The time for sneering is over

Naive politics will always have to deal with economic truths. And the latest data leaves Osborne, an

By David Blanchflower Published 25 August 2011 16:45

I have to say, I am beginning to feel a bit sorry for our dear Chancellor, who has backed himself into a corner. He was so confident when he came into power that he was right. All that sneering about the Labour government having failed and that he was going to put us on the path to nirvana.

Unfortunately, naive politics of that kind was always going to have to deal with the economic data. Osborne's economic strategy was always doomed principally as it had zero plans for growth; indeed, we are still awaiting an announcement of a policy for growth but now it is too late. Denying the need for a plan B was always a dangerous strategy.

In a speech at Bloomberg on 17th August 2010, Osborne argued as follows:

I'm optimistic that if we:
- stick to the course we have set ourselves on;
- hold firm to our plans;
- deal with our debts;
- start to rebalance our economy;
- and provide the stability Britain has been so lacking in recent years;

then we can navigate our way through to calmer waters.

The alternative -- to change course, put off dealing with our problems, be in denial about the scale of the deficit -- is the surest way to disaster. It would wreck the British economy.

And, ludicrously, he went on to argue: "We are all in this together."

Unfortunately, as I have been predicting would happen from the formation of the coalition, sticking to Osborne's economic plans is wrecking the British economy. No stability, rising unemployment, no calm waters and no rebalancing; and, most importantly, the consumer is running scared with negative real wage growth, rising prices and rising fear for the future.

The data today on the consumer side is horrid once again and, added to that fear, is likely to be a major downward pull on growth. This is another nail in the coffin for the OBR's growth forecast. In March 2011, the OBR forecast that consumption would make a positive contribution to growth in 2011 and even more so in subsequent years. That doesn't look likely.

Retail sales volumes fell, on a year ago in August, at the fastest pace for over a year, the CBI said today. Retailers were the most negative they have been about the general business situation since February 2009. The CBI's latest quarterly distributive trades survey found that 31 per cent of retailers saw the volume of sales rise in the two weeks to 16 August, while 46 per cent said they fell. The resulting rounded balance of -14 per cent was in line with expectations (-12 per cent) and the most negative since May 2010 (-18 per cent). A balance of -11 per cent of retailers said they felt more negative about the business situation over the next three months than they did three months ago; the most negative for 18 months. Retailers are scaling back investment plans over the next 12 months, with the balance of -11 per cent the most negative since February 2009 (-26 per cent). Not good.

The Nationwide Consumer Confidence Index for July fell by two points to 49 points and now stands at a near identical level to January 2011. Over half of consumers believe that it is currently a bad time to make a major purchase. Especially worrying was how the proportion of people who believe the economic situation will be better than today in six months time decreased by 3 percentage points. Robert Gardner, Nationwide's chief economist, said:

At 49 points, the main confidence index remains well below its long-run average reading of 79. With the economic recovery still facing strong headwinds it is unlikely that we will see any considerable improvement in confidence in the remainder of 2011. Indeed, it may be that we see a further deterioration in August, following riots in a number of UK cities and the sharp declines seen in stock markets around the world. Overall, conditions for the UK economy remain challenging, especially for consumers.

Bad.

Plus, Martin Weale, one of the inflation hawks on the MPC, in a speech today in Doncaster explained that he changed his vote this month from an increase of 25 basis points -- that he had voted for in the previous seven meetings -- to one of no change. It was because of:

. . . the weaker economic outlook . . . the need for insurance is less than it was; by the time we produced our August forecast, the market path for interest rates consistent with keeping inflation close to its target was much less steeply sloped. Averaged over the next two to three years, the interest rate did not need to be as high. As a result, I did not see the case for an immediate increase in bank rate at our last meeting in August.

The economy is weakening and the chances are that the MPC will have to do more quantitative easing -- and soon.

We are not all in this together and Osborne's policies are wrecking the rapidly slowing UK economy. The time for sneering is over.

