Opinionomics | 5 June 2012

Must-read comment and analysis. Featuring booze and the Queen, just like this weekend.

1. Breaking the negative feedback loop (Reuters)

Governments that enjoy low borrowing costs can improve their creditworthiness by borrowing more, not less, writes former treasury secretary Larry Summers

2. Austerity has never worked (Guardian)

It's not just about the current economic environment. History shows that slashing budgets always leads to recession, writes Ha-Joon Chang

3. Minimum pricing: a view in favour (Demand Nothing)

Owen John argues that criticism of minimum pricing focuses on two things: Firstly a misunderstanding over what it actually entails and, secondly, the accusation that this is a policy designed to specifically penalise the poor.

4. Time to FoI the Queen? (Left Foot Forward)

Ben Phillips looks at whether the monarchy is value-for-money (it's not).

5. The Keynesian case for Romney (Washington Post | WonkBlog)

Ezra Klein points out that with Romney's victory comes an end to fiscal deadlock. Which can only be a good thing.

The Queen. Probably not hit by minimum pricing.

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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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.