The Great Debate UK
– Hugo Dixon is a Reuters Breakingviews columnist. The opinions expressed are his own –
The new UK coalition deserves 7 out of 10. The pact between the Conservative and Liberal Democrat parties, led by David Cameron as the new prime minister, seems determined to address the country’s most important problem — the deficit. This is vital given that the euro zone debt crisis could still prove contagious. It should also be positive for sterling.
Some good ideas are also emerging on tax and spending. But other plans for tax and banks look odd — and there are doubts about whether these bedfellows will be able to work together. After all, Britain has not had a coalition government since World War Two.
Some will be disappointed that George Osborne, who has not been impressive as the Tories’ finance spokesman, will be Chancellor of the Exchequer. But the overall policy stance looks promising. The new government clearly sees dealing with the mess in the public finances as its top priority. The LibDems, led by Nick Clegg, have signed up to Cameron’s plan to find 6 billion pounds in efficiency savings in the current financial year.
– Ian Campbell is a Reuters Breakingviews columnist. The opinions expressed are his own –
A first estimate of UK first-quarter growth is a chilly 0.2 percent. Failure of government policy, the opposition will say. Shows the folly of proposed Conservative spending cuts and tax increases, Gordon Brown, the prime minister, will claim. But a colder financial look will see that enormous stimulus has so far produced the weakest of recoveries. Whatever the election outcome, the UK’s leaders are going to have to be grown-ups. In this emergency, cooperation – or coalition – is required.
– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
Critics might say the UK’s inflation target is just for fun. Consumer prices were 3.4 percent higher in March than in the previous year, well above the 2 percent target rate, but the Bank of England will do nothing at all.
If the central bank were serious, shouldn’t it raise interest rates and crush every bit of life out of the UK economy? Not really. The UK has above target inflation because world oil prices are high, the pound is low and VAT is up. But it has inflation for poorer and richer.
– The author is a Reuters Breakingviews columnist. The opinions expressed are his own. –
Crisis, what crisis? That could be motto for the election manifestos published by Britain’s main political parties this week. Neither Labour nor the Conservatives addressed the country’s fiscal crisis head-on.
-Danny Wootton is UK Innovation Director at Logica. The opinions expressed are his own. He will participate in a Reuters Budget live blog at noon GMT on Wednesday, March 24, 2010. Please tune in and join the discussion. -
It is pretty well accepted that budget cuts in public spending are inevitable, but it is important that a plan to effectively use the funding that will be available to stimulate the economy and drive innovation forward is developed.
from The Great Debate:
Rest in peace, Great American Consumer. We will not see your like again.
"Cash-for-clunkers" aside, consumers seem bent on actually paying back debt rather than racking it up, a change that if sustained, as it is likely to be, will dampen economic growth not for months but for years, and not just in the U.S.
Outstanding U.S. consumer borrowing fell by a jaw-dropping $21.6 billion in July, according to data released this week by the Federal Reserve, five times more than analysts expected and the second largest monthly drop since the end of World War II.
There's something scary about big numbers. It's one reason we in the media often like to put the biggest number we can find into a headline.
So it was no surprise that most media outlets went gaga over the Obama administration's projection that the nation's debt will grow by $9 trillion over the next decade. And sure enough, critics of the administration's efforts to reform healthcare were quick to seize on that scary number as another reason to advocate doing nothing.
from UK News:
Prime Minister Gordon Brown has suggested he will push expansionary fiscal policies to help boost the economy. Brown's comments were the latest in a series from him and Chancellor Alistair Darling stressing the importance of boosting the economy, which shrank in the third quarter of 2008 for the first time in 16 years and is expected to contract more sharply next year.
Bank of England Governor Mervyn King has also put his weight behind "some fiscal stimulus", just as the Bank predicted in its quarterly inflation report that the economy would shrink sharply next year.