I repeat a question I’ve never had a satisfactory answer to: why do the Conservatives have such a good reputation with the economy? They are a disgrace. They’ve been warned time and time again by everyone from amateur bloggers to Nobel Prize winners that their plans are going to impede not help any recovery. Yet they carry on regardless. Ideological maniacs to the core. They’ll only be happy once the welfare state is no more, once all public services are in private hands, and once the only things we need pay money on is war & police. Utter scum. The sooner we’re rid of them the better.

@1 Presumably because rightwing newspapers and commentary repeat it ad nauseam. It’s now just regarded as accepted fact that conservatives are best with the economy, despite any and all evidence to the contrary. Best example of what “narrative” means in political terms you’ll find anywhere.

Cylux, Mr S. Pill: It’s also, I think, because it’s largely unchallenged politically.

Labour’s line throughout has been that it is necessary to make severe spending cuts – but not quite this severe or quickly, and not in the same places.

That makes the debate about what sort of cuts and when, with whether massive cuts are good for the economy at all being accepted common ground.

Whether that’s because Labour genuinely believe this or are just scared of running against the popular press, I don’t really care. The effects are the same.

@1

A very good question. In my native Guildford the tories have consistently shown themselves to be fiscally incompetent. I suppose the reason the myth persists is because the tories are much better at presenting their disasters as triumphs. Just look at Thatcher’s monetarism.

First the ‘wrong kind of snow’; now the ‘wrong kind of inflation’. Conclusion: the ‘wrong kind of government’?

Might this be the place to point out that government spending cuts aren’t, in fact, due to start till later on in the year? Given that their main economic policy hasn’t yet been implemented, it might be a bit early to start judging their economic perfomance.

@6,

Moderate cuts have started (£6bn of ‘in year cuts’ announced in May). VAT rose on Jan 1st. Real cuts begin in 2 weeks.

But this article is about the forecasts for 2011/12 and 2012/13, when the major cuts will be occuring, so I don’t really understand your objection.

They’ve been warned time and time again by everyone from amateur bloggers to Nobel Prize winners that their plans are going to impede not help any recovery. Yet they carry on regardless. Ideological maniacs to the core.

Why do you assume they want a recovery?

They’ve been warned time and time again by everyone from amateur bloggers to Nobel Prize winners that their plans are going to impede not help any recovery. Yet they carry on regardless. Ideological maniacs to the core.

Why do you assume they want a recovery?

+1

assume that they have the interests of the country at large at heart and their actions are truly insane. that is a bold assumption to make, however.

@ 8&9 “Why do you assume they want a recovery?”

This is paranoia taken to a new level. You don’t have to think of them as anything other than chancers who are evil to the very last fibre of their being to still think that they want a recovery. This is because they have a far better chance of getting re-elected if the economy is doing well and therefore, even if we assume that they have no concern for anything other than themselves they will still be trying to boost the economy.

———–

An interesting counter-factual might be to consider where we would be if Labour’s plans had remained in place. Sunlight and roses or a tanking credit rating?

@1 – Mr S.Pill, geez that’s a good one. I guess we’ve moved on economically with regard to the banks and before Thatch perhaps bankers weren’t viewed with such contempt and there was a level of corporate managerialism that differentiated them from Labour’s collectivist workforce attributes.

I guess also in that Labour were a bit shaken with pan European communism and socialism and stuff which left Tories sort of free markets people and Labour were a bit more interested in economic philosophy, political organisation and more central control. But those distinctions are a bit past their sell by date. Dunno, this inflation movement was just a matter of time and most of the levers have dragging time lags.

7. Pedant Alert!! – VAT rose on Jan 4th!

10. Falco – sunlight and roses.

“I repeat a question I’ve never had a satisfactory answer to: why do the Conservatives have such a good reputation with the economy?”

They don’t. But they do bend over backwards to help the very rich. Who owns the corporate media? The very rich.

“But they do bend over backwards to help the very rich. Who owns the corporate media? The very rich.”