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71 comments

Wed, 2011-08-31 13:40 — Clare (not verified)

So no answer to the Swiss question then, how pathetic you are.

BTW you are wrong again Tourette's is treatable though many of the treatments have severe side effects. Though making light of what is a severe medical condition suffered by many for what is a rather lame pun exemplifies the ignorant human being you are.

Sat, 2011-08-27 03:48 — Bufton Tufton (not verified)

We are living in interesting times, to say the very least. But I am curious what proposals you make not about how best we could stimulate the economy in the short run - we Keynesians are largely agreed on that front - but rather what reforms ought be made both to resolve our (Britain's) long term problems with high structural unemployment, consistently large trade deficits, and a stagnating median wage. The problems aforementioned all lead to a deficiency of aggregate demand in the national economy - something which would have produced far lower trend growth over the last decade without the credit boom, and which if unresolved will leave our economy increasingly insignificant in decades to come. For whilst I agree that, to paraphrase Keynes, we cannot but wait for the storm to pass and the sea to calm, long run issues have been exposed in the Great Recession which now need to be addressed.

Thu, 2011-08-25 20:44 — David Blanchflower1

Mr Albright
It may surprise you to hear that I am a tax cutter. We should be cutting taxes on firms to encourage them to invest and hire as well as investing in the infrastructure to get the private sector moving.

The way to go right now is to cut national insurance on the young to zero and give big investment and hiring subsidies to firms. Spending on the infrastructure with projects that are employment heavy is the way to go. A growth strategy to create jobs is the way to go. Creating jobs must be the government's mantra in place of we a bankrupts and need to cutbthe deficit. Mine is more credible
Danny blanchflower

Thu, 2011-08-25 20:44 — stevem1

Alas,Albright your argument about NuLab bringing the country to the brink of bankruptcy was seriously undermined months ago by Mervyn King when he said the blame lay with the bankers. It is true ,though that Brown saved the world when he persuaded governments to pump money into the banks.. As anyone who reads these columns knows I despise NuLab ,but credit where credit is due. Throughout history governments have done what this Tory led government are doing. Not one economy has been rescued. I would urge you to read "the Dark Valley" by Piers Brendon. He describes the foolish policies followed then. They are one and the same. They failed then and they will fail now.

Thu, 2011-08-25 20:53 — ang (not verified)

David Blanchflowers', analysis of the dangerously deluded Osborne, is, as always, spot on.
@swantatra. Osbornes' sneer looks more like he is breaking wind.
Has anyone seen the 'money supermarket .com. advert, with the pot-bellied bloke surfing, he is the spit of Osborne. God I hate him.

Thu, 2011-08-25 21:18 — Awake!

Mr blanchflower
You want to cut taxes to stimulate growth I think is what you're saying. Would you fund that with debt or do you think it's possible that there is room to redirect govt spending? In other words, is a policy of growth in the short term, whilst we sit on the brink, combined with an active policy of deficit
'management ' possible do you think?

Thu, 2011-08-25 21:21 — Awake!

What is nulab? A think tank I can't find them

Mon, 2011-08-29 10:32 — Awake!

@ matt
you're an idiot. This 350 bn thing really seems to wind u up.
The north sea oil revenue funded Uk growth for a period- it wasn't actually wasted because it mitigated some the much pain the country experienced (were u even around then?)- It wasn't well managed but large scale projects generally aren't. I suspect u have no responsibilties, are too young to remeber shit, so this is all a game of who shouts loudest to you.
On friday Martin weale on the MPC started talking about printing money again in the UK, however SINCE JANUARY up until last month he'd been asking for a rate rise, and lots of people made money betting against that- so he's gone from rates up to QE in 1 month based on , his words"a stark change in the economic envirionment". What a shambles, he's clueless. The truth is he's an idiot also, but he sits on the MPC so we have to listen to his quotes based on his title. And I guess that's what alll thisis about- stop quoting others, think for yourself- last week mr Blanchflower attacked Osborne, quoting Lagarde as having attacked Osborne, but in that piece I pointed out to Balnchflowere that nothing of the sort had taken place, she hadn't even mentiond Osborne's name- u lapped it up though, without even checking- NOW, lagarde saying AGAIN
"First, sovereign finances need to be sustainable. .... But without a credible financing path, fiscal adjustment will be doomed to fail".
Do u know the story of the boy who cried wolf?

