Given the nature of the event at which the speeches were made yesterday the party leaders were talking mainly in generalities . Nevertheless attitudes matter and the divide here comes across clearly.
I was wrong last night when I said Warner was better than his blog. He isn’t, as you can see! He actually merely repeats the populist cry for ‘more details’ of what should happen at an unknown date in unknown circumstances.
The Times’ leader sits uncomfortably on the fence but clearly the Times’ sketch writer had a lovely time at the conference - didn’t she?
Christina
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TELEGRAPH 24.11.09
1. A bigger state is not the route to recovery
David Cameron is showing that he grasps the fundamentals of economic recovery.
Telegraph View
Talk of a hung Parliament, prompted by a surprisingly tight Ipsos/Mori opinion poll over the weekend, added spice to yesterday's appearance by all three party leaders at the CBI's annual conference. There is nothing like the prospect of a close-fought contest to concentrate the political mind and Messrs Brown, Cameron and Clegg did not disappoint. By the time they had gone through their paces, the battle lines for the forthcoming election campaign were far more clearly delineated.
For the Prime Minister, the economic recovery will be delivered by the state. He may not have been quite as explicit as that, but that was the implication of his speech. His was the "first government in the world", he said, to produce a "time-specific deficit reduction plan" (a rather grand way of saying Labour intends halving the deficit in four years, a timescale that many of the business leaders in his audience will have found woefully unambitious). And while he offered lip-service to "unleashing" business dynamism, his detailed proposals were all Whitehall-oriented – introducing fast broadband services, building nuclear power plants, investing in high-speed railways, speeding up the planning process.
Intrinsic to this corporatist view was his reiteration of the message that fiscal stimulus (ie, more taxpayers' billions) must keep flowing into the economy or the recovery will be choked off. This, of course, is Mr Brown's most critical "dividing line" with David Cameron, who again argued yesterday that cutting the deficit hard and fast is not an alternative to growth but part of the solution. The Tory leader received some powerful validation from interesting new research by the Policy Exchange think tank, which has examined a dozen historical examples of public expenditure reductions, here and overseas, and concluded that spending cuts encourage faster growth while tax hikes impede it.
The Conservative leader wants to complement deficit reduction with creative measures to cut red tape and reduce taxes on jobs while embracing broader reforms to welfare and education, all aimed at tilting the balance of the economy more firmly towards wealth creation. As for Mr Clegg, the member of the trio with most to gain from a hung Parliament, he rather split the difference, endorsing Labour's time frame for clearing the deficit while at the same time echoing the Tory preference for spending cuts over tax rises.
It has long been evident that voters have lost faith in this Government, but the polls indicate that Mr Cameron has yet to convince them that voting for him will make a real difference. He clearly grasps the fundamentals of economic recovery – that should help.
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2. Britain has run out of money, the CBI is told
When the CBI met for its annual conference a year ago, the world economy was still staring into the abyss. Since then, we seem mercifully to have pulled back from the brink. Most major economies are already technically out of recession. Britain is expected to have joined them by the end of the year.
By Jeremy Warner
The worst of the crisis seems to be behind us. [Few others would agree though that IS the Labour ‘line’ -cs] But as Dominique Strauss-Khan, managing director of the International Monetary Fund, yesterday told this year's gathering of business leaders at the Hilton Hotel on London's Park Lane, the road ahead is far from clear.
The recovery is fragile, and still largely maintained by extraordinary levels of fiscal and monetary stimulus. A double dip recession is still possible, while there are signs, particularly in the banking sector, of a return to the bad old ways. Bankers, possibly in anticipation of the coming regulatory crackdown, are using loose monetary conditions to party again as if in the midst of a full scale boom. The reality in the real economy, as many of those at yesterday's conference could have told the miscreant financiers, is still shrinking levels of credit availability and rising unemployment.
With the task of household balance sheet repair still barely begun, and a fiscal consolidation of truly daunting magnitude fast approaching, it is hardly surprising that despite the nascent recovery, the mood among business leaders is scarcely any better than it was a year ago. Business is struggling to see where the demand and the growth, let alone the credit, is going to come from. The theme of the CBI conference was "routes to recovery" but as one wag put it, a more resonant title, given the mood, would have been "routes to nowhere".
\Mr Strauss-Kahn identified four key concerns. One is how to withdraw the exceptional levels of fiscal and monetary support without damaging the economy. His message here was that there is not yet enough private demand to allow for a swift exit.
Second, he's ever more worried about burgeoning capital flows to emerging markets, which he sees as potentially destabilising. Developing countries are ahead of the curve on recovery. This lack of synchronisation is leading to a heavy influx of capital into emerging markets, which in turn is helping feed asset bubbles and overheating.