Please remind us, how much of the media does Murdoch now control after the government waved on the takeover of BSkyB?

You don’t have to think of them as anything other than chancers who are evil to the very last fibre of their being to still think that they want a recovery. This is because they have a far better chance of getting re-elected if the economy is doing well and therefore, even if we assume that they have no concern for anything other than themselves they will still be trying to boost the economy.

What would happen if they don’t get re-elected?

What’s the worst that could realistically happen to Cameron, Osborne or any tory member of the cabinet if they lost the next election?

In a pluralistic society you might have a point, but not in this one.

Incorrectly assuming some notion of common ‘self interest’ would somehow bind us all to the same cause is what got us in this mess in the first place and what does ‘boost the economy’ actually mean? A simple rise in certain macroeconomic indicators doesn’t imply that anybody other than a very small minority is any better off – see the US atm where a chicago school inspired latin american style ‘economic miracle’ is taking place.

@1 et al: “why do the Conservatives have such a good reputation with the economy?”

I think it’s in the same way that horse manure smells wonderful compared to dog mess. Labour have never left office with the economy in a good state, not even once.

@ 12: Some reasoning would be appreciated.

Puzzled? Surely you followed the link (provided by the FT in the article) to Chote explaining back in January that inflation could have unpredictable effects on finances:

http://www.ft.com/cms/s/0/9035868a-272a-11e0-80d7-00144feab49a.html#axzz1HMduk28U

”Please respect FT.com’s ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email to buy additional rights or use this link to reference the article – http://www.ft.com/cms/s/0/9035868a-272a-11e0-80d7-00144feab49a.html#ixzz1HMeglhqz

It is often thought that higher inflation improves the public finances because it boosts tax revenues, which are linked to total spending in the economy, but does not automatically increase cash-limited areas of public spending.

However, in his first interview since taking up his position at the OBR, Mr Chote dashed hopes that the deficit was likely to fall faster now that inflation appeared to be running ahead of the office’s November forecasts.

“There are numerous ways inflation can affect the public finances, some positive and some negative, so we cannot say for sure whether higher inflation lowers or raises the projected deficit,” said Mr Chote. ”

On your list of reasons why inflation might effect the finances, you missed interest. Quite a biggie. Especially with all those index linked gilts knocking about.

Maybe you will get to try the ‘borrow more, to borrow less’ strategy one day.

@15:

You honestly believe they don’t want to be in power?

What definition of a pluralistic society are you using because I think I’m missing what your saying here?

“chicago school inspired” – this would be the USA under Obama that pumped billions of dollars out as stimulus? Doesn’t sound all that Chicago-ish to me.

Although have to say I’m surprised it is forecast to be higher 2012ish, as it is going to be lower than forecast this financial year. OBR’s predictions for borrowing last budget (%GDP) were:

10/11 – 10.1
11/12 – 7.5
12/13 – 5.5
13/14 – 3.5
14/15 – 2.1

In fact, reading your rather hysterical post again, I note there is mention of cuts to growth forecast for next two years. That would explain a chunk as well.

All depends on the meaning of significant I suppose.

Those interested will be able to view the OBR forecast tomorrow lunch here:

http://budgetresponsibility.independent.gov.uk/publications.html

AStateOfDenmark

Maybe you will get to try the ‘borrow more, to borrow less’ strategy one day.

Let’s hope so as the current strategy is – as predicted – palpably failing.

” Labour have never left office with the economy in a good state, not even once.”

Hogwash. It depends on what your definition of the economy is. Sucking up to rich people should not be the definition of the economy. The brown shirts love high unemployment because it keeps workers in line. Despite the fact that they made a big fuss about 1 million out of work in 1979, they soon put that figure up to 3 million (really nearer 5 million) Unemployment is rising now thanks to Osborne’s political social engineering.

Capital will always try to bring down Labour govts, so it is not surprising that they will claim the economy is in a bad state. The market should not be the judge. The market lies a lot.

20 Current strategy has barely started.

Public spending increased almost 6% Apr-Feb 11 compared with Apr-Feb 10.

