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Mr Osborne's prescription

Stephanie Flanders | 23:29 UK time, Wednesday, 24 February 2010

Usually politicians wait to be in power before laying out their vision in the annual Mais Lecture at Cass Business School. Geoffrey Howe did it in 1981. Lord Lawson in 1984. Gordon Brown in 1999.

Tony Blair was the great exception - he was invited in 1995. Last night it was George Osborne who decided to tempt fate, playing the chancellor-in-waiting with his vision of economic policy if he wins No 11.

Some will detect the whiff of hubris. But there are plenty in the city who call him a lightweight. This speech was supposed to shut them up.

It probably won't, though, as you can see in my piece for the television bulletins tonight, the city economists and grandees I spoke to afterwards seemed pleasantly surprised.

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However, this lecture might quiet those who say the Conservatives are about austerity for austerity's sake.

There wasn't much new policy. We heard a bit more about the independent Office of Budget Responsibility, and a commitment to a full "audit" of the public finances, before the first budget, within weeks of a Conservative victory.

Incidentally, the need for that great "opening of the books" - with all the appropriate gasps of horror- means the party won't be able to provide much more detail of its spending plans until after the election. Shame.

Labour and the Liberal Democrats were already criticising the lack of detail before Osborne stood up. But the speech did add intellectual fibre to the slogans, and give a further sense of what Chancellor Osborne's priorities would be.

You can summarise it in three words: It's Mostly Fiscal.

Yes, Osborne talked about monetary and financial policy in his speech: there was a promise not to let Britain inflate its way out of trouble; talk of tweaking the inflation target to take account of housing costs; and a restatement of the case for putting the Bank of England in charge of more nuanced macro and micro prudential regulation of the financial sector.

He also talked about "where the growth would come from" under a Conservative government, re-stating his eight benchmarks for measuring its economic success. But that was the shortest part of the speech. Also the weakest.

And even then, talking about the supply side, and boosting private investment, Mr Osborne could not help talking about the need to raise public sector productivity through a "radical programme of public sector reform".

The beating intellectual heart of the speech was the Osborne's desire to make the strongest - most unapologetic - case he could for tackling the deficit as soon as possible.

Regardless of what you think about the merits of his argument, he made it well.

If you think the Conservatives are right about cutting the deficit as quickly as possible, but you're having trouble convincing your friends - you should read this speech.

If you think that Conservative talk of austerity is all about cutting the government down to size, with little thought for the health of the recovery - you should also read it.

The case for cuts that is given in this speech is more nuanced than that given in the economists' letter in the Sunday Times. It is certainly more thoughtful than anything we've heard previously on this subject from the shadow chancellor.

It is also, largely, an argument about what will best support a vigorous private sector recovery in the next few years (though of course he wants to change the way government works as well).

You might still vigorously disagree with him - and many economists will. But you can't say he hasn't thought about it. Or considered the implications for growth.

People who think that Mr Osborne is over-doing the risks of inaction will quibble with his claim that higher gilt yields show Britain's declining fiscal credibility.

He notes that the spread between ten year gilts and German bunds is now 90 basis points, "compared to 70 basis points for Spain and 110 basis points for Portugal".

But there's a lot going on in that gap: like the fact that we have higher inflation than they do. Also, investors might be expecting faster growth in the UK than in Spain in Portugal, meaning higher medium-term interest rates.

The spreads on sovereign Credit Default Swaps (CDS) - loosely, the cost of insuring against a sovereign default - are a better, albeit imperfect guide to investors' worries. On that measure, the five year spread for the UK is 88 basis points, versus 44 for Germany.

That's not great, but it compares with nearly 170 basis points for Portugal and 127 basis points for Spain.

Of course, you could argue that investors simply think that we will inflate away our debt - making formal default less likely than these other economies who lack that way out. The point is that these market signals are more complicated than they look.

Critics might also say Mr Osborne was under-stating the importance of economic growth in sustaining market confidence.

In his speech he said that people who worried that private demand was too weak to take the place of public spending failed to ask why private demand was weak, and underestimated the role of confidence in supporting growth.

That could be right. But it's also true that, if demand doesn't materialise, sooner or later the markets will punish you for having bleak economic prospects as well.

It is, indeed, all in the timing. And no-one - on either side of this debate - knows what the right timing will turn out to be.

Finally, there is that big hole at the centre of the argument, where the numbers have to go.

However rigorous the argument for early cuts, you're still left wondering, as a practical matter, how George Osborne could make cuts that were large enough to impress the markets - yet small enough to keep the recovery on track.

Even if he could cut a swathe through Whitehall in a matter of weeks (which he can't), Mr Osborne admits there isn't much room for monetary policy to take up the slack.

That will be the unending debate of the next few weeks and months. What you can say tonight about the shadow chancellor is that he has set out his intellectual stall.

Comments

Page 1 of 2

  • Comment number 1.

    QUOTE: "you could argue that investors simply think that we will inflate away our debt - making formal default less likely than these other economies who lack that way out." UNQUOTE
    ------------------

    Buried in there, is Britain's likely future. If we have enough time and can keep it under control ... and assuming the world's financial system doesn't collapse. Another tool will be keeping the pound's exchange rate drepressed to enourage exports.

  • Comment number 2.

    Might have looked and sounded good at the time but is full of holes for which he has no answer.

    Take his statement, "And third, a supply side revolution that releases the pent up enterprise and wealth creation of our country, encourages a nation of savers, and addresses the long term structural weaknesses that no government has ever properly tackled - like poor education and a welfare system that traps people in workless poverty."

    Nowhere does he attempt to define this "supply side revolution". We heared similar comments in the Thatcher era - and that started us off the road that has led us to where we are now.

    He did not, because he can not, identify where this "pent up enterprise and wealth creation" actually resides. He will not, because he knows that it will los his party the next election, identify what he actually means by "tackling the welfare system".

    So, the 3rd and the supposedly vital branch of his BIG idea is in reality meaningless waffle.

    Sorry, lightweight he was, lightweight he remains. This is not the man and these are not even the ideas (they cannot be called policy) that will lead this country out of its present economic problems.

  • Comment number 3.

    The political class cannot admit the truth - living standards have to fall.

    It also seems that the recipe being dreamt up is stagflation. Dust those flares off.

  • Comment number 4.

    Remember Mrs Thatcher's "There is No Alternative" [TINA]? Did the "Medium Term Financial Strategy" of the early 1980s help or hinder economic reform?
    Reading Osborne's speech I see little evidence of anything that indicates he understands the concept of "market failure" that contributed to the current mess.

    I watched Evan Davies' BBC-1 programme on Wisbech and the contribution of immigrants to our economy, and was left with a sense of deja vu. How can we expect the less motivated or less-equiped in our unemployed to re-enter the labour force if they are not helped, motivated or, in the end, given real incentives to get off benefit? [or do incentives only work for investment bankers (sic)?

    "It's all too easy in times of economic hardship for commissioners and providers of services to see short-term cuts as the solution. However, such action would be grossly short-sighted and would undoubtedly deliver long-term pain. During these times of economic downturn, it's vital that careful investment is made in mental health services and prevention programmes. Clinicians and managers need to work together to address these challenges" Professor Dinesh Bhugra, President of the Royal College of Psychiatrists, 12 November 2009
    http://www.medicalnewstoday.com/articles/170735.php

  • Comment number 5.

    I read the speech and I didn't find too many nuances, just the usual cliches. Maybe you had to be there.

    I don't think any of the cuts he's talking about will touch the surface but I suppose it would be political suicide to start talking about actual job losses before the election.

    Nothing much about the reform of banks even though he warned against unreasonable bonuses presumably after he knew about RBS's approved £1.3 billion payout so it looks like he doesn't have a problem with that.

    Nothing about small businesses and creating jobs.
    It seemed more like a speech aimed at the public sector saying 'things will be tough but we will look after you'

    Watching Laurel and Hardy's love-in in parliament you'd have to imagine the Tory boys couldn't be more dysfunctional but that's not saying much is it?

    It's not looking good.

  • Comment number 6.

    So what does Osborne mean by a "supply side revolution".

    He means the application of computing and the internet to the provision of public and private services.

