10 down – could Cameron’s Tories become number 11?

18th May, 2012 4:49 pm

Yesterday David Cameron made a speech in Manchester on the Eurozone crisis. He argued that it’s time to “make up, or break up”. Like something out of a cheap soap opera, the UK Prime Minister is speculating and his party is briefing furiously that there’s simply no getting away from the course we’re on. Austerity is the way forwards, and Greece in particular has to get on with it; as is, no questions asked – as that famous Fleetwood Mac song goes.

And isn’t this whole debate taking on a rather dated, 1980s feel to it. There’s no alternative for Greece, even though its exit from the Eurozone would spread a contagion that could quite easily break the Euro and seriously damage Britain’s already tepid, stalled recovery. So what’s the plan Dave? Where do we go next? Any clue? What of Francois Hollande’s ‘Changement’? And what are the odds on an 11th government falling in the Eurozone since 2008?

It’s increasingly clear that DC believes ‘Austerity’ and ‘Growth’ are inextricably linked, with the former leading consequentially to the latter. In simple terms, he’s dead wrong. Basic economic theory, Keynesian economics, and the economic data coming out of the UK economy over the past 12 months tells us this. Fundamentally bringing the debt down will not create jobs, it won’t grow the private sector, it won’t stimulate demand, it won’t reform our financial sector and it won’t magic an industrial policy out of thin air.

It’s increasingly clear that there is no ‘Plan B’. No ‘going for growth’. Ed Miliband is right to point out, amid opinion poll ratings that put Labour consistently between 10 and 14% ahead of the Conservatives (who themselves currently languish around the 30% mark – there lowest poll rating in a decade), that all that Cameron has delivered is a double-dip recession. But he has also delivered a witheringly incoherent and incompetent message on the economy (NB. one car plant does not a recovery make, however good news it is for the hard-working people of the North West) – the latest example being his former director of strategy’s parting shot, promoting a further £25 bn worth of cuts to the welfare budget.

But what of Hollande’s alternative just across La Manche, on mainland Europe? Well the plan here is to increase public spending by £20 bn, creating an additional 150,000 jobs straight off and raising the top rate of tax for millionaires, whilst cutting corporation tax for SMEs. Let’s remind ourselves here that 96% of growth in the UK economy comes from SMEs. That sounds like a plan for growth to me. The deficit will still come down, but it will come down a great deal quicker if the economy grows at the same time as applying a deficit reduction plan.

Only yesterday Msr Moscovici, the French Finance Minister, stated clearly that France will not ratify the EU’s fiscal pact, unless it includes provisions for growth. And France is not alone, as 10 governments have toppled (so far) since 2008, public opinion has shifted increasingly towards where the economics always has been: austerity without a genuine, sophisticated plan for growth leads to economic stagnation.

Cameron would do well to note that, if he hopes that figure ’10′ does not become 11.

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  • PaulHalsall

    It would simply be much cheaper to wipe out all Greece’s debt and let it start from scratch than to face the trillions of economic losses a break up of the Euro could initiate.

    Unfortunately, if Greece were just left off, then Italy, Spain, Ireland etc, would want the same.

    I wish I knew a solution, but I don’t really think anyone does.

    • treborc1

      Somebody had better have an idea, otherwise Riots may be the least of the problems.

  • Cari_esky

    Roosevelt bucked the trend in the 1930’s USA because he had to,  the people were tiring of austerity.  To much austerity in the end can create a hotbed of problems not just for individual countries but also the wider geopolitical area.  

  • TomFairfax

    I like the idea the government have no Plan B.

    Let’s remember what Plan A originally was. What they said to get elected.
    – The nations debt reduced to zero within a Parliament.
    – Private sector would generate enough jobs to take up those laid off in the public sector

    I don’t know what DC calls it now, but it sure as hell isn’t Plan A.

    – The budget deficit of zero in the next Parliament (same as Labour 2010)
    – Unemployment rising, and ‘Private’ sector expansion paid for by the taxpayer paying firms to provide government services.
    – Blame the real Private sector for not creating half a million new jobs supported by those government policies they describe as ’empty rhetoric’.

