Is this Clegg’s “green shoots of recovery” moment?  I’m sure he will not be allowed now to forget Norman Lamont’s infamous phrase nor the fact that the Conservatives laid in to Shriti Vadera when she used the phrase herself.  It does look rather odd following so closely on the heels of a very worrying Nationwide Confidence Index (PDF) not to mention all the other weak confidence surveys.

   Filed under: Recession | No Comments »

Today’s employment figures confirm the problems facing older unemployed people. In the first two years of the recession, it was clear that young people were being hit harder than any other group, and I argued that they should be the primary target for government support.

I still think that we have to pull all the stops out to stop creating another generation of young people facing greater poverty and worse employment prospects for the rest of their lives. But it’s becoming plain that there’s a group of older unemployed people who are finding it hard to get back into employment. Since the start of the year, when the labour market began to recover, over-50s have gained less than other groups. Read more »

   Filed under: Equality, Recession | 3 Comments »

Two articles this weekend explain the nature of the crisis in the USA. In the Financial Times, Edward Luce writes a long article about what’s gone wrong with the American dream -  not just the recession, but the great stagnation of the last thirty-forty years. And in the New York Times, Robert Shiller explains why jobs are crucial, rather than GDP growth. Both highlight the fact that what the US needs to do is to focus on better prospects for what they call the middle class (what we usually call the working class in the UK, or Middle Britain) – people with steady jobs who are the motor not just of economic but also social progress. Read more »

   Filed under: Economics, Globalisation, Health, Middle Britain, Recession, Social mobility | 1 Comment »

The debate rages in the Financial Times comment columns – should we continue the fiscal stimulus as the TUC argues, or cut the deficit as fast as possible, as the Coalition Government is doing? And it rages around the world. The latest paper from the US-based Center for Economic Policy and Research, “Alternatives to Fiscal Austerity in Spain”, argues that the pro-cyclical policies of cutting the deficit being followed by the Spanish Government, as advocated by the IMF and EU, could lead the Spanish Government’s debt to be higher than if the maintained their fiscal stimulus. The main argument – which the TUC believes also applies in the UK – is that the most important element of debt reduction is growth, and cutting Government expenditure will reduce or restrain growth, leading to more debt (due to lower tax takes and more state benefit expenditure, for example).

   Filed under: Economics, Public spending, Recession | 1 Comment »

There’s a terrific piece by Robert Skidelsky What do deficit slashers wear under their hair shirts? on Comment is Free.

Back to Keynes!

   Filed under: Economics, Recession | 1 Comment »

I have no idea why he went, though like most commentators I find the official explanations hard to believe. If he was always going to go now, you might think they would have had a successor lined up.

There is nothing wrong with bringing some genuinely independent scrutiny into public policy making, but Budd’s departure will make many more ask whether the OBR is truly independent.

The previous government got the National Audit Office – which does fulfil this independent role – to examine Treasury forecasts. But the new Chancellor did not extend NAO scrutiny to those prepared by the OBR. Read more »

   Filed under: Budget, Economics, Recession | No Comments »

Here is Samuel Brittan in today’s FT:

The trick of the British establishment is to turn discussion from “whether to” into “how to” questions. The media debate is on which government services to cut or on the balance between spending cuts and tax increases. Once the discussion has been channelled into these trenches the establishment has won. The real argument, however, should be on whether we need unparalleled fiscal austerity or not. Read more »

   Filed under: Economics, Recession | 2 Comments »

On Friday 4 June, a joint delegation of European trade unions and employers met with the President of the European Commission to discuss the impact that cuts in public expenditure across Europe will have on employment. Unions and employers had agreed a joint declaration on the issue, which saw agreement that growth is the only sustainable solution to the problems of the budget deficits caused by the global financial and economic crisis. It is incredibly important that employers were willing to join the ETUC in calling for growth, thus rejecting the prevailing orthodoxy in Governments, the Commission and bodies like the OECD and IMF that cuts are the main priority. On the eve of the meeting, ETUC General Secretary John Monks  warned that the current path risks repeating the errors of the 1930s, when co-ordinated cuts in public expenditure around the developed world turned the global recession into a profound depression. AS well as supporting growth and a sustainable industrial strategy, the ETUC is arguing for financial sector re-regulation, fiscal co-ordination and a financial transactions tax.

   Filed under: Beyond Crisis, Employers, Europe, Financial crisis, Public services, Public spending, Recession | 2 Comments »

The G20 Finance Ministers meeting this weekend in Busan, South Korea has just decided to turn its back on the unemployed and the poor, and retreat to the economic orthodoxies that led to the last recession and the Great Depression of the 1930s. Chris Giles,  writing for the Financial Times, reports that the communique just issued abandons the idea of a co-ordinated bank levy (although allowing it to go ahead in individual countries), and abandons support for fiscal stimuli, preferring instead to advocate public expenditure cuts . The market has won, and we will all suffer an age of austerity as a result. The only strongly dissenting voice was the US, which is still worried about growth. US Treasury Secretary Tim Geithner wrote to the G20:

“Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery,” he wrote, adding that fiscal tightening won’t “succeed unless we are able to strengthen confidence in the global recovery.”

Ahead of the summit, the International Trade Union Confederation called for no withdrawal of fiscal stimuli (ie no to cuts in public expenditure) until the unemployment crisis is over, as well as re-regulation of the finance sector and a financial transactions tax, and greater transparency and consultation with civil society on behalf of the Financial Stability Board.

   Filed under: Economics, Financial crisis, G20, Recession, Unemployment | 1 Comment »

Just when you thought every international institution was joining the headlong rush to demand that Governments withdraw economic stimulus packages, the International Labour Organisation (ILO) hits back. Opening the summer conference with the publication of its annual report, Recovery and Growth with Decent Work, the ILO has broken with the malign consensus (or what Paul Krugman calls “conventional madness”). ILO Director General Juan Somavia says 

“in response to pressure from financial markets, many countries are being pushed into stringent fiscal policies that jeopardize recovery, making it less likely that investments, growth, employment and wages will pick up in the short run or that tax revenues will recover any time soon. The end result is that deficits will become more difficult to reduce and debts more difficult to pay off.  So why now, at this very uncertain time of weak recovery, should the sovereign debt issue, with such a sense of a gathering storm, become the major, urgent, overriding global policy priority for markets? This may not be in their own interests if it leads to greater economic contraction or even a double-dip recession. It was just such a response that helped to bring about the Great Depression of the 1930s.”

   Filed under: Beyond Crisis, Economics, Recession, Unemployment | 1 Comment »

Lovely presentations of data on the UK public finances since the war by The Guardian here.  Scroll down to the table near the bottom and you notice something interesting: the period between 1946 and 1979, when the post-war social democratic consensus reined, saw only five years when the public finances were in deficit.  However, since 1979  there have only been seven years when the public finances weren’t in deficit.

Unlike orthodox neo-classical economists, I prefer empirical evidence and history to theoretical models and I think that counts as a pretty strong data set. It suggests two things: Read more »

   Filed under: Economics, Europe, Financial crisis, Politics, Public spending, Recession | 1 Comment »

One of the quiet success stories of this election has been the way some academics have contributed their expertise to the debates. My favourite has been the series of analyses of key policy battlegrounds published by the Centre for Economic Performance at the London School of Economics. CEP has now published the full set and if the subjects where I know something are anything to go by, they are fair, authoritative and expert. Read more »

   Filed under: Economics, Election, Equality, Labour market, Migration, Public spending, Recession, Unemployment | 1 Comment »