After a rather inspiring hour of TV debate, here was my take. Who won? No-score draw, I reckon. Will it change anything? No. Was it worth it? Not really. For another take go to the Westminster blog, which is plumping for Vince Cable as the victor.
So boxed-in are the three candidates for chancellor by the budgetary arithmetic that there was broad agreement on the main tasks facing the next occupant of Number 11.
All agree that cutting the budget deficit is a top priority and it will require a tougher spending settlement than those under Mrs Thatcher in the 1980s. None wanted to tell the audience in the studio or at home what deep cuts they had in mind although they each had some small examples to give the impression they were tackling the problem.
They all accepted that pensions for public sector workers should be trimmed and those employed by the state could not have a guarantee of their jobs. They all agreed taxes would rise and did not rule out changing income tax or value added tax. A brain drain of the richest was an exaggerated threat, they chorused, suggesting their priorities lay elsewhere. The government should address inequalities and bankers’ bonuses were outrageous. Banks should lend more and this was one the necessary ingredients for securing growth in the economy.
That much was agreed, so the disagreements were relatively minor.
Alistair Darling and Vince Cable rounded on George Osborne for Read more
If all goes well in the post-recovery world, the Americans will be saving and the Chinese will be buying, according to Paul Jenkins, Senior Deputy Governor of the Bank of Canada.
In a speech today, Mr Jenkins spelled out Canada’s view of the world’s economic future. He predicts industrial economies have a potential growth rate of between 2 and 2.5 per cent and emerging-market economies have a rate of between 5 and 8 per cent. Emerging markets’ growth will so far outstrip developing countries growth, he says, that by 2020 emerging-market economies will likely account for over 55 per cent of global output, compared with 45 per cent today.
And emerging-markets won’t just be producing more, they’ll be consuming more too. Read more
Chris will be posting on the economic aspects of the programme. Also, please note that our Westminster Blog colleagues are doing a live blog. Read more
Romania and Hungary cut interest rates to record lows on Monday as central bankers looked to support growth following improved investor risk perception in central and eastern Europe.
The National Bank of Romania lowered its monetary policy rate from 7 per cent to 6.5 per cent, while the Magyar Nemzeti Bank in Budapest trimmed the base rate from 5.75 per cent to 5.5 per cent, the lowest since the fall of communism.
Romanian and Hungarian currencies have strengthened in recent weeks and it has become cheaper to insure against the risk of their debt defaulting, as investors bet that eastern Europe is gradually overcoming the worst of the financial crisis. Greek banks hold significant assets in Romania, but so far contagion risks appear benign. Read more
No recovery until 2011 or later: this is the base case of 31 top retail executives, including Sir Stuart Rose and Peter Marks, CEO of the Co-operative Group. The retailers also expect inflation, a hike in the VAT rate and increasing mergers and acquisitions in the industry, shows The long and winding road, a report by Sarah Butler for Kreab & Gavin Anderson.
Today’s European confidence figures, by contrast, are mostly up, driven by bullishness in the industrial sector. A lower euro is helping producers. But lower sterling is having the opposite effect on retailers. “Sterling has weakened and that will feed through to non-food prices because of Read more
Forget the waffle about cutting £12bn of waste out of government from the Conservatives and £11bn of efficiencies from Labour. We now have a firm policy from the Tories: to cut £6bn (or 2.8 per cent) from government departments’ 2010-11 budgets. The savings will be used to fund reductions in national insurance contributions for employees and employers. What can we say about this policy:
- Deep, clear and immediate budget cuts. The £12bn headline reduction in “waste” is, in reality, a simple cut of £6bn in departmental expenditure limits for 2010-11
As part of normalisation of interest rates, the central bank of Israel has raised the benchmark interest rate to 1.5 per cent. The Bank stressed that even with the rise, monetary policy remains expansionary. Annual inflation, at 3.6 per cent, is currently above the target range of 1 – 3 per cent. The rise was:
Intended to return inflation to within the target range and to keep it there, and to contribute to the further recovery of economic activity, while supporting financial stability. The path of the interest rate will be determined in accordance with the inflation environment, the entrenchment of growth, in Israel and globally, the rate at which the major central banks increase their interest rates, and in light of developments in the exchange rates of the shekel. Read more