    From home-working public servants to internet universities. Faster broadband allows the residential internet to move from filling in forms online, to an approximation of personal attendance and interaction, and the collection and analysis of huge volumes of ever changing data.

    It will require care. Some functions don't work well without physical attendance. For example criminal courts and live performances.
    Some functions require the confidence building element of physical attendance.
    Others require an unpredictable sequence of interactions with different individuals who are in the same location but performing separate functions. These would take much longer and so cost more.

    But imagine a home computer running a program that switches a property's electricity and gas supplier or investing a pension, carrying out moment by moment analysis and fund transfers, all automatic. Investment bankers and fund managers will be replaced by data and algorithm providers. We have the technology to do this today. We lack the infrastructure of a superfast reliable internet and the appropriate rules and regs.

    Of established business', it's the service providers and utilities that will be most effected. And govt is the largest service provider of them all.

  • Comment number 7.

    However rigorous the argument for early cuts, you're still left wondering, as a practical matter, how George Osborne could make cuts that were large enough to impress the markets - yet small enough to keep the recovery on track.

    Even if he could cut a swathe through Whitehall in a matter of weeks (which he can't), Mr Osborne admits there isn't much room for monetary policy to take up the slack.


    This is the point. Monetary policy will be forced upon whoever will be Chancellor; the EURO problems won't pass just because we love our Pound but will influence imports, exports and what will be left of any financial markets.

    Very brave of Mr. Osbourne to address the problems prior to being elected; his means, however, will be very, very limited and one wonders why anbody would go for an office full of time bombs.

  • Comment number 8.

    #2 Foredeckdave

    I'm afraid you are right. It has been observable for some time that there are onyl two ways out of this mess. Either the private, wealth (and tax revenue) creating part of the economy starts to grow like topsy, or we inflate our way out of debt.

    It is therefore a great ambition to release the "pent up enterprise and wealth creation of our country". But how?

    And, actually, can we be sure that there is a reservoir of enterprise and wealth creation "pent up" somewhere: and that it has not simply been disippated. Where is the energy and investment that will create the new jobs and wealth? Where are the new opportunities to be exploited? What are the obstacles that, once removed, will release the deluge?

    The fact is that none of them: not Osborne, Brown, King nore any of the others, are doing anything more than whistling in the wind and waiting for the private sector to bail them out by growing once more. But there is no evidence that this is happening. Increasing tax revenues would be a good sign - and where are they? Nor that it will happen soon: increasing industrial investment (nb not just borrowing) would be a good sign - and where is that?

    The "enterpise and wealth generating" part of the economy is under the cosh. I sometime wonder what would havbe happened if the £200 billion had been invested in enterprise and wealth generation - rather than thrown at the banks. We'll never know.

  • Comment number 9.

    Everyone should know that if the Tories win the election they will cut far more than they will admit to during the campaign and i for one will not be upset by that. They can start by getting rid of the universal principle for lots of benefits such as child benefit and the winter fuel allowance. Tax credits must go for for an awful lot of people. State help for those who need it most is fine. Those who don't need it shouldn't get it and under this Government that category has balloned out of all proportion.

  • Comment number 10.

    If a person walks into a Citizens Advice Bureau who is massively in debt and continuing to spend far more that their income on a monthly basis the advice would not be to borrow more money and consume with it.

    It is the same for companies and nations as it is for individuals.

    Britain has many creating, inventive and scientific people, all currently drowned out by massive state spending and interference. Government needs to just stay out of the way. It is the problem not the solution.

    We are not all Keynsians now.

  • Comment number 11.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 12.

    I`m sick to death of your constant cheerleading for the British establishment`s evil twin bribe-taking public relations firms.

    As if any of their statements are anything other than bankster-coddling lies.

    BTW,how`s that American jobless recovery coming along Stephanie?

    That might have a darn sight more effect on us than these pitifully parochial mud-slingings in Primark-esque Air Strip One eh?

  • Comment number 13.

    I don't think its as complicated as people say.

    Government overspends => Need to cut costs and raise taxes

    External drivers (the financial markets and the IMF) always advocate cutting early and deep, and yet voter-fearing governments get their knickers in a twist about when, and how much, and some economic theory that says when in a hole no need to stop digging.

    There doesn't seem to be any middle ground. Born-again Keynesians like Blanchflower and Hutton harp on about not facing the music, presumably until the moment the IMF or a currency crisis force us to the other extreme.

    Its just wasted talk, start the belt-tightening now before its too late and lets get on with it and stop wasting time on this "when and how much" debate. The pregnant pause we are now in is slowing down growth because the private sector industries that will lead us out of this (mainly financial services) are unclear about future government policy.

  • Comment number 14.

    The Conservatives can posture and whinge as much as they like, but I have no doubt that if they had been in power for the last ten years WE WOULD BE IN EXACTLY THE SAME MESS.
    They would not have "controlled" the banks, would not have stopped the "lame-duck boom", would not have stopped our banks squandering the rest of the worlds' money, would not have curtailed City greed.
    They would have ridden the "Golden Goose", just like New-Labour did, until the farce was exposed.
    If the Tories win the next election, I wish them well with the "poison legacy" they have to deal with, but don't tell me that we wouldn't have had a wreck under Tory rule......who started the "deregulation" of the banks?
    If, as seems likely, the Tories do win, we must expect to see militant trade-unionism return in a big way. It will not be pleasant.

  • Comment number 15.

    164. At 10:19am on 24 Feb 2010, LAKSHMAN PARDHANANI wrote:

    I rather worry about the mentality of British exporters who you say are using the depreciation in the value of the pound to improve their margins by as much as 15% rather than lowering prices by not more than 10%.It is at times like these that they should be looking to get and to lock in more customers with competitive prices and service with the longer term in mind.
    My worry chimes in with another statement you make towards the end of your article where you say that growth in Europe is a precondition for a recovery in the UK.True present day trade patterns suggest this, but is it not time to have a fundamental rethink of UK's industrial and export strategy given that for the next 3 or 4 decades Asia is expecting to grow at about 8% and the U.S. and Europe are on the wane?
    Or is it that old habits and prejudices die hard?

    >>>>>>>>>>>>>>>>>>>>>

    George Osborne is just not listening is he!

    Perhaps Labour and the BBC can 'put their old habits and prejuduces behind them' and come up with something better if they have no confidence in what GO is saying?

    We're all ears for some real informative economic critique, analysis and policies?

    Deafening silence ... I fear

  • Comment number 16.

    This speech shows that the conservatives do not deserve to win the next election. They don't deserve the blame for needing to make the toughest decisions among an ill informed nimby electorate. After a 4th Labour term, people might finally realise that they are and always have been totally clueless when it comes to the economy.

    Next year, the forces of hell will be unleashed upon the economy in the form of higher taxes and lower government spending (apart from on debt repayments). If Labour get in, we will almost certainly get higher interest rates to boot.

  • Comment number 17.

    No matter how sophisticated and nuanced Mr Osborne's speech is when it comes to the election the Tories will be seen as the nasty party again and doing a Thatcher on the public sector. What is needed is a debt management strategy geared to a recovery strategy. The latter will not be helped by cutting even a modest swathe through Whitehall (and presumably town halls). Shamefully both all three political parties are doing the job of cuts at local level (2000 jobs at Birmingham is an example).

    There appears to be an assumption that public sector cuts equals reduced deficit but it does not take long to realise that not only in cash terms (redundancy pay tax refunds etc) but in terms of economic 'divider' effect the deficit outcome would be heavily discounted or even go counter to intention. I do not expect Mr Osborne to say any more than I dont like the public sector because I want to keep more of my high income and to hell with the poor and unemployed but I do not see a radical difference with Labour in their actions nationally and locally.

  • Comment number 18.

    The elephant in the room is the housing market. This is the source of the debt which has fuelled the country for the last decade; it is illusionary increase in the value of our homes that has acted as a substitute for true productive growth.

    Osborne said that debt would no longer underpin our economy, and he said that existing debt would not be inflated away. So what then is the status of our inflating housing bubble? Would he allow it to deflate, or would he continue along the Labour policy of doing anything and everything to keep it inflated?

    It was a shame that Osborne chose not to take questions in the room afterwards - I think this shows that he is a mouthpiece rather than a true chancellor. Cable for Number 11.

  • Comment number 19.

    #14 stevewo,

    You are probably right.


