Tag Archives: recession

The double dip recession that never was?

Did the double-dip recession ever happen? It looks increasingly possible that it didn’t — the BBC reports the latest revision to the data:

A revision by the Office for National Statistics (ONS) has cast doubt on the UK’s double-dip recession last year. Revised growth estimates now suggest the construction industry shrank in the first quarter of 2012, but by less than previously thought. Analysts say the revision may be enough to mean the overall economy narrowly avoided falling into recession for a second time. The ONS is due to give official confirmation of this in June.

In fact there was a …

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“We’re not in recession”. Last July’s headline comes true (belatedly).

Four months ago, just after the last set of quarterly figures published by the ONS showed a sharp contraction in the UK economy, I highlighted economist Hamish McRae’s very public assertion that the UK was in actual fact no longer in recession. Pointing to the second-highest rate of job creation ever in the private sector, combined with falling inflation, he declared: ‘pull all the other data together and the figures would be consistent with an economy growing at around 1 per cent a year’.

Here’s what he has to say about the latest quarterly growth figures of +1.0%, which …

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The politics of sluggish growth: good for the Tories, bad for Labour, and as for the Lib Dems we’ll see

Today saw the publication by the IMF of its latest growth forecasts. UK growth prospects are downgraded once again. Growth in 2012 is now forecast to be -0.4% (the most recent quarter’s strong showing is anomalous) and an anaemic 1.1% in 2013. As The Spectator’s Jonathan Jones observes, the only thing new here is that the IMF is falling ‘into line with the consensus’.

On the face of it this is bad news for the Coalition, further evidence that the economic strategy of deficit reduction driven forward by David Cameron and George Osborne, and endorsed by Nick …

Posted in Op-eds | Also tagged , , , , and | 33 Comments

Opinion: Danish economy shows now is not the time for Plan B

Critics of the coalition’s economic policy come from many and diverse perspectives, from those such as John Redwood who advocate the traditional Tory neo-classical approach of cutting taxes and spending until growth is achieved to those who advocate forgetting the deficit and spending until growth occurs.

The traditional Tory arguments were largely demolished by the great Liberal economist JM Keynes in the 1930s, and their reheated version disproved by JK Galbraith in the 1980s.

The arguments of those who wish to see stimulus spending are more cogent but the latest data concerning the Danish economy should provide them with food for thought.

In …

Posted in Op-eds | Also tagged , and | 48 Comments

“We’re not in recession”. And no, that’s not the claim of anyone in the Coalition.

Hamish McRae, an economist and associate editor of The Independent, has been claiming for some while now that the official figures aren’t reflecting the reality of the economy. A week ago, he made the bold statement that the UK is not in recession:

The British economy is becoming more and more interesting. This week we have had two positive surprises … the fall in inflation to 2.4 per cent, a much sharper decline than expected, with the prospect that it may be below 2 per cent by the autumn … a further fall in unemployment on the

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LDV poll: More than half Lib Dem members back ‘new approach’ to boost economic growth

Lib Dem Voice has polled our members-only forum to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Some 560 party members responded, and we’re publishing the full results.

54% of Lib Dems back ‘new approach’; but 27% say ‘stick with Plan A’

LDV asked: Thinking about the government’s economic policies, which of the following best reflects your view?

    27% – Borrowing more at a time when we already owe so much will simply make matters worse, as the country will have to pay back even more money in the longer term. We have

Posted in LDV Members poll | Also tagged , and | 5 Comments

PMQs: Miliband hits barn door – twice

Britain back in recession, embarrassing emails about government links to Murdoch. These are gifts to the opposition. The most open of open goals at this week’s Prime Minister’s Questions.

I liked Miliband’s opening question:

Today we had the catastrophic news that Britain is back in recession. I am sure that the Prime Minister has spent the past 24 hours thinking of an excuse as to why it is nothing to do with him, so what is his excuse

Posted in PMQs | Also tagged , , , , , and | 31 Comments

Nick Clegg on the double-dip recession: “our answers are the right ones to repair the damage done”

Nick Clegg spoke this morning to the Institute of Directors, shortly after the announcement that the Office of National Statistics estimates that the economy contracted by 0.2% in the first three months of 2012 — a second quarter of shrinkage that officially means the UK is once again in recession. Here’s what he had to say:

As you may have heard, the first set of GDP figures for this year have just been released. And so, if I may, I would like to start by addressing what is disappointing news. The ONS’s preliminary estimate for Q1 GDP has

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Opinion: Pick your horse in the grand recovery stakes

Moody’s, the US credit ratings agency, has put the UK on negative outlook, threatening the country’s triple A status. This came the day after three other organizations had also made their views known.