Third, where are the new growth engines going to come from? The hope is that it will be the big surplus nations that provide the future demand, but as things stand, they are nowhere near big enough wholly to compensate for weak consumption in mature economies.
And finally, there is the whole question of financial reform. On this front, Mr Strauss-Kahn was almost apocalyptic in his warnings. It was vital, he said, that the world got this right, for another banking bailout of the size just seen would be socially unacceptable for democratic societies. It would not be possible to bailout the banks again, either politically or fiscally, so if we are faced with another financial crisis five years down the line, the consequences would be catastrophic. [He’s IMF - We are in Britain and our problems are both worse and different from other western countries. Mr Strauss-Kahn fails to spot this both over timing and over the real possibility not of a collapse in 5 years but next year! -cs]
So much for the analysis. What about the execution? All three of Britain's main party political leaders were on hand yesterday to outline their plans for fiscal consolidation and restoring growth.
Drawing comfort from Mr Strauss-Kahn's warnings about the dangers of withdrawing fiscal support too quickly, the Prime Minister stuck to already announced plans for halving the deficit over four years. He promises to keep fiscal support measures in place for as long as it takes to produce a sustained recovery in private demand.
Yet in placing so much of his hope for future growth on infrastructure spending, he seems to have plain forgotten that his fiscal consolidation plans involve some of the biggest cuts to capital spending by the public sector ever seen. The rhetoric on creating a business friendly Britain wide open and attractive to inward investment says one thing, but the practice of higher taxes and more regulation the complete opposite.
The other party leaders scarcely instil more confidence. Having been hurt in the polls for focusing too much on the pain of fiscal consolidation, David Cameron was keen yesterday instead to stress his strategy for growth.
An immediate "emergency growth budget" is promised if he wins the election which will include cuts in corporation tax. Unfortunately, it's a reality for a nation as fiscally challenged as this one that politicians cannot blithely go around promising tax cuts with no method of funding them. [Oh dear! Surly he knows that there is a mass pf evidence that cutting such taxes INCREASES tax yield and CREATES activity. Where has he been? -cs] Mr Cameron plans to pay for these reductions by cancelling allowances and other reliefs.
But nor is Mr Cameron stepping back from his commitment to start the fiscal squeeze earlier than the other two main parties propose.
I'm not going to enter the debate on whether fiscal expansionism crimps private sector growth and therefore undermines, rather than supports, recovery. Mr Cameron was banging on about it again yesterday, citing the example of aggressive marketing of national savings to support his contention that funding of public debt is sucking the lifeblood out of the economy. But you can argue it convincingly both ways. [That’s a ‘cop-out’! -cs]
There is in any case a less contrived justification for the Tory approach, which is that as things stand the country is set on the road to national bankruptcy. The sooner the problem is fixed, the sooner the economy can reboot and return to decent levels of growth. Fiscal support at best only smooths the correction. It doesn't eliminate it, since the effect is only to transfer a private sector debt overhang onto the public sector and therefore the taxpayer.
Mr Brown is right to insist that all major developed economies face similar fiscal challenges. [NO major economy - ,other than Japan whose problems are long-standing - faces the depth of our deficit -cs]
And to be fair, he's not as oblivious to the dangers as he seems. He's looked long and hard at the example of Japan, which is already a good deal further down the road to fiscal ruin than Britain with little in the way of growth dividend to compensate. He claims to be determined not to repeat these mistakes.
Ignore the electioneering, and the underlying policy prescription from all three political leaders seems wearingly similar. Nick Clegg, the Liberal Democrat leader, even seems to have accepted the Treasury's existing timetable for the restoration of balanced budgets – eight years.
The Liberal Democrats have been a bit bolder in saying how they would get there, but all the three parties need urgently to put more flesh on the bone.
What none of them can yet bring themselves to admit is that the immediate fix will require a big further increase in mainstream taxes on top of those already planned, regardless of any spending cuts further out [that’s because taxes work quickly while cuts take longer -cs] . And that's why those in business are so pessimistic about "routes to recovery". It's a changed world they've entered. Britain's flexible labour market will help the country adapt, but it's going to take time the economy to reshape itself around its changed circumstances. No wonder the capital is flooding east.
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THE TIMES 24.11.09
1. (Leading Article) The Politics of Business
Gordon Brown and David Cameron do differ on the route back to economic growth. The most important thing is a credible plan to cut the public deficit
At the CBI conference yesterday, Gordon Brown said that “our strategy for growth is not at the expense of necessary deficit reduction — it is absolutely central to that objective”. David Cameron then said that “dealing with this deficit is not an alternative to economic growth — the two go hand in hand”. Mr Brown says that growth will reduce the deficit. Mr Cameron says growth is impossible without reducing the deficit first. Mr Brown is so committed to reducing the deficit that he has made it illegal to fail. Mr Cameron wants him to hurry up. What is British business to make of this political exchange?
