The Tories’ biggest economic claims (there are only two of them) are that they generated a recovery (after 18 months it’s already fading) and that they created a million private sector jobs. The latter claim is now under fire from all sides.
First, it has just been reported by the thinktank Centre for Cities that 11 of every 12 jobs created have been in southern England and only 1 in the rest of the country. This gap between the best and worst pedrforming towns and cities has now widened so far that it has created a 2-tier economy of dynamism and decline. Continue reading →
It is really bewildering how far the Tories continue to push supply-side economics, and are now preparing to do so yet again even though every such initiative has failed miserably, but deliberately ignore the open goal of demand-side economics.
Osborne softened the Vickers bank reform package as a quid pro quo for the banks increasing their lending to industry under the auspices of Operation Merlin. The banks took the weaker reform package bait, but then disregarded the higher lending. Then Osborne offered Funding for Lending to the banks, but what did the banks do? They once again thwarted the intention to release funds for industry by opting instead to use the funds for mortgages and property development because bricks and mortar were a safer loan.
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Ed Balls lost no time in attacking the government when the latest figures emerged showing a contraction of the economy in the last quarter, urging them to “urgently re-think their reckless plan to cut the deficit too far and too fast and start putting growth and jobs first.” Osborne’s reaction, however, is “we’re not going to be blown off course by the bad weather.” In fact, it’s worse than that: at the very time we might be slipping into a double-dip, the government’s primary focus is likely to be on inflation. The markets are already assuming that there will be a three points rise in interest rates this year in spite of city fears that higher rates too soon “could be GDP suicide“. Higher prices are primarily caused by a weak pound, the government’s foolish decision to raise VAT and the surge in global commodity prices. If this turns out not to be a temporary inflation spike, it is surely right to increase the inflation target rather than prejudice growth and jobs. Continue reading →