A few days ago I relied on a Bank of England statistic that 1.2 million homes would soon face negative equity. For an even gloomier forecast read this post by the excellent Fraser Nelson at the Coffee House blog.
George Osborne’s speech to the LSE today is well worth reading. In it he sets out his opposition to the Government’s proposals of spending its way out of the impending recession and thereby dismisses as flawed the Keynesian model the Chancellor is advocating. The Tories approach to deal with the inevitable rise in borrowing during a recession is not more borrowing but effective use of monetary policy such as allowing the Bank of England to do its job and cut interest rates. It’s a similar proposal to what Lord Lawson advocated two days ago which I mentioned here. There were no promises of big tax cuts in the speech, but smaller measures previously announced to help families and small businesses such as a council tax freeze, deferring VAT bills for six months for SME’s, a cut in payroll taxes for for the smallest companies and a stop to planned tax rises on family cars and small businesses.
After the cross party agreement on bank bailouts, the difference in approach between Labour and the Conservatives in dealing with the economic slump is becoming clear. I expect the differences will become even more clear after the pre budget report and George Osborne’s response to it. As things stand Labour is in the Keynesian corner, we Conservatives in the corner of the Monetarists. Let the battle commence.
You have to admire the
bare faced cheek sheer audacity of Labour in producing this dossier trying to portray George Osborne as a novice. One would have thought that with government borrowing going through the roof, house prices tumbling, 1.2 million facing negative equity, repossessions rising rapidly, more and more small businesses going bust daily, unemployment approaching 2 million, a long and painful recession looming as well as a plethora of economic gloom stories coming out each week, Labour would have enough on their plate without trying desperately to question George Osborne’s judgment.
The dossier is a calculated attack on George Osborne who Labour perceive incorrectly to be vulnerable after yachtgate. A dossier in return listing Gordon Brown’s failures would require a lot more than 14 pages to catalogue. It could perhaps start with this quote from Gordon Brown in January 1997:
‘In 1993, I said the new Labour Party would never construct economic policy by drawing up a wish-list of spending, seeing how much of it could be financed by taxation and meeting any gap by borrowing. There would be no return to the days of careless demand management, masquerading as Keynesianism.’
…which is exactly where we are at.
More bloodletting at the BBC with the controller of Radio 2 Lesley Douglas resigning. Jonathan Ross has been suspended from the BBC for 12 weeks but will that be sufficient to placate the angry public?
It’s somewhat hypocritical of me to say this when this is my third post on the Ross/Brand story but the press and media coverage of this has snowballed with all other news being pushed aside. Gordon Brown must be doing cartwheels as the country’s focus shifts from his handling of the economy to the BBC’s handling of this sorry affair. The BBC has had over 30 000 complaints and there are ongoing investigations by both the BBC and OFCOM; and we’ve also got calls to debate the BBC handling of this episode in the commons! This is similar to the Shilpha Shetty/Big Brother racism affair where the public also telephoned with complaints in their thousands wanting action and which too was given plenty of oxygen by the media. It appears that we as a country love to hate a real life villain and until Jonathan Ross isn’t
sent to the gallows sacked, there’ll be no peace.
Lord Lawson wants interest rates cut and not cuts in taxes to deal with the impending recession. Contrast this with what what Ken Clarke recently said on Newsnight that interest rate cuts would have a negligible effect on reviving the economy. Which one of them is right?
From recent statements made by the Chancellor it seems he will try and borrow his way out of trouble with some tax cuts being funded by the additional borrowing highly likely . The fiscal rules laid down by Gordon Brown as Chancellor have been binned with the Chancellor saying it would be perverse to stick with these in the current economic climate. We’re back to the the Monetarists v Keynes economic debate with the Chancellor all set to favour Keynes.
Russell Brand has the honourable thing and resigned. The BBC will be very relieved that it doesn’t have to take a decision relating to one of the two presenters. I doubt very much anyone will have tried to talk him out of his decision.