Osbourne

by

Up Europe!

“Woe, woe and thrice woe!” says “Senna the Soothsayer” Cameron. The economy will collapse, world war three will start and we will be cast into the outer wilderness on the fringe of Europe. On the other side of the debate Senator “Ludicrus Sextus” Johnson has a profound but unaccountable fixation with bananas and seems to feel they are proof positive that we should leave Europe.

 

Nauseus“Nausius” Osborne on the other hand has written an ode on the perils of  leaving Europe clarifying that it will cost every household four thousand three hundred sesterces in lost GDP. Of course this is the Nausius who found twenty-eight billion sesterces on the way home from the Forum but had lost it again before he got home!

Lots of very clever people have been supporting Nausius and Senna in the Treasury, the World Bank, the IMF, and the Bank of England. Sadly their track record on prediction does not inspire confidence. Not one of them spotted lending money to individuals with no incomes, jobs or assets, by banks that were ludicrously in debt might end in tears.

Just as the cry goes up “we need a vision”  who should step forward but “Preator” Gove setting out how sovereignty could be recovered and trade with the rest of the world established. Unfortunately it seemed to be set within a vision of a return to Imperial Preference and ultimately the Gold Standard. You could almost hear the strains of Land of Hope and Glory as he spoke.

“Lurcio” Corbyn has sensibly been keeping his head down. Whether it’s about not intruding on private grief or not wanting to stir up his own portion of that grief he seems to be avoiding the bofrankie-howerd-07ut of rhetoric inflation that has taken over the Tory Party.

If this is a decision which will shape the future of our country for the foreseeable future the quality of the debate about it has been derisory. It is of course a difficult issue. The leave campaign have the problem of trying to conjure up what a different world might look like when many of the actors that will have a role in that different world flatly contradict what they say. On the remain side the case is difficult because it starts from the premise that Europe is in principle a bad thing but then goes on to insist we would be insane to leave it in practice!

One worries that when it comes to the vote the “don’t give a damn’s” will have it.

There is a radical case for the UK remaining within Europe. It is a case which also requires a commitment to reform both of the UK’s semi-detached position and the accountability of the existing Community structures. It has been made interestingly by Yanis Varoufakis, the sometime Finance Minister for Greece, and by Martin Sandbu of the Financial Times. Whatever you may think of their politics, and I have no idea what Mr Sandbu’s are, at least they raise fundamental economic, social and political questions about the future of Europe and the UK’s role in it. These are the questions the electorate should be considering, not spurious predictions about the future that are impossible to verify ex ante. More of this anon.

by

Welfare Cuts Credibility

The Osbourne budget and the subsequent resignation of IDS t only threaten the governments claim that we are all in it together, much more seriously they raise questions about their economic competence. In November much was made of the discovery of a spare £27bn forecast over the 5 years of the parliament. In truth this is less than 1% of the expenditure over that period and it is a brave person in any business that thinks their figures are correct to +/- 1% over one year much less 5.

If Mr Osbourne had said at the time this was nothing but rounding and not something to be taken account of in the calculations he could legitimately have taken the same line now when the same calculations mean that instead of a £27bn benefit we have a £29bn deficit.

Critically, all this means that the Chancellor now has a £13bn hole in 2019/20 fiscal target of budget surplus. He has however more than made up the £13bn hole. But how has he done it? According to Paul Johnson, “More than half
of it is purely temporary – shifting tax revenues into that year and shifting
capital spending out. The target would not be forecast to be met without
both this shuffling of money between years and a wholly unspecified
spending cut of £3.5 billion on top of the specific cuts announced in
November.” In other words the figures have been made to fit the policy.

Nothing illustrates the approach of the Chancellor more than his repeated claim that he would never make the figures fit the policy as he delivers a budget which requires the figures to fit the policy. To be fair the fiddling did not look to the short term political advantage for the Tory Party it was more about long term career advantage of Mr Osbourne.

The charge the budget process is driven more by political considerations than National interest has carried little weight when it came from the Labour Party. When it comes from within the cabinet it is a different issue. There is a crack here which has the potential to undermine the key claim of the Conservatives, that they are better at managing the economy. Labour should seize the opportunity.