    It’s not Plan A. DC say’s it’s not Plan B. I suggest we might as well name it Plan R, and ask the government to the Chancellor to explain the Plan R’s details.

    • Dave Postles

      Here, collect your hundred pound voucher from Boots, which avoids corporation tax, and spend it at Parentgym for the old Etonian mate, Octavius Black.  That looks like a Plan B to assist the private sector.

      • TomFairfax

        Hi Dave,
                           I know it’s mad. Taxpayers money for the service but somehow it’s not public sector really.

        In this case is it a method to undermine the duplicate ‘free’ service from Sure Start centres?

        If a business has the majority of it’s business in the Public sector contracts how is it ‘Private’ sector. Surely it’s the source of income that determines the sector it operates in.

        BTW: Is that the same branch of the Black family tree as Bellatrix LeStrange?

    • Winston_from_the_Ministry

      Defecit, not debt.

      Oh, and unemployment is falling.

      The last bit you have a point.

      • treborc1

         falling well it depends on how you look at it does not.

      • TomFairfax

        I chose the words carefully. More carefully than you believe GO does seemingly.

         I grant that running an average budget surplus of greater than £150billion a year to pay off the debt in one Parliament is no more believable now than it was in 2010, but GO said debt, not deficit at the time.

        Maybe he meant something else, but going on about a potential trillion pound national dept if things didn’t change and how he would take the action to reduce it to zero is difficult to interpret as much else, other than deliberate dishonesty or ignorance of what he was talking about. I don’t think he’s really in the ignoramus category.

        Ever since the target has been getting smaller and smaller, and yet we still hear him saying the governments Plan won’t change.

        Shame about achieving the trillion pound national debt last quarter. That wasn’t in Plan A either.

        • TomFairfax

           Just remembered that evil Quantitative Easing that George Osborne was so damning about in 2010. Strange that Plan A involved him authorising more of the same earlier this year, when it didn’t two years ago.

        • Winston_from_the_Ministry

           I’m pretty sure he said defecit. Do you have a quote of the other?

          • TomFairfax

             Hi Winston,
                                     Try the archives of the Telegraph between from 2009 up to May 2010. He gradually changes from ‘debt’ to ‘deficit’ in the face of people telling him the plans originally proposed are unrealistic.

            Even when he does say deficit, the paper’s still reporting it as debt, even in May. Which I guess could be considered unhelpful or helpful depending on the impression it leaves in May 2010, or May 2015.

            You could argue he slipped up initially and then corrected himself, or you could argue that a professional spin doctor started off with something catchy and easy to communicate and then gradually shifted in the face of criticsm from all sides and that it was never debt he really meant.

            The problem he might find, is that even when he was saying something half sensible, the headlines weren’t, and like TB with Iraq, he doesn’t seem to have gone out of his way to correct the impression caused by supportive but inaccurate reporting.

          • Winston_from_the_Ministry

             I’ve tried an aveanced Google search as the Telegraph search tools are pretty poor, but I can’t find anything to back you up.

            Maybe you could point me in the direction of one of the articles you mean?

          • TomFairfax

            Lol. I could, but that would spare you the need to read through the other broken promises contained in the articles. 2009 has a splendid amount.

            As you’re clearly not that rich in time or lacking in the grey matter, I confess it is really a red herring as far as finding his mention of debt reduction to zero during the election campaign. I’m just an evil [email protected] on occassion. I’ll get over it one of these days.

            You could also try and see if Youtube has the recording of the relevant snippet in video , but frankly I’d be surprised if you haven’t got better things to do.

            In the end, Dave Stone is probably correct. George would have struggled to get the concepts over to a wide audience without simplifying it. And as we all know, it’s difficult to simplify communication without distorting it.

            So I’ll grant he probably didn’t mean it. Still there’s no prizes for letting hostages to fortune going to waste.

          • It was probably felt that ‘debt’ fitted more easily into the ‘maxed-out on the credit card’ idiocy.