The CBI predicted that the UK would avoid a double-dip recession, the services firm BDO published the results of a survey suggesting turnovers were continuing to fall and the Chartered Institute of Personnel and Development reported that employers were more likely to lay off staff.

It is now four and a half years since the uncertainty of the credit worthiness of banks and hedge funds that were …

Posted in Op-eds | Also tagged and | 6 Comments

Opinion: Why cutting later would increase the chances of a double-dip recession

About the only thing to emerge during Ed Miliband’s time as Labour Leader so far, which could be called a policy, is the belief that the cuts the coalition are implementing are being delivered “too fast and too deep.”

Essentially Labour are saying they would cut by less and later. The purpose of this article is to discuss the “too fast” part of this argument.

The first six months of the coalition’s time in office saw higher than expected growth and higher than expected inflation. Neither of these were really caused by anything the coalition did in those six months, rather …

Posted in Op-eds | Also tagged and | 41 Comments

Opinion: Latest consumer data shows new ‘growth strategy’ is not needed

The advent of 24 hour news channels has led to the media creating a fresh conventional wisdom with every new day.

They started by highlighting the dangers of a double dip recession because the government would cut too fast and too deep. Now, that’s something which Ed Milliband doesn’t even believe if you give credence to his recent appearance on the Andrew Marr Programme.

When the media were airing the cuts too fast argument, I indicated that the danger facing the economy over the medium term would come from inflation.

When the media turned its fire on the danger of inflation, and …

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Vince on 0.2% growth: “the promised recovery is barely visible”

It’s official: the UK economy has enjoyed a second quarter of growth, as the BBC reports:

The UK economy continued to recover from recession in the first three months of the year, according to official estimates. GDP grew by 0.2% between January and March, the Office for National Statistics (ONS) said.

Here’s what Lib Dem shadow chancellor Vince Cable had to say – in text:

These figures show that the promised recovery is barely visible. There is a real danger of the UK going into a double dip recession. As people deal with their own debts and as the banks continue to strangle good British businesses by starving them of credit the recovery will remain fragile.

“The British economy has had a massive heart attack – it has just emerged from the intensive care unit into the recovery ward. The worst possible action is the Tory proposal to pull out the drip-feed when the patient is still in a critical condition.

“Not only must we tackle the deficit in a considered and rational fashion, we must also ensure that we support jobs and infrastructure as well as making sure businesses get the credit they need to drive growth in the economy.”

And on video:

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Should this poll result worry us?

Today’s BBC Daily Politics / ComRes poll asking which of the three major parties’ leadership teams is more trusted to steer the economy through the current downturn has caused a bit of a stir – it shows Labour’s duumvirate of Gordon Brown and Alastair Darling out ahead of the Tories, an about-turn on three months ago.

Here are the results:

    Putting your party allegiance aside, who do you trust most to steer Britain’s economy through the current downturn?
    Gordon Brown & Alistair Darling 33% (+7% on Dec 2009)
    David Cameron & George Osborne 27% (-6%)
    Nick Clegg & Vince Cable 13% (-6%)
    Don’t know

Posted in Polls | Also tagged , and | 11 Comments

Nick calls for cross-party Council of Financial Stability

Hmmm, well I have my doubts about this one. Not the idea: that’s obvious and right. Of course we need to build political consensus in order to carry through the tough spending cuts any party (or parties) which finds itself in government will have to implement.

Only myopic Labour/Tory tribalists will try and pretend a government with the support of one-in-five of the electorate can decimate (in that word’s literal sense) public spending to bring the deficit under control with any kind of legitimacy.

No, the problem I have with Nick Clegg’s idea is this: the name, ‘Council of Financial …

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Vince lays down the gauntlet to Alex Salmond

Lib Dem shadow chancellor, Vince Cable tonight addressed Reform Scotland on the action that needs to be taken to reform banking and protect the economic recovery. LDV is publishing extracts from Vince’s speech, below, including his call to SNP leader and Scotland’s First Minister Alex Salmond to follow the Lib Dems’ lead and state clearly how the Scottish government will live within its budget in the years ahead:

Banking
We need to rethink our approach to banking. Successive Labour and Conservative Governments have left Britain vulnerable to an over-inflated financial services sector, where institutions became too big to fail.

