Tag Archives: Budget Cuts

Shock report reveals truth on economy

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16 June, 2010

 

I’m pleased to say that, pretty much, my prediction was wrong, and the press and broadcast media did not embarrass themselves by misrepresenting the OBR report.  No shock horror headlines.


The front pages were varied, covering the imminent Bloody Sunday report and the BP debacle, alongside Nick Clegg’s ugly assault on public sector pensions.


The Daily Mail succumbed to a front page diatribe, screaming about the OBR’s “devastating analysis” but by and large, nobody was fooled by the spin.  Indeed, some commentators were saying that the OBR’s figures were “too rosy”, which I think means they didn’t discredit Labour in the way that some had hoped.


None of which stopped George Osborne shaking his fists and saying, “never again will a government be allowed to fiddle the figures.”


Comments like that, in the teeth of the evidence, are going to seriously undermine Osborne’s credibility.  They’re also old, old, old politics.  There is still room for Labour to answer the public’s call for more decency in the way Westminster goes about its business.


Which is why we need a new Labour leader now, not in September.


Speaking of which, there was much complaint online about Newsnight’s poor production values, and Paxman’s chairmanship of the Labour leaders’ debate.  Ed Balls was surprisingly winning.  Andy Burnham was cruelly described online as looking like a Thunderbird puppet (Troy!).  Diane is Diane, and if you like her, you’ll still like her after that performance – but if you don’t, you’ll be feeling unmoved.  Ed M looked like somebody’s younger brother, and I know how that feels.  David Miliband is the next leader, that is very clear.  At one point he spoke, quite effortlessly, on behalf of the whole panel.  He’s just got it.


The prospect of months of further hustings fills me with dread; there is no need for prolonged introspection.  Look how fast the Coalition moved to get itself into No 10.  With a new leader, Labour can move fast too.  In these crucial months, while Labour wonders who said what to whom in Cabinet, and the candidates mess about on swings, the Coalition is getting away with murder.


The OBR report didn’t do it, but there IS a new report out which damns the Government.  But it damns the new Government, not the old one.  The Chartered Institute of Personnel and Development (CIPD) was forecasting unemployment of 2.65m this year.  In the light of the Coalition’s emphasis on public sector cuts, they have revised their figure upwards to 2.95m.


Between friends, let’s call it 3m.  Unemployed.  This year.


It begins.

The cuts bandwagon

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14 June, 2010


The excellent Larry Elliott – Economics Editor of The Guardian – warns that the ‘Deficit Hawks’ need their talons clipped.


It is clear to him, as it is to me, that the current clamour for cuts at all costs is either economically naive, or politically wilful.  Is “the real agenda to finish the demolition job on the welfare state that began in the 1980s”?


Mr Elliott asks why the economic literates in government aren’t piping up to stop the madness.  Where is Vince Cable?  Where is Chris Huhne?


Good questions.  We are sleep-walking with Europe and the rest of G20 into another recession, but this time it will be entirely self-inflicted.


Today, the newly-created Office for Budget Responsibility (sounds Pythonesque) produced some really quite boring figures.  See for instance the summary by the BBC’s Stephanie Flanders.


I even bothered to look at the report itself.  Interestingly, it is based on the old Goverment’s policies, not the Coalition’s.  That makes it, already, hideously out of date.   I wonder how much it cost to produce a document based on a reality which already did not pertain even when it was commissioned?


Given the report’s built-in obsolence, if I were George Osborne, I’d be hoping for some really juicy ammunition to come out of it.  But sadly for him, it is lacking in tidbits.


Growth predictions are down a tiny bit from Alastair Darling’s numbers.  Eg, he predicted 3.5% for 2011, and based his maths on a conservative 3%.  OBR is now forecasting 2.5% growth.  But many other figures are now predicted to turn out better than predicted under Darling.  The net effect of these revised predictions is pretty much nil over the five years: OBR predicts a rise in the structural deficit by 2015 of only 0.3% of GDP – less than £5bn.


Stephanie Flanders reports that Sir Alan Budd and the authors have conceded, on questioning, that:

“that 2015 figure means that the OBR does think that Labour’s policies would have eliminated a large part of the structural deficit by the end of the next Parliament. The OBR expects it to go from 8.8% of GDP in 2009-10 to 2.8% in 2014-15.”


So, basically, no news in these figures at all.


Let’s see how tonight’s news reports the figures, then.  Let’s see how tomorrow’s papers headline them.


Call me cynical, but I’m guessing: doom and portent.


Mr Osborne, predictably, claims: “It’s damning evidence that the mess the previous government left behind is even bigger than we thought”.


But elsewhere, I’m already seeing:


“The OBR report strengthens the case for cuts.”


“Britain’s debt levels rising faster than expected.”


“UK has bigger fiscal hole to fill.”

  

Some of that is of course to be expected.  What worries me is it’s everywhere.  Even The Guardian, in which Mr Elliott complains about the deficit hawks going unopposed, is on the band-wagon.  Mr Elliott’s on page 27.  Here, meanwhile, is the front page:



So whatever the press says tonight and tomorrow, don’t be fooled.  The markets weren’t. 


Following the report’s release today, the pound rose against the dollar.