            No doubt the terms of the debate will undergo further modification in order to conceal ineptness and failure.

      • James

        Long-term unemployment and part-time employment both at a record high. The fall in unemployment is basically men going into part-time jobs out of desperation because no full-time jobs are available.  

        The situation really couldn’t be more dire.

        • Winston_from_the_Ministry

          It’s fairly obvious it could.

    • JoeDM

       Good points.   What we have at the moment is a coalition government that has lost its way.

      The original objectives were correct.  What has happened is that the wet Cameroonians and Limp Democraps have not got the bottle to do the job properly.

      • TomFairfax

         Unfortunately that’s the same argument as used by the most left wing socialists to explain why previous attempts haven’t worked in their case.

        Sadly the Ricardian model used by the Marxists and much of the Conservative party was time expired by 1900 in the west, because they only apply in a economy that runs as a self contained autarky, starting with massive disparities between the haves, and have nots, with measures to maintain that disparity, and not in a global trading environment where there’s free movement of labour as well as goods and cash, and most people are affluent, rather than rich or poor.

        However, I’ll grant the Cameroon’s aren’t Tories. I wrote the same thing in May 2010 on this site. I remember the Tories taking issue with it then.

  • Speaking of Tories….there was a Labour councillor who used to frequent this place quite a lot who proudly announced his defection to the Tories on ConHome the other day. His words from this very website not so long ago “Conservative Neo-Liberalism must be challenged and we need the best advocates to do so, because at the moment nobody is offering a sustainable status quo never mind a better and fairer future for the vast majority of people.The best advocates are you, the members of the Labour Party and its affiliated and traditional allies. The decision, and the power, reside with you.”….it must be the economic brilliance of Osborne that has guided him to the Conservative Party.

    • TomFairfax

      Hi Red,
                       I suspect more to do with how he and others were turfed off the Labour group for asking awkward questions about the leader of Barking & Dagenham council’s housing arrangements.

      I recall him mentioning some issues about getting anyone to look into the other practices he’d uncovered.

      I also recall him mentioning he’d recruited more members for Labour after leaving the group.

      Alan Giles probably has a more up to date view on how things are going on in that neck of the woods, and I’d never suggest for a moment  that he votes Conservative.

      • Tom,
                   his jump from left wing labour to right wing Tory is bamboozling. I can’t imagine if I fell out with anyone in the party it would turn me from a socialist to someone who states on ConHome that his new party needs more right wing policies….very strange in deed.

        • TomFairfax

           It does seem strange I know. (The Carswell influence in evidence as well unfortunately. I think he over rates him just because he is independently minded as well. Carswell has the wisdom of someone who knows he’ll never have to implement any of his own ideas, and berates the civil service without accepting Ministers are responsible people who  make the final decisions and ought to be able to think for themselves. Though I’ll grant the evidene of Ministers being capable of this is quite limited currently. Gove may be the exception, but he appears unable to judge between practical and impractical.)

          However, I wonder if he’ll have more luck breaking down the walls of silence and collusion in B&D with the backing of a main party instead of alone as an independent or as independently minded member of the ruling group.

          He has demonstrated that first and foremost he’s someone who believes in the need for politicians to lead by example and display moral integrity. Country before party.

          I imagine being told to shut up and keep his nose out when clearly something untoward is happening (and is then revealed to be the case) doesn’t instill feelings of belonging to the group involved.

          But I do think he would have carried more authority as an independent.

        • treborc1

          Well of course he was never left wing, lots of people joined Labour when Blair took over, nobody in his right mind would say Blair was a lefty he was basically to the right of center and to people he was keeping the Thatcherite flag   flying

      • AlanGiles

        Sorry Tom, I have only just seen this. With the caveat that I live in the next door borough (Havering), I know B & D. Basically, Mr Smith and his cronies run a tight ship, and anybody who dares to pose questions that are deemed to be “unhelpful” to the council, or rather Mr Smith’s control of it are given short shrift.