On a UK level – where British banks are 4.5 times bigger in terms of their liabilities than the country’s economy – this is bad enough. But in Scotland, this has been still more pronounced. At the time they got into trouble, RBS’ and HBOS’ liabilities were 25 times the size of Scotland’s economy.

Posted in Scotland | Also tagged , , and | 1 Comment

LibLink: Giles Wilkes – The hidden cost of quantitative easing

Over at The Guardian’s Comment Is Free website, Lib Dem blogger Giles Wilkes – liberal think-tank Centre Forum‘s award-winning chief economist – argues that though quantitative easing was needed to prevent financial collapse, it has made the rich richer, and taxpayers will foot the bill for growing inequality. Here’s an excerpt (but NewsHound does recommend you read the full article to enjoy Giles’s imagined budget speech of a year ago):

QE was the right thing to do: it may become the most significant step that Labour took to fight recession. … quite possibly averted an outcome far worse: an

Posted in LibLink | Also tagged , and | 1 Comment

Vince: “Labour and the Tories are accusing each other of being confused and contradictory on the economy, and they’re both right.”

Attack is the best form of defence, I guess, so it’s no surprise that the Tories – seriously on the back-foot since it became clear that David Cameron and George Osborne haven’t got a clue what they plan to do about the deficit – have launched a broadside against Labour. With Peter Mandelson using a press conference this morning to accuse the Tories of “confusion and disarray”, the Tories have accused Labour of being “in chaos”.

So far, so yawn. Or as Vince Cable put it today:

Labour and the Tories are accusing each other of being confused and contradictory on the economy, and they’re both right. The fact that they insist on this political bun fight shows they have failed to understand that the British public and the markets want a clear picture of what the next Government will do.

“The Liberal Democrats are the only party that has had a consistent approach.

“We’ve been very open about the scale of cuts required and setting out where our priorities would be, while recognising that the timing must be decided by the strength of the economy. That is why we have set out five tests for when and how we start to cut.”

And here’s a reminder of those five tests to form an objective judgement of when it’s safe for the British government – whether gold, red or blue – to start cutting public spending:

  • evidence of sustained economic growth;
  • employment growth;
  • overseas demand (especially in the EU);
  • monetary and credit conditions in the UK; and
  • the market cost of government borrowing.

And in case you’ve not had your fill of Vince’s common-sense, here’s a 30-second video pointing out the Tories’ economic muddle:

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Vince on 0.1% growth: “We are not out of the woods yet”

So, it’s official: the UK has at last emerged from the most sever recession in 90 years … just. Figures released today show the economy grew by 0.1% in the last three months of 2009, lower than many analysts had predicted, says the BBC.

Here’s what Lib Dem shadow chancellor Vince Cable had to say:

The markets will be surprised that growth has been markedly slower than expected. Far from the quick recovery the Chancellor has been praying for, the economy is only just staggering back into growth.
 
“The British economy has had the economic equivalent of a heart attack

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Daily View 2×2: 25 January 2010

Happy Monday morning, everyone. Let’s get straight down to business …

2 Must-Read Blog Posts

What are other Liberal Democrat bloggers saying? Here’s are two posts that have caught the eye from the Liberal Democrat Blogs aggregator:

Posted in Daily View | Also tagged , , and | 8 Comments

When should the state intervene? RBS, Kraft & Cadbury and the Eternal Liberal Dilemma

US firm Kraft’s proposed takeover of Cadbury’s has made headlines in recent days. First, because it’s a major, historic British brand being snapped-up by a non-UK business (or ‘foreign predator’, as Vince Cable labels them). Secondly, because of the fear that job losses will result. And, thirdly, because of the role of the Royal Bank of Scotland – in which the British government has a majority stake-holding – in lending the money to Kraft which will fund its acquisition of Cadbury’s.

The Lib Dems – in the shape of Nick Clegg and Vince – have sharply questioned the role of the Government in the takeover. At Prime Minister’s Questions yesterday, Nick asked Gordon Brown:

… there is a simple principle at stake. Tens of thousands of British companies are crying out for that money to protect jobs, and instead RBS wants to lend it to a multinational with a record of cutting jobs. When British taxpayers bailed out the banks, they would never have believed that their money would be used to put British people out of work. Is that not just plain wrong?