Do any of you really think Labour would have increased spending by more? You are deluding yourselves if so.

Sally, if you wish to dispute what I have said about Labour’s record on the economy then producing some evidence would be a good move.

I just did dipstick.

Sally, while you’re pouring yourself your next cup of crazy perhaps you could try and work out the difference between assertion, evidence and wibbling off the subject. If you don’t agree that Labour has always left the economy in a bad way then show some evidence that this has not been the case.

Yes, but we are arguing oranges and apples. I reject your Tim Worstell ……..“knows the cost of everything , but the value of nothing” ….. definition.
Under your definition Labour left office is 1951 with the economy in bad shape. But the country had a new NHS and welfare state. The market loons who you think are right would would oppose that.

As I say, it is more than just “does the city like it” bullshit. As has been proved over the last few years the city knows jack shit.

How about Sweden Sally? Is that country sufficiently fair/progressive/socialist etc to be worthy of looking at?

If so, here’s the deficit in Sweden since it bottomed at nearly 12% of GDP in 1993:

http://www.scb.se/Statistik/OE/OE0903/2011A01/OE0903_2011A01_DI_02_EN.gif

It was in surplus 5 years later. They are now forecasting debt/GDP will be as little as 20% by 2014.

How do you think they managed that?

Falco @ 10

Seriously mate, give it a rest. The Tories are not interested in a ‘recovery’, not in the way we mean anyway. What they want is a ‘recovery’ for their own people. They wish to ‘recover’ to the position re 1911. A small elite of rich and the rest in dire poverty. They are using the deficit as cover for long term strategies. Have you seen the Tories doing ANYTHING that they would not be doing, had we not had the deficit?

If you look at the Tories ‘salad days’, the days when they look upon dewy eyed at the suceess they created. When was that? The 1950s,the 60s, nope he the good old 1980s when unemloyment went through the roof and manufacturing was ripped into shreads? Why was this their greatest success? Because they finally got to destroying the post war settlements, that why. The gap between rich and poor grew wider during that time and whole communities were torn asunder.

In fact, manuy of the areas that the Tory shock troops smashed apart have still not recovered in time for the second wave.

Sally the examples you gave are things on which a monetary value can be put and would be included in GDP. Now considering that we are talking about the economy, what measure is your preferred one if GDP is not a measure you support?

I have tried to explain but you are obviously too stupid to understand.

When you ignore unemployment, quite frankly I am not remotely interested in your warped version of what the economy is.

28 “The Tories are not interested in a ‘recovery’, not in the way we mean anyway. What they want is a ‘recovery’ for their own people.”

Exactly!

@16

“Labour have never left office with the economy in a good state, not even once.”

Hmmm… but no government “leaves” office with the economy in a good state, it’s most of the reason why they are politely *asked* to leave by the electorate. Off the top of my head everytime we’ve switched from blue to red or from red to blue the economy has been in a bad situation (allowing for Sally’s interjection about the definition of economy, good, etc). I think the simplest answer (Occam’s razor maybe?) is as others have suggested that the media is mostly right-wing & pro-Tory so the myth has grown out of all proportion to any grounding in fact – if it ever had any. I mean it’s such a burdensome myth that Labour even had to promise to stick to Tory plans way back in ’97. New Labour and that.

Oh and I disagree with the idea that the Cons don’t have the interests of the country at heart, just that their definition of “the country” doesn’t include anyone unfortunate enough to be young, old, sick, disabled, unemployed, poor, etc etc.

There is a lot of bureaucratic constriction and most of it workforce scenario planning rather than, you know, doing a job. I sometimes worry that the main institutions of Blighty just aren’t up to it.

You honestly believe they don’t want to be in power?

It doesn’t matter to them, I’ll ask you again – what will happen to them if they lose the next election? Will all their wealth be confiscated? Will they face the guillotine? Or will they simply toodle off to a plethora of directorships and lucrative speaking engagements courtesy of the people they spent four years enriching?