        It is a very poor area, and one thing I can tell you is this (it sounds relatively trivial but bear in mind that it IS a poor area: the Libraries service in most of London, including reasonably affluent Havering allows free use of its computers in it’s libraries to browse the internet: that must be of great help to unemployed people looking for jobs or students tracking down information. From April this year B &D stopped free use of the computers and a charge of £1.00 for half an hour is now made.

        Of course B&D is far likely to have residents who are less well-off and therefore don’t have computer access at home.

        I just give this one example to show how parlous is the state of B & D finances.

        I remember from when Ralph posted on LL he is a very honest, plain speaking man, and like me, felt that personal integrity in politicians should go without saying, be they national or local. I remember discussing at lengthy on LL the expenses scandal as the whole sordid broiling came to light, and Ralph like me felt it was equally as unacceptable for a Labour politician to fiddle his/her expenses as it was for the other parties (some LL posters at the time tried to find mitigating circumstances for the McNulty’s and Blair’s, which incurred as much anger from Ralph as it did from me.

        I know when I first read the press reports (local newspaper) about Mr Smith’s housing arrangements, I was disgusted (and still am). 11,000 people on the waiting list and yet Mr S and his son get rehoused in 6 weeks!  

        In the same ward incidentally (Mayesbrook)  George Barratt who sometimes posts on LL (he did so earlier this week) now sits as an Independent.

        I must confess nothing would induce me to join the Conservative party, but if we allow that Shaun Woodward, for example, could change sides on a matter of principle, I think we have to allow Ralph the same courtesy in that unlike the Luke Boziers of NL, he appears to have done so purely out of principle and not for any thought of personal gain – a Conservative is very unlikely to be elected in B&D. He is a very genuine man, I feel and I am sure that he had his own, non mercenary,  reasons for doing so.

        I think the sad truth is that politics in general gets dirtier by the month (a bit like radio & TV comedy) and far too many people, of all parties, feel that it is not what is  or wrong that matters, but what they can get away with. For somebody with a highly developed sense of honesty and decency like Ralph, it must be intolerable.

        * Sonny Payne (1926-1979)

        • TomFairfax

           Hi Alan, Forget the apology. Thanks for the support in this. Much better than anything I could put forward.

          Incidentally I met George whilst canvassing down there prior to 2010’s elections. He was spot on about Cocker Spaniels being mad as a box of frogs. I’m glad I took his advice and got one.

          It is bewildering how good people can be treated in this way in n attempt to cover up things being kept secret from the Labour group they were members of.

          George has some style as well. He called on the local BNP London assembly rep to ask  if he would vote Labour, while dressed in a manner likely to cause the poor Nazi to choke on his bile.

          • Alexwilliamz

            Very sad news. Not knowing the details makes things difficult to comment on, but I have a lot of respect for Ralph and if there something is dodgy in B & D then the party should have the guts to sort it out.

  • Peter, have you personally ever actually been very poor? Have you personally ever been in debt?
    It honestly doesn’t sound like it to me.

    When you are in debt to the amount of your entire annual income, then plans for more borrowing by perhaps starting up a tiny business, like perhaps spending money on necessary things like your health or a computer, like your being able to buy a paper to look for jobs, like your ability to have a cup of coffee for networking, melt away. Borrowing and debt are like a huge stone which you wake up with in the morning and which you carry until you go to sleep at night with it still on your back.

    Do you know this? Have you been there? Have you got any money invested in a British bank which is exposed to Greek debt because you may lose the lot if you aren’t lucky. Then you will know what the Greeks are suffering.

    At the moment the Greeks seem to think, as does Mr Ed Balls, that it is just a matter of paying out to support the vulnerable and the deprived child and getting things back to how they once was in 1997.

    If only…….

  • trotters1957

    Cameron’s view that we need austerity and the Europeans need growth ( spending in other words) is intellectual dishonesty. 
    But that’s a very loose use of the word intellectual.

