Posts Tagged ‘Growth’

Miliband’s bridge building with business should be applauded

01/07/2014, 08:15:02 AM

by Jonathan Todd

The case for augmenting Labour’s cost of living campaigning is almost as old as this campaigning. The advantages accruing to Labour from this campaigning are challenged by those that accumulate to the Conservatives from the more general economic improvement. This improvement encourages optimism among businesses, which some feel Labour threatens.

Labour needs to reassure these businesses and the voters who work for them that Labour poses no such threat. That, as Pat McFadden and Alan Milburn have both put it, Labour is as concerned with generating wealth as with distributing it. It is, as Chuka Umunna is quoted in a recent FT article headlined ‘Labour seeks to reposition as pro-business party’, a fairly academic decision how you can cut the pie more fairly if you haven’t increased the size of the pie first.

That Umunna is clearly right, while business fears that this is not understood by Labour, makes the repositioning heralded by the FT welcome. We are now in what The Sunday Times described as “a week long campaign to mend fences with business leaders”. No matter what big policy announcements this week may bring, Labour should not expect that they alone will secure business support.

Fifty small press releases matter more than a big policy announcement, as the ex party adviser Steve Van Riel recently observed. If Labour wants better relations with business, and I’m pleased that we do, we shouldn’t think that these can be cemented in a week, no matter how big our policy announcements. Such relations require diligent cultivation over the long-term. Which the activities of this week should be a staging post on.

It is to be hoped that Ed Miliband and his shadow cabinet are up for this. Because there will be those in our party who will implore them not to be. Similar protestations, as Uncut has noted, have blunted moves to the centre on welfare. Concerted efforts to win business support would be another move to the centre, which is valuable enough that Miliband should be prepared to endure internal criticisms.


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Growth has returned, but Labour can still win on the economy if it can answer these five questions

28/01/2014, 10:39:00 AM

by Jonathan Todd

The return to solid GDP growth (at least compared to recent years) was always going to present Labour with a challenge. However, notwithstanding the immediate favourable headlines that the government has garnered from today’s figures, the present economic debate still contains numerous positives for Labour.

First, the 50p tax – enjoying 60% support – is popular. Second, the Balls fiscal consolidation plan is also. Polling for Labour Uncut prior to Labour party conference explored how voters would respond to Labour promising to keep most of the present government’s spending plans but to borrow more for public works such as building homes. Balls’ position now amounts to this and our analysis at conference revealed its appeal. Third, left popularism – otherwise known as bashing the banks and big energy – is, by definition, popular.

Inevitably, growth tips the balance towards the government on the economy, but if the public back Labour on the answer to the following five questions, the party can still win the debate. If, however, the public back the Tories, then Labour will need some new responses, and fast.

Balls v Big Business? Who will win?

It sounds like something the Ricky Gervais character Derek might ask but it’s a variation on a Huffington Post headline. The Post story noted coverage in the Financial Times (‘Businesses blast 50p tax plans by Labour’) and the Daily Telegraph (‘Bosses blitz Labour’s 50p tax rate’).

‘Big Business backs New Labour’ now seems a less likely story. Yet it was as recently as 19 December last year that Balls was quoted in the Financial Times as describing financial services as: “A massive advantage for Britain. Don’t throw the baby out with the bathwater.” Having served with distinction in the prawn cocktail offensive, we might wonder whether Balls’ heart is really in battling big business.


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The International Labour Organisation offers Ed the policies for jobs and growth

13/06/2013, 05:09:39 PM

by Robin Thorpe

“Women and men without jobs or livelihoods really don’t care if their economies grow at 3, 5 or 10 per cent a year, if such growth leaves them behind and without protection. They do care whether their leaders and their societies promote policies to provide jobs and justice, bread and dignity, and freedom to voice their needs, their hopes and their dreams” -Juan Somavia

Juan Somavia was the Director-General of the International Labour Organisation (ILO) until 2012. The ILO was founded in 1919, in the wake of a destructive war, to pursue a vision based on the premise that universal, lasting peace can be established only if it is based on social justice. The ILO became the first specialized agency of the UN in 1946.

