The Great Debate UK
The headlines generated by the forthcoming UK budget are likely to be political rather than economic; the general election is next year. Despite a faster than expected fall in unemployment and inflation, macroeconomic developments since the December autumn statement present limited scope for forecast revisions to government borrowing. But come the post-budget analysis, some of the seemingly esoteric revised economic assumptions may have important consequences for how the budget is perceived politically.
The modest changes we do expect to the economic forecasts would be seen as positive in essence. Small upgrades to the growth outlook should translate into borrowing reductions of between £3 billion and £6 billion per year throughout the five-year horizon. That would leave the underlying measure of borrowing at £332 billion for the six years to 2018-19, down from £358 billion in the existing forecast from December, which itself represented a significant improvement on last year’s budget.
In these terms the presentation of the budget maths looks, on the face of it, to be a good news story for the government. It can claim deficit reduction is getting back on track. The complication comes though in the assessment that is made by the Office for Budget Responsibility (OBR) about the responsible way to approach tackling the rest of the deficit from here.
Those expecting a rivetingly exciting spectacle when the chancellor announces his budget next Wednesday will be in for disappointment, but that doesn’t mean that this won’t be an intensely political budget, given this really represents his last chance to make changes which will be fully appreciated by the electorate by the next general election. Having said this, his room for manoeuvre is limited, and the effect on the overall fiscal balance will be minimal.
–Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.–
Spring has sprung.
The grass has riz.
I wonder when the Budget is….
On 19th March actually or, more importantly in this age of nonstop campaigning, six weeks before the European elections and barely a year away from the general election. Since the 2015 Budget will be too late to affect our wallets before we go to the polls, this is George Osborne’s last chance to reassure us that the economic situation is under control. Will he be able to resist the temptation to give us a reward for our patience through four years of austerity and to reassure us that the misery is nearly over?
from Anatole Kaletsky:
Which major economy is most likely to disappoint expectations this year, and perhaps even cause a financial crisis big enough to break the momentum of global economic recovery? The usual suspects are China and southern Europe. But in my view the most likely culprit will be Japan.
While Japan no longer attracts much attention these days, it is still the world’s third-largest economy, with a gross domestic product equal to France, Italy, Spain, and Portugal combined. Its industries still pose the main competitive challenge to U.S., European and Korean manufacturers, and its regional weight is still sufficient to trigger financial crises across the whole of Asia -- as it did in 1997.
from Jack Shafer:
The last place you'd expect to discover a map to navigate the future of the content-advertising landscape would be a book about the golden age of radio. But damn it all to hell, there it is on the concluding 12 pages of Cynthia B. Meyers' new book, A Word From Our Sponsor: Admen, Advertising, and the Golden Age of Radio.
Not to discourage you from reading Meyers' first 281 pages about the co-evolution of broadcasting and advertising before excavating her new media insights, but this is one of those books that demands to be read backwards -- conclusion first, historical arguments and research later. In Meyers' view, advertising is not something appended to radio and TV broadcasts or shimmied into the pages of newspapers and magazines. Advertising has been both the dog wagging the tail and the tail wagging the dog, sometimes occupying points in between, its symbiotic relationship with popular media forever ebbing and cresting. And while the past never predicts the future, this book gives readers a peak around the media future's corner.
from Ian Bremmer:
As we march toward Sunday’s Crimean referendum, the result is predetermined. Crimea will vote Russia, and tensions will only escalate. At this juncture, it’s important to take a step back and ask who “lost” here. What could the United States have done differently? What about Russia? Was the outbreak of violence and explosive geopolitical confrontation inevitable? Where does it go from here?
If the United States’ primary goal has been to keep violence in Ukraine and tensions between outside powers to a minimum, it has made a series of significant missteps. The United States failed to offer real economic support to the Ukrainian government before events reached a crescendo. Former President Viktor Yanukovich didn't want to just work with the Russians; he was looking to strike a balance between Russia and the EU while skirting economic collapse. Europe pushed too hard, and the IMF wasn't going to step in in time. The lack of support from the West helped push Yanukovich far enough towards Russia that protests in Kiev reached a point of no return.
from The Great Debate:
At a press conference on March 12, General Rodzali Daud, chief of the Royal Malaysian Air Force, faced a confused and angry audience. What exactly happened to Malaysia Airlines flight MH370, which vanished last Saturday en route from Kuala Lumpur to Beijing? Fury mounted in this case, not because the general did not know enough -- but because he may have known much more than he or his colleagues were willing to share.
In contrast to the initial reports of the aircraft's sudden disappearance, Wednesday’s coverage suggests several "last sightings" with a possibility that the plane turned back to Malaysia. The previously undisclosed military radar data, it turns out, captured an unidentified airplane 200 miles into the Straits of Malacca, between Malaysia and Indonesia. A Malaysian air force staffer claims that the plane showed up on the military's radar for over an hour following the communication failure. Yet on Thursday, Malaysia’s senior officials still denied these claims. Not surprisingly, they have come under fire for misreporting, obstructing the multinational search mission, and prolonging the agony for family and friends of the 239 passengers and crew.
from The Great Debate:
In the summer of 1787, Catherine the Great of Russia set out to inspect the recent additions to her far-flung czardom, including the Crimean peninsula, annexed from the Ottoman Empire four years earlier.
Catherine’s lover, Prince Grigory Potemkin, the governor-general of these new southern provinces, knew shabby landscapes wouldn’t satisfy the German-born empress, who set high standards for order. So he lined her route with wooden boards painted with cheerful housing façades, to hide the squalor of the serfs’ lives. On her return to St. Petersburg, Catherine announced she was pleased with her new territory’s bucolic riches.
from The Great Debate:
The news that Greek-style yogurt maker Chobani is looking to sell a minority stake that would value the company at around $2.5 billion should in theory be a big boost for Greece’s beleaguered dairy industry.
But instead, the main beneficiary will be Chobani’s Turkish founder, who operates the company in upstate New York, and who has proved to be innovative in a way that Greek dairy farmers are not. In fact, they are so stuck in their traditional ways that it’s actually illegal in Greece to call low-fat yogurt “yogurt.” Any variant that contains additives of any sort must be labeled “dessert of yogurt,” which is akin to waving a warning flag at consumers.
from Nicholas Wapshott:
The European Union, at the forefront of the hostilities between Russia and the West, is in a bind.
It has belatedly adopted Ukraine as one of its own. Yet the EU economy is so frail, thanks to its beggar-thy-neighbor economic policies, that it is reluctant to use financial and trade sanctions to punish Russia for occupying Crimea and threatening to occupy the eastern part of Ukraine.