American investors fear divided government

Debt ceiling struggle raised concerns.

Suzy Khimm, of the Washington Post's WonkBlog, reports on a new Gallup poll of American investors, which asks them what they fear the most:

More than unemployment, oil prices, the housing market, tight credit, or the euro zone crisis, investors believe that a politically divided federal government could hurt the US investment climate, according to a new Gallup poll that surveyed American adults with “investable assets of $10,000 or more”:

Gallup poll

The second most common fear is the federal budget deficit. Altogether, this suggests that investors believe the recent political gridlock over the debt-ceiling and budget has been extremely harmful to the U.S. business climate. Presumably, they’re concerned that this could continue should President Obama be re-elected along with a GOP Congress, or vice versa.

Before the election, the Conservative line on coalition governments was much the same as the one these investors seem to hold: political divisions hamper the ability to make crucial economic decisions, which, especially in a depression, can lead to an inability to competently handle crisis. Two years on, those fears have been comprehensively put to bed. Far from coalition resulting in legislative gridlock, as divided government has in the US, this government has been the most radical in a decade.

The European debt crisis would obviously rank higher in a British version of this poll, but the interesting ones to see would be the relative positions of the budget deficit and unemployment rate. In both, the UK is now worse off than the US (when the deficit is expressed as a percentage of GDP, that is), but the narrative seems to be different on both sides of the Atlantic. Whereas the US has experienced its "jobless recovery", now transitioning to a "growthless recovery", the failure of the UK to experience the same levels of growth means that the unemployment rate often blends into the general gloomy economic background.

Obama signs the budget control act, raising the debt ceiling. Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.