The Great Debate UK

from Breakingviews:

Cameron takes deficit amnesia to a new level

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

David Cameron crowed when UK opposition leader Ed Miliband forgot the deficit in a keynote speech last week. Yet Britain’s prime minister has now taken deficit amnesia to a new level, insisting on the need to tackle the country’s biggest problem while simultaneously pledging a tax giveaway. It’s an electoral bribe he can’t afford.

The blatant politicking is deeply unhelpful given the awful state of the UK finances. Cameron has made eliminating the deficit his chief goal. That means being tough on spending, and on taxation.

His pre-election promise of a rise in the threshold for paying income tax from 10,000 pounds ($16,200) to 12,500 pounds offers welcome support to the low paid. But the proposed increase in the threshold for the 40 per cent rate, from 41,900 pounds to 50,000 pounds, makes no economic sense. It does, however, make political sense. It appeals to one of the core constituencies of Cameron’s Conservative Party, middle-class voters who resent seeing more of their earnings slip into the higher-rate tax band.

from John Lloyd:

No gimmicks, just 10 good reasons why Scotland shouldn’t leave the UK

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Readers of a romantic bent, perhaps Scots or descendants of Scots, may think that it would be cool for Scotland to vote for independence from the United Kingdom next Thursday.

If so, here are 10 reasons why they’re wrong. It would mean nationalism  – the call to old loyalties deeper than any civic and cross-national identities – would win. The Scots nationalists are nothing like the proto-fascist groups at large in Europe: indeed, their party is social democratic, liberal in social policy. But the demons unleashed will be stronger than their politics. The countries of Europe have many secessionist movements. Spain has two, in Catalonia and in the Basque country. Belgium is divided between the French Walloons and the Dutch-speaking Flemish. Italy has an old secessionist movement in German-speaking Alto Adige and a new one in the north, claiming a territory called Padania. France has an occasionally violent movement in the island of Corsica. Others will come along. All would be hugely encouraged by Scots independence. It would consume Europe for decades. The UK has been, in the past century, an imperial power, claiming ownership of large parts of the globe, fighting and imprisoning those who sought liberation in Africa, India and elsewhere. U.S. President Barack Obama’s grandfather, Hussein Onyango Obama, was imprisoned and tortured by the British in Kenya because he was suspected, it seems wrongly, of being a member of a militant pro-independence group, the Mau Mau.But in the latter part of the 20th century and in the 21st, Britain ceased to be part of the problem and strove to become part of the solution. The ‘solution’ is to find a way to manage the world out of confrontation and division into a common effort to attack its real problems – ecological damage, poverty, drought, Islamist and other terrorism. The loss of Scotland would diminish it, weaken its presence internationally, weaken what it does and can do for global governance. The UK is a major and founding member of NATO: it’s a nuclear power. Yet all of its submarine-based nuclear armament is based in Scotland, at a base near Glasgow. Moving it – as an independent, anti-nuclear Scottish government would demand – would take years and many billions of pounds to execute. And this at a time when NATO is seeking more commitment, more defense spending from its members to counter the growing threat from Russia. The United States, presently blamed by critics inside and out for being weak in the face of global challenges – from Islamist terror, from Russia, from China – has under Obama’s presidency sought to convince the Europeans that they must take greater responsibility. Scots independence would be an example of a people taking less: it would present the malign example of a region, by claiming independent status, ducking out of taking the hard choices in the world – while seeking protection from those still constrained to make them. The UK has been a large part of ‘the West’ – that group of nations, which include ‘Easterners’ like Japan, South Korea, Australia and New Zealand and others – that privilege democracy, a strong civil society and rule of law. For the UK to lose Scotland would point up to a failure of democracy, at a time when the growth of China and the challenge of Russia is putting it’s primacy in doubt. With the discovery of major oil reserves off Scotland in the early 1970s, most of the UK’s oil has come from the fields off the Scots shore. There are still large reserves – how large, is still being proven. Scotland would demand total control of these reserves – they would be mainly within its territorial waters. It’s another malign example of a region rich in mineral reserves severing links with the larger state of which it was part in order to enjoy the easy income. It’s what the Oxford economist Paul Collier called, in a recent talk, ‘a dirty little resource grab’ – one sure to be copied elsewhere. Scotland has a large financial sector, even after the near-collapse of the Royal Bank of Scotland, still one of the world’s banking giants. The turbulence and uncertainty which independence would cause would prompt several big banks and financial institutions to relocate to England: and foreign-owned businesses would also take precautionary measures. It wouldn’t be disaster: but it would mean that the UK, presently growing more strongly than any other European state but still recovering from recession, would be badly knocked back. Modern terrorism has targeted the UK: it’s seen by radical Islam as both a threat to their plans to create a fundamentalist Caliphate and to make of the Moslem populations round the world – there are nearly 3m Moslems in the UK – adherents to their cause. As UK security chiefs have warned, an independent Scotland with  new and small security services would be hobbled in efforts to combat extremism – and would be seen as a pressure point. Finally, there’s the more indefinable damage: to civility and to common culture. The nationalist campaign has raised tempers on both sides of the divide – within Scotland itself, and between Scotland and the rest of the UK, especially England. Nationalists like to see England as still an imperial hangover, un-modernized, run by ‘posh’ Conservatives for whom most Scots didn’t vote. Independence would make this still worse: many English say they want Scotland to go, because they’re tired of their complaints. It would be a long time before that died down: and something precious, a recognition of difference within unity, would have been lost.
This much is at stake. The world will not benefit, now or in the future, from an independent Scotland. But there’s nothing it can do about it, but wait to see what choice that nation makes.