From the 5th to the 20th of June 2013 the ILO are holding the 102nd International Labour Conference in Geneva. On the agenda are several themes that have been prevalent in the UK media recently and have relevance to the lives of the UK population. These are;

  1. Sustainable development, decent work and green jobs
  2. Employment and social protection in the new demographic context
  3. Social Dialogue

OK so they don’t sound relevant in the bureaucratese in which they are written, however these issues could all have a profound impact on our quality of life. I shall attempt to decipher them for you.

The first of these deals with the two most significant challenges facing humanity in the 21st Century; achieving environmental sustainability and ensuring decent work for all. The ILO report on this topic states that “The shift to a sustainable, greener economy offers major opportunities for social development: (1) the creation of more jobs; (2) improvement in the quality of large numbers of jobs; and (3) social inclusion on a massive scale.”

The report goes onto to say that “an assessment of a broad range of green jobs in the United States, for example, concluded that they compare favourably with non-green jobs in similar sectors in terms of skill levels and wages. Research in China, Germany and Spain has also found the quality of new renewable energy jobs to be good.”

Major investment both in terms of policy and money will therefore only reap rewards; if we are to gain the most from this opportunity then we can’t simply play at building wind-farms.

Long-term policy commitments must be made to ensure that private investment is forthcoming, something not helped by last week’s UK parliamentary vote against a clean power target, which will also affect the motor manufacturing industry.


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A return to growth may answer some of Labour’s tricky questions

25/05/2013, 03:17:52 PM

by Kevin Meagher

Confirmation from the Office of National Statistics that growth was indeed 0.3% in the first three months of this year – avoiding a triple dip recession – is good news for the economy – and potentially for Labour too.

Conventional wisdom has it that a return to growth is politically damaging for the opposition. At a stroke attacks on the government’s economic ineptitude lose their purchase. The gloom lifts. The Chancellor can puff out his chest and tell us the pain was worth it, the worst is past. Let, if not quite the good times, then certainly the better times roll.

But what if the opposite is true? What if rather than restoring the government’s fortunes the economy returning to growth is actually helpful for Labour?

After all we saw exactly this pattern through the mid-1990s when a reviving economy did little to refloat John Major’s political fortunes. In fact a return to growth may help Labour deal with its three big problems on the economy.

The first two are related to spending. Labour is committed to a temporary fiscal boost to kickstart the economy and knows it has little spare cash to meet its wider social democratic priorities. It remains elliptical about what it will do on either score and polls consistently shows the party simply isn’t trusted yet to run the economy, its third big problem.

Indeed, Ed Miliband’s reluctance to spell out how that stimulus would be paid for came glaringly unstuck during his interview with Martha Kearney on Radio Four’s World at One programme a few weeks ago.

Asked repeatedly if Labour’s approach would require an increase in short-term borrowing, he employed that classic Tony Benn tactic of answering a different question, maintaining debt would be lower in the long-term with Labour’s approach.

A spin of the news cycle later, Miliband was in safer environs on the Daybreak breakfast sofa conceding that, yes, short-term borrowing would increase as a necessary means of driving growth with in turn reduces longer term debt.


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Osborne’s reputation for economic competence is fatally damaged. Labour must now start restoring theirs

23/04/2013, 12:13:09 PM

by Matthew Whittley

Perceptions of economic competence will largely determine who takes power in 2015. It is well-known that Labour has its work cut out to regain trust with the nation’s purse strings, but if anyone needed further proof that the economy isn’t safe in George Osborne’s hands, the need look no further than today’s economic news.

The latest figures tell us that there has been no improvement in underlying borrowing, which is has been running at almost the same level for the past two years. According to OBR forecasts, it will be around the same this year. As a result of the failure to stimulate any growth in the economy, the government is now set to borrow £245 billion more than planned

George Osborne’s main opportunity to do something about the hole he’s dug for the nation, was in March with the budget. But he blew it: the budget amounted to no more than a “do nothing” series of holding measures.

