UK News

Insights from the UK and beyond

from Anatole Kaletsky:

Even Britain has now abandoned austerity

The Age of Austerity is over. This is not a prediction, but a simple statement of fact. No serious policymaker anywhere in the world is trying to reduce deficits or debt any longer, and all major central banks are happy to finance more government borrowing with printed money. After Japan’s election of Prime Minister Shinzo Abe and the undeclared budgetary ceasefire in Washington that followed President Obama’s victory last year, there were just two significant hold-outs against this trend: Britain and the euro-zone. Now, the fiscal “Austerians” and “sado-monetarists” in both these economies have surrendered, albeit for very different reasons.

Much attention has been focused this week on the chaos in Cyprus. Coming after the Italian election and subsequent easing of Italy’s fiscal conditions, the overriding necessity to keep Cyprus within the euro -- and its military bases and gas supplies outside Russian control -- will almost surely mean another retreat by Germany and the European Central Bank from their excessive austerity demands. But an even more remarkable shift has occurred in Britain. The Cameron government, which embraced fiscal austerity as its main raison d’etre, was suddenly converted to the joys of debt and borrowing in this week’s budget.

Of course, the rhetoric of British Chancellor George Osborne’s budget speech gave no hint of his Damascene conversion. On the contrary, it ridiculed “people who seem to think that the way to borrow less is to borrow more.” But Osborne’s trademark sneers could not disguise the meaning of the policies and numbers he presented.

Long after the U.S., Japanese, Chinese, Canadian, Australian and most European governments, Britain has finally been forced to accept Keynes’s “paradox of thrift”:  A government that tries to reduce its borrowing during a recession generally weakens the economy so much that it ends up increasing its total debt. Conversely, a government that expands deficits during periods of weak economic activity, or finds ways to encourage private borrowing and discourage private saving, usually ends up lightening the national debt burden.

from John Lloyd:

A free press without total freedom

Journalism gyrates dizzily between the dolorous grind of falling revenue and the Internet’s vast opportunities of a limitless knowledge and creation engine. On the revenue front, no news is good. The just-published Pew Center’s “State of the US News Media” opens with the bleak statement that “a continued erosion of news reporting resources converged with growing opportunities for those in politics, government agencies, companies and others to take their messages directly to the public.” Not only, that is, is the trade shrinking, but those who once depended on its gatekeepers have found their own ways to visibility.

Journalists’ task, as large as any they have collectively faced in 400 years of their trade’s existence, is to find a way to continue the journalism that societies most need and citizens are least willing to pay for: detailed, skeptical, truthful, fair, investigatory writing and broadcasting. It’s a big ask. The British are in the process of not answering it. They are staging a sideshow: not an unimportant one, but in a minor key all the same.

from Blogs Dashboard:

A devalued pound can’t save the British economy

There it goes again. Sterling has been dropping sharply this year against the U.S. dollar and especially the euro, as Britain turns to a tried and trusted remedy for its economic problems: devaluation. Even with its slight uptick on Wednesday, sterling is down more than 6 percent against the euro since the beginning of 2013 and has slid 10 percent over the past six months.

This is not something the British government is boasting about, especially at a time when there’s concern over -- and sometimes a high-level condemnation of -- countries such as Japan that allegedly seek to manipulate their currencies. But it’s also not something the British government or the Bank of England is trying to hide – or stop.

from Felix Salmon:

Britain’s fiscal failure

Never mind Sachs vs Krugman: by far the most interesting and important fiscal-policy debate right now is Cameron vs Wolf.

David Cameron, of course, is the prime minister of the UK, and last week he gave a rambling 4,000-word speech on the national economy which is almost impossible to read. For some reason the speech appears online in what you might call teleprompter format, with a single sentence sometimes spanning three separate paragraphs. It's a clear indication that Cameron is more interested in rhetoric than he is in substance.

from Jack Shafer:

Horsemeat hysteria

Disgust, the gag reflex and flights to the vomitorium greeted this week's news that horse flesh had breached the beef wall to contaminate burgers and frozen beef meals (lasagna, spaghetti Bolognese, shepherd's pie, meatballs) all over Europe. Some of the "beef" products contained 100 percent horsemeat, and early forensic tests hinted that the contamination might go back as far as August 2012.