    #10, truths33k3r,

    "Britain has many creating, inventive and scientific people, all currently drowned out by massive state spending and interference. Government needs to just stay out of the way. It is the problem not the solution."

    2 questions for you:

    (a) Where are all these people?

    (b) Where are the markets that they are going to exploit?


    #6, sizzler,

    "But imagine a home computer running a program that switches a property's electricity and gas supplier or investing a pension, carrying out moment by moment analysis and fund transfers, all automatic. Investment bankers and fund managers will be replaced by data and algorithm providers. We have the technology to do this today. We lack the infrastructure of a superfast reliable internet and the appropriate rules and regs."

    Now forgive me for having some doubts regarding your computing nirvanha but I seem to vaguely remeber that Investment Bankers and Fund managers got us into this mess by gambling with data they didn't undertand and algorithms that didn't work?

    If that is to be the basis of Osbourn's "supply side revolution" then it is as flimsy as the rest of his statement - a sound-bite at best

  • Comment number 20.

    If my understanding that parties not in power do not have access to the detail of the country's finacial position prior to an election is correct, then that is completely unfair. How can such parties be expected to set out detailed plans when they do not have access to the information. What a way to run a country.
    There are many factors to reducing the cost of government. One which is rarely mentioned apart from the Conservatives is to reduce the number of MPs. But we need to go much further and reduce the number of MEPs, MSPs and Councillors and associated staff. They are the people who generate all the legislation, enquiries, questions which require the armies of civil and public servants who are only doing what the politicians set in train. For me that is the real challenge to reducing the size of government and bureacracy.

  • Comment number 21.

    Some simple questions for Osborne and Cameron:

    Why do you continue to pursue a cuts-at-any-cost policy which puts you at odds with the IMF and a clear majority of public-facing economists?

    Which public spending cuts will you make in 2010-11 to match your rhetoric?

    Will you stop talking down the UK’s credit ratings?

    Will you stop describing Britain’s deficit as a “debt crisis” in light of international comparisons showing that Britain’s debt burden is neither large nor unsustainable?

    Will you admit that you were wrong to oppose the fiscal stimulus including the critical cash for jobs and training?
    ----------------
    Where are you Vince Cable?

  • Comment number 22.

    People talk about cuts. How much do they want to cut? Since we come off the gold standard debt has been leveraged up, both by consumers and by government. If all debt was paid back in this country there would be no money in circulation.

    Money should only ever be created for investment. Money should be backed by gold or something else of value.

  • Comment number 23.

    #15/#164 from a previous blog - the reason exporters are taking margin is because there are not enough buyers in the market place.

    It would be great to go out and secure new customers but if everyone has stopped spending you have to try and squeeze the most out of those customers who are - and its not easy when everyone who is selling is desperate for business too.

    I suspect #164 is talking theoretically.

  • Comment number 24.

    I am alarmed "talk of tweaking the inflation target to take account of housing costs" Does this now mean GO intends to allow inflation to rip in order to inflate away the housing debt caused by years of over the top house price ncreases. That's all very fine and wonderfull if you are still working and your income will keep pace with inflation. If your retired and on fixed income with savings to top you up then you are doomed to see your hard work and preparation for retirement washed away on a tide of other peoples excesses. Nowhere is there a mention of decent returns for savers on their retirement nest eggs. I think Roy@08.54 has his finger on the truth there regarding housing costs also. GO sounds a lightweight, looks a lightweight and acts it. The Cameroon would be better asking Vince Cable to join his team in a hung parliament. At least he knows what he is talking about.

  • Comment number 25.

    #16 If labour get in again we will get more debt, maybe more quantatative easing, higher house prices(in nominal terms), low interest rates.

    If they print enough money then they can carry on just as the world has done since the 80`s. Leveraging the financial system.

  • Comment number 26.

    ......I wonder if the international debt market has already priced in what they really think UK Govt debt is or are they basing their lending rates on what Gordon and his cronies at the Treasury say it is? Let's hope so because if they haven't interest rates are going to shoot up once Osbourne conducts his public audit and actually opens up the books. Talk about "unleashing the forces of hell"! I hope he knows what he is doing?

  • Comment number 27.

    You seem to be damning George Osbourne with faint praise Stephanie this morning. Please remember that you are supposed to be politically neutral and that Labour's policies should come under the same microscope.
    Having been a reader of notayesmanseconomics web blog who has analysed our govenment bond market and its relative performance during this crisis the yield spreads you quote from the speech are out of date.
    Also notayesmanseconomics view is that inflation may persist which you Stephanie do not but you say as an explanation for higher bond yields
    "But there's a lot going on in that gap: like the fact that we have higher inflation than they do"
    Actually of course higher expected inflation would raise government bond yields.But it begs the question of what you now think.
    Also I notice that you feel that credit default swaps are a better guide than government bond yields for your analysis. This is curious because on the 12th February you felt that they were driven by
    "the speculators who bet on these instruments"
    So a quite liquid market is less important and significant than an illiquid one operated by speculators...

  • Comment number 28.

    "Usually politicians wait to be in power before laying out their vision in the annual Mais Lecture at Cass Business School."

    Usually journalists give commentary and opinion. We can read Kaletsky and get his opinion on what should be done, we can read David Smith and get the same. Larry Elliott writes exactly what he thinks should be done. Come on Stephanie, you write every week on teh holes on Osbourne's policies and the lack of detail in Darling's. We want to know exactly what you think should be done. Take a view with some details in it!

  • Comment number 29.

    #13
    "I don't think its as complicated as people say.

    Government overspends => Need to cut costs and raise taxes"

    Unfortunately it is very complicated.

    Get it wrong and it will either have no effect (and the market will savage sterling) or it will keep us in recession (we definitely have'nt left recession).

    We need an election PDQ.

  • Comment number 30.

    #26 Let's hope so because if they haven't interest rates are going to shoot up once Osbourne conducts his public audit and actually opens up the books.

    Isn`t that`s what is needed? Higher interest rates, encourage saving, lower house prices, poor businesses going bust. Thrift being rewarded. Mindless speculation being punished.

  • Comment number 31.

    #28
    "Come on Stephanie, you write every week on teh holes on Osbourne's policies and the lack of detail in Darling's. We want to know exactly what you think should be done. Take a view with some details in it!"


    Coome on Stepanie - go for it.

    Show us you are not just a pretty face.



  • Comment number 32.

    23. At 09:14am on 25 Feb 2010, GRIMUPNORTH77 wrote:

    #15/#164 from a previous blog - the reason exporters are taking margin is because there are not enough buyers in the market place.

    It would be great to go out and secure new customers but if everyone has stopped spending you have to try and squeeze the most out of those customers who are - and its not easy when everyone who is selling is desperate for business too.

    I suspect #164 is talking theoretically.

    >>>>>>>>>>>>>>>>>>>>>>>>>

    Yes - good point! It's hardly a lesson we need to learn from Asia is it!
    - 'When you're in trouble sqeeze what you can?'

    I think the position of UK import/export is vital to our economic prospects and is being over-looked by most - the writer of 164 raised an excellent point I think regarding exports with a curious final reamk about old habits and prejudice - but the writer, I think, makes the mistake of assuming that 'margins' are the same in each country - they probably are widely dissimilar due to resourcing/import/labour costs between various countries, product to product etc.

    Also, imports and tariffs are different in all countries - even the EU and in some countries are cleverly protectionist and the underlying story is that British manufacturing is a poor state with too much global competition.

    To cut a long story short - all political parties are now making sweeping statements about how Britain will be transformed into a new exporting powerhouse economy when they get elected - I don't think it's quite that simple?

    For me UK unemployment is the key issue - everything else can wait - full employment means full tax income and near zero welfare benefits being paid.

    It seems like 8m people 'economically inactive' (about a third of the working population?) is only a big issue for people like Frank Field, MP - all the rest:- BBC, BoE, politicians, economists etc issue waffle.

  • Comment number 33.

    #31

    ....in particular where will growth come from.

    We no longer have the one dimensional model where American consumers start to spend and Britain follows America out of recession.

    Whilst we were sleeping, Rip van Winkle like, drugged up to our eye-balls on bubble debt there was a paradigmn shift.

    We now live in 3 or 4 dimensional model with the emerging economies in the East.

