Slugger O'Toole

Conversation, politics and stray insights

How a spot of economic revisionism may yet save George Osborne (and friend David)…

Mon 23 July 2012, 4:08pm

Interesting take on what on the face of it look like some disastrous polling for the current Chancellor of the Exchequer from YouGov Supremo Peter Kellner. It’s predicated on the tendency of forecasters to be overly pessimistic about actual performance of the UK economy:

The revisions of the 2009/2010 figures came well after the last general election. They were far too late to help Labour. This time, any revision is likely to come well before the next election, in good time for Osborne to tell a happier story.

Of course, this may not save him or his party. Even if the most recent GDP figures are revised upwards, nobody can guarantee that growth will continue. Britain’s export markets, especially in Europe, still look fragile. We may find that the double-dip has been postponed but not prevented. Plan B may still be needed.

However, any dispassionate assessment of Britain’s current economic problems must cope with the financial equivalent of the fog of war. Nobody can be sure where we are, even less where we are heading. Which means that Osborne can’t be certain that Plan A is working – but his critics can’t be certain that it is doomed.

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Comments (17)

  1. andnowwhat (profile) black spot says:

    Phrases like “when the upturn happens” just shows that these guys have not got a clue, as does blaming the European problems for the lack of growth.

    Yep, it was fine for them to tell SMEs (thought they supported them and they were to be part saviour?) to [text removed - mods] find markets from their own pockets whilst the government is incapable of realising that it must seek to do business beyond the EEC.

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  2. Mainland Ulsterman (profile) says:

    The problem is, the Treasury is down on its own predictions – which presumably were predictions about the figures as announced, not as they might appear in 2 years’ time. We were supposed to be looking at something like 2.4 per cent growth this year, according to the government’s own plan: instead it’s been revised down to 0.8 per cent and may go lower (correct me if I’ve go these figures a percentage point or two out one way of the other).

    I think one thing the government seems to have under-estimated is the extent to which private sector fortunes are dependent upon public sector spending. Strategy seemed to rest upon the idea that the private sector would surge to replace the holes being carved out of public spending. How this was going to happen, with so many of the public worse off due to those very public sector cuts, I know not – let alone the large parts of the private sector that works for the public sector. This was why the rush to cut quickly was so foolhardy – it hasn’t created a wonderfully lean environment for new start-ups to forge ahead, it’s exacerbated the already difficult conditions. And guess what Sherlock, recovery is slow as a result.

    My former employer, a large research agency, was one example. A thriving private sector business, but it took a huge hit when government spending was cut back.

    What we’ve been going through is a huge social and economic experiment by a small group on the right. The cuts have measured and timed not out of some fine economic judgment but because of a political ideology that believes in a small state, low tax model and which has seen an opportunity to mould the country in that direction. They choose their approach because they want it to work, rather than because there is an evidence in will or could work.

    They are clueless economically but worse, they don’t see the social health of the country as the proper business of economics.

    I think the Tories have got off very lightly so far because people were very tired of a by then openly tired and shambolic New Labour in 2010. People bought the nonsense that Labour caused the slump (I note Kellner quotes revised economic figures showing what a good job Labour was doing in 2009-10). The Tories had agreed with virtually all of Labour spending rises at the time. Their squawking in 2010-11 about Labour getting us into a mess was massively disingenuous; but it did work and it protected them despite their obvious incompetence virtually from Day 1. The message is wearing thin now though and I think Labour should grasp the nettle of their pre-election economic record and challenge the Tory / coalition narrative on that. To be fair to Ed Balls he has started doing that more, but they need to get the 2009-10 figures in front of the public and remind them how it could have been. People need to understand there was an alternative to the idiotic ideological detour to disaster that a few public school political fantasists have put us through.

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  3. andnowwhat (profile) black spot says:

    MU

    One phrase constantly occurs to me: They know the price of everything, the value of nothing. They’ve no concept of the social wealth that public sector workers bring. I’m astonished at the rank and file of the LibDems. They have got nothing form the tories and lest they do something, they are looking at years of political oblivion (well, they might have a chance if Scotland goes). The policies are verifiably not working on an economic level but as you assert, that’s not what they are at, this is an ideological agenda of the right.

    Across the UK, high streets are full of to let signs, pound shops and gaudy sale signs in windows, Not only are there so many people who can’t spend, many of those who can spend are afraid to because of insecurity. Meanwhile, banks are fed money via QE (including the laundering via “aid” to Ireland) whilst the much vaunted SMEs cannot get the credit they need.

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  4. Hi, Mick,

    George and Dave have yet to address this looming titanic iceberg, which isn’t going away, you know ……… Posted Monday 23rd July 2012 17:45 GMT amanfromMars 1 …. on http://forums.theregister.co.uk/forum/1/2012/07/23/amazon_lovefilm_pushbutton_london_office/

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  5. andnowwhat (profile) black spot says:

    Great to hear another story from the party of the haven’t a fek’n clue: Paying cash is immoral. This from a party who’s chairman, William Hague, spent 11 years refusing to comment on the tax status of their major party donor, Green.

    Oh! And they were happy to bang on about Jimmy Carr’s tax payments but when the tory supporting Gary Barlow’s were revealed to be the same, the very next day, Dave decides that he doesn’t comment on individuals finance.