  • trotters1957

    The Greek deficit is less than 5 billion euros. The rest approximately 45 billion euros is interest and capital repayments on the debt.
    The answer is to cancel the debt and the ECB to fund the bailout when necessary.
    Why is an economy with 0.47% of global GDP being allowed to bring down the banking system?
    The Germans have a lot to answer for.

    • MonkeyBot5000

       Even if you don’t cancel the whole debt, stopping the interest would probably help.

    • Bill Lockhart

      “The answer is to cancel the debt and the ECB to fund the bailout when necessary.”
      If you don’t mind a chunk of your pension fund being given to the Greek government as a gift, that’s fine.

      • trotters1957

        I don’t mind at all.
        Someone somewhere has to take the hit from the pricking of an asset bubble.
        Greece cannot and will not pay back their debt, ever.

        The choice is who takes the hit.
        The rich who benefit from asset bubbles and created the crisis or the poor who don’t and didn’t.

        I’m clear who should pay for this.

        • Bill Lockhart

           What evidence do you have to support the notion that the Greek soverign debt  catastrophe was caused by rich people benefitting from an “assets bubble”?

          • trotters1957

            When Greece, Ireland  and the other weaker nations entered the Eurozone huge amounts of capital flowed into their banks and on the back of low German interest rates created an asset and debt bubble.
            When the bubble burst government debt spiraled as tax revenues fell.
            Where have you been for the last ten years?

          • Bill Lockhart

             So were they not fiscal running deficits before the banking crisis?
            The people borrowing money they couldn’t afford to build horrible breeze-block “houses” in Galway were not forced to do so by “rich” people.  In Greece, people retiring at 50 on a full pension because they were trombonists or hairdressers were not the evil “rich”: they were the beneficiaries of the Left’s all-too-familiar other-people’s-money-for-votes policy. And, as we are now paying for our parents’ collective greed and profligacy, so are younger Greeks.

          • trotters1957

            Non sequiturs, straw men abound in your posts as usual.

            Poor people don’t have assets by definition. Rich people have property, pension funds, stocks and shares and cash, do. These people, like me and possibly you, benefited from an unsustainable debt boom. It is these people who should pay not the poor.

            Greeks in fact work longer hours and retire later than all the so-called hard working northern europeans. This myth is fueled by the stereotypes that people like you lap up.

            A report by the French bank Natixis says 
            “Yet official EU figures show this to be a total untruth. Research by the Chief Economist of French bank Natixis has shown that Greeks work some of the longest hours in Europe – in fact, on average, they work almost twice as long as the average German worker (2,119 hours compared to 1,390 hours). On average, Greeks also retire later than Germans. From 2000 until the start of the crisis, Greek government spending was lower as a proportion of the economy than in France or Germany – indeed it was below the EU average. ”

            You must feel really silly.

          • Bill Lockhart

             Why should I feel “really silly” when I wrote nothing whatever about working hours?  The example I provided about hairdressers and trombonists are demonstrably true. I would feel really silly if I had written utter nonsense such as “Poor people don’t have assets by definition”  That’ll be by, er, *your* definition.

            Productivity and number of hours ostensibly worked are completely unrelated. You shouldn’t believe everything you copy and paste from the TSSA website

  • Daniel Speight

    What I do not understand is it seems that the Europeans are killing themselves trying to save their banks which have been recklessly lending. Both ourselves and the Americans have been doing the same. When we try to save the banks who are we really saving? Is it really ourselves? I’m no longer sure?

  • EM_Connolly

    Great article. I’m particularly interested in the comment that  “96% of growth in the UK economy comes from SMEs” – I haven’t come across this figure before. Would anyone please be able to point me to where I might find this statistic? 

  • “..austerity without a genuine, sophisticated plan for growth leads to economic stagnation.” Cameron & Osbourne Haven’t Even ‘Begun’ To Notice This. Even With Britain Economy Suffering A Double-Dip Recession, Cameron Saturday, Was Still Preaching To The G8: France, Germany, Italy, Japan, the United States, Canada & Russia, That Austerity WITHOUT A Growth Plan Was The Only Way To Go.


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