    The West does not have a divine right to prosperity.

  • Comment number 34.

    Whoever is in power after the election, a slow fiscal squeeze will be
    the order of the day. Above anything else, this will allow base rates
    to stay very low for a good while, and thus minimise mortgage defaults - crucial while we taxpayers own such a large portion of the banking
    sector. Any thoughts of the kind of large-scale immediate squeeze once
    dreamt of by Osbourne have gone out the window. Apart from a few
    eccentrics, no-one now proposes such a dangerous move.

    Whereas we know that Labour will broadly favour tax hikes, probably via
    VAT and tinkering with allowances etc., it's far from obvious what the
    Tories would do in order to squeeze us slowly.

    Apart from cutting inheritance tax, which would have the opposite
    effect, they haven't said anything firm about their fiscal plans.
    When they do mutter about things like tax breaks for married couples,
    they quickly drop these plans when they realise that they are half-
    baked, and in the wrong direction, we need squeeze, not loosening.

    So far then nothing concrete about what steps the Tories would take to
    produce a slow fiscal squeeze.

    Therefore,it has to be assumed that they too would revert to type.
    Whereas Labour would tax us more, Osbourne would simply cut public
    spending, by making large numbers of redundancies, taking us back to
    crumbling infrastructure and long waiting lists. Just like the 1980s.

    It would be nice if the Tories admitted this, and nice if Labour
    admitted that their choice would be to raise taxes instead. Even so, it
    is obvious that this is the choice we face at the next election.

  • Comment number 35.

    Britain is going to get poorer. It's unavoidable.
    It's "locked in" to our colossal national debt.
    The Tories, Libs or Labour can do little or nothing about it.
    The trick for all these parties is NOT how to stage a "spectacular recovery", but how to SPIN OUT the reduction in our living standards over the longest possible time.
    "Too pessimistic"?
    Well, heavy industry is continuing its' relentless drift away from this country (Corus didn't OPEN a massive steelworks at Redcar this week, they CLOSED one).
    And as the RBS figures show, there are still plenty of bad debts in the cupboard.
    In the meantime, we were all more interested in what Tiger Woods had to say about his private life, or what Cheryl and Ashley were doing.....typical of the public apathy that reinforces national decline, and helped to cause the disaster in the first place.
    And as others have noted, "manipulation of the property market" is still one of the governments' not-so-secret weapons.
    Is property still over-valued?
    Britain is now all about "celebs, houses and over-paid bankers".
    A "banana republic" without any bananas.
    I wouldn't expect any "industrial miracles" from the Tories.
    Give me strength, that was gloomy, even for me.

  • Comment number 36.

    Stephanie

    I am not an economist however the figure of £70bn is quoted as the structural deficit of the UK? Gordon Brown had a mantra about balancing the budget over the economic cycle yet it now appears that what he did was borrow to fund the structural deficit. This leads me to wonder how much economic growth there would have been in the British economy if the PFI fiddles and economic hubris had not occur and what will be the growth if we do eliminate the structural deficit.

    When I read that RBS took fractional reserve banking to new levels and lent 50 times their deposits, I start to wonder what was actually going on in the British economy for the last 10 years. Someone wasn't watching the shop.

  • Comment number 37.

    Strikes me as fairly unreasonable to continually accuse Osbourne of lacking coherence in his policy for reducing our debt - the bit we cannot get away from is that it is MASSIVE - there will obviously need to be some kind of skilful trade off between cuts and tax hikes vs growth.

    The sad fact is that we are in for a good few years of economic woes - for me, I actually don't think the boy Darling is doing a bad job but he is clearly having to fight GB at every turn.

    Time for a change

  • Comment number 38.

    George Osborne said: “We are coming to the end of the first full Parliament since the Second World War when national income per person has actually declined."

    But, did Thatcher also preside over drop in GDP per head?

    Full Fact's analysis of George Osborne's Mais Lecture claims at http://fullfact.org/?p=572

  • Comment number 39.

    #34
    "Even so, it
    is obvious that this is the choice we face at the next election."

    Agreed.

    The Tories will cut with GUSTO.
    Labour will tax with GUSTO.

    The problem is too large to tinker with (as in departmental efficiency programmes).

    The 'GUSTO' ingredient will be supplied by external pressure - the markets.

  • Comment number 40.

    Can you confirm wheather Labour has given the Torys access to the books, from memory John Major gave Brown access 6 months before the 1997 election, but Brown refused access last year.

    Do they have access yet? If not how can labour keep calling for them to put flesh on the bone and list the cuts they are planning?

  • Comment number 41.

    #35
    "Give me strength, that was gloomy, even for me."

    A very realistic assessment of where we are and where we are heading.

  • Comment number 42.

    After reading these comments, some of which I agree with some I feel are flawed I must say on the whole we in the UK want the truth the whole truth and nothing like the truth. We do not want politicans to tell us how it is. We would rather them sat "there there it will be all OK in a little while. A little rub and the pain will be over". Unfortunately we have politicans who are scared of telling us how it is, may be because of how bad it is or more likely they are scared of loosing their seats. We also have a BoE who are now starting to stray away from their remit. I am probably one of the few who think giving the BoE its head was not the correct thing to do. When things are going well, no issues, when things are as they are now you need a concerted unified approach which does not always appear to be the case.

    I am probably the wrong person at present to be talking to if you want green shoots as a topic of conversation. On the macro level I feel that there are still a number of bumps still to come. The US will struggle due to its current path to spend its way out of recession. Because as in our case at some point you need to pay it back. Also the EU has still to deal with the so called PIIGS and others who are now becoming more vulnerable. Greece is still the main burning issue that no one especially the Germans want to confront. As this not only affects the economy but also their currency.

    The UK still has issues with it's national debt and personal debt. We are still living with a housing bubble, according to a number of economists and financial think tanks and bodies, house prices should fall be at least another 15%. However we are already talking about increases. We can not live with an economy that is being driven by a imaginary property boom.

    Finally we have to ask where is the recovery going to come from. Many are looking east. Don't hold your breath. China is still looking to be a net exporter as is India. Their home markets will offer little in the form opportunities as Germany has experienced in the last couple of years. China is also experiencing a property boom which by their own admission is unsustainable.

    So in my humble opinion what we need is a politician to stand up and tell us how we stand. Open the books fully and not just give us the sound bites.

    Then and only then we we realise that it is time for austerity in the public sector, put some thought into what we are buying, in terms of where it is coming from, Buy British first. This is what is happening across the rest of Europe now and has been the case for some time. We also should try and fight at our weight rather than well above it, as this costs us money, money we just do not have. We no longer have an empire so why do we keep on trying to act as if we do.

  • Comment number 43.

    34. nondom wrote:

    "When they do mutter about things like tax breaks for married couples,
    they quickly drop these plans when they realise that they are half-
    baked, and in the wrong direction, we need squeeze, not loosening."

    To every action there is always an equal and opposite reaction....if encouraging marriage as the social norm for couples, particularly where these relationships involve children, then the savings from not having to support single mothers on benefits (see article in Daily Mail today) could well exceed the cost of tax breaks for married couples. So this could actually be a 'squeeze, not loosening' after all. You need to start 'thinking out of the box'.

  • Comment number 44.

    JohnKonrad wrote:

    I watched Evan Davies' BBC-1 programme on Wisbech and the contribution of immigrants to our economy, and was left with a sense of deja vu. How can we expect the less motivated or less-equiped in our unemployed to re-enter the labour force if they are not helped, motivated or, in the end, given real incentives to get off benefit?

    I totally agree with you, however what has been offered so far by this government has not worked. It was not working before the crash so why should you think it will work now.

    The area of training and skilling needs to be rethought.

  • Comment number 45.

    Personally, I don't really care whether Mr Osborne is lightweight or not or intellectually rigorous or not.

    As an ordinary working man, I want a Chancellor (and government) that will deal honestly and fairly with us. The history books of the future will describe these last 10 years as an abject failure by its Chancellors and the Government to do this. We (and our children & grandchildren) have been robbed blind and it is us that will pay the price.

    We are not asking for much. All we want is a government which will not steal our pensions, encourage manufacturing industry to invest by giving targeted fiscal incentives, stop pouring money down the drain buying votes and wasting billions on foolhardy excursions into theatres of war with no discernible advantage for the United Kingdom.