Both the British government and the European Union called for "horsemeat summits" to investigate the food scandal, with British officials surmising that a criminal conspiracy would be found responsible for adulterating beef products with cheaper horse. But for all the horsemeat hysteria recorded and amplified by the press, "no risk to consumer health" was posed by the products, as the Food Safety Authority of Ireland reported. The injuries from eating horsemeat were not physical, they were psychological, and where they were not psychological they were anthropological, or else simply nonexistent. According to the Ireland health authority, every beef-and-horse burger it analyzed tested negative for phenylbutazone, a common horse medicine that's banned from the food chain.

from John Lloyd:

England’s inevitable gay union

Earlier this week the British Parliament housed a restrained, sometimes mawkish and at times moving debate on gay marriage – and the bill passed the House of Commons, 400 to 175. The story was not that it passed, which had been expected. Instead, it was the split in the major governing party, the Conservatives, more of whose 303 MPs voted against the bill than for it. (Conservatives voted 136 in favor of the bill, with 127 voting no, five abstentions and 35 not registering a vote.) Prime Minister David Cameron, still intent on ensuring that his party is liberal as well as conservative, was emollient and understanding of those against the measure but presented his support in the context of a “strong belief in marriage. … It’s about equality but also about making our society stronger.”

His remarks signal that while there is division on the right over gay marriage – at least in Europe –and that while prejudice and bigotry still exist, the serious debate is between contending notions of conservatism. For liberals like Cameron and many in his party, gay marriage extends the benediction of an ancient rite upon modern couples, drawing them into the rituals of homebuilding and long-term affection that have so far been claimed as a heterosexual monopoly. For opponents, marriage must be just such a monopoly, since it is a union of one man and one woman for the purpose (if not always the practice) of procreation, of continuing society’s values in particular and the human race in general.

from The Great Debate:

Stubborn national politics drag down the global economy

Four years ago world leaders, meeting in the G20 crisis session, agreed they would all work to move from recession to growth and prosperity.  They agreed to a global growth compact to be delivered by combining national growth targets with coordinated global interventions. It didn’t happen. After the $1 trillion stimulus of 2009, fiscal consolidation became the established order of the day, and so year after year millions have continued to endure unemployment and lower living standards.

Only now are there signs that the long-overdue shift in national macro-economic policies may be taking place. The new Japanese government is backing up a "minimum inflation target" with a multi-billion-dollar stimulus designed to create 600,000 jobs. In what some call the “reverse Volcker moment,” Ben Bernanke has become the first head of a central bank for decades to announce he will target a 6 percent level of unemployment alongside his inflation objective. And the new governor of the Bank of England, Mark Carney, has told us that "when policy rates are stuck at the zero lower bound, there could not be a more favorable case for Nominal GDP targeting.” Side by side with this shift in policy, in every area but the Euro, there is also policy progress in China. It may look from the outside as if November’s Communist Party Congress simply re-announced their all-too-familiar but undelivered wish to re-balance the economy from exports to domestic consumption, but this time the promise has been accompanied by a time-specific commitment: to double average domestic income per head by 2020.

from John Lloyd:

A church married to the wrong side of history

After the attack on the Twin Towers in September 2001, the evangelical preacher Jerry Falwell took some time to tell his fellow Americans that homosexuals (along with abortionists, feminists and pagans) were at least in part to blame. “I point my finger in their face,” he said, “and say, ‘You helped this happen.’”

Later, in a “did I say that?” moment, he apologized.

It was a low moment, but not an unusual one. Falwell is in the hate-filled corner of the religious spectrum. But even those religious leaders at the mild and inclusive end must, more in sorrow than in anger, generally tell gay men and women that as much as they respect them, they can’t officiate at their marriages. That’s a bridge over too-troubled waters.

from Breakingviews:

Boris Johnson intervention reduces Brexit chances

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By Hugo Dixon

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

Boris Johnson's intervention in the European debate reduces the chance of a British exit from the European Union - or Brexit. The Mayor of London, a popular Conservative politician, says he will campaign to keep Britain in the EU provided it can negotiate a pared-down relationship based on the single market.

from Anatole Kaletsky:

Britain’s two cheers for Carney

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When Mark Carney, the respected head of Canada’s central bank, was appointed on Monday to the even more august position of governor of the Bank of England, Britain’s reaction was a characteristic blend of self-deprecation and smugness.

The self-deprecation was publicly expressed by an Opposition MP, Barry Sheerman: “Isn’t it a little surprising that the leading banking nation on earth could not find a British candidate for the job?” This feeling of mild embarrassment seemed to be quietly shared by many Britons in addition to the distinguished domestic candidates who were passed over.

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