PBR In A Nutshell

Yesterday, Tories were nervously expecting Labour to steal a tax-cutting march. What Darling finally announced is complex, irrelevant and unaffordable. The main economic effect of the flagship VAT policy will be felt by the big spenders who spend more on goods that attract the full rate. But of course, the massive movements in the updated borrowing forecasts (previously shown by Dizzy to be systematically optimistic) are the most shocking element of the PBR as shown below.



Clearly the 45% tax rate and 0.5% NI rises aren't going to plug the gap. You might reasonably ask where the other future tax rises were in Darling's announcement. They are missing because the government is banking on spending cuts and efficiency savings the likes of which they have never achieved in the past... The message is clear - we're in the shit and our grandchildren will be paying for it.

Increasing The Size Of The State

Most governments would like to spend more and tax less especially when approaching an election. New Labour has been on an election footing since Gordon Brown was crowned leader and (surprise surprise) the size of the fiscal deficit has gone up and up since then. The G20 meeting was of course nothing more than political cover for turning this significant fiscal gap into a chasm.

As well as being politically cynical and utterly irresponsible by passing the tax burden onto future generations, increasing the size of the state is economically damaging. Much research negatively correlates the proportion of government spending in the economy with economic growth.

In Mervyn King, we have a discredited Bank Of England head, who is probably more focused on fighting to keep his organisation independent than tackling the real problems we face. These bank forecasts look like complete fantasy to me. The recession is much worse than policymakers seem to realise. Here in the real world, bad news is accelerating. Gordon Brown seems quite happy. He is a vampire feeding on our misery.

PragueLabour

I remember certain online combatants from the Labour Party threatening to set up Prague Labour identity. It seems that fifth columnist Cynthia Roberts got there before them. Here. Understandably, she denies being an STB spy..

Why Are Labour Attacking Osborne? - To Please The Great Leader

Of course, it's true that Labour high command want Osborne out. Draper, Campbell, Mandelson and every small name Labour whip would all be there claiming credit were he to be moved. And on Labour's left, class war idiots like Bob Piper love nothing more than a mean-spirited campaign against a 'Tory toff', but I find it surprising that acute observers, Tim Montgomerie and Iain Dale have reached the conclusion that ;

1. Labour’s high command’s main motivation is to damage Project Cameron,
2. That motivation is relevant when it comes to picking our top team

I’d criticise point two for being too cynical, but point one for being insufficiently cynical. In my view, the anti-Osborne mob mentality at the top of New Labour comes from trying to please the leader. I doubt many will dispute that there is no Conservative politician who Brown despises more than George Osborne and it is that personal animus that is the primary motivation propelling Labour’s spin doctors and politicians on a collision course with George. Independent thought has been hollowed out of the Labour Party. It's cynical careerism all the way.

I must add that Tim and Iain's defence of George is doing him no favours. David Belchamber, who is my favourite commenter on Conservative Home, concludes that it appears that George retains his post solely because he is a close friend of David Cameron. Outside the Westminster Village, that is a widely held and deeply damaging perception that Tim and Iain are reinforcing. My view is that the Shadow Treasury Team urgently needs freshening up and clarity of purpose. Short-term face-saving is not a justification for delay.

Little Positive Effect!!!

London’s leading shares remained in the red during the afternoon session as Obama's US Presidential election victory had little positive effect on the markets...

As at 9am on Thursday 6th, I reckon the FTSE has fallen about 6% since Obama's coronation...

Since when did little positive effect mean deeply negative?

Obama Milestone

The occasion of the first black US president ranks up there with the first man on the moon as momentous event that will go down in history. It represents more than just a wonderful symbol, but unfortunately I can't help but wish that was all it was.

In Obama, we have an avowed economic protectionist and a foreign policy prevaricator. There will be sops to the left, but having experienced Blair 1997 or Clinton 1992 it feels like we've been here before. I expect Obama's first term to be strong on right-wing rhetoric with a determination to hold the centre ground. Obama's campaign for 2012 starts here.

This will no doubt fall on deaf ears, but is there any chance we can get back to sorting out the UK now?