Thu, 2011-08-25 21:44 — Awake!

Mr Blanchflower
cutting NI to zero for the young- well apart from being difficult to administer, isn't it the same as setting up the economic zones that osborne is doing right now- essentially the subsidy to business is passed on by reduction in business rates, allowing the business more flexibility in allocating it's resources. If you're looking to tackle youth unemployment, remember that by definition it's cheaper to employ the young, they start on lower salaries than experienced staff, rightly so as 'older' married men have more responsibilities to meet- if anythng, in these times of rising living costs, the older workers who tend to be the breadwinner should be getting a subsidy-maybe bring back the married man's allowance? It is strange that youth unemployment is so high bearing in mind they are cheaper to hire, so why not ask ourselves why that is?

Thu, 2011-08-25 22:01 — Awake!

stevem
brown saved the world by nationalising the banks? then one of your mates says osbornes out to help his mates!! you don't think the money Brown handed over helped them perchance?
@ Jugzzy
Don't misrepresent!! Labour got nothing out the swiss, and Osborne has.. and you think that Brown would have done a better deal? yeah, he was a great negociator, look at the sterling work on the aircraft carriers (break clauses where the govt pays TWICE if they walk away) or how about the commitment to INCREASE teh European budget whilst all national governments are having to cut theirs. Brown negociated zilch when he handed the banks a blank cheque, Osborne getting 2.5Bn a year from them- those are facts, not you're supposition that he MIGHT have got more out the swiss. It's typical of you're level of intellectual capacity to imagine that the swiss would let the treasury march into geneva and have a look at everything!?!?! think about it before u open your dumb gob- why would the swiss do that, their economy is built on those private banks- you'd be asking for something impossible, so hiow exactly is that the basis for a negociation- Their clients would ALL leave, it's their mainstay- do u even understand that??

Sat, 2011-08-27 12:21 — matthew fox (not verified)

I wonder if Osborne could cut VAT on energy to zero?

Mon, 2011-08-29 12:17 — matthew fox (not verified)

Clare, thank you for writing so much and knowing so little.

I looks like we can your name to the roll call of crackpots.

Sat, 2011-08-27 13:21 — Indu Pendent (not verified)

@matt
Why? It would shift the tax burden from inefficient consumption of imported energy on to something else.

Higher VAT on energy could fund lower NI, PAYE and corporation tax and therefore create jobs. It means domestic consumers pay more but its all part of the realignment needed in peoples expectactions in order for the UK to become competitive.

History tells us (e.g. glass manufacturing) not to tax things we make ourselves but to tax things that other people make but without provoking them to retaliate.

High UK VAT penalises imports relative to exports -- more UK exports (sold free of UK VAT) and less Chinese imports (which VAT gets added). High VAT is something the UK could get away with without causing a trade war.

Mon, 2011-08-29 12:22 — matthew fox (not verified)

@Fast Asleep

North Sea Oil financed 3 million on the dole, the destruction of our manufacturing industry and upheaval that destroyed the north and west midlands.

The taxpayers is still picking up the tab for the borrowing excesses of Thatcher and Major.

Fri, 2011-08-26 01:37 — David Blanchflower1

Awake!
My solution would be in part to move spending from entitlements to investment in jobs. I would also fund it by more borrowing focussed on job. Borrowing is very cheap right now. The UK government can borrow for 30 years at 3.75%. Why wouldn't it invest in all our futires when it can borrow so cheaply?

