Today the recession / slump (call it what you will) moves on with this (from the Telegraph):
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UK unemployment jumps to highest since 1995 as recession pain bites
UK unemployment has jumped to the highest in almost 15 years, as the downturn forces companies to axe workers.
The number of Britons joining the dole queue climbed by 210,000 to 2.47 million in the three months to the end of July, figures from the Office for National Statistics showed today. That's the highest level since 1995.
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But beyond that Osborne has been active recently and there has been a favourable reception to his moves .
Christina
TELEGRAPH 16.9.09
1. Osborne's path from austerity to prosperity is in the right direction
For the Tories it was a significant victory yesterday to witness Gordon Brown finally admitting to what any sane person had concluded was necessary not just a year ago but at least two years ago as we entered this crisis. Cuts in public spending to stem the new crisis of public debt.
By Damian Reece
The state's liabilities are so big and potentially destabilising that they now seriously endanger any nascent recovery. The Prime Minister's moment of clarity came at the annual TUC conference. But it wasn't just any old cuts. It was a case of cut, cut, cut and cut again - costs, inefficiencies, unnecessary programmes and lower priority budgets. They'll have to go, he said. [If he can identify them now, why did he allow them and why not stop them now ?-cs]
Having gorged on debt to turn us into the world's most financially obese nation, Brown wants us to back him while he takes us on a crash diet of high fibre fiscal bran flakes. Brown's conversion to fiscal rectitude has all the credibility of a Marjorie Dawes Fat Fighters session.
But to have a high-spending Labour Government – the highest in history – finally on the run is a massive opportunity for the Conservatives.
As I said in yesterday's column, the electorate know what's coming but they want Parliament to get on with it.
"Only by facing up to the facts now will the next Government be able to start building a new economic vision for the future," was my conclusion
George Osborne, the Shadow Chancellor, yesterday made an intelligent start to setting out that vision for the Tories. His speech to the Paths Back to Prosperity conference, organised by The Spectator magazine, revealed in more detail than previously how a Tory government would run the economy.
His plan makes sense and, if carried through, would deliver the sort of policy mix we've been advocating here for some time – a combination of low interest rates and tight spending policies with supply side reforms to boost our competitiveness. Although Osborne didn't go so far as to say it, he could have said that such a policy approach would result in the role of the state in the economy being minimised and that of the private sector being maximised.
That doesn't mean doing away with essential front line public services to maintain the welfare state, as Labour will claim, but delivering what is really needed by society's most vulnerable in the best, most efficient manner, while liberating the rest of society from the impoverishing effects of an over-bearing and over-funded and wasteful state sector.
Brown's message on cuts to the TUC was that they would come, eventually, when recovery had arrived. We could be waiting some time if we allow Labour's prevarication to hold sway beyond the next general election. Unless public debt is tackled soon it will send the economy into reverse. The Bank of England can't inflate money supply for ever; it can't keep buying the Government's IOUs indefinitely. The markets know this and will soon start challenging the Treasury's ability to fund the public debt at anything other than higher and higher costs to the taxpayer.
That's why we need more than a sense of urgency. We need credible plans for action.
At least twice in his speech Osborne referred to the need for "early" action to control spending. The sooner the better. Only with a tight fiscal regime can the Bank maintain low interest rates to help wake the private sector from its slumbers.
It's true, you can't spend your way out of recession. You may be able to use state coffers to underpin a crumbling financial system temporarily but public spending will serve only to suffocate sustainable, long-term output growth driven by private enterprise.
While fiscal discipline and an active monetary policy to keep rates low are prerequisites for recovery, they are not sufficient. Britain still needs to be a world leading location from which to do business and that's why Osborne's supply side reforms ring true. When I first took over this column, several years ago in a completely different world, I urged David Cameron to join me in adopting the mantra of the three Es - education, environment and energy - when designing financial reform.
I was delighted to see his Shadow Chancellor yesterday call for "radical school reform", more private investment in areas including "smart energy networks" and the transition to a "low carbon economy". He added lower corporation tax rates and a simpler tax system to his reforms plus welfare reform, better skills and more infrastructure investment for good measure.
This would add up to a formidable package and give Britain a sense of priority and direction. Osborne still bemoaned the banks' lack of ambition on lending but a return of credit will come with a return of confidence. That latter commodity is in the balance with much now depending on how quickly and effectively the next Government tackles its debts
2. Tories' George Osborne unveils new economic model for UK
A Conservative election victory would trigger an emergency budget to ensure low interest rates, cut public spending and effect a "programme of reform no less radical than the one that restored the UK's economic competitiveness in the 1980s and 1990", according to George Osborne, the shadow chancellor.
