Posts Tagged ‘double dip’

The double-dip, if it is one, has not changed the rules of the game

02/05/2012, 07:00:17 AM

by Rob Marchant

Delight, for many on the left, met the economic figures last Wednesday. Britain was not in recovery after all, but was the victim of a double-dip recession. Paul Krugman wrote eloquently of Britain’s “death spiral of self-defeating austerity”, and Ed Balls had a very good day.

All true, or very likely so, although one cannot know for sure, Balls and Darling seem to have been closer to the mark, and Krugman is usually a pretty shrewd observer.

Balls’ argument is looking considerably stronger than it did and, in parliamentary terms, as Dan Hodges puts it, he “put George Osborne on the canvass” . So this is the start of Labour’s long road back, right, now we have fixed our economic credibility problem?

Ah, would that it were that simple. Where we might want to differ from the good Hodges is when he says that “Balls has won”. He has not. Labour has not. For a number of reasons: but most already known. Stephen Beer, a fund manager, warns at Progress that we have not done “enough to restore economic credibility for Labour”, and he’s right.

But it is more than that. Even if we can make a convincing argument, in the court of public opinion, for being cleared of economic incompetence, there are a half-dozen other charges which it will surely want taken into consideration.

First, as Hamish McRae points out in the Independent , government predictions have underestimated GDP by half a per cent, on average, over the last ten years. So we may well not actually be in recession at all after the figures are corrected.

Indeed, the insightful McRae goes as far as to predict that the “doomsayers will be proved wrong” on the basis of some alternative figures from Goldman Sachs. Not conclusive, but enough to make us hesitate.

Second, the Tories being proved wrong is not the same as Labour being proved right. We do not know for sure what might have happened, had Darling or Balls been Chancellor instead of Osborne. Neither can we even explain in detail what we would have done: while we have specified a level of cuts, we have not yet said where we would have cut, which of course could affect outcomes.

So Labour might have done just as badly, or worse. We do not know and, besides, the game of alternative histories is rarely one which moves voters.

Also Beer writes correctly that, on top of this, we need to get back credibility with the financial markets, where we currently seem to be doing our best, via our “predators versus producers” talk, to alienate them.


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Thursday News Review

19/08/2010, 07:34:56 AM

Level pegging after 100 days

At a time when it’s tough to get on the employment ladder, kicking away the first step up that was Labour’s future jobs fund at the same time as removing 10,000 university places is callous. It’s also economically illiterate, hiking welfare costs and reducing tax take. Scrapping the schools building programme, ending Labour’s planned expansion of free school meals and taking away free swimming and play areas place our youngest in the cuts front line. The reality that it is ideology driving this government is nowhere more evident than in the wasteful £3bn, top-down reorganisation of the NHS – the age of austerity suspended when there’s a free market to introduce to the NHS. – Peter Hain, The Guardian


'No thanks Nick'

Labour leadership contender Ed Miliband has said he would demand the resignation of Nick Clegg before forming a coalition with the Lib Dems. Mr Miliband told the New Statesman that the deputy prime minister’s support for the government’s spending cuts would make it “pretty hard” to work with him. The comments come after Lib Dem deputy leader Simon Hughes said a coalition with Labour was “still on the agenda”. – The BBC

Banks should pay their way

Miliband [David] proposes to double a 2 billion pound annual tax on banks introduced by the coalition — a move to make banks contribute to reducing the deficit after several of them had to be rescued during the financial crisis. He said this would enable the government to avoid cuts in tax breaks for business investment announced by finance minister George Osborne in an emergency budget in June. “He is imposing a bank levy of 0.07 percent of the (banks’) balance sheet. That is by no means a big hit on the banks,” Miliband said, adding however that Britain needed a strong financial services sector. “If you doubled the bank levy you wouldn’t have to abolish capital allowances for manufacturing,” he said. – Reuters


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