    It’s bad enough that they’re c****s but they’re also a useless, inept bunch of c****s

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  6. Old Mortality (profile) says:

    MU
    ‘I think one thing the government seems to have under-estimated is the extent to which private sector fortunes are dependent upon public sector spending.’

    Private sector activity which depends on public spending is not of the kind which should be encouraged. If you’re only customer is the public sector then you’re effectively part of the public sector. Most people don’t think of lawyers as being part of the public sector but many of them receive their entire income from the state.

    andnowwhat
    ‘They’ve no concept of the social wealth that public sector workers bring.’
    … at a price that’s no longer affordable.

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  7. articles (profile) says:

    Given that income inequality is increasing inexorably and more so in the UK than anywhere else in the developed world (as I seem to recall reading in the Guardian) the public sector becomes even more important as a means of redistributing income and wealth. Education and Healthcare, free at the point of access, is a price worth paying on those grounds alone.

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  8. andnowwhat (profile) black spot says:

    The recession continues. The royal jubilee and the weather get the blame this time.

    Anyone fancy doing a list of Gideon’s excuses? I’ll kick it off with the Japanese tsunami, whatever the hell that had to do with the price of eggs in the UK

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  9. andnowwhat (profile) black spot says:

    Old Morality..

    Dave wants to set up a society where people are constantly insecure in their jobs. That’s a complete disaster for the economy but he’s too thick to work that out

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  10. Old Mortality (profile) says:

    articles
    ‘…the public sector becomes even more important as a means of redistributing income and wealth.’

    …through six-digit salaries for doctors and even larger payments to legal-aid parasites.

    andnowwhat
    ‘Dave wants to set up a society where people are constantly insecure in their jobs.’
    When did he say that? Anyway, why should public sector employees enjoy more security than other workers, regardless of their value or performance, unless they’re animated by a public service ethic which would imply a willingness to accept a lower income than they might
    otherwise achieve.

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  11. articles (profile) says:

    articles
    ‘…the public sector becomes even more important as a means of redistributing income and wealth.’

    …through six-digit salaries for doctors and even larger payments to legal-aid parasites.

    Yes both have very strong trade unions sorry self regulating professional bodies

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  12. andnowwhat (profile) black spot says:

    Up to 2008, public service workers, like myself, endured endless ribbing by our private sector worker friends about our wages, in particular. Unlike many private pensions, our’s (superannuation) was carefully managed with conservative investment.

    Isn’t it odd that those in finance say that they deserve their large salaries and even threaten to leave but doctor’s and lawyers get attacked for their salaries, 2 elite professions which demand high levels of intelligence and skill.

    Having worked in the NHS for years, I’ve seen what junior doctors have to endure and I wouldn’t wish such demands on my worst enemy. Then they go in to their speciality (unless they become a GP) and have further training, which continues throughout their career.

    Meanwhile, the geniuses of the financial world, who played a massive part in bringing us to where we are, continue their delusion

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  13. articles (profile) says:

    I wouldn’t begrudge the medics their money, as to lawyers the jury is still out.

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  14. Old Mortality (profile) says:

    andnowwhat

    ‘Having worked in the NHS for years, I’ve seen what junior doctors have to endure and I wouldn’t wish such demands on my worst enemy. Then they go in to their speciality (unless they become a GP) and have further training, which continues throughout their career.’

    You’re missing the point. It’s not about how worthy they are, it’s about whether we can go on paying them as much as they think they deserve. Your witless comparison with bankers is entirely irrelevant.

    articles
    I presume you’re wholeheartedly in sympathy with their tantrums over pensions.

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  15. BluesJazz (profile) black spot says:

    The public sector/private sector divide over pay and pensions is the biggie in the South/Republic, and it’s going to be here and the rest of the UK and Europe.

    The UK government is actually dealing with this. Though the Doctors are horrified they may get slightly less than £70,000 annually in retirement. Horrors!
    Most public sector workers will be lucky to get £5,000.
    Your GP got to where he is through privelege, he expects to stay there and make sure his children bet the same.

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  16. Old Mortality (profile) says:

    Blues Jazz
    ‘Your GP got to where he is through privelege, he expects to stay there and make sure his children bet the same.’

    That’s just given me a great idea for promoting social mobility – offspring of doctors should be at the bottom of the pile when allocating places in medical training.

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  17. Mainland Ulsterman (profile) says:

    Old Mortality,
    To follow your logic there should be no private sector involvement in public sector projects – which would actually increase the public sector, not shrink it.

    You may have a point if you’re saying firms wholly dependent upon public sector-sourced contracts should be regarded as effectively part of the public sector. But I was talking about that whole wedge of the economy which is mixed private and public – big construction companies, research companies like my old one, bits of pharma and so on. In the real world there is always going to be a very significant portion of private sector businesses that get involved in public sector work and it’s no bad thing surely. Odd to hear that criticised from the right though …

    I suspect the government underestimated the wider impact on the economy – and economic confidence – of public sector cuts. Even if you’re a private sector worker like me, you’re likely to have public sector employees in your household, wider family or circle – and what happens to them affects at the very least your take on how confident you feel about the economy and may well affect your household income too. The public and private sectors do not live in different worlds, it’s the same world – and they are intricately interwoven with each other.

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