The UK is guilty of “constantly accommodating” China, hissed an anonymous White House official in mid-March. The British government had just announced the UK would become a founder member of a new China-led financial institution that one day could rival the World Bank.
Ever since Beijing launched the $50bn Asian Infrastructure Investment Bank last October, US officials have insisted Western countries “could help shape the standards and rules” this institution will adopt “by staying on the outside”. The real reason for Washington’s lack of engagement, of course, actually lay in fears the AIIB will become an instrument of Chinese foreign policy. That, after all, is precisely the role the World Bank has played for the US for the best part of 70 years.
Gordon Brown is to stand down from the House of Commons. The Former Chancellor and Prime Minister won’t seek re-election as an MP in May 2015, we learnt last week. Some will remember Brown for his tub-thumping speeches, for his claim to have “saved the world” in the aftermath of the 2008 financial crisis or for selling much of the UK’s gold reserve at the bottom of the market.
Others might recall his hard-bitten fingernails or cringe-making caught-on-tape condemnation of “that bigoted women” – after a pensioner and lifelong Labour supporter quizzed him on immigration during the 2010 general election campaign.
After writing a weekly economics column in this newspaper for a decade or so, along with a fair few elsewhere, I can now finally say I’ve made it. Why? Because, as I only lately discovered, some paragraphs from one of my Sunday Telegraph offerings appeared in a recent economics A-level examination.
“The UK is locked in the most feeble economic recovery in our history,” this column argued back in mid-2013. “Real wages continue to decline … and there’s been little sign of any ‘rebalancing’ away from consumption and towards exports”. Having read this quotation on their exam paper, along with a few more of my choice words, A-level candidates were then asked to “evaluate Mr Halligan’s analysis”, providing evidence to support their views.
Most pundits assume the UK general election will be fought against a strong economic backdrop. The Conservatives certainly hope that buoyant consumer sentiment, including continued rock-bottom interest rates and stable financial markets, will help them secure victory, and even an overall majority, in May 2015.
After David Cameron’s conference speech in Birmingham earlier this month, complete with a promised £7bn income tax cut, some 39pc of voters said it was the Tories “they most trust to manage the economy”, compared to just 19pc backing Labour. It was in the afterglow of that Prime Ministerial speech that the Tories chalked up an overall poll lead for the first time in more than two years. A strong economy, then, will clearly be front-and-centre in any successful Conservatives general election campaign.
I’d like to congratulate Douglas Carswell on forcing a by-election in his Clacton constituency. Furthermore, I hope he wins. I write this not because I’m a UKIP supporter, because I’d take a particular pleasure in seeing the Conservative party suffer in this high-profile Essex constituency or because Carswell is a personal friend. None of these things is true.
What is true is that on the various occasions I’ve met him since he entered Parliament in 2005, and in much of his prodigious written output, I’ve found Carswell to be not only perceptive and intelligent but also, genuinely principled. He’s a debater and thinker who identifies tough issues, immerses himself in research, then comes to clear, intelligible conclusions. That’s rare among MPs.
As far as most observers are concerned, Mark Carney’s speech at the Mansion House last Thursday boiled down to a single half sentence. The first rise in interest rates since July 2007 “could happen sooner than markets currently expect”, the Bank of England Governor uttered, to assembled City grandees and the wider world beyond. This sparked a frenzy of speculation that rates could start rising from their historic low of 0.5pc, where they’ve been since March 2009, sooner rather than later.
Before Thursday, the consensus expressed in bond and currency markets was that the first rate increase in almost seven years would happen early in the second quarter of 2015. Carney’s after-dinner bombshell changed that, with economists scrambling to update their forecasts.
The Bank of England is increasingly optimistic about the UK growth outlook. Britain remains on course to expand by a very punchy 3.4pc this year, Governor Mark Carney revealed last Wednesday, presenting the latest quarterly Inflation Report. Our economy, then, is now growing at its fastest pace since 2007, prior to the financial crisis. The Bank’s Monetary Policy Committee further upgraded its 2015 growth forecast, from 2.7pc to 2.9pc.
Over the next 2 and a bit years (9 quarters), UK GDP is set to rise at an annual average of no less than 3.1pc. This latest Inflation Report is among the most bullish the MPC has published since it was established 17 years ago. Britain is now moving “from a recovery supported by household spending to an expansion sustained by business investment”, according to Carney. “The economy has started to head back towards normal”.
With next month’s European elections looming, and a general election just over a year away, the government is now vigorously trying to shift the political narrative away from the downsides of “austerity” and instead towards the benefits that derive from the prudent control of day-to-day spending.
Last week, a clutch of ministers – including George Osborne and David Cameron – were photographed inspecting building projects across the country, hard hats and high-visibility jackets in abundance. The message was that the coalition is delivering on infrastructure, as the Treasury conveniently published an updated list of major projects set to be completed or started in 2014/15.
George Osborne has been widely lauded for his fifth budget. The Chancellor’s political stock rise sharply since March 19th, with headline writers cheering the higher personal tax allowances, fuel duty freeze and greater investment incentives.
Coinciding with improved news on inflation and wages, Osborne’s upbeat budget has added to a growing sense that the UK has turned the corner, with the sunlit economic uplands now in sight, in good time for the May 2015 general election.
What we saw last Wednesday was, by a considerable margin, George Osborne’s most impressive budget. The Chancellor’s Commons set piece, in terms of both content and delivery, was substantive, sure-footed and – here’s the clincher – actually stood for something.
The package of measures in Osborne’s fifth annual red-box wielding ritual were clearly designed to promote business investment, boost foreign trade and unlock pension savings. For once, no post-budget spin was required. The Chancellor has expressed some strong opinions and developed some policies you can hang your hat on. Good – and it’s certainly been a long time coming.
While the microeconomics of Budget 2014 (the individual measures) contain much that is laudable, the bigger macroeconomic picture remains dire. I’m glad Osborne has put his thinking cap on and finally decided to do something. But I remain extremely concerned about the UK’s broader budgetary stance, our massive (and still fast-expanding) national debt and the lack of determination when it comes to rescuing Britain’s public finances from their current parlous state.