Danny Blanchflower

Sat, 2011-08-27 13:47 — matthew fox (not verified)

@ Indu Pendent

Weren't you the genius who asked why Brown didn't cut VAT on energy to zero?

Fri, 2011-08-26 02:15 — Awake!

mr Blanchflower
investment in jobs sounds great, and no doubt Brown did create plenty, but unsustainably so a load of people get to lose their jobs now, and that is an experience I wish on no man. Strangely, in 2010, there were 240 thousand working immigrants who came into the Uk for work, and over the last 15 years over 2 million have found work here coming from abroad, yet unemployment stands around 2.5 million or just short- the question is, and it's related to one earlier about the high youth unemployment, the question is why do we have so many unemployed when so many from abroad have found work- AND, a lot of the money these foreign owners earn GOES HOME i.e. goes out of the country, out of the economy- I don't begrudge people making great treks, leaving loved ones to come and do 5 years in the UK to save enough and have some capital when they go home, but shoudn't we in the UK be asking ourselves why we're experiencing this phenomenon? After all, it's no way to live just taking state handouts, it kills he self esteem eventually, and the people paying for it become frustrated as well, and worst of all, the resources that the state makes available to help the genuinely needy gets sucked up by scroungers, and that is the great tragedy- it's what I thought labour was always about, recognising and helping those who through no fault of their own were on a scrap heap, and what the last government not only failed to address, but I believe encouraged.

Sat, 2011-08-27 14:18 — Indu Pendent (not verified)

@matt
Foxy - head out of your fox hole for 2 secs.

I pointed out the Gordon didnt cut VAT to 0% when he had the chance. Why was that I wonder? Reduced rate VAT is neither one thing or another - perhaps it was a vote seeking fudge?

Fri, 2011-08-26 05:56 — E Hart (not verified)

@ Nick It was the Americans that brought the Swiss into line. Without their pressure this wouldn't have happened. Sorry. Nothing to do with Osborne.

Osborne will eventually change tack for two reasons: 1) He'll have to; 2) He wants to be re-elected.

However purblind he is - and he is very purblind - he must have noticed that the cost of borrowing is very cheap and he must also have noticed that his strategy cannot work without growth.

He's policies are so feeble-minded and counterproductive - little by little they are destroying his own argument.

The key is investment and you wont get that unless there are real prospects for growth. Why would anyone invest when the prospectus that Osborne has put out is so weak?

Also, how on earth can you pay down the defict when you are losing revenue and depressing demand?

His policy is an oxymoron and so is he.

Fri, 2011-08-26 06:19 — E Hart (not verified)

@Awake

You have a point. Labour did very little to tackle unemployment in this country. It created plenty of jobs but most of them (830,0000 went to migrant workers.

Also, they [Labour] carried a rump of unemployed left over from Thatcher's experiment with slash and burn. That never really went away.

According to some we don't just have 2.5m unemployed - there are also around 6.5m people who are "underemployed" (that's not even counting those who live on a pittance). You cannot build a thriving economy on people who are paid peanuts. What have they got to spend? The policy of this government and the previous government were and are nonsensical.

We should move to a German or Scandinavian economic model and stop behaving like the US. We need higher taxes on the wealthy and a better distribution of wealth if we are ever to get out of this trap we've set ourselves.

We also needs to start manufacturing things again and developed different forms of enterprise which are not prey to international capital (i.e. mutuals in banking, insurance etc., industrial and other co-operatives etc.) anything to stop the economy being bled white for the benefit of corporate shareholders and the wealthy.

As thing stand most of the large corporations and companies could exodus the country and there would be little we could do about it.

The really big threat to our sovereignty comes from international capital.

If necessary, the government should keep its stock in Northern Rock, RBS and Lloyds HBOS otherwise the emperor will end up with no clothes again. It not sensible or strategic to leave the economic prey to the predations of the market. The market isn't interest in Britain or its people per se - it's interested in moolah.

Fri, 2011-08-26 08:20 — Awake!

