Tagged with economy

Only Corbynomics can reverse the economic slowdown

Corbynomics1-2The British economy is slowing down. In the 3rd quarter of 2015 the economy had expanded by just 2.3% from the same period in 2014. This measure removes the volatility of erratic quarter to quarter movements in GDP.

The most rapid pace of growth in this recovery has been the 3.1% recorded in the 2nd quarter of 2014, which mainly reflected government efforts to stoke consumption (particularly in housing) in the run-up to the election. Since that time the growth rate has progressively slowed. This is shown in Fig.1 below. Despite the severity of the recession, at no point has the growth rate matched the higher levels seen before 2008 to 2009. Continue reading →

“Butskellism” versus Keynes and Marx

Corbynomics1The debate is continuing on the purpose of government borrowing and the role of ‘balanced budgets’ – which was started by John McDonnell’s position of balancing the budget on current expenditure but borrowing for investment. This is not surprising given that economic policy has to be the core of the programme for a Labour government.

A thoughtful addition to the debate is this piece by Jo Michell in the Guardian, who asks for a real alternative to Osborne, which SEB has provided in relation to the Fiscal Responsibility Act. But an important misunderstanding should be clarified. That article argues that advocacy of a balanced current budget over the business cycle would be to ’emulate Ed Balls and austerity lite.’ That is incorrect. It would only be the case if the level of government investment were maintained at current miserably low levels. Instead what is proposed here is a transformational increase in public investment, sufficient to foster a sustained recovery led by public investment. Far from this being ‘austerity lite’ it makes state driven investment a key to economic policy – entirely unlike the policy of Ed Balls.

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Labour needs to get rough with the Tories & take them on

Labour-RoseThe difference between the two main parties has often been remarked upon. The Tories’ Achilles heel is their Bullingdon Club overweening self-confidence and insufferable arrogance, and Labour’s is its self-effacing humility and timidity. The two party conferences just past illustrate this clearly. The bluster and downright lying by both Osborne and Cameron takes one’s breath away. Osborne boasts of the ‘fastest growing, job creating and deficit cutting recovery’ in modern times.

All untrue: growth in the US, and for that matter in Ireland too, is much faster, the jobs created are so miserly that government tax receipts are actually now falling, and the deficit is actually now growing. Cameron has the gall to project a £7bn giveaway backed by no new sources of funding which, if proposed by Labour, Osborne would pounce on as irresponsible profligacy and which Cameron himself denounced in 2008 with the words “You cannot talk about tax reduction unless you can show how it is paid for, the public are not stupid”. Obviously he now thinks they are. Continue reading →

Ed Miliband needs to challenge the UKIP surge

At the time of writing (15:47) UKIP has won 78 seats and is averaging 25% of the vote in the wards where it is standing. That is quite something. Not only is it making the Tories look stupid and the Liberal Democrats look irrelevant, it makes Labour look like they haven’t the nous to be an effective opposition.

This is to change. As Rafael Behr has written in his New Statesman column this week politicians have two choices; they can yield or defy. The Labour leader clearly has an eye, at least, to the latter.

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The worrying 35 per cent: how can we convince the country?

As I stare down the barrel of the economic collapse caused by austerity policies of this Government, it does not take long to realise that the next election is going to be fought on the lines of which party is perceived to have the competence to rescue the country’s economy.

Cameron and Osborne are definitely paying the price for their recent economic incompetence. The problem for me though is that according to a recent YouGov poll, 35% of the public still hold the last Labour Government solely responsible for the cuts, 27% the current Government and 28% both.

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