Posts tagged Economics

Budget 2012 at a glance: George Osborne's key points

Helpful summary from the BBC.

UK inflation rate falls to 4.2%

Finally. Inflation seems to be genuinely on a downward path. Good news for household budgets everywhere.

Life isn’t just – but self-belief works

This is well worth a read. And an interesting take on redistribution of wealth.

The hopeful continent: Africa rising

The Economist:

Over the past decade six of the world’s ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.

Whilst not ignoring the many problematic issues the plague so much of Africa, this is an optimistic look at the neglected continent and the real growth that has been happening and it’s potential in the future.

The Economist: Another recession is on its way, but the government’s policies are broadly right

The Economist:

Mr Osborne has not got things completely right. But this government’s instincts have been saner than its big-spending predecessor’s. Mr Osborne was correct in his determination to tackle the deficit quickly. The notion that he has caused the coming recession is nonsense. More flexibility is now needed. But, sadly, all the options for Britain are pretty dark.

The whole piece is a helpful overview of the state of our economy and looks at what George Osborne is getting right (and wrong) with his response.

The night before the chancellor’s autumn statement

Pretty funny (in and economic in-joke kind of way) piece by Tim Harford. Here’s how it starts out:

In an act of last-minute desperation, the prime minister decides to replace his chancellor George Osborne with a figure judged to have broader political appeal: Santa Claus. (The decision was approved by a committee of Liberal Democrats.) The FT can now present a transcript of the conversation the night before the chancellor’s autumn statement.

Follow the link to read the transcript.

Osborne and Balls: Their differences (and similarities) in economic approach

Stephanie Flanders, BBC economics editor:

Mr Balls thinks a short-term fiscal stimulus would pay for itself, at least over a few years, and would not seriously jeopardise the government’s standing in financial markets. So, incidentally, do some right-wing critics of the chancellor, who are lobbying for immediate tax cuts. But many in the city would still agree with Mr Osborne, that the short-term benefit for the economy of any stimulus would be small, and the long-term costs for the government’s credibility rather large.

It’s up to you to decide which is right. There are plenty of clever people on each side. But when it comes to the gloomy reality facing the UK over the next few years, I’m afraid the chancellor and his opponent are more or less agreed.

The whole article is a helpful look at both the differences and areas of agreement between the chancellor George Osborne and the shadow-chancellor Ed Balls.

The FT's economics editor urges Mr Osborne to stick to plan A

Chris Giles:

The chancellor is right to reject the arguments of the Plan B brigade because the risk that investors would lose confidence in the deficit reduction plan far outweighs the likely small economic gains. On the National Institute’s own estimates, huge temporary tax cuts, sending borrowing to a new record of 12 per cent of gross domestic product, are required just to push the 2012 forecast growth rate up from about 1 per cent to 2 per cent. After that, borrowing would still have to be cut.

EU is set for its own sub-prime crisis

Allistair Heath:

I’m not suggesting that [Eurozone debt] will necessarily cause another full-blown crisis or recession, though there is an increasing chance that it will, albeit not this year. But what I find strange is why otherwise rational people still believe that another bail-out or three, combined with a bit of pressure on countries to balance their budgets, will be enough to allow the crisis to go away. There is absolutely no chance of that. The problem is massive – the analogy with sub-prime American mortgages is perfect, on all levels.

Oh joy.

Ed Balls and Labour now isolated on deficit reduction plans

James Forsyth in The Telegraph:

It clearly no longer credible for Balls to claim that Osborne is out of the mainstream or that the Obama administration proves that there’s an another way to address this problem.

Ed Balls has dug himself a nice little hole. The US are now shifting their approach to an almost identical one to what the UK Coalition are doing in terms of deficit reduction. It doesn’t make the Coalition right of course, but it does take away what Balls has been using to legitimise Labour’s stance.

Is Cameron giving companies the mother of all tax breaks?

A few weeks ago George Monbiot wrote an article accusing the government of making one of “the biggest and crudest corporate tax cuts in living memory”. This article is Robert Peston’s response to that. If you’re into this sort of thing, it’s an interesting read. If you’re not, the short answer is that Cameron is not giving companies the mother of all tax cuts.

The government seems to be trying to do precisely the opposite of what Mr Monbiot accuses it of doing: it is trying to stem the exodus of companies and their assets abroad.

Which is not to say there is no cost to exempting branch dividends from UK corporation tax. The Treasury estimates it at £100m per annum by 2014/15, subject to confirmation by the Office of Budget Responsibility

That’s equivalent to 0.2% of all revenue raised through corporation tax, and 0.3% of UK corporation tax paid by multinationals, which will be the beneficiaries.

This is precious money given away at a time when the government is looking for brass farthings wherever they may lurk.

But unless you believe that a fiendish conspiracy of multinationals has somehow succeeding in gulling the Treasury and HMRC about the true cost of all this, it isn’t - to quote Mr Monbiot - one of “the biggest and crudest corporate tax cuts in living memory”.