Obama should give Cameron an economics lesson

Only one of the two leaders is stimulating the global recovery.

No meeting between Barack Obama and David Cameron is now complete without a joint article lauding the "special" (or, in this case, the "essential") relationship and recalling the two countries' past triumphs. The Washington Post is the venue for today's op-ed and the first sentence hasn't even elapsed before the obligatory reference to Churchill.

Rather than the sections on Afghanistan, Iran and Syria (where there is consensus between the two men), the most intriguing passage is on the economy (where there is not). Obama and Cameron write:

As leading world economies, we are coordinating closely with our G-8 and G-20 partners to put people back to work, sustain the global recovery, stand with our European friends as they resolve their debt crisis and curb the reckless financial practices that have cost our taxpayers dearly. We're committed to expanding the trade and investment that support millions of jobs in our two countries.

That's sufficiently bland to avoid any controversy. But it disguises the fact that while one country (the US) is stimulating "the global recovery", another (the UK) is acting as a drag anchor on it. George Osborne was once fond of boasting that the UK had grown faster than the US, "despite fiscal stimulus in the former and fiscal consolidation in the latter, showing that the problem is not too much fiscal responsibility."

But that's not a claim he can make now. The final figures for 2011 showed that the US grew by 1.7 per cent, while the UK grew by just 0.8 per cent (see graph) - one of the worst growth rates in the EU. On employment, the picture is a similar one. While Obama is putting people back to work, Cameron is putting them on the dole. US unemployment is now at its lowest level since the recession, while UK unemployment is at its highest level since 1996.

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What explains the contrasting data? Well, while Obama chose to stimulate growth, Cameron chose to strangle it. Obama introduced an extended payroll tax cut, Cameron raised VAT to a record high of 20 per cent. As the ippr's Eric Beinhocker notes in today's Times (£), the US President's tax cut injected $92 billion a year of stimulus into the US economy, with the result that consumer spending increased by 2.2 per cent last year while it shrank by 0.8 per cent in Britain.

When Obama visited Britain last year he refused, to the despair of the Tories, to endorse Cameron's deficit reduction plan. Noting that the pair come from "different political traditions", he added that the "sequencing and pace" of fiscal contraction would be different in each country.

If and when the subject of the economy arises during Cameron's visit, it will be worth watching the two leaders' language. Having been vindicted by the data, Obama has every reason to offer some free economics tuition.

George Eaton is political editor of the New Statesman.

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Scottish Parliament votes in favour of a second independence referendum

The UK government was quick to respond. 

The Scottish Parliament has voted for a second independence referendum by a margin of 10 votes on the eve of Westminster triggering Article 50. 

After hours of debate - postponed after last week's terrorism attack at Westminster - the MSPs voted 69 to 59 to back the First Minister's call to trigger Section 30 of the Scotland Act.

MSPs voted for a Green amendment which demands votes for 16 and 17-year-olds, but amendments by Labour, the Conservatives and the Lib Dems were defeated. 

Nicola Sturgeon took Westminster by surprise in early March when she announced she would be seeking a second independence referendum for Scotland to decide before it was "too late to choose a different path". 

The Scottish Parliament can vote to demand a second referendum, it still needs permission from Westminster to hold one. So far, the Prime Minister has refused to countenance one before Brexit. After the vote, Scottish secretary David Mundell reinforced this message, suggesting a vote could not take place until the 2020s. 

However, some unionists quietly fear that a tussle between Westminster and Holyrood over powers will only play in the nationalists' favour. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.