When they fail it won’t matter, nothing will be politically or ideologically established, the notion that ‘x’ doesn’t work won’t become enshrined into the fabric of society. They’ll just get another go in a few years time, they have billions to gain and absolutely nothing to lose.

“chicago school inspired” – this would be the USA under Obama that pumped billions of dollars out as stimulus? Doesn’t sound all that Chicago-ish to me.

This would be the USA where corporate profits are going through the roof and yet many are still struggling, just as happened in numerous countries in central and south America.

http://www.huffingtonpost.com/2010/11/23/corporate-profits-q3-2010-_n_787573.html

So Sally you consider employment to be a very important factor. Is that the only one? If not then what other factors should go in and why? When you’ve worked all that out you may have something worth talking about instead of odd ranting.

“the fact that inflation is risising, earnings are stagnating and real wages are falling is not ‘new news’. It’s been obvious for sometime. Meryvn King made a major speech on this very topic two months ago. It seems odd that the OBR would haved just grasped this fact.”

Maybe they haven’t just grasped it, but this is the first set of forecasts they’ve produced since it became clear?

“as Mervyn King has noted one the major factors behind higher inflation in 2011 has been the impact of January’s rise in VAT. Osborne can hardly blame ‘the wrong sort of inflation’, when his own policy is helping to stir that inflation.”

…to say nothing of public sector pay freezes, which are obviously part of the reason wages are stagnating.

“I’m not sure that higher inflation really can explain missing the borrowing forecasts.”

It’s not *higher* inflation per se that’s supposed to be the problem, is it? It’s “the wrong sort of inflation” – inflation unaccompanied by wage growth etc. That might not be a one-year-only phenomenon even if higher inflation is.

The truth behind George Osborne’s Deficit Reduction Plans (the rate at which we drive down the amount the country borrows)
A c loser examination of the ‘RED BOOK’ , the truth is that, if we look at his forecasts last year and compare them with next year, he fails to hit his targets by a country mile.
• Last June he said borrowing for this year would be 116 billion pounds but this has gone up to 122 billion.
• And in 2012 he forecasted borrowing of 89 billion but he’s now saying it will be 101 billion.
• This is massively important, while the country is still borrowing our debt figure is not going down but up and up.
• Remember the government said to judge them over the course of the parliament and their ability to reduce the deficit.
• Well by the end of the parliament (2015) the Con-Dem’s forecasts our national debt would have dropped to 1.3 Trillion Pounds but infarct the Red Book has revised this figure up to 1.35 or even . 6 Trillion Pounds .
• So the government is now forecasting another 300 billion pounds, on the national balance sheet by 2015
• Why does this all matter? Well we are paying 44 billion in interest rates today and from next month we will be paying 50 billion pounds a year, this dead money, which could be spent better and elsewhere.

Unfortunately for us this means further and deeper cuts to living standards, jobs, public services and a slowdown in growth will continue into 2012/13 and possibly beyond.

George Osborne’s experiment to prove Keynes wrong is simply going to wreck the UK.

Most public sector workers made redundant and the knock on wont take effect in real terms until after March as the last are laid off, and services closed.

You’ll then be looking at 2-4 months before this hits the private sector.

Personally I think things will look fairly OK, but at the end of summer the shit will really have hit the fan and Osborne will be really under pressure.

To undo the public sector cuts and restart the economy back to where we are now today will cost us all dearly and only fuel our deficit.

Just a quick note post-Budget:

Table 4.18 of the OBR report tells us that higher inflation is adding £5bn to social security bills over the period, table 4.19 reveals that it will add £1.8bn to tax credits, 4.20 gives a figure of £1.6bn on public sector pensions and 4.21 shows £3.3bn on debt interest payments – for a ‘wrong sort of inflation’ figure of £11.7bn.

Against borrowing revised higher by nearly £45bn.

I’m claiming victory on this…

@38: I’m not a big fan of Keynes but even I don’t believe that his solutions consisted of nothing more than ‘spend until you go bankrupt’. You have to have a surplus to spend that should have been built up in the boom times. We don’t have that and who do we have to thank for that?