After persisting too long, Mr Brown has now accepted that spending cuts are inevitable. The political argument to come will be about where, rather than whether, [AND ESPECIALLY ‘WHEN’ -cs] the axe should fall. Mr Brown maintains, however, that his small discretionary stimulus has aided the economy and that to reduce spending more rapidly than he plans anyway is to take an unwarranted risk with a still-fragile recovery. That case was granted the support, at the same CBI conference, by Dominique Strauss-Kahn, the managing director of the International Monetary Fund.
Whatever the importance of the discretionary stimulus, Mr Strauss-Kahn also drew attention to something for which Mr Brown does deserve credit. In defiance of his reputation as a man too prone to calculate and too slow to act, Mr Brown responded swiftly and intelligently to the near-collapse of the banking system. His action, domestically, to raise the funds to bail out the banks and, internationally, to arrange a co-ordinated response, were successful. On this at least, Mr Brown will be judged better in retrospect than he has been at the time.
For it is remarkable that Mr Brown has failed to cash a political dividend for his impressive action. The key to why lies precisely in the political chicanery of which he is still too fond. The latest example is the disreputable deal he cut to install Baroness Ashton of Upholland as the European High Representative for Foreign Affairs. The price Mr Brown paid for gaining his candidate of no known views is that he gave way entirely on positions that are crucially important to British business. A Briton in one of the three vital economic posts in the commission would surely have served the national interest better.
It does not follow, however, from the fact that the Prime Minister has squandered the trust he once commanded with business that it has flowed to the Leader of the Opposition. Mr Cameron’s relations with business leaders are still best described as wary. [see below - ?? -cs] Mr Cameron reiterated his belief yesterday that future growth could be jeopardised by a failure to cut the deficit. The trouble is that his precise measures — freezing public sector pay for a year, cutting Whitehall by a third, reducing benefits for better-off families and raising state pension age earlier — do not add up to an answer to his own question. [Which was - er - what? -cs]
Mr Cameron’s announcement of an emergency growth Budget — something he seemed to have opposed consistently — was a shift in tone, if not in policy. Mr Cameron has poured scorn on the recovery power of public works but, rather late in the day, has defined a growth strategy of his own.
He proposes that, within 50 days of taking office, a Conservative government will reduce business regulation, cut corporation tax to 25p, cut small companies tax to 20p and abolish all tax on the first ten jobs of a new business.
The Government retains the advantage of incumbency. In the Pre-Budget Report it can signal serious cuts to public spending. Mr Brown would then provide British business with an assurance that the public finances will improve. If he were to borrow some of Mr Cameron’s business-friendly measures too, then so much the better.
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2. Glowering Gordon gives way to dancing Dave at the CBI conference
Ann Treneman: Political Sketch
Dave bounded on to the stage at the CBI looking completely at home. The business leaders had already endured a bombastic lecture from a glowering Gordon Brown. Then came Nick Clegg, who talked of paradigms and cloud formations. But now, finally, they could relax. Here was Dave — sleek, smooth, their kind of chap. You could almost hear the room purr with happiness.
“You wait for one party leader and then three come along at once!” chortled Dave. The audience glowed back up at him.
He got straight to the point. “This is the last time I will speak to the CBI before Britain goes to the polls.” The faces looked up at him and I swear that every person in that room finished the sentence “and you become prime minister”.
He beamed out at them, the Hilton’s chandeliers reflected his shiny, clean face. He was upbeat. Growth. Growth. Growth. He said growth was all part of his masterplan to cut the deficit. It seemed that previously when he said “cuts”, what he meant to say was “growth”. The words were practically the same.
He invoked the businessmen’s holy trinity — the OECD, the CBI and President Obama — as his backers in this hocus-pocus. (Should Obama sue?) Dave attacked Gordon for promising “billions of pounds of unfunded spending commitments”. Then he did exactly the same, dangling all sorts of goodies— but, to be honest, he could have talked pure porridge and they wouldn’t have noticed.
The crowd were smiling. They looked entranced. You could almost feel the chumminess. Dave made it seem as if he were talking to each one personally. It is one of his gifts and it worked.
When question time came, he raced away from the lectern, like a rock singer heading down into the crowd for adoration. The others had taken three questions at a time. “I don’t believe in the three-question rule!” he announced (although he does). “It allows politicians to get out of answering your questions. We can’t have that!” Can’t we? Well I think we did. Dave warbled on, telling them with almost alarming precision exactly what they wanted to hear. The new 50p tax rate? Dave knew some didn’t like it. “We can make some progress over time,” he soothed.
Dave raced from one end of the stage to the other, as if dancing with each questioner. One woman couldn’t find the microphone. “Just shout!” shouted Dave. “It always works for me!” Then they all laughed together.
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