@ E. hart
the ink isn't dry on the agreemnt between the british and swiss governments and already there are 2 history revisionists fervently denying that Osborne had anything to do with the agreement- one claiming Brown was about to get a better deal (based on his negociating track record unlikely) and now E.hart saying it was the Americans who negociated the agreement on our behalf... It's just the blindness of some of the left to accept anything that the tories do that has actually put me off this party- it's embarassing.
And E.hart, u say we can't build a thriving economy, the UK is the 5 or 6th largest in the world, with a very modest amount of commodities in it's back yard, so it must be thriving- How big do you want it to be?
our taxes are higher than germany and similar if not more than sweden if u take into standard of living.
E hart you can't seek international investors money (that's what the government borrows by the way) and then seek to pin it in the UK otherwise u won't get it in the firstplace.
What I don't get is why does everything HAVE to be funded with debt in the left? It's almost a prerequisite to any venture. Could we not imagine a day where structural deficits are illegal?
Does the left get that whilst it messes around with it's experiments rather than allow individuals to manage the resources, North sea oil is running out? does everyne seriously think this is as bad as things can get? It's so naive- Mr Blanchflower wrote that naive politics will have to deal with the economic truths, well that's true- people might wish to start by comparing themselves to everyone and the world a bit more- it's naive to always look at the guy who has more material wealth than you and then write about how shocking materialist our culture has become.

Fri, 2011-08-26 08:47 — Shinsei67

@E Hart

What on earth has the Swiss deal got to do with America ?

If you are trying to have a discussion about financial policy why use expressions like "feeble minded" ? It just shows that you have no understanding of the arguments of those you disagree with. Osborne's plans may be wrong (economics is an argument) but the fact that the professional economists of IMF, OECD, CBI largely agree with him show that he is hardly out-on-a-limb.

I don't disagree with you that we need investment and growth. Of course we do. However there will be no growth if the deficit stays high.

So you have to drive a path carefully between cutting teh deficit slowly enough not to force a recession and yet firmly enough not to allow the deficit to increase and thus push up interest rates.

Seeing as growth is still positive, the deficit coming down and employment actually still increasing Osborne seems to be doing ok.

Mon, 2011-08-29 14:18 — Indu Pendent (not verified)

@matt

Foxy, you are all mixed up. This is what happends when you only pop your head out of your fox hole now and again - you only selectively hear snippets fed to you by your friends.

Its the massive £350Bn mortgage on our kids futures that we was talking about - the money has not yet been paid for. In a few short years, it practically doubled the National Debt built up over the hundreds of years and the wars. Enough to pay for 2 japenese earth quakes, to make the UK self sufficient in sustainable engery, to buy 200 new hospitals a year on the interest charges.

The Tories waisted some of the North Sea oil money but it was largely put to good use as an investment which the country has had tangible return from long term high living standards - e.g. braking the grip of the xxx (employee self interest groups begining with "u" - a known blocking word for NSM postings).

The 1980/90's government was not perfect by a long way but they did leave the country in a better state than they found it with a managable national debt.

But £Bns of North Sea oil kept pouring all the way through the last government (had you forgotten this?). The massive £350Bn debt left by Gordon was spent in the pursuit of votes and power -- it was in addition to Labour's oil money.

A generation of ordinary kids will have to make sacrafices to repay the debt - 'socialist values' have been redefined by Labour.

Do you have any ideas why the Labour front bench have gone totally silent on spending cuts needed to protect the AAA, rebalance the inherited structural deficit, pay interest and repay the debt? (Its the cuts that Lagarde is criticising weak ineffectutal policy makers for not making - she implies criticism for the UK for not making bigger cuts faster in the last year).

Fri, 2011-08-26 10:11 — Mr. Divine (not verified)

@Danny Blanchflower: 'spending from entitlements to investment in jobs.'

