Honeyball’s Weekly Round-Up

Labour Party

This has been a bad week for George Osborne with attacks on his austerity measures coming from all sides. It has become clear that a majority of people believe that government’s economic policies are damaging the economy rather than helping, a new poll reveals, as the coalition government begins an internal war over how to stimulate growth.

George Osborne has ten days until he delivers his crucial fourth budget, and an Opinion/Observer poll shows almost three times as many voters (58%) believe the austerity drive is harming the economy as those who think it is working (20%).

The findings will add to pressure on Osborne to change course as the UK hovers on the brink of a triple-dip recession. Given Osborne’s form when it comes to changing his mind in the face of overwhelming evidence, I don’t have much hope that he’ll do what needs to be done.

The independent Office for Budget Responsibility rebutted claims by the prime minister that the government’s deficit-cutting strategy was not responsible for choking off growth, stating that austerity had knocked 1.4% off GDP in the past two years.

In the first two years of the coalition, most polls showed solid support for the government’s hard line on the spending cuts, though the Tory lead over Labour on economic competence has narrowed in recent weeks.

The stark poll findings come as home secretary Theresa May appeared to make a pitch for the leadership of the Tory party, arguing in a speech to a ConservativeHome conference that the Tories must govern for the whole country, not just sectional interests. May said: “We’re at our strongest when anyone and everyone can feel that the Conservative party is for them.” The speech, resembling a leader’s party conference delivery in its scope and tone, was seen as an attempt to raise her profile at a time when many Tories are losing faith in Cameron’s ability to remain as leader beyond the next election.

On top of this, a key plank of the chancellor’s plans to reform Britain’s banks in the wake of the financial crisis and the Libor rate-fixing scandal is “wholly inadequate”, MPs have warned as they reopened the debate on breaking up the banks.

The parliamentary commission on banking standards said the government’s proposal for the regulator, the Financial Policy Committee (FPC), to review the strength of the ringfence between high street and riskier investment banks was little more than the regulator “marking its own examination paper”. It said the government should include a specific provision to consider a full, industry-wide split-up of the banks if the ringfence was judged to be failing.

So the Tories look like they are singularly failing to do anything right when it comes to the economy.  And with senior Conservatives stepping forward with not so subtle hints that they might challenge Cameron for the leadership, we might be on the brink of political civil war, where the only real losers will be the British public.

The Eurozone avoids recession after the UK has sunk into double dip

Labour Party

The first meeting between President Hollande and Chancellor Merkel ended with a show of unity, at least on the surface, and a joint view that Greece should stay in the Euro. Meanwhile, as IMF head Christine Lagarde adds her voice to those who think Greece may have to leave the single currency, the Eurozone remains in crisis. The result of the next round of elections in Greece will be crucial for both that country and the Euro itself.

It is important at what may turn out to be the crossroads for the Eurozone that those who make these decisions do not get caught up in the general air of panic. There is no doubt the atmosphere in Europe is febrile, while the Merkel/Hollande meeting is being described as sober.

Yesterday I argued that Europe’s leaders must take on board the results of a recent poll in Germany as well as the national elections in France and Greece which produced winning results for candidates opposing austerity. Fortunately it looks as if this may be sinking in. Horst Seehofer, head of Germany’s CSU Party, sister party to Merkel’s CDU, is now calling for some element of growth.

Yet the Eurozone crisis and the problems in Greece are taking place at the same time as the Eurozone is keeping its head above water as far as recession is concerned. It was announced yesterday that the Eurozone had avoided recession thanks, interestingly, to stronger than expected German growth. Even France, sometimes seen as a problem due to its 35 hour week and generous pensions, recorded neither growth nor contraction.

This is not, of course, the case in the UK. At the end of April we were informed that the British economy had again sunk into recession putting us into the unenviable double-dip category. David Cameron, of course, blamed the Eurozone crisis. This claim looks less than tenable in the light of the Eurozone’s ability to avoid recession itself. In fact, according to a recent Sunday Times/YouGov poll 32% of people blame the return of recession on the Tory-led coalition.

Cameron and Osborne have, in fact, been fortunate that the Eurozone crisis has taken attention away from the British economy. Our economy is not doing at all well, as those who have lost their jobs and the young people who cannot find employment will tell you. In addition, the Bank of England has today revised its forecast for growth downwards. We are, in fact, seeing a re-run of the decimation of our society last seen under Margaret Thatcher in the 1980s.

The British people are, however, cottoning on to this. The local elections on 3 May showed beyond a shadow of doubt that they preferred Labour under Ed Miliband to this Tory-led coalition. Labour is on the way up, the Tories are going down and the beleaguered Liberal-Democrats seem headed for electoral wipe-out.