With household budgets squeezed and business lacking confidence to invest, Osborne should have prioritised growth by borrowing to invest in capital projects, rather than borrowing to finance failure as is currently happening. One doesn’t need a PhD in macroeconomics to know that capital spending has a huge multiplier effect on growth.

However, the derisory £2.5bn of capital investment promised in the budget falls way short of what is required to kick-start the economy. To put this figure in context, the Economist, hardly a bastion of Keynesianism, recommended an extra £28bn of infrastructure investment.

It should have become clear by now to him that the debt can’t be reduced in the absence of growth. The UK has grown only 0.7% since the third quarter of 2010. During that time, Japan and Italy are the only major G20 economies to have performed worse than the UK.


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Sadly, neither party offers much hope for 2013

27/12/2012, 08:00:03 AM

by Peter Watt

This is my final post for 2012 and inevitably I am therefore reflecting on the year just gone.  It has been an incredible year for the country from the euphoria of the jubilee to the emotion and pride of the Olympics and Parlaympics.   Sat in the Olympic park back in early August you could feel the optimism and the pride of all who were there.  You could feel it on the trains and on the buses and in the streets as people enjoyed a sense of something shared that was good.

And it wasn’t just a London thing – I spent super Saturday watching Brazil versus Honduras in a packed St James’ Park and then watching the evening unfold on a giant screen in the heart of Newcastle.  The mood was the same, and it felt great.

Once again across the country, families will have struggled to make sure that they had a good Christmas.  They will have done all that they can to have a good time, to enjoy their time together, to party and to be optimistic.  The queues at the Boxing day sales show that people want to spend if they can and no doubt we will all be hopeful as the clocks countdown to midnight on the 31st.

But sadly, reality will soon kick in.  Because sitting behind all of the hope and optimism of the year are the hard economic truths of a flat-lining economy, flaky export markets, huge economic uncertainty in Europe, a weak financial services sector, and austerity in the public sector.

From early January families on modest incomes will lose child benefit, from April many will see their taxes rise as more are dragged into the 40% bracket.  Other families will see their levels of tax credits fall relative to prices, or the amount of support that they get to help with their disability fall.  Others will lose their jobs or have to reduce their hours.  If you are young and unemployed then your chance of finding work will be slim, not much better if you are over 50.  Fuel prices will continue to rise, food won’t become cheaper.


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The political consequences of Mr Osborne’s economics

05/10/2011, 07:00:10 AM

by Jonathan Todd

George Osborne’s exhausted economic strategy will undercut his political strategy. Nothing in his speech on Monday changes this.

He knows that political narratives need pasts, presents and futures. His past is of Labour “overspending” producing economic failure; his present is about tough Tory “medicine”; and in his rosy future “together we will move into the calmer, brighter seas beyond”.

This “medicine” seeks to close the deficit this parliament, which is intended to secure market confidence and create space for “fiscal conservatism” (cuts and tax rises) to be offset by “monetary activism” (rock bottom interest rates and quantitative easing, of which we may see more soon). “In a debt crisis”, these interest rates are, “the most powerful stimulus that exists”.

However, this “stimulus” hasn’t stopped breakdown in Osborne’s economic strategy threatening his political strategy.

First, interest on government debt may be low, but Osborne can’t claim all the credit for this. Expectation of more QE pushes yields downwards, as does the “worldwide bond bubble”.

Second, if low interest on government debt was a sufficient condition for growth, Japan wouldn’t have suffered a lost decade and UK growth wouldn’t have been so anaemic as to see falling tax revenues create fiscal holes for Osborne. He either needs to accept that he’s been too aggressive and the deficit cannot be closed this parliament or be more aggressive still and impose further cuts and tax increases this parliament to fill the fiscal holes.


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The deficit: it’s double or quits all round

27/09/2011, 08:42:08 AM

by Jonathan Todd

The politics of the deficit has had two phases. The exposure on the FT’s front page last Monday (19 September) of a £12bn hole in public finances means we are entering a third.