What kind of jobs are you talking about? I agree with you that borrowing at 3.75% now is a very good strategy. But exactly what do we use the money for? Where does the investment exactly go?

Sat, 2011-08-27 20:29 — matthew fox (not verified)

Come one Indu Pendent, that bluster of yours is a serious problem.

When Ken Clarke had the bright idea of putting 17.5% VAT on energy, he also knew that EU law prevented anyone else reducing VAT on energy to zero.

Why is it you know so little? What hole is your head stuck in? Do I get a clue?

Fri, 2011-08-26 11:51 — Clare (not verified)

Danny please remind why the government can borrow at 3.75% over 30? Oh yes that's it because we're still a AAA in no small part thanks to "Slashers" spending plan. Keep on borrowing with no control as you propose and our cost of debt will rapidly rise.

I guess all the lefties on here think it very unfair that the market charges for risk and that the likes poor old Greece should be given a break. It must be incredibly inconvenient for their never never brand of politics to see the cost of UK 10 years relative to France, Spain and Italy. Thanks goodness for the markets though they are virtually the only mechanism for holding these idiot politicians to account for their wasteful lunacy.

I'm waiting excitedly for Danny's next installment where he proposes the planting of a money tree is the solution to the world's ills.

Fri, 2011-08-26 12:23 — Robert Taggart

@ Blanchy...
"The time for sneering is over" - no more blogs from you then ? !

Sun, 2011-08-28 00:27 — Mr. Divine (not verified)

Your head is stuck is stuck in hole of the past matthew. Stop thinking it is a Labour versus Tory battle.

Mon, 2011-08-29 16:27 — swatantra

Will he, won't he?
For the past 2 years the ecomony stuck in the doldrums, interest rates at 0.5%, Growth at 1%.
Time for action, or time for yet more snoring?

Fri, 2011-08-26 14:26 — David Blanchflower1

Mr Taggart
No sneering intended, merely incisive economic commentary. The facts are extremely telling.

Danny Blanchflower

Tue, 2011-08-30 20:58 — matthew fox (not verified)

I am impressed Clare, you have been able to string a series of words together, without swearing, congratulations.

I didn't think tourette's was treatable with medication.

Fri, 2011-08-26 14:47 — Keithpp (not verified)

Why is it that Osborne's supporters are incapable of rational thought?

I suppose to neo-liberal extremists irrationality is no barrier to belief. I wonder has anyone explored the connection between a belief in creationism/religious fundamentalism and an espousal of neo-liberal economic theory.

Tue, 2011-08-30 21:09 — matthew fox (not verified)

Indu Pendent seems to be suffering from severe memory loss, the poor chap keeps forgetting what he has written.

Ken Clarke levied VAT on energy bills, and did so in the knowledge, it could never be reduced to zero.

I bet Indu Pendent wishes he had never asked that question, bless him that dim witted fool.

Sun, 2011-09-18 08:50 — Benedict

Fri, 2011-08-26 14:54 — PoliticalTrannie

To those who are still supporting Osborne's politically naive strategy, maybe they should read this- http://www.telegraph.co.uk/finance/financialcrisis/8723302/Nobel-gurus-w...

Fri, 2011-08-26 15:17 — Nick2 (not verified)

Keithpp:
"I suppose to neo-liberal extremists irrationality is no barrier to belief. I wonder has anyone explored the connection between a belief in creationism/religious fundamentalism and an espousal of neo-liberal economic theory."

I've often thought the same. They seem trapped by this blind faith and magical thinking. Bless.

Fri, 2011-08-26 15:21 — Awake!

Keith pp
Osbornes supporters are the ones have to pay for the mess that's been left behind that's why. They are the ones who employed 2 million foreign workers whilst the 'rationalists' u allude to kept 2.5 million British workers on the scrap heap. They are the ones who are being called upon to employ the thousands of non jobs that Blair and brown created. They are the ones whose childrens taxes will fund some of the best pension funds in the world. So cut them some slack if they believe that as the world implodes under the debt mountain(3 fold increase under labour), it's worth considering DEBATING whether we load up with more debt.