  • Comment number 46.

    "Supply side revolution"; another over - used but essentially meaningless expression. I would like to see it consigned to the outer darkness because while it always sounds good, in reality it is so devoid of detail that the listener cannot have any idea of what the speaker actually thinks he (or she!) means.

    And of course having released the "pent up energy of enterprise and wealth creation" that released energy can only generate wealth if it results in products or services being sold, which in turn requires someone buying them, and expecting people to buy and at the same time somehow save (given what the national average income actually *is*) is carrying optimism more than a little too far. I find myself wondering "Wealth? For whom?" Perhaps "enterprise" and "wealth creation" should also be forbidden words from now on.

    I am instinctively a conservative, but voting for "boy wonders" with a clear conscience is going to take some doing. I know the Conservatives have to be careful to avoid saying anything that might frighten the horses; the trouble is that without policies that do just that there is little hope of getting the UK back on to some sensible course.

  • Comment number 47.

    For me there is one very telling statistic. Just before the crash, when everything was supposedly going along brilliantly, the public sector spent a smidgeon under 44% of GDP. The equivalent figure in other boom times since WW2 was around 35-38%.

    Labour is addicted to spending. Until we realise that save in recessions an economy cannot be run on the basis that every person working in the private sector not only has to support himself/herself but also (nearly) another person in the public sector. It is not good enough for public sector workers to claim that they support the economy because they spend their wages - your wages only came from taxation (and borrowing) so all you are doing is spending money taken from the private sector.

    Vince Cable, who has been right about a lot in this recession, I believe suggested cuts of £120bn in public sector spending are required. I think this is about right.

    George O has yet to provide any credible indication of what the public sector would look like with cuts of that magnitude. It would be very different, there would be things govt stopped doing completely. Until I have that information George and therefore Tories are not credible

  • Comment number 48.

    I'm both a public sector worker and a private sector entrepeneur. I think there is definitely a lot of money that could be saved in the public sector (my own sector in education still wastes a lot of money). But its difficult because unfortunately the people who waste the most money are the people at the top and are unlikely to stop themselves from wasting said money.

    My private developments also have been marred by lack of government support for small businesses. The use of tax incentives abroad to poach away talent (no, I'm not talking about bankers) etc.

    Basically, we need government to stop wasting money by actually taking a good hard look at how it is spent in every public sector. We need government to actually invest in smaller companies and start-ups so that a few of them will grow into larger companies with much more potential for added revenue and jobs. We need to stop throwing money at vanity projects like the olympics and the afghanistan war and start investing in our competativeness (more reliable internet infrastructure, better transport etc). We need to modify education to bias it towards more revenue generating areas (creative industry, high-tech etc) and we need to ensure we have stable and affordable sources for natural resources.

    I agree with another poster that universal benefits need looking at too, but that is a tiny saving that need to be part of a planned trimming back of spending on the public sector.

  • Comment number 49.

    If Osbourne does get to No.11 in a couple of months he will certainly become much hated. So its probably wise to at least start off giving a clue to the hardship that will be faced, and start getting his skin toughened up.

    I honestly think that they should name any austerity measures after the current government. For example, instead of raising VAT to 20%, they can instead bring in another tax called the Brown Tax at 2.5%. And if they will raise fuel duty, call it the Darling tax. So at least for the next 20 years every time we talk about taxes we are reminded of why they are there. {I am being serious, although it sounds comical}

  • Comment number 50.

    Ms Falnders you seem to have been impressed...or are you just being 'balanced', diplomatic, and polite ?

    One speech does not a Chancellor make. ANY SPEECH CAN BE WRITTEN BY OTHERS AND REHEARSED BY AN ACTOR.

    How about Osbourne, Darling, and Cable take part in an
    in-depth cross-examination by, say, YOU, Robert Peston, and Gavin Davies. Just as in a job interview. Let their unrehearsed answers reveal their econnomic understanding.

    Magdalen may be a grand place to play croquet and study History. Mr Osbourne may even have been a success in the Bullingdon. But so far his apparent ability leaves me cold.

    And before you shoot me down in flames, I doubt that I'll be voting for any party at the GE.

  • Comment number 51.

    Why is Osborne a lightweight for trying to resolve the defecit issue?

    Please can the people who keep inter-changing QE/The defecit/The debt stop it!!!!!!

    In all fairness to George, how can he be expected to provide detailed analysis of what he would do, without access to the full information?
    Bearing in mind the whole we are in?

    I am once more astonished that he is accused by the Government of talking the country down for even discussing it, yet in the next breath he is accused of having no policies

    Talk about wanting it both ways

    Not that I think he is talking the country down...Rather that, though, than bring it down, like the current GB massive

  • Comment number 52.

    The elephant in the room here is retirement age and pensions. If this was raised to 75 immediately, especially for civil servants, it would save a significant portion of the deficit, relieving pension pressures on both the private sector and the public one and lowering NHS costs.
    Couple this with a 10% decrease in civil service pensions over 15K a year
    and a wages freeze and it might be possible to avoid loss of employment in the public sector.

    The downside would be temporarily increased youth unemployment but its unlikely that people who are currently retiring will be replaced.

    However if anybody was to suggest it prior to the election it would be a certain way to make sure they were unelected.

  • Comment number 53.

    Many thanks for such a comprehensive analysis of George Osborne's speech.

    Like the majority of people who are not economists and are only trying to feel out the overall picture I found this extremely useful.

    One thing is clear. Anyone expecting miracles from any government over the next few years is going to be extremely disappointed.

    First priority is to open up the books for after thirteen years of a government there will be many anomolies that have not been taken into consideration. Until a full audit has been carried out it is totally unreasonable to expect any future chancellor to be clear about what he will be able to do.

    Even as we speak changes are happening at a pace everywhere so nothing is stable and any forecast made today could be completely out of date by tomorrow.

  • Comment number 54.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 55.

    Denial,DENIAL ,Denial, DENIAL,the truth is something that society cannot and WILLNOT face.Perhaps it is
    because we have daily proof that the leaders of our society display a complete refusal to trust us with the
    true facts, because they THEMSELVES will not face that this country is in deep RECESSION and remain so for many years ahead
    Their now--mummy will make it all go away.

  • Comment number 56.

    39. At 10:36am on 25 Feb 2010, Richard Dingle wrote:
    #34
    "Even so, it
    is obvious that this is the choice we face at the next election."

    Agreed.

    The Tories will cut with GUSTO.
    Labour will tax with GUSTO.

    =========================================

    34/49

    This is the negative impressions from both sides which they are seeking to imprint upon the nation.

    The reality is the there is no choice - both will have to make cuts and increase taxes and reduce benefits due to the size of the problem unless they inflate it out.
    The balance of these and how they will go about it is the choice which needs to be presented to nation at the election.

    I somewhat doubt it will be.

  • Comment number 57.

    What if the rich economies have atually reached their peak productivity? Continuous growth is an impossibility. We are still one of the richest nations in the world if a little overspent. 2% growth was unsustainable, now is the time to plan for a steady state economy. We can live well on current incomes -just as soon as we pay off our debts. Perhaps a fewer flat screen tv's and foreign holidays? Concentrate on GDP per capital and less stress on growth that isn't going to happen.

  • Comment number 58.

    34. At 10:14am on 25 Feb 2010, nondom wrote:

    Whoever is in power after the election, a slow fiscal squeeze will be
    the order of the day. Above anything else, this will allow base rates
    to stay very low for a good while, and thus ...

    >>>>>>>>>>>>>>>>>>>>>>>

    How about taxing UK 'non.dom raiders'? (Yes, I'm being polite!)

  • Comment number 59.

    Anyone listening to R4 Today this morning?

    In the event of a hung parliament - Mc Bully stays as PM until the Queen sends him to the Tower or something like that?

    Well why wait - I say, 'let the Beefeaters have him right now!'

    Anyone still think that interests rates won't go up this year if McBully stays in charge?

  • Comment number 60.

    A savvy greasy-pole climber he may be, but George Osborne's economic financial training = Maths GCSE
    This speech will have been written by Kenneth Clarke + advisors. Osborne is the greatest danger to face this country since Arthur Scargill.

  • Comment number 61.

