Tag Archives: economy

Farron’s strategy to tackle Corbyn is all wrong

 

Recently Tim Farron responded to Jeremy Corbyn’s economic strategy by saying “Unfortunately Corbyn’s anti-business policies will ensure that no company has the budget to pay the wages their employees deserve”.

Now this is absolutely true and it’s very much Tim Farron’s approach to Corbyn and Labour at the moment. But it’s also absolutely the wrong approach to take.

The thing is, the public already thinks Labour aren’t economically competent and the Tories keep on ramming home that message. But since the public think that the Tories are economically competent then any attacks we make on Labour’s economic competence will just drive voters to the Tories.

In a nutshell, attacking Labour on the economy does nothing more than to annoy Labour voters who we want to win over while helping to turn undecided voters to the Tories.

Posted in Op-eds | Also tagged and | 71 Comments

George Osborne’s austerity policies put economic growth under threat.

On 6th January George Osborne made a speech emphasising the threats to the UK economy in the coming year. His emphasis on the weakness of the economic situation might have come as a surprise to anyone who had listened to his autumn statement, where he was keen to trumpet how well the economy is doing, but Mr Osborne is a spin master above all else, and he clearly feels that the time has come for a different spin on our economy. The spin yesterday was all about the impact of the global economy on the UK.

The UK and US economies are growing at the moment, but growth in the rest of the world is looking very shaky. A down-turn in the global economy is bound to have an impact at home, and George Osborne’s austerity policies are not helping the UK to weather any potential global economic storm.

The biggest threat to the UK economy at the moment is not inflation, but deflation. Deflation means that any debt held by individuals or companies increases in value rather than decreasing over time. As a result deflation discourages spending and investment by individuals and companies, particularly the type of long term investment our country desperately needs.

Posted in Op-eds | 4 Comments

What’s wrong with the Chancellor’s Autumn Statement?

There are three huge defects in the Chancellor’s autumn statement

1 Technical

The Chancellor fundamentally believes that the government budget can and should be balanced, or even run in surplus. This basic accounting assumption drives his whole thinking. But facts prove him, and the traditional thinking of the whole financial establishment, wrong on this. He has been unable to eliminate the deficit. He will not be able to eliminate it. In modern high technology, high productivity economies, deficit is inevitable, and manageable.

There’s a huge problem in thinking here. The Chancellor approaches economic policy like an accountant, rather than as an economist. Books should balance. He talks about what we can afford, purely in financial terms. But it’s not money which gives value to the real economy, but rather it’s real economic activity which gives money its value. Economic activity creates financial value, and not the other way round. What we can afford has to be measured in real resources of people, skills, natural resources, technology and capital assets. A thought experiment demonstrates this. If it were possible to plug a machine into the earth to produce the whole GDP without labour and therefore without wages, then the money vouchers the government would have to allocate would all be a total financial deficit each year. Money does not have to be backed either by gold, or by the sale of government bonds, but only by output GDP. Deficits are here to stay. Facts support this hypothesis.

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Susan Kramer responds to the Autumn Statement in the Lords

New Liberal Democrat economy spokesperson responded to the Autumn Statement in the Lords yesterday. Here’s her speech in full.

It is always a pleasure to follow the noble Lord, Lord Davies of Oldham, but I confess that he disappointed me today. He did not throw anything, so we have missed out on the drama of the other place. I was also somewhat disappointed in the Budget. It is less generous than it appears on first viewing: we still have a £12 billion cut in welfare. If I understand it correctly, that will now happen as people transfer into universal credit. I am sure that the Minister will advise noble Lords about that—it would be good to understand how it will work. Of course, I am absolutely delighted that the Chancellor reversed his plans to cut tax credits for poor working people. I think, with some interest, that had the Chancellor been a Member of this House a couple of weeks ago, when the relevant statutory instrument was debated, he would have supported neither the Conservative nor the Labour Motion, but the Liberal Democrat fatal Motion.

We are also pleased with the up fronting of money for the NHS in this Budget, especially the investment in mental health. That is welcome, but can the Minister confirm whether that £600 million is new money for mental health and does not contain any former promise within it? We are supportive of stamp duty on buy to let and very supportive of the increased spending on infrastructure. We note that the Chancellor partially explained that that was because borrowing is now cheap. That is what we have been saying for weeks, so we are very glad that he has listened to that argument.