I really could go on because numbskulls like you who pop in
with zero critical comment then take a pop deserve to be exposed for the tools you are. You miss the point about being an extremist- they OVER rationalise, justifying ends that from a common sense standpoint are irrational...examples include deregulating the banks based on the rational belief that the bankers ( and Tories) agreed with it, the they blow up crippling us all. Another seemingly rational idea was bailing them out..all this leading us to an extreme situation, one that your pea brain cannot comprehend. U haven't got a clue what's happening

Fri, 2011-08-26 15:28 — Awake!

Nick 2 and political trannie
Pair of wankers... Answer why are 2 million peopl working here from abroad? No answers then? Just comments about faith. Go and look up 'knight of faith' under Kierkegaard , u will then realise the worm I've been all your life. It's a bit tricky but a couple of clever cogs like yourselves will get it

Mon, 2011-08-29 19:15 — Clare (not verified)

@ matt.

still no answer to the question then? would you rather 5bn additonal revenue to spend on the nhs, welfare or whatever or nothing at all for 13 years. I notice you never bother to answer questions so I'm not sure why I'm botering to ask?

btw matt peak oil production in the north sea was reached in 1999 6m barrels per day under labour, so again your facts are just plain wrong.

Fri, 2011-08-26 15:45 — wightangler

Cheap unskilled labour plus , off the books, no holiday pay and if live-in wages below minimum wage- happens a lot where i live and many recent retirees were formerly displaced trades in capital undercut by unskilled trade.
cheap labour allied to outsourcing has been a constant of globalism with predictable income disparity increase results- add preferential lending rates for the 2 tier economy since 1987 and capital concentrations increase in traditional elites using corporates and globalism and the fact that nulabour politically benefited from migration with asylum from those that energy reserve rich states that were bundled in with the proxy invasions. Transfering debt from private to public burden was necessary since much of the real domestic ecomomy was locked in -like it or not- and pensions- well seeing as you can hire these for a fee - makes Maxwell seem like a man ahead of his time.
Wankers at least have some use- useless pricks have none.

Sun, 2011-08-28 14:14 — Indu Pendent (not verified)

@matt

Foxy, Danny will have a hard time refering to it fairly in his articles but read what Larage is saying in her speach rather than blindly following your friends. The World moved on 5 years ago and left Gordon behind. Even Tony, Peter (in his nice house) and Danny think so.

There are mixed Tory and Labour messages but she strongly supports the Coalition's approach with an implied criticism they not going fast enough on deficit restructuring. She says anyone who thinks we should borrow more without protecting the "AAA" is wrong (they will be saying it to win votes or for self interest).

"First, sovereign finances need to be sustainable. .... But without a credible financing path, fiscal adjustment will be doomed to fail."

i.e AAA must be the top priority to the UK's recovery to ensure that the structural deficit and financing for growth can be supported whilst the economy is being rebalanced. Forget borrowing without payback as it will destroy the AAA. She says start cutting future expenditure and not store up problems for the future (she criticises that this was done in the past).

"Micro-level policy actions to relieve balance sheet pressures - felt by households, banks, and governments - are equally important. We must get to the root of the problem. Without this, we will endure a painful and drawn-out adjustment process. Structural reforms will surely help boost productivity and growth over time, but we should take care not to weaken demand in the short term."

i.e. the UK must cut its cloth to suit its means. The structural deficit must be addressed as fast as possible by promoting the private sector. If we dont cut our cloth now then things will not get better and it will be a slow painful process for us and our kids.

A criticism of the Coalition is that they have not addressed the deficit quickly enough e.g. the weak approach to public sector pensions, astonishing market rate busting public sector pay settlements (due to corrupt self interests) and reducing public expenditure by reducing the recruitment rate rather than redundancies of non-economic jobs. The UK economy is still growing due to inefficient state borrowing with no long term payback!!! - its caused by the weak ineffectual policy makers that Larage criticises. The UK are no where near what Larage calls austerity measures or rapid cut backs -- the UK's progress to recovery has and is being held back by greedy self interests who put themselves above the next generation and the country.