    I love this blog. So many experts, all qualified to judge the merits of different politicians and their policies!

    I think it is impossible to decide how well Mr Osborne will do until he has been in the job for a year. He doesn't have experience or track-record, so we will have to wait and see before we judge. Brown and Darling have both experience and track records; Brown's track record is abysmal, but Darling seems to be trying honestly to climb out of the abyss. And it can't be easy with the trolls lobbing boulders at him. Even then, his results have yet to be seen, so I don't see how he can claim to be better qualified than Osborne.

    Many posters suggest that Mr Cable is some kind of economic superhero, but we cannot sensibly consider him. All of his pronouncements have to be judged in the knowledge that he knows he will never have responsibility. He is like an economics correspondent: he can say what he likes at any time, as it won't affect him, his party, the economy, the country, or our jobs very much. What Mr Osborne or Mr Darling says can cause major ripples.

    If you don't know how to vote, just think: will the country be better off if we give the current government more time to try something else (and who will actually be Chancellor if they win another term?)? Or will it be better off if we try someone else, even if they have never held office before?

    Don't vote for anyone else, because your vote on the economy will be wasted.

  • Comment number 62.

    #34 Nondom & #39 Richard

    I agree with both of you apart from one thing. It is not a choice of higher taxes or lower spending, its a lot of both with a slight difference between the two.

    If we vote for Labour we will get much higher taxes and spending cuts on 'non essential' areas (which begs the question if it wasn't essential, why it was it being spent in the first place?).

    If we vote for the conservatives, we will get much higher taxes (slightly less than Labour) and spending cuts (slightly more than Labour).

    3-3.5% growth in GDP a year against this backdrop? My sides are about to split with laughter.

    To people who have said that the tories have not proposed any ideas on how to reduce the deficit. What about raising the retirement age and a public sector wage freeze? Is it 'essential' that all public sector workers (apart from at RBS, joke) get a pay rise?


    #49 jonearle

    This is is a good idea. However, the Brown tax would probably need to be in the region of 5-7.5%, and spread to a wider range of goods to have a meaningful impact on the deficit.

  • Comment number 63.

    Stephanie, this topic is economics-related but it is also obviously one of the biggest "political" topics of the moment. I expected Nick Robinson to say something on it from that perspective. Do you know what has happened to Nick? He disappeared after getting embroiled in "The war of Gordon's Tantrums."

    Has he been "taken out" or just injured in the cross-fire?

    If he is out long-term, is Laura likely to hold the fort again?

    Perhaps you could issue one of your time-stamped post scripts?

  • Comment number 64.

    43 the fatcat

    I thought you were serious, and were about to explain how a tax break
    on married couples (don't get me wrong I would benefit) would raise
    money for the govt, until you referenced a Daily Mail article in
    support...

    Nice one, you had me there!

  • Comment number 65.

    One might question the long-term, political wisdom of winning the next election.

    Whoever wins will have a hard time. We have mounting debts, but no political will to increase public service efficiency. We are forced into devaluation and inflation to reduce or debt. Our production of oil and gas has peaked. We have no manufacturing base either to drive our economy or protect us from the rising cost of imported goods. Our only large area of economic activity is banking and finance that makes money as a service industry and selling paper. Surely the service part will move away to places where it’s needed, where they still manufacture, and the world must be giving up on buying paper promises from us. The last hope is to invest heavily new industries and in education, neither of which are likely to deliver much in the life of the next government. And when did we last manage to invest wisely in new industries or education?

    My advice to Lab and Con is to do your best to lose the next election. The next government will meet the biggest challenge since that of Winston Churchill in 1940. Unless you have sufficient wisdom, honesty and courage, to lose the election will better for you in the long term.

  • Comment number 66.

    #42. After reading these comments, some of which I agree with some I feel are flawed I must say on the whole we in the UK want the truth the whole truth and nothing like the truth. We do not want politicans to tell us how it is.

    Tell it how it is... ok.
    1) We were massively overspending during the good times before the crisis. Individuals, Companies and Government all in unsustainable debt.
    2) The Government didn't control the money supply. Banks make all the money (money=debt), and it was allowed to run out of control.
    3) The Government decided to bail out the banks in a way that kept the wealth of the rich, at the expense of the ordinary tax payer, his children and grand-children.
    4) The Government refuses to take seriously the ageing population, both in terms of health needs and pension liabilities.

    Unfortunately we are deep in debt because of 1,2 and 3. Yet the worse problem of all is 4, it just doesn't have to be solved "today".

  • Comment number 67.

    What we are seeing is a sort of Dance of the Seven Veils in which all parties, not just George Osbourne, traverse around the issue of the fiscal deficit dropping hints at the spectators about how they will address or rather undress for it.

    It is unfair to accuse Osbourne of showing little substance where all participants are trying to get away with showing off very, very little of what they mean as well.

    The reality is that there are going to be cuts: the biggest in over sixty years. This is going to be even worse than anything Mrs. Thatcher did as she was at least able to keep the level of state spending increasing throughout her period of tenure. That is not going to be possible this time round. So it is going to be quite horrible. Whoever does the cutting will be blamed for the cut. It is not going to be very nice at all.

    I am amazed that the lad even wants the job as it is going to be a seriously tough call!

    What I do appreciate about this is the attempt at candour. The coming General Election is going to be about the economy and nothing else; although the political class are going to collectively talk about everything else to distract the electorate as best as possible for as long as possible. The more we all demand answers from the politicians then the less prospect they have of hiding away from this issue.

    I will say this that in Darling, Cable and Osbourne we do have a set of reasonably decent people trying to be as truthful as their party machines permit. There is hope: maybe a hung parliament will be a blessing in disguise.

  • Comment number 68.

    #57. Concentrate on GDP per capital and less stress on growth that isn't going to happen.

    Unfortunately, without giving all the ABC of economics, our form of capitalism completely relies on debt, and continued growth. As soon as growth stops you get implosion, not a steady state.

  • Comment number 69.

    So, Captain Brown having built his ship so that cargo capacity is miserly to make way for ship's officers and crew, installed a 300 liter petrol gas guzzler engine,that has to be refueled daily, gets lost, enters stormy unsafe waters, hits the rocks causing heavy losses, and folks question whether the replacement captain will do better? How could he do worse?

  • Comment number 70.

    This might seem a bit negative but you can not expect this type of govenment (Tax and spend) that did not see the bubble was about to burst, yes the govenment that will abolish boom and bust! to suddenly change their nature and put the right measures in place to aid a recovery.

  • Comment number 71.

    A previous contributor concluded with:

    "Perhaps Labour and the BBC can 'put their old habits and prejuduces behind them' and come up with something better if they have no confidence in what GO is saying?

    We're all ears for some real informative economic critique, analysis and policies?

    Deafening silence ... I fear"

    No other news channels can match the BBC's resourses; the public have no choice in providing this huge funding. The BBC must also accept then the largest responsibility for educating the public that sustainable wealth is created through a)inflation of house prices b)public sector expenses and c)importing our clothes, domestic appliances and just about everything else.

    I am not an economist so I would like Stephanie to explain where we are going to get the money to continue this economic model? Will China continue selling us their TV's if we can only pay with monopoly money?


  • Comment number 72.

    59 nautonier

    In reply to your post it will come as a shock to most people that even if there is a hung parliament Gordon Brown could retain power if he can get a majority together.

    Many think that a hung parliament will be the answer to all our problems but when looking at the ragbag of different parties all working in their own vested interests and not the countries the prospect becomes quite terrifying.

    We have even heard Alex Salmond saying he could have the balance of power in Westminster. Who can imagine something like that.

    It will need a mathematical genius to work out the different combinations.

    Because very few actually know what a hung parliament entails it is time the media started educating the people of the consequences. Perhaps the BBC should be the first.


  • Comment number 73.

    Let's hope Big brother is better at prescribing than his little bother.

  • Comment number 74.

    #9 Golan
    Sorry to comment so late.
    Support your view on the removal of universal entitlements, but not just in the benefits/tax credits arena, but beyond into health care etc. Problem is then loadsapeople will have to spend money on fundamentals of life rather than pleasure goods and that ain't no vote winner.