By Louise Armitstead
Mr Osborne, who unveiled the "Conservative Strategy for Recovery" at a conference organised by The Spectator magazine, claimed a triumph over Gordon Brown on the argument of continued public spending. Mr Osborne said that Mr Brown's announcement of public spending cuts at the TUC Conference amounted to "complete capitulation".
He said that within two months of an election the Tories would "effect nothing less than a new British economic model" that "will require fundamental change across the whole spectrum of economic policy, including taxation, infrastructure, skills, housing and financial regulation".
The Tory policies are:
• Monetary activism. The shadow chancellor said as strategies for recovery, both public spending and the VAT cuts were wrong. Instead he argued that keeping interest rates low – for public finances, businesses and individuals – would be the "main focus" of economic policy. He added that the so-called "monetary policy transmission mechanism" – making sure interest rate cuts are passed on as lower borrowing costs for households and businesses – was key.
• High-capitalised banks to ensure that costs were not simply absorbed by "zombie banks" but passed onto businesses and individuals. He said: "Monitoring bank margins and the extent to which lower interest rates are passed through to consumers should be a key focus."
• Bank competition – including promoting new entrants, expansion of existing smaller players or divestments of "dominant groups".
• Bankers' pay that is pro-competition but not paid for by the taxpayer. Mr Osborne stopped short of specific pay policies but gave warning: "The profits that the banks are making are not simply the results of success, they are subsidised profits ... We are underwriting these profits for a purpose – to help recapitalise the banks and support the broader economy, not so that they can be paid out as huge bonuses or distributed as excess returns to shareholders."
• Fiscal responsibility. Mr Osborne promised a "credible commitment to cut spending and get to grips with our record budget deficit". He warned that "the consequences of a loss of international confidence for a debt-laden economy like the UK would be truly devastating". He said that while the Bank of England is buying more debt than the Government is issuing, the problem will be disguised, but when this stops – we will have to rely on international investors to fund our borrowing. At that point we will start to discover the true market appetite for UK government debt.
• Supply-side reform. Mr Osborne said the Tories would introduce a range of policies designed to boost the economy without public spending. These would include lower corporation tax rates and a simpler tax system; radical school reform, welfare reform and better skills; more private investment in infrastructure and other long term productive assets such as high speed rail and smart energy networks; and the transition to a low carbon economy.
• Regulatory reform – designed to "create a financial system that serves the long-term interests of the economy, not its own short-term interests".
At the TUC Conference the Prime Minister dismissed Tory ideas as the "wrong choices at the wrong time for the wrong reasons because they have the wrong priorities for Britain".
FINANCIAL TIMES 16.9.09
Osborne plans urgent ‘cuts’ Budget
By George Parker, Political Editor
George Osborne said on Tuesday he would introduce a “cuts” Budget within weeks of a Conservative general election victory, rejecting Gordon Brown’s claim that such a move would “derail the recovery”.
The shadow chancellor said Britain was an open economy that could easily withstand fiscal tightening next year and that he would waste no time in tackling the projected £175bn deficit.
“We would need to take early and big decisions for dealing with the deficit,” he told a Spectator debate on the economy. Supply-side reforms in education and transport infrastructure would also be priorities.
Mr Osborne, speaking in London, said if the election were held on May 6 2010 – as widely expected – he would implement a radical and painful Budget in June or July. He has half-joked he expects the first Tory Budget to make him the most unpopular man in Britain, as he delivers tough medicine at the start of a Tory term in the hope voters see the dividends by the following election.
Although he says spending cuts, not taxes, would bear the brunt of the fiscal tightening, there is speculation Mr Osborne would follow Sir Geoffrey Howe, a former Tory chancellor, in raising value added tax rates. Mr Osborne admitted he did not have all the details of government contracts, particularly in the defence area, but he also plans to keep secret many of his planned cuts for electoral reasons.
Cabinet ministers in a Tory government would be required to sign up to the radical cuts package before they “go native” in their new departments.
Lord Mandelson, the business secretary, has said that Mr Osborne and other Tories are “foaming at the mouth” at the prospect of curbing the state, but the shadow chancellor said tackling the deficit was of vital national interest.
He claims it would help keep interest rates low and cited Ben Broadbent, chief UK economist at Goldman Sachs, as saying that fiscal tightening in an open economy “has little appreciable impact on aggregate output” because it shifts demand from non-traded goods towards the traded sector, with exports replacing government spending.
Vince Cable, the Liberal Democrats’ Treasury spokesman, called for a fiscal consolidation of 8 per cent over five years and argued that voters should be given a clear prospectus.
The main proposals include zero overall growth in public sector pay – - - - - =
[These were reported in my “ Cable goes for his 'choice cuts'” yesterday)
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