"The current economic turmoil has exposed some serious flaws in the architecture of the eurozone, flaws that threaten the sustainability of the entire project. "

i.e. the UK needs to retain the flexibility of setting its own montetary and fiscal policy. If only we could fix the disaster of uncontrollable immigration which is damaging the country. The UK should reduce its debt back down to the level the economy, which has its routes over hundreds of years, is designed to operate at - we are different to other countries and should not try to emulate them.

Thu, 2011-08-25 17:15 — Arturo Bandini (not verified)

I'm not naive - I know the trolls will be here in force soon, wilfully disregarding the facts.

I'm starting to suspect Gideon and his cheer-leaders are not just wrong, they are actually mentally ill.

Thu, 2011-08-25 17:17 — swatantra (not verified)

You'll never get rid of the sneer on George's face; he was born with it.
Don't be fooled George has Plan A--- still up his sleeve, though he won't admit to a Plan B. So we are likely to see some QE after the next lot of figures. And Blanchflower can take some pleasure is saying : I told you so.

Thu, 2011-08-25 17:21 — Trish (not verified)

The problem is we've never been in it altogether. Cut the tax burden at the very top, allow large organisations to make a mint but don't pay corp taxes, hammer the poor and squeeze the middle class. Almost forgot, cut the terrible tax burden of the super rich. Ironically only yesterday, the French super rich made an appeal to their government to tax them more! As for asking George to stop sneering ... I think thres is more chance of an economic recovery happening.

Fri, 2011-08-26 16:18 — Awake!

At wightangler
All unskilled labour... All below minimum wage ... That's your comeback. They let in 2 million illegals . U don't believe that, no one does. Capital concentration in traditional elites... Sounds like you're a bit chippy more like. Transferring debt from private to public was necessary cos economy was locked in... Again, ure excusing your moronic leftie predecessors. It wasn't necessary . Ure icon blanchflower just stated that govt should invest in growth, so the bank bail out u so glibly support was nonsense as well. look at it rather than quoting me some bollox. I have lived the economy 25 years, u keep trotting quasi theories u read somewhere, u keep trotting out the same reheated garbage and expect me to eat it. And if u can't see the earlier 2 are wankers for zero critical comment taking a pop then ure a cock as well. U mist have used all your brainpower this year to write that

Thu, 2011-08-25 17:27 — Malcolm McLean (not verified)

The issue is not whether the economy grows by a couple of percentage points, remains flat, or shrinks by a couple of percentage points over the next year. It's whether we have a catastrophic collapse - governments unable to borrow, inflation at 100%, banks once more in unable to honour deposits. Economic policy must be geared towards preventing that collapse. Which we can only do by removing the baby boomers' unaffordable pensions entitlements, which are the underlying cause of the problems.

Fri, 2011-08-26 16:23 — Keithpp (not verified)

Wow.

A "leap of faith" aptly describes Osborne's policies, problem is he is taking all the rationalists with him.

Fri, 2011-08-26 16:33 — Awake!

@ keith
look, objectively. We've got flat /positive growth, debt came down last month, unemployment down in 1 year- How is that, in the backdrop of the global crisis, terrible or even bad news- why lie to yourself? Is it REALLY trollish to discuss in the light of these stats that the debt needs to be debated?
Look at half the answers, people attacking with no argument, so de facto blindly being led- is that wise?

Fri, 2011-08-26 16:35 — Awake!

@ keith
i'm so far from being a rationalist u coudn;t believe it

Fri, 2011-08-26 16:48 — Awake!

Ah I see Keith . Osborne is indeed making a leap of faith, any policy is a gamble. But you and the rationalises are convinced you're right, you know he's wrong. Insight