The UK isn't a "safe haven", it's just stagnant

Lower borrowing costs are a reflection of economic weakness, not strength.

"The difficult decisions on the deficit have made the UK a safe haven in the recent economic storm," boasted George Osborne in his response to last week's anaemic GDP figures. Today, the Chancellor and his advisers are pointing to the fact that the cost of borrowing yesterday fell to its lowest level for over 50 years as proof of that claim. A spokesman for Osborne said:

"It's a vote of confidence, one of the key aspects of our plan has been a tight fiscal policy combined with a loose monetary policy, it's the right mix for economic growth, and the need to rebalance towards exports and away from consumption."

The yield on 10-year UK gilts has fallen to 2.76, which means far lower interest repayments on government debt, potentially saving the taxpayer billions of pounds. But is this really an unequivocally good news story, as Osborne suggests? After all, it's likely that the fall in rates has much much more to do with the fact that the Bank of England base rate is unlikely to rise until 2012, than it has with the supposed "strength" of the British economy.

Here's Paul Krugman's take:

Yields in the US have, of course, plunged rather than risen. And they've plunged for the same reason UK yields have plunged: a scarily weak economy suggests that it will be years before the central bank raises rates.

In a wonderful pay-off, he adds:

It's sad, actually: the wolf is at the door, and Osborne thinks it's the confidence fairy.

Over on his blog, Faisal Islam, Channel 4's excellent economics editor, makes the same point and highlights an important experiment by the National Institute of Economic and Social Research. The NIESR points out that one would expect a fall in rates, if the result of increased economic confidence, to correlate with a rise in the FTSE-100. But after crunching the numbers, the body found no such relationship. NIESR director Jonathan Portes concluded: "Low long-term interest rates appear to reflect economic weakness and lack of market confidence in the prospects of the UK economy, not the reverse."

Over to you, Mr Osborne.

George Eaton is political editor of the New Statesman.

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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland