Shome Mishtake, Shurely?
Private Eye Guido Fawkes
Sir, I wonder if any of your readers have noticed the striking resemblance between this week’s front cover and our own site four day ago. Could they by any chance be related?
Labour Bribing Voters Red Handed
Guido missed his Uttoxeter Labour News this week, but luckily and eagle-eyed co-conspirator spotted the flagrant attempt to treat members of the electorate:
It brings a new meaning to “wouldn’t go if you paid me…”
Macrory Off | PR Week
Adam Smith to Testify | Guardian
Britain is Conning the Bond Market | Speccie
SOAS and “Typical Israelis” | The Commentator
Re-moding | Dot Commons
The 1922 Voting Calculations of a Tory MP | Paul Goodman
Irish Referendum – ‘Yes’ is ‘Ticket for Titanic’ | Irish Indy
Lack of Accountability of Anonymous Spokesman | Boing Boing
Simon Hughes Riding Trucker | Crash Bang Wallace
Tuesday, 15th May 2012
How Britain is using spin to con the bond markets
TIM MORGAN 1:42pm
Austerity, austerity, austerity. The A-word is cropping up everywhere at the moment, whether in France or Greece or Germany. And the UK isn't immune from it either. If there is anything on which Britain’s political factions agree, it is the reality of fiscal austerity. Whether it's Ed Balls banging on about ‘too far and too fast’, or the coalition saying that their programme of painful austerity is essential if the UK is to defend its triple-A ‘safe haven’ status, this is something on which our political class has reached consensus.
But, as we at Tullett Prebon argued in a briefing paper yesterday (available hereas a pdf), the tale of ‘big’ cuts in public spending is a bare-faced deception. Just look at the official Treasury numbers. They show that real public spending was just £8 billion (1.1 per cent) lower in 2011-12 than in 2009-10. This number, modest in itself, needs to be set against the big (£31 billion, or 4.6 per cent) increase in spending during Labour’s last year in office. At £681 billion, public expenditures in 2011-12 were £23 billion (3.4 per cent) higher than in 2008-09 (£659 billion).
The full scale of the ‘fast one’ that the UK has been trying to pull both on the markets and on the public is evident from looking at the two- and three-year records to 2011-12. Starting with the two-year period between 2009-10 and 2011-12:
— Real GDP has increased by only £40 billion.
— Of this, no less than three-quarters (£30bn) has been appropriated by the government.
— State spending has been cut by a paltry £8 billion.
— Public debt has increased by £218 billion.
Government, then, has mopped up most of the skimpy recovery in GDP for its own use, has made very modest spending cuts, and has added well over £200 billion to its debts.
The motivation for government spin is obvious enough, of course. On the one hand, rises in market interest rates could be a disaster, given the extent to which British households are leveraged. On the other, implementing the real cuts required to back up a genuine austerity package has proved politically unpalatable. It seems improbable that the bond markets (and the rating agencies) will continue to fall for this spin-job, and they are likely, sooner rather than later, to call the UK authorities to account.
Dr Tim Morgan is Global Head of Research at Tullet Prebon.
Filed under: Bonds (3 more articles) , Coalition (2065 more articles) , Debt (189 more articles) , Economy (1000 more articles) , Ed Balls (361 more articles) , George Osborne (790 more articles) , Public finances (751 more articles) , Spending cuts (620 more articles) , Tax rises (115 more articles) , UK politics (5356 more articles)
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