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A Liberal Democrat Economy Group

Tim’s talking about the economy. And it’s great.

With George Osborne building an economy to benefit big business and Mr Corbyn swerving Labour towards “big state” nationalisations, there’s a clear big gap for the Liberal Democrats to be the Party of Britain’s creative talents, home-grown entrepreneurs and innovators, the self-employed and small business owners.

But we need to go further.

It’s increasingly urgent that Lib Dems present a distinctive economic agenda to underpin our social and liberal plans.

So the Party needs a new (possibly unofficial) Liberal Democrat group to raise awareness and to promote what the Liberal Economy means.

(That is a group about the Liberal Economy to be quite distinct from “Economic Liberals”, or for that matter Social Liberals, accepting input from either side or neither.)

Posted in News | Also tagged and | 14 Comments

Tim Farron’s full speech on the economy: the radical gems that weren’t in the extracts

In days of yore, 6 months ago, if the Liberal Democrat leader made a keynote speech on the economy, the journos would be there in force. While there was a bit of coverage on the Guardian and BBC, it was nowhere like it used to be. So, I guess that means it’s up to us, and by us I mean all Liberal Democrats, to get the word out. The first section of this piece has some commentary on the speech and the full text is at the bottom.

The trails sent out last night in my opinion missed out the best bits of the speech. The whole thing covered a huge amount of ground from entrepreneurship to mass migration to climate change to inter-generational fairness to massive investment in infrastructure to housing. There were also some key elements that weren’t there quite as strongly as I’d have liked, for example on the living wage and tackling poverty and inequality. He spoke of these things in his Beveridge Lecture to the Social Liberal Forum two years ago.

He cast the Liberal Democrats as the party of small business, innovation and creativity, while the Conservatives were the party of corporatism:

The fact is that the Tories aren’t really pro-free market capitalism at all.  They are pro-corporate capitalism.

They are there to fight not for entrepreneurs, not for innovators who oil the wheels of the market, but for the status quo.

In recent years, a common criticism of the Liberal Democrats is that we have been way too establishment. Tim Farron sets out that we are no such thing, likening us to entrepreneurs as the insurgents:

So I say “let the Tories be the Party of huge complacent corporations”

The Liberal Democrats will be the Party of Small Business, the party of wealth creators, the insurgents, the entrepreneurs.

And there’s a good section about challenging power, government or corporate:

We are in politics for precisely the opposite reasons to the Tories: to challenge orthodoxy and challenge those with power, while they support orthodoxy and established power – in business, just as in politics.

Because here is the truth – it doesn’t matter if it is big government or big business, the fact remains, too much power in the hands of too few people means a bad deal for everyone else.

Posted in Op-eds | Also tagged , , and | 22 Comments

LibLink: Vince Cable: Britain’s economic recovery is precarious and an economic storm is coming

Vince Cable has form for predicting economic disaster, so you take notice when he says that there could be another one on the horizon, even if he qualifies it with an anecdote from his professional life:

I use the word “could”. I am always mindful of the day 20 years ago when I was greeted in my role as chief economist at Shell with a plaque, in Arabic, which translated meant “Those who claim to be able to forecast the future are lying even if, by chance, they are later proved right”. The reputation of economic forecasting as a science, which makes astrology looks respectable, reflects the same scepticism. And that scepticism was greatly reinforced by a total failure of standard economic models based on efficient financial markets to anticipate the last disaster.

Writing in the Independent, he outlines the factors which could indicate that all is not well: the high level of debt, the asset bubbles which have been created particularly in housing and the international economy, particularly any shock waves from a Chinese slowdown.

One side-effect of keeping economies growing through cheap money and credit creation through quantitative easing has been the generation of asset bubbles, especially in property markets. Britain demonstrates the problem in an extreme way, magnifying underlying imbalances between housing demand and supply. Double-digit housing inflation is not merely creating appalling social problems and division between classes and generations but grossly distorting investment from productive activities to property holding. The Bank of England has tools of macro-prudential management to curb this inflation but the extreme timidity in using them reveals the high level of dependence on this precarious and dangerous form of growth.

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