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Why not being able to organise a piss-up in a brewery suddenly matters
There’s one big problem with the branding of George Osborne as “The Austerity Chancellor”. That is, as a direct result of his own policies, he has made the economy much worse. Borrowing is going up, we’ve lost the “triple A” rating which Osborne himself was very proud of, consumer demand is effectively dead, and job security appears to be at its worst. It is of course vaguely possible that George Osborne is ‘sensitive’ about his own failings, and, to onlookers, he did look genuinely surprised at his level of unpopularity at an occasion which should have caused him immense pride.
And yet the popularity of his unpopularity cannot be underestimated. The YouTube video above has had 929,641 views. It seems that people have clicked on this video with the same relish that some people on a motorway slow down to observe a pile-up on the opposite carriageway. It is in a way easy to identify why George Osborne is unpopular; he gave a perception of enormous arrogance, and yet drove the UK economy into retropulsion with remarkable efficiency. Due to his policy, his target of ‘paying off the deficit’ by 2015 is pure science-fiction. People are undoubtedly sick of the ‘it’s all Labour’s fault’, and yet Labour members are still very enthusiastic about blaming the current UK’s troubles on Margaret Thatcher. It could be that George Osborne, with his Bullingdon past, has activated the ‘politics of envy’ button, and so there is a perception that he and Iain Duncan-Smith are “punishing” the most vulnerable members of society such as disabled citizens, while pursuing policies which are ‘friendly’ to the members of society with higher incomes.
In politics, leopards can change their spots all too easily. My gut feeling is that there will be another hung parliament in 2015. Sure, Ed Miliband managed to shoot ‘on target’ at an open goal today, and quite miraculously for some managed to avoid the crossbar. And thankfully the Liberal Democrats have blocked David Cameron’s “boundary changes” plan. All Ed Miliband has to do is to avoid losing, and there is absolutely nothing in it for him to play dangerously. In a similar vein, after the shambles that was last year’s Budget, George Osborne doesn’t need to pull any rabbits out of his hat. Last year, he was bigging up a great ‘reforming budget’ which rapidly disintegrated into a slanging match over pasties, and whether a railway Cornish pasty stall in a railway station had in fact shut down. Osborne will obviously be keen to avoid a repeat performance of last year’s catastrophe.
Not being able to organise a piss-up in a brewery suddenly matters. Commentators have often discussed openly what the Achilles’ heel of this Coalition might be. It is not disunity – there is no narrative of people violently throwing wobblies or mobile phones, or a similar episode of political fratricide. It could be that this Coalition is simply ‘out of touch’, and this is to some extent supported by evidence such as the “Millionaire’s tax benefit” or the “Bedroom tax”. However, the label of sheer incompetence is still a crucial one. Despite the screw-up that is the UK economy under the Coalition’s watch, certain voters are not blaming the Liberal Democrats. Despite the never-ending list of things that have gone wrong, such as the recent section 75 NHS regulations, there always seems scope for things to get even worse. Michael Gove does not want any further shambles over his school qualifications, while Theresa May’s star appears to be ‘in the ascendant’ with a perennial blistering attack on human rights. However, both parties do not wish to scupper their chances of a leadership bid if David Cameron fails in June 2015, and certainly are mindful of the old adage that “He who wields the knife never wears the crown”, with numerous former casualties such as David Miliband and Michael Heseltine.
Nick Clegg may suddenly have got ‘second wind’ having won Eastleigh, but this victory was only because Labour would have needed a miracle to win it (with Eastleigh around 250th on his “hit list”), and Maria Hutchings amazingly came third in a two-horse race. His party’s slogan “strong economy and a fair society” is obscenely fradulent at so many levels, even if you generously park his blatant lie about Labour having been incompetent over the economy. He himself had conceded the need for a £1 TN bailout of the banks as an emergency measure in the global financial crisis, and this is clearly stated in Hansard. The economy which was in recovery when he took over in May 2010 is now virtually dead, and heading for a “triple dip”. And if his “fair society” is epitomised by bedroom taxes victimising narrow sections of society, library closures, withdrawal of education support allowance, privatisation of the NHS which had been universal and free-at-the-point-of-use, high street closures of law centres denying thousands of ‘access-to-justice’, reports of suicides following welfare claims, Nick Clegg and his party genuinely need help. However, both the Conservatives and the Liberal Democrats are mindful that they have reached a “critical mass” of cock-ups, and the Liberal Democrats, lacking all insight and being in complete denial, still feel that they have a useful rôle to play in propping up any minority government. However, next time Labour intend to repeal the Health and Social Care Act, so it would be a joke for the Liberal Democrats to ‘support’ this if they found themselves in government again, but Labour might need their votes. The only way to avoid this scenario is for Ed Miliband after his lengthy policy review to convince voters that there are genuine reasons why he should be allowed to implement his ‘One Nation’ vision. However, all political parties are prepared to ditch symbols of their values. It could be that Labour has no problem with revisiting the issue of electoral reform, again, if the Liberal Democrats demanded it; Clegg couldn’t care less if this were to become yet another ‘once-in-a-lifetime-opportunity’.
The label of this Coalition is well deserved, in fairness. David Cameron knows himself that he is living on borrowed time, but it is the whole Cabinet which is incompetent. For all his perceived faults, Ed Balls is a committed Keynesian, and has called it right on the economy; the only reason David Cameron perseverates in his hate campaign of him is that he knows he is a threat. In fact, all of the opposition are, because the Coalition has somehow managed to alienate systematically disabled citizens, the chronically sick, lawyers, physicians, human rights activists, and so on, in fact anyone apart from big corporates. The fact that he has managed to piss off most of the country ultimately will be his downfall.