The June 2010 budget divided the first and second stages. Up until then, and throughout the general election, the debate focused on whether to cut in 2010. Labour and the Liberal Democrats warned that Conservative plans to do so were reckless. Then we lost the election and the Liberal Democrats helped the Conservatives implement these cuts.

The debate that was long needed – how to approach the deficit beyond 2010 – didn’t open up until the June 2010 budget. The imprecision of Labour’s plans kept a lid on this debate until then. George Osborne lifted this lid with all the force of a dominatrix once he had the bully pulpit of the treasury. The message that Labour had mismanaged public finances and that Osborne would fix this over this parliament was incessant. It is, however, starting to become clear that Osborne won’t be able to do this.

The third stage of the deficit debate is about acknowledging this failure. The £12bn hole in public finances is a consequence of growth not keeping pace with that anticipated by Osborne. Anaemic growth produces shrivelled tax returns, which are the stuff of public finance holes. There is some debate about whether the holes are really so. But, short of sudden improvement in our growth, there will be inarguable holes before too long.

All parties face choices.


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Snail-pace growth? They have snow in Europe too. What they don’t have is Osborne.

26/07/2011, 03:00:34 PM

by Rachel Reeves

Throughout the phone hacking scandal, the chancellor has tried to keep his role in the “regrettable” appointment of Andy Coulson as the PM’s director of communications out of the spotlight. Despite being the one who allegedly recommended Coulson’s appointment, Osborne has done his best to bat away any responsibility for his role in that crisis.

Today, as the latest data show that GDP grew by just 0.2% in the second quarter of 2011, the chancellor is no doubt wishing he could be as slippery in evading responsibility for the staggeringly anaemic “recovery” that is now entrenched in the UK.

Growth of 0.2% in the second quarter of this year is a slow-down from growth of 0.5% in the first quarter, which in itself was only just enough to counter the contraction in the economy of 0.5% in the last quarter of 2010. Compare this to Q2 for last year, when the economy, in its third quarter of economic recovery, was growing at 1.1%, thanks to the decisive action from a Labour government that knew a strong recovery was critical to getting the country back on its feet and the deficit down.

Now, as a result of the too far, too fast approach of the government since May 2010, growth has continued to falter, a year and a half after the economy moved into recovery, and the economy is flat-lining. Three years after the peak of GDP before the recession started, output has not managed to recover by even half of the 6.4% that it fell since the first quarter of 2008. This recovery is turning out to be anaemic, as well as historically and internationally weak.

Today’s GDP figure of 0.2% is far below what the treasury needs if the economy is to meet its forecast for growth of 1.7% for this year. And let’s remember, that forecast has already been downgraded three times – the independent office of budget responsibility was forecasting growth of 2.3% for 2011 just a year ago.


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Budget 2011: David Cameron is Ricky Hatton’s Mum

23/03/2011, 07:00:02 AM

by Jonathan Todd

The current Spectator cover story claims that Conservatives are as struck by panic as they were in the autumn of 2007 when Gordon Brown seemed set to crush them by calling an election. George Osborne saved their bacon then and they look to him to revive them now. Everyone else is looking at Libya. Hence, the impact of the budget will be dimmed. But Osborne will try to pull a big enough rabbit out of his hat to wrest attention away from the middle east.

Osborne doesn’t begrudge Libya coverage, obviously; particularly not if it leads to his boss being seen as a competent and brave war leader. If – and clearly this is a massive if – a stable post-Gaddafi Libya emerges, then the earlier shambles will be largely forgotten and David Cameron will gain kudos, which will make him harder to dislodge from Downing Street. The resignation of Lord Carrington did little to dent the boost that the Falklands war gave Margaret Thatcher at the 1983 general election.

Osborne’s rabbit isn’t intended to divert eyes from Libya or the spotlight from Cameron. It will seek to disorientate Labour and have our leaders confuse tactics with strategy. Fiscal constraints limit the cards in play, but the cards available are all held by Osborne. He knows that he can use them to establish dividing lines that will set the terms of debate. He was as keen a student of Gordon Brown as either Ed Balls or Ed Miliband. (more…)

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