Posted in Op-eds and PMQs | Also tagged , , , , , , , , , and | 11 Comments

Daily View 2×2: 18 January 2010

Happy Monday morning, everyone.

On this day, in 1788, Britain established a penal settlement at Botany Bay in Australia; while, in 1903, President Theodore Roosevelt sent the first transatlantic radio transmission originating in the United States to King Edward VII. Even more excitingly, it’s the birthday of AA Milne (b. 1882), Oliver ‘Laurel &’ Hardy (b. 1892), Cary Grant (b. 1904) and Peter Beardsley (b. 1961).

But without further tarrying …

2 Must-Read Blog Posts

What are other Liberal Democrat bloggers saying? Here’s are two posts that have caught the eye from the Liberal Democrat Blogs aggregator:

  • Holyrood: The Budget Battleground (Caron Lindsay)

    The first act of the budget drama plays out this week. Let’s hope that the process is more serious production and less pantomime farce.

  • A couple of classy links (Alix Mortimer)

    I once saw a blogger, a smart, impassioned, left-wing blogger, comment to the effect that his £40,000-odd salary was not that high.

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LibLink … Vince Cable: Hard hats on, here comes the Rotten Election

Over at the Mail today, Lib Dem deputy leader Vince Cable anticipates a year of fevered political battle, and issues a call for a reformed political system and a grown-up debate. Here’s an excerpt:

Once the seasonal festivities are out of the way, the public will be on the receiving end of months of sustained political bombardment over the airwaves and through the letterbox until a General Election puts an end to it. As someone who will be firing a lot of the ammunition, I am ready for this battle but I am conscious that the old rules no longer apply.

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LibLink … Chris Huhne: These mystery men can break governments

Lib Dem shadow home secretary Chris Huhne has an article in today’s Times noting that how much it costs the Treasury to borrow money depends on three ratings agencies … and asks the crucial question: are they fit to wield this power?

Chris’s credential for writing an article outside his brief? Well, he founded the sovereign group at Fitch Ratings, and was group managing director. Here’s an excerpt:

Last week Moody’s — one of the big three international ratings agencies — warned that the UK’s top bond rating would be under threat if Britain failed to sort out its public finances

Posted in LibLink | Also tagged , and | 4 Comments

Vince Double-Bill: PBR video response and LibLink Times article

Here’s the video response Lib Dem shadow chancellor Vince Cable recorded yesterday in response to Alistair Darling’s Pre-Budget Report yesterday. (It is him, promise: you can make out the outline of his hat in the evening gloom – it might be worth filming Vince nearer a street-lamp next time.)

Posted in LibLink | Also tagged , and | 1 Comment

Millennium’s Credit Crunch Diary: October and November… Worst! Recession! Ever!

This week sees the Government reveal its Pre-Budget Report, usually a review of spending in advance of the budget where the Chancellor says how he’ll be paying for it all though, traditionally, the run-up to a general election is the time for the Chancellor to play Santa, showering presents on favoured voters in key marginals, and with all the indications now pointing to a March General election, chances are we’ll never quite get to Hard Labour facing the BILL.

This year, of course, there is considerably less room for LARGESS. So let’s start with a look at where we’re …

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LibLink … Vince Cable: Banks must help clean up the red ink

Over at the Mail, Lib Dem shadow chancellor Vince Cable previews this week’s pre-budget report, says what the Lib Dems’ priorities would be, and and argues that the banks should pay back the taxpayer for saving their business. Here’s an excerpt:

This week the spotlight switches from bankers’ bonuses to government deficit. The collapse of the banks and the recession has devastated public finances. In Wednesday’s Pre-Budget Report, taxpayers will get the bill and the debate will begin as to who pays and how and when. … Unless painful budget measures accompany a fairer tax system, the public will be very angry. … There has to be a clear plan to bring the finances back into good order. Otherwise, there is a serious risk of a collapse of confidence leading to much higher interest rates and a weaker economy for a long time. It will not occur this side of an Election. …

I guarantee, on my party’s behalf, that we are prepared to take unpopular decisions – albeit with a commitment to distribute the burden fairly.