Heir to Keynes: Prof Paul Krugman explains why the UK economy is not like a large credit card
From the Huffington Post,
“For most Americans, a trip to London means drinking a few pints and maybe taking a picture of one of those guards with the hats. For Paul Krugman, it means critiquing the entire direction of Britain’s economic policy.
Krugman, the Nobel Prize-winning economist and left-leaning New York Times columnist, appeared on the BBC program “Newsnight” this Wednesday, jousting with two British deficit hawks over the U.K.’s austerity agenda.
The Brits — venture capitalist Jon Moulton and Conservative Member of Parliament Andrea Leadsom — argued that the British government has to reduce spending if the country is to dig itself out of the economic slump it’s been in. Krugman countered that such a strategy could cause Britain’s economy to implode — since, he said, the public and private sectors need to circulate money to each other in order for anyone to prosper.”
Prof. Krugman explains clearly here why the UK economy is not like a large credit card in a recent article entitled, “The Austerity Agenda”:
“The bad metaphor — which you’ve surely heard many times — equates the debt problems of a national economy with the debt problems of an individual family. A family that has run up too much debt, the story goes, must tighten its belt. So if Britain, as a whole, has run up too much debt — which it has, although it’s mostly private rather than public debt — shouldn’t it do the same? What’s wrong with this comparison?
The answer is that an economy is not like an indebted family. Our debt is mostly money we owe to each other; even more important, our income mostly comes from selling things to each other. Your spending is my income, and my spending is your income.
So what happens if everyone simultaneously slashes spending in an attempt to pay down debt? The answer is that everyone’s income falls — my income falls because you’re spending less, and your income falls because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.
This isn’t a new insight. The great American economist Irving Fisher explained it all the way back in 1933, summarizing what he called “debt deflation” with the pithy slogan “the more the debtors pay, the more they owe.” Recent events, above all the austerity death spiral in Europe, have dramatically illustrated the truth of Fisher’s insight.
And there’s a clear moral to this story: When the private sector is frantically trying to pay down debt, the public sector should do the opposite, spending when the private sector can’t or won’t. By all means, let’s balance our budget once the economy has recovered — but not now. The boom, not the slump, is the right time for austerity.”
The Tory deceit of VAT and the ‘Jobs Tax’: Ask a straight question, don’t get a straight answer
Andrew Marr interviewed David Cameron on his show broadcast live on the morning of 9th January 2011. Recently, people have been beginning to mutter very loudly how deceitful David Cameron and Nick Clegg have been in framing their explanation of the UK economy – and especially the ‘jobs tax’.
This excerpt is a shining example of David Cameron’s evasive nature in answering a simple question, such that you have unfortunately forgotten the question by the time you’ve got to the end of the answer.
http://www.bbc.co.uk/iplayer/episode/b00xmh5g/The_Andrew_Marr_Show_09_01_2011/
(begins at 35:40; ends at 37:10)
Andrew Marr:
You’ve mentioned jobs several times there. You must have had an estimate from your own Office for Budget Responsibility about the ‘jobs effect’ of the VAT rise to 20%. Roughly speaking, how many people are going to lose their jobs because of that?
David Cameron:
Oh look – look, of course, putting up VAT or any tax has an impact on the economy. You have to ask yourself the question – what would be the impact of not dealing with the deficit? We wouldn’t be sitting here talking about growth and jobs, we’d be sitting here saying, ‘you’re in opposition, sitting in a hole like Ireland, like Greece, and you’ve got the IMF knocking at your door. You’ve got credit downgrades, your interest rates are piling up, confidence is sapping out of the economy, the economy…
Andrew Marr:
Sure, but ..
David Cameron:
No, but this is very important. Any tax rise has an impact on economic growth, I can’t deny that for a minute. Economic forecasts are now done independently by the Office for Budget Responsibility. But you have to ask the question, what if you weren’t dealing with the deficit, which would be (I think) economic madness, and the second question you have to ask is, if you don’t do VAT, what tax would you do? The first category there would probably be National Insurance, that’s what Labour have committed to, and putting up National Insurance, as I’ve said, when you’re trying to get the economy growing and get jobs growing would be a very very perverse thing to do.”
Andrew Marr:
And nonetheless, [VAT] is a regressive tax. You yourself have said VAT is a regressive tax. Is it at 20% there for the long haul; there for good?
You can see at this point Marr simply waving the white flag after an exhausting non-answer.
A simpler explanation is provided by Stuart Adams, Institute of Fiscal Studies’ senior research economist, who has told Cathy Newman’s FactCheck that:
“VAT tends to weaken work incentives much like income tax or national insurance would. Rather than reducing the amount of take home pay that you can get for working an extra hour it reduces the amount you can buy with your take home pay. So VAT acts as a tax on jobs if you like – just like Income Tax and National Insurance do.”
Source: Channel 4 website
However, this is only part of the story. Indeed, estimates vary widely on the effect VAT has on jobs, from minimal to a lot. However, one aspect is definite – to miss out of the discussion altogether, as George Osborne and David Osborne have desperately tried to do in spinning their ‘jobs tax’ Tory Story, is grossly deceitful.
Shibley Rahman’s regular political blog is at http://shibleyrahman.com