billed as an agenda for growth. This is welcome, but a year late. The burning agenda now is the cost of living. It was our cover story for The Spectator last October: why fret about mild 1 percent-a-year cuts, we asked, when the real killer will be prices? Petrol at 130p a litre is only the most visible sign of this. Other horrors confront shoppers in the supermarket - salmon fillets up by a third, potatoes and butter by a quarter. When Alan Duncan speculated that petrol could hit 200p, he was on the right scent. While the BBC is talking about cuts and Osborne is talking about jobs, Ed Miliband is now talking about the cost of living - even helping to launch a Commission on the Cost of Living.

George Osborne’s speech to the Tory spring conference today showed the classic left-right way in which he wants to frame the political debate about the economy ahead of the Budget on the 23rd of March.  In a move straight out of the election-winning centre-right playbook of the 80s, he attacked Balls and Miliband as “Two left-wing politicians who don't understand anyone who wants to get up and get on, anyone who want a better life for their family, anyone who want to create wealth, and start a business, and create jobs, and leave something to their children.

On any normal day, a missive from Tim Farron to George Osborne – urging him to axe the planned rise in fuel duty – would be striking enough. On a day when the Lib Dems finished sixth in a by-election, it has a whole lot more piquancy to it. I'm not saying that the Next Lib Dem Leader™ is trying to cause trouble, or even hastening to shore up support. He has, after all, been dutiful in defence of the coalition this morning, and he has been highlighting fuel costs for some time now. But Lib Dem backbenchers clearly have some demands for the government – and now's the time for this one. Farron's point is that the Treasury can use some of it's stronger-than-expected incomings to stave off the hike.

The decision on News Corp's take-over of BSkyB has thrust Jeremy Hunt into the spotlight. The culture secretary is many Tories' bet to be the next leader of the party. Hunt is ambitious even by political standards: during the Brown bounce he canvassed opinion as to whether he should stand in the Tory leadership contest that would follow an election defeat, and has a John Major like ability to make factions in the party feel like he is one of them. Add to this, a good television manner and one can see why people think he'll go far. One of the odd things about politics is that there is no heir apparent to Cameron in the Tory party. Hague used to be considered the obvious emergency replacement. But that is no longer true.

Danny Finkelstein’s paean of praise (£) to Andrew Cooper, the PM’s new director of political strategy, contains several interesting lines.  Finkelstein says that his former flat mate’s biggest challenge is, ‘Devising a strategy for changes in the NHS so that a critical political battle isn’t lost disastrously’. This is yet another indication of how nervous Osborne and co are about Lansley’s reforms and reopening the NHS as a political issue. The second is him reporting that Cooper will tell ‘Cameron to be a national leader, rather than a party politician. Especially in the Commons.

Attack, attack, attack. That's the temper of George Osborne's article for the Guardian this morning, which sets about Labour's economic credibility with a ferocious sort of glee. Perhaps the best passage is where he asks how many times Labour can spend their ubiquitous "bank tax," but this is more pertinent to the recent debate: "Where does all this leave Ed Miliband's newfound enthusiasm for the "squeezed middle"? Let's pass over his failure in every interview to define it – his last effort included around 90% of taxpayers. Where we can all agree is that these are difficult times for family incomes. There are two root causes. One is global: rises in food and commodity prices.

Some speculation (£) today that the Office for Budget Responsibility will shortly downgrade its 2011 growth forecast – and hence the growth forecast in next month's Budget. If so, then you can expect Ed Balls to crow on and on about it. He did, after all, prime the attack in his recent clash with George Osborne across the dispatch box: "With consumer confidence falling, with inflation rising, with no bank lending agreement, no plan for jobs, no plan for growth, no plan B - does he really expect us to believe he can meet this forecast for economic growth this year or will he have to stand here at the Budget in six weeks' time and downgrade his very first growth forecast?

Immigration isn’t a topic much discussed nowadays, because it’s one where the Tories and Lib Dems don’t agree. That’s a shame. Because there’s an urgent problem to be fixed in the British labour market: that every time the economy grows, it sucks in immigrant workers. If this dysfunction continues, it will finish Cameron. The News of the World (where yours truly is a columnist (£)) has today looked at the latest figures for this. I reprint them for CoffeeHousers below. They show that during that disastrous fourth quarter in 2010, where the economy shrank by 0.5 percent, the number of employed British-born people fell by 110,000. As grim as you’d expect. But the number of foreign-born workers actually rose – by 7,000.

One of the questions that most fascinates Westminster is what would make Vince Cable walk out of the coalition Cabinet. Cable might be a diminished figure and have lost standing on the Lib Dem left by pushing through the tuition fees hike, but his departure would still shift the tectonic plates of politics. As James Kirkup blogs today, banking reform, or the lack thereof, is the most likely cause of Cable going nuclear. Cable is a firm believer that retail and investment banking need to be separated, a view that he pretty much reiterated on Marr this morning. Osborne and the Treasury are far more cautious on this front. Everyone in government is waiting to see what the Vickers Review recommends.

Ken Clarke’s political career has had the resilience of a cockroach, but even he now seems to be cracking. Tim Montgomerie has shot a vicious broadside at Clarke's dated politics in today’s Mail. And Clarke, for his part, has given an interview to the Telegraph, where he gives a convincing impression of a man completely out of touch. Clarke concedes (just) that the ECHR needs reform, but he defends its supreme jurisdiction: ‘Some people are very angry [about prisoner voting], but we should be able to resolve that. The jurisdiction of the [European] court remains the fraught issue. I don’t see how we can say that we don’t obey courts if we don’t want to.

Bankers make estate agents look popular and so any government deal with bankers that doesn’t involve kicking them is politically tricky. The Treasury, acutely aware of the politics of all this, are very keen to stress that the government ‘played hardball’ with Barclays, HSBC, Lloyds and RBS in the Project Merlin talks. The actual deal is not a bad one. The promised £10 billion pound increase in lending to small businesses is better than expected. On bonuses, the banks have got off relatively easily. But crucially the bonus pool will be smaller than last year and bank head’s bonuses will be dependent on meeting lending targets for small businesses.