Timing is very tricky. Rushing into painful cuts or tax rises will plunge the country back into recession. … The Liberal Democrats and I have already indicated some of the programmes that could go: ‘baby bonds’, tax credit for high earners and identity cards. There will be defence cuts, providing these don’t affect the kit for our soldiers in Afghanistan; the Trident missile system is one item for the long term. Unless politicians spell out priorities, we shall get indiscriminate, damaging cuts to valuable services. …

Taxes should be cut for those on low and middle incomes by lifting the income tax threshold to £10,000
a year, £200 a week. This should be paid for by removing tax reliefs which enable the very well-off to avoid income tax. I am sticking with the idea of a mansion tax, a one per cent charge on property over £2 million. This is also a way of getting non-doms to pay tax; you can’t move a mansion to Monaco or the Caymans.

If we are looking for more tax money, the place to start is with the banks. Some are making very large sums on the back of a taxpayer guarantee and we should demand a fee for this – ten per cent of profits. These are the people who got us into this mess and splattered the nation’s account in red ink. They should get out of their pin stripes, roll up their sleeves and take the lead in cleaning up.

You can read Vince’s article in full here.

And you can watch Vince call for a tax on bank profits courtesy of BBC News here:

Posted in LibLink | Also tagged , and | 2 Comments

Vince: it’s time for a National Infrastructure Bank

The Lib Dems’ shadow chancellor Vince Cable today set out proposals today for the creation of what he’s calling a National Infrastructure Bank.

In his speech to The Civilisation Congress, Vince notes that the UK has one of the worst records for infrastructure investment in the OECD, and argues that there is an urgent need for a step change in infrastructure investment to create jobs, increase competitiveness, promote environmental sustainability and boost the economic recovery. Creating a National Infrastructure Bank – leveraging public funds with private capital – is, he argues, the best vehicle, especially with private investors beginning again to look for good long-term opportunities.

Here are the highlights from Vince’s speech:

There is a big hole in the prospects of the long-term recovery and growth of the UK economy.

Our infrastructure is currently rated 34 th in the world, which is poor by anyone’s standards. The Policy Exchange estimates that £500bn needs to be spent over the next decade on transport, energy storage, broadband and transmissions systems.

But in this recession, infrastructure investment is one of the first things to be squeezed and there is currently no prospect of investment on anything like the scale that is needed.

Posted in Party policy and internal matters | Also tagged and | 1 Comment

Nick Clegg’s speech to the CBI conference

Nick Clegg addressed the CBI conference in London this moring, “set out how to foster a rapid recovery and shape a new competitive, sustainable economy.” Here’s the full text of what he said:

We are in the teeth of one of the most difficult and unpredictable recessions we have ever faced.
The origins of the recession, at the heart of the financial services sector on which we have relied too heavily for far too long, begs profound questions about how we can rebuild the British economy on a different, more sustainable footing in the future.
As the CBI said this morning – this recession can be a catalyst for positive change.
In the short time we have today, I want to run through the five main areas where I believe urgent action is required not only to foster a rapid recovery in the short term, but to shape a new competitive, sustainable economy for the long term.

  • First: stabilise, decontaminate and re-balance our financial industry.
  • Second: a strong, credible plan to sort our Britain’s finances, to maintain confidence in our credit-worthiness.
  • Third: invest in infrastructure, to create jobs now and the right environment for sustainable growth later.
  • Fourth: decentralise decision-making and business support to drive growth in industries and regions that have been left behind
  • And fifth: change our tax system to put money into the pockets of people who both need it and spend it, helping rebuild consumer demand.
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LibLink … Vince Cable: Economic recovery? It’s vanished into a yawning gap between a rich capital and the rest of the country

Over at the Mail, Lib Dem deputy leader Vince Cable examines the “trickiest problem” facing Government: “to rein in public borrowing without making recession worse or damaging the useful things government does”. Here’s an excerpt:

The grim news that the economy is still in recession makes this dilemma more acute. It also reminds us that Britain is a deeply divided country. In the inflated metropolitan bubble of the City, there is a lot of excited talk about recovery based on a bounce-back in the stock market, city bonuses and rising house prices in posher parts of London.

This is a different world

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Vince – this “could yet become the deepest recession on record”

The BBC reports the bleak economic news:

The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession. It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.

Here’s what Lib Dem shadow chancellor Vince Cable had to say:

For all the hopes of a quick recovery, these figures make it clear we are still in the longest and what could yet become the deepest recession on record.

“For all that has been thrown at

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