This much is at stake. The world will not benefit, now or in the future, from an independent Scotland. But there’s nothing it can do about it, but wait to see what choice that nation makes.

from Breakingviews:

UK’s strong GDP has a soft centre

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Fly the flag. The headlines will be about the solid milestone. The UK finally replanted its flag on its 2008 GDP growth peak, three years after Germany and the United States reclaimed theirs and after a mere five years of ultra-low interest rates. But the landscape – the details of the second-quarter GDP – has its uncomfortably rocky side.

from Breakingviews:

UK banks have much to fear from latest probe

By Chris Hughes

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The latest competition review of UK banking should aim to be the last. An antitrust probe in 2000 led to limited price controls after concluding that British lenders made excess profit. There were two more big investigations after the financial crisis. Yet concerns about market inefficiencies persist. That suggests the Competition and Markets Authority should do something radical this time.

from Breakingviews:

London real estate at an inflection point

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Most real estate valuers in London think property prices in the UK capital are about to fall. That prediction has been easy to make and easier to get wrong in the last five years. This time, the evidence that global investors’ favourite housing market has peaked is looking credible.

from John Lloyd:

The UK’s paradox of faith

When David Cameron recently proclaimed in the Church Times -- the organ of the Church of England -- that he was a Christian, that his faith helped guide him through life and work and that Britain is a Christian country and should be proud of it, he was met with a wall of disapproval.

When a European leader says he's a Christian and that he lives in a Christian country, he's asking for trouble. The approved political position in Europe is that religion should be commended for its sterling values when it cares for the poor and condemned when it is used as a rationale for terrorism. Otherwise, politicians should steer clear and leave it to the clergy.

from Mark Leonard:

Syria and the politicization of British foreign policy

Syria’s population -- at the heart of so many proxy battles for influence -- last night found itself drawn into a different kind of conflict -- this time over the future of British politics. After the British Parliament's vote against action in Syria, the former Liberal Democrat leader, Lord Ashdown, tweeted that Britain is a "hugely diminished country" this morning: “In 50 years trying to serve my country I have never felt so depressed/ashamed.” But is he right to see this vote as a retreat into isolationism? I think it is rather a step into a more modern diplomacy, one where politics do not end at the water’s edge.

Once the dust settled on the vote, David Cameron’s closest ally, Chancellor George Osborne, said there will be a lot of "soul-searching" about Britain’s role in the world. There is talk about the shadow of Iraq, pacifism and anti-Americanism as a result of an unholy alliance between conservative little-Englanders and pacifists of the left. But though these tendencies were both represented in the lobbies of the House of Commons, they still represent a minority of the political spectrum. It is worth remembering that the Labour leader Ed Miliband did not argue against military action in principle, and even made a point of saying he could support intervention without a U.N. Security Council resolution.

from Hugo Dixon:

Cameron, UK hurt by Syria vote fiasco

Rarely has a UK prime minister done so much damage to himself in a single week as David Cameron has with his mishandling of a vote authorising military action against Syria. Cameron may cling onto power after his stunning parliamentary defeat on Thursday night, but he will cut a diminished figure on the domestic and international stage. In the process, he has also damaged Britain’s influence.

Cameron’s litany of errors began with his decision to recall parliament from its summer holidays in order to give the green light to British participation in a military strike designed to punish Bashar al-Assad’s murderous regime for its alleged use of chemical weapons against its people last week. The decision to get parliament’s approval was right, even if not constitutionally necessary. The mistake was to rush things before all the evidence of Assad’s culpability had been gathered and published. In France, which is also contemplating military action, the parliamentary debate is scheduled for next week.

from Breakingviews:

UK’s big build dreams still dogged by past binge

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The UK government wants austerity to pave the way for bold modernisation of Britain. In reality its cuts don’t reverse the previous explosion in government spending and there isn’t much money for its big infrastructure dreams.

from Anatole Kaletsky:

If Europe wants Thatcherism, it must abandon austerity

Among all the obituaries and encomiums about Margaret Thatcher, very few have drawn the lesson from her legacy that is most relevant for the world today. Lady Thatcher is remembered as the quintessential conviction politician. But judged by her actions rather than her rhetoric, she was actually much more compromising and pragmatic than the politicians who now dominate Europe. And it was Thatcher’s tactical flexibility, as much as her deep convictions, that accounted for her successes in the economic field.

Governments in Europe and Britain today are obsessed with hitting preordained and unconditional targets: Inflation must be kept below 2 percent; deficits must be reduced to 3 percent of gross domestic product; government debt must be set on a declining path; banks must be recapitalized to arbitrary ratios laid down by some committee in Basel. In sacrificing their citizens’ well-being and their own political careers to these numerical totems, modern leaders often claim inspiration from Thatcher. And when voters turn against them, Europe’s leaders keep repeating Thatcher’s most famous slogans, “There is no alternative” and “No U-turn”.  But are these the right lessons to draw from Thatcher’s political life? A closer look at her economic achievements suggests otherwise.

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