    By the way, one area where this government's ballooning of entitlements has not taken place is in the support of the unemployed - execept of course that they have created over 5000 jobs to deal with the unemployed in job centres and placement agencies. If anything the actual cash available as benefits has become even harder to obtain, AND everybody who fails to get re-employed within 6 months is of course a complete waster and scrounger and in many cases removed from the benefits system.
    And what do we have.... the greatest growth in long term unemployed ever.

    I'm waiting for the term 'unemployment poverty' to be crafted to sit along side some of the other povertys. Guess it will be a long wait

    The Clash's 'know your rights' is as pertinent today as when they were castigating Thatcher. Who said 'Meet the new boss...same as the old boss'.

  • Comment number 75.

    #51 kevinb,

    If you care to read what Osbourne actually said last night it is clear that he is a offering very little in the way of a clear strategy for resolving our present difficulties. He is a lightweight. Now, to give him his due, none of his opponents are atually setting the world on fire with their proposals either.

    Therefore, from your support in #51 I suppose that makes you a lightweight too.

  • Comment number 76.

    #72
    "In reply to your post it will come as a shock to most people that even if there is a hung parliament Gordon Brown could retain power if he can get a majority together."

    Shocked already.

    He has the charm, the people skills, etc to make it a given.



  • Comment number 77.

    It is a shame that out of 57% of the British people that have access to the internet only a handful read this blog and the comments here, instead the majority prefer stuffing their heads with that football player's divorce, big brother and other rather irrelevant means of entertainment.
    Thank you, Stephanie, for providing an excellent ground for relevant discussions.

    @53 "One thing is clear. Anyone expecting miracles from any government over the next few years is going to be extremely disappointed."

    Agreed.

    We know that under the Labour government, an illusion of wealth was created through inflated house prices, public spending, etc. whilst the application of real wealth creation mechanisms has declined. Since the start of the recession the failing public sector has been inflated (via service contracts, jobs and money poured into it) at the expense of the failing private sector (just in the UK over 180 billion in pension fund deficit, rampant cost cutting, redundancies etc).
    What we have today is a huge proportion of the population on benefits, on pension, working in the public sector (8million of the economically inactive (including 1 million British pensioners living and spending their money overseas) + 6 million of public sector workers) - 1/4 (25%)of the UK population (people that are offering next to nothing to the economy in real time apart from workers of schools and hospitals, pensioners are in the same category because they rely on public services and pension funds for their well-being), these people's livelihoods depend very much on continuance of this system, these people are the most likely to vote, the problem is of course is that both parties cannot afford to let this system be criticized and will support it to gain votes.


    Whether it is Labour, Conservatives or LibDems, this system will not change, there will be no real cuts and there will be no real job losses, QE will continue until the economy collapses in a hung parliament and opposite sides will blame each other, leaving the ignorant public to their misery.

    So here is my suggestion - when there is a choice between such similar ego-tripping parties such as Labour and Conservatives - go for Finland or Australia.

  • Comment number 78.

    Ok I will give George Osborne the benefit of the doubt, presumably he hasn't seen the books and so can only guess at the horrors that lie within.

    I would like him to spell out where he wants us to go though, in 10 or 20 years, what tax take does he think the UK government needs, what services does he think the government should be providing, what the employment rate should ideally be, how much should we spend as percentage of GDP on education, health, pensions, defence etc.

    We are in a mess now, we all know that.

    I am prepared to accept that for whoever is in power, the next 5 year term could very well be taken up with fixing inherited problems.

    But what do Dave and George think this country should look like in 10 years ?

    Why should I give them 5 years to fix the current problems and set us on the new path if I don't know what that path might lead to ?

    I know what GB and AD's plans are, fix this mess and then more of the same.

    DC and GO, show us yours.




  • Comment number 79.

    The Independent Office of Budget Responsibility!! Grand name, but aren't there people who have this responsbility now? The Conservative plan is to reduce government by adding an additional layer. It costs a lot to reduce government.

  • Comment number 80.

    @Bertram Bird, how can you possibly know the "qualifications" or not of various posters. Don't be so patronising, I am an investment banker with 10 years' experience and have also successfully built and sold my own business. Is that enough to be allowed to comment on business/economics?

    To summarise your position seems to be we haven't heard much evidence of Osborne's competence, but let's just blindly give him a go. Cable talks sense but because he's unlikely to get elected, what he says can't be trusted.

    He is indeed an economic superhero, because in the view of most informed observers, including the financial press, he has correctly analysed the crisis - he published a book on it! - and Britain's position, and presented a clear roadmap for recovery. He is indeed like an Economics correspondent. What's wrong with that? Churchill was a historian.

  • Comment number 81.

    72. At 1:09pm on 25 Feb 2010, virtualsilverlady wrote:

    59 nautonier

    In reply to your post it will come as a shock to most people that even if there is a hung parliament Gordon Brown could retain power if he can get a majority together.
    >>>>>>>>>>>>>>>>>>>>>>>>>>>
    Here is a link that I forgot to include last time re: hung parliament:
    http://www.charter2010.co.uk/?gclid=CLuppOjVjaACFUIA4wod1wi6eA
    A hung parliament could also bring about an independent England and Wales and Scotland and NI.
    The SNP are frightening but mainly for Scots who like the notion of an Independent Scotland but in reality most Scots are more scared of Scottish Independence under the SNP than we are south of the border and I think therefore that the nightmare break-up scenario will be most unlikely (but theoretically possible with a hung Parliament in terms of the SNP finding it easier to get a referendum).
    The SNP are rubbing their hands waiting for some of that Falklands Islands oil money heading this way and which they' will miss out on if they succeed 'winning' a Scottish Independence vote.

    Personally, I'd like to see Scotland go Independent so that England can spend their share of the Falkland Islands oil money!

  • Comment number 82.

    #56
    "This is the negative impressions from both sides which they are seeking to imprint upon the nation."

    Possibly.

    With a full Parliament ahead of them whoever wins - assuming a reasonable overable majority - will revert to type.

    Neither Labour or the Tories are fleshing out the detail for fear of terifying the patient.

    The real choice is between long slow decline (whoever wins the election) or a radical bold approach that might just work and give the UK a future in this world.

    The Bold Approach would include inter alia...
    1. Reducing the State to no more than 20% of GDP (small,lean and mean)
    2. Employing professionals to run Government departments rather Oxbridge generalists.
    3. Phasing out ALL benefits over a 5 year period
    4. Complete overhaul of our education system. Integrating education with business needs - internships from year 2 onwards.
    5. Radical Constitutional reform including a Bill of Rights
    6. Playing a full constructive part in the EU and working to make it better.
    7. Slashing taxes by 50% over a 5 year period.
    8. Greater social mobility. A single state education system.
    9. A state of the art NHS but not free at the point of supply.








  • Comment number 83.

    The adversarial nature of party politics is counter-productive.

    You couldn't run a soccer team like this let alone a nation of 60 million.

  • Comment number 84.

    #67, stanilic,

    Well we are feeling in a generous mood today aren't we? However, "It is unfair to accuse Osbourne of showing little substance" takes the biscuit.

    I accept that he could not give numbers or %s but he WAS talking to an iformed audience with his Mais lecture. Therefore to dress a complete load of waffle like "supply side revolution", "freeing pent up enterprise and wealth creation" , " a nation of savers", without having a single firm policy upon which such waffle can be achieved is rather more than just pathetic. In this speech he had the opportunity to demonstrate that he truly undertood the problems and had developed appropriate policies to combat them - he either could not or would not. Even he did not even attempt to demostrate how he proposed to cut and stimulate at the same time.

    Perhaps even more revealing (it's those veils again!!) is that the Tory myopics on here have not jumped to Osbourn's defence but chose to try and throw muck at Brown, Darling and Cable.

  • Comment number 85.

    Osborne and Cameron always include a line about maintaining low interest rates in their 'economics' related propaganda.

    Neither of these men seem to understand the pivotal role that too low interest rates had in creating and inflating the bubble that let to the worst crash in several generations.

    Or perhaps they do understand the role of too low interest rates in creating economic bubbles and intend to create another (or rather sustain and inflate the one that has already been created in houses and the stock market).

    Either way neither are fit to run the place (however nor are the present lot or the regulators.)

  • Comment number 86.

