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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Tony Blair won't endorse the Labour leader - Jeremy Corbyn's fans are celebrating

The thrice-elected Prime Minister is no fan of the new Labour leader. 

Labour heavyweights usually support each other - at least in public. But the former Prime Minister Tony Blair couldn't bring himself to do so when asked on Sky News.

He dodged the question of whether the current Labour leader was the best person to lead the country, instead urging voters not to give Theresa May a "blank cheque". 

If this seems shocking, it's worth remembering that Corbyn refused to say whether he would pick "Trotskyism or Blairism" during the Labour leadership campaign. Corbyn was after all behind the Stop the War Coalition, which opposed Blair's decision to join the invasion of Iraq. 

For some Corbyn supporters, it seems that there couldn't be a greater boon than the thrice-elected PM witholding his endorsement in a critical general election. 

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

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