    Most of the key decisions of the next 5 years will be "thrust upon us", they will not be planned (nor indeed are they "plannable" in that we cannot foresee them).

    So the key issue in this election is: do you trust the people who got us into this mess to continue in government as the leaders tasked with trying to get us out of it?

    Sutrely the answer must be a resounding "No"?

  • Comment number 87.

    84

    I did defend Osbourne, and you called me a lightweight!

    I would vote Conservative, yes, although that doesn't mean they are right on everything

    You may not like his ideas, he does have them though

    Smaller Government...get that defecit down...

    The expenses scandal has switched so many people off politics, that the Government are getting an easier ride than they should

    Cameron has also been poor lately

    What is your plan for recovery?

  • Comment number 88.

    83. @Maimonedes Do you hold a similarly dim view of the adversarial nature of the jury trial system, or of the Socratic Method of Plato's Dialogues? What would you prefer? Italian-style coalition government? Trial by combat? Dictatorship?

  • Comment number 89.

    #85
    "Osborne and Cameron always include a line about maintaining low interest rates in their 'economics' related propaganda. "

    It won't be down to them.

    The bond markets will set interest rates.

  • Comment number 90.

    61 Bertram Bird.

    It's the public's lazy acceptance of a two-party system that has exacerbated the business cycles we have endured since the war.

    We are continually lurching between the damage done by either the Tories or by Labour, and the damage done whilst the next lot try to reverse it.

    Add to that the sheer complacency caused by a two-party system - evident in the Tories confidence that they will regain power (despite their currently rather weak opposition) simply because Labour are finished.

    If we want to get British politics back on to its feet more people need to vote for anyone but Labour or Conservative in the General Election. The reward might be that we are one day governed by people who are not fools.

  • Comment number 91.

    84

    I think the Darling Budget will be interesting

  • Comment number 92.

    foredeckdave #84

    'Tory myopics on here have not jumped to Osbourn's defence but chose to try and throw muck at Brown, Darling and Cable'

    I think you're taking these speeches far too seriously. Of course it's all hot air, as was everything Blair said pre 1997.

    So called Tory myopics are capable of seeing the damage that Gordon Brown and company have done to the economy over the last 10 years and believe GO and DC (or pretty much anyone else) will do better.

  • Comment number 93.

    George Osborne's policies may be good or bad - with the increasing likelihood of a hung parliament he probably won't get the chance to put them into practice in any case. But what is not in doubt is his hectoring, school prefect style of presentation which is a real disadvantage for the Tories. But then again, given the dire state of the economy and the country, I suppose nobody really wants to win the next election anyway. Caledonian Comment

  • Comment number 94.

    #82:

    "2. Employing professionals to run Government departments rather Oxbridge generalists."


    I thought the reason we ended up with an entire industry of "management consultancy" was precisely because of the demand for "professional" management, instead of the old Oxbridge gang who presided over Britain when... it was more prosperous?

    Good luck with scrapping benefits and charging for the NHS!

  • Comment number 95.

    Hello Gavin the Gromit @80 - nice to hear from you.

    You said: "how can you possibly know the "qualifications" or not of various posters. Don't be so patronising."

    I thought I was being tongue-in-cheek, not patronising. I am always struck by the certainty of all the contributors. Most seem to be much more expert (and qualified) than I am, yet their opinions form a wide spectrum. And they are all certain.

    If you want to swing at me, go ahead. It won't hurt me. This is just a forum for discussion, and I meant it when I said "I do love this blog."

    So you are an investment banker. Good choice of career. I hope you have had a good ten years, that your clients have done well, and that you have achieved both by creating new wealth without disadvantaging others and or their pension funds. If so, well done.

    Similarly with the business you built and sold. Congratulations. I admire you, as I couldn't do that.

    Neither of these qualify you more or less than me or anyone else to comment on Britain's economic state. We can all have an opinion, but we will each have a different perspective. I have had a career, not a business. I now have a pension. And that background gives me a perspective.

    Your summary of my thoughts was incorrect, but that's probably the fault of my blogging. Neither you nor I know how Mr Osborne will turn out when he actually has to do the job (though I sense you think he is going to be useless). We don't know how Mr Cable would to in practice (though you like his book). They can both talk a lot, but they may perform differently on the job, when faced with real choices. Mr Cable may be great, but he isn't in the right party to have a go, so he can say and write whatever he likes; however much I may (or may not) trust him he is unlikely to have to prove himself in office.

    In a National Unity Government I might trust Darling, Osborne, Cable or Clarke. My only really strong feeling is that, regardless of who is managing the economy, Mr Brown should be nowhere nears ANY levers of power.

    Have a nice day.


  • Comment number 96.

    75. Stephanomics: Big Difference - At 09:53am on 04 Feb 2010, nautonier wrote:

    At the moment, only George Osborne has a credible economic growth model to show the actions and government investment/priorities in order to argue that the UK economy is sustainable and able to service the massive and increasing UK sovereign debt mountain.

    >>>>>>>>>>>>>>>>>>>

    Some of us have already commented on George Osborne's plan which overall I think is the only credible plan on the table.

    Lefties and others will of course not like it for party political reasons but I'm not a raving Tory supporter, I'm completely independent - surprising that those criticising Osborne's plan have nothing to better it or are completely off track. It has a few weaknesses but it is likely that Goerge Osborne is still holding back so that Labour don't steal the Tories ideas (again).

    But in economic terms, I think that G.O. should be commended. I like it overall although as some have pointed out still needs some detail and that is likley to be on its way after the enxt budget.

    Also, the term 'credible plan' also I think means that it:

    - gives confidence to the economy and markets
    - has a definite time horizon
    - is affordable
    - is measurable
    - is achievable
    - is qualitatively and quantitatively robust
    etc etc

    For those who don't agree - show us something better! 'Planning' is obviously a dirty word for the lefties.

    The pressure is now on Darling and not G.O.

  • Comment number 97.

    90. At 3:09pm on 25 Feb 2010, Roy wrote:

    "61 Bertram Bird.

    It's the public's lazy acceptance of a two-party system that has exacerbated...


    ...If we want to get British politics back on to its feet more people need to vote for anyone but Labour or Conservative in the General Election."

    I have every sympathy for these ideas, but I am left with the same question that this raises every time it is mentioned: "For whom do I vote to get NONE OF THE ABOVE"?

    There are occasional posters here that suggest that we demand a NOTA box on the ballot paper. This could in the extreme produce a government elected by 5% of the electorate, with the rest "spoiling" their ballot papers. The government would still have a mandate and a right to impose...whatever.

    We have an adversarial system because people have different perspectives on reality. Call it right-brain/left-brain or logical/artistic or whatever. So we lurch from left to right and back as the minority at the margin swing back and forth.

    It doesn't solve anything to vote Green or UKIP or Raving Loony, because then your vote is akin to NOTA. But I agree with you that what we have is hopeless.

    I think we need more "micro-voting." That is, referenda. Then it is less important if your party loses. Also, if a party is elected, but another party's policy is preferred in one area, they could co-opt an opponent as a minister. So, I might one day vote Liberal Democrat if I could neutralise some of their barmy ideas. Similarly I might be more accommodating of a Tory or Labour government that toned down some parts of their manifestoes. I do not want to be told that something is being done because I gave the government a mandate by voting them in as a least worse choice. That way, for example, CND members have elected New Labour, who are renewing the deterrent. And there are mony other examples.

    How do we start the ball rolling? Start a new party? I think we might have a leader in gavinthegromit (above), who is a proven entrepreneur.

  • Comment number 98.

    #89. Richard Dingle wrote:

    "#85
    "Osborne and Cameron always include a line about maintaining low interest rates in their 'economics' related propaganda. "

    It won't be down to them.

    The bond markets will set interest rates."

    So, if that is the case the bond markets set interest rates at 0.5% did they?

  • Comment number 99.

    The british public never gets the chance to influence policies.They can only vote for a party.Once that party is in power they are controled by the block votes of the establishment that put them in power.The person in the street might vote but do not ever think that you influence policy.Remember the fuel protest.All that achieved was the highest priced diesel on the planet.Gorden Browns revenge

  • Comment number 100.

    #94
    "who presided over Britain when... it was more prosperous?"

    When was that.
    Were they 'presiding' or 'sowing the seeds' of our current dilemnas.




 

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