Look Left – IMF warnings, economic non-solutions and Romney’s financial skeletons


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George-Osborne-Christine-Lagarde• The IMF downgraded its UK growth forecast again this week – warning UK economic policy must change or face permanent damage.

Forecasting growth of just 0.2 per cent this year, it was the third IMF downgrade in under a year, having previously forecast 0.8% growth in April 2012, 1.6% in September 2011, and 2.3% in April 2011.

Issuing a stark warning to the George Osborne, it said current economic policy in the UK will not be able to “absorb significant slack in the economy” – remarks seized upon by Ed Balls as further vindication of his repeated calls for a Plan B.

This week’s downgrade and comments are the latest in a long line of reports, briefings and articles from the IMF urging action to reverse the slump and warning the government’s policies are damaging the recovery.

See here for more examples of recent IMF criticism, and read about how the economic downturn is hurting David Cameron’s poll ratings here and here. This week saw Labour take its biggest Ipsos Mori monthly poll lead for five years.

 


This week’s most read:

1. Further poll blow for Cameron as Labour take biggest lead for five years Shamik Das

2. UK economy will hit the rocks if Osborne follows Allister Heath’s plan Will Straw

3. Poll: Cameron seen as out of touch, out of ideas, weak, indecisive and dislikeable Shamik Das

4. Parliamentary motion calls on Barclays’s senior staff to stop fundraising for Romney Will Straw

5. Leaked report on costs of nuclear spells trouble for the government Regg Platt, IPPR


 

• So what, then, should be done (or definitely not done) to fix the economy?

Here’s what not to do: more spending cuts, paid for with tax cuts for business and top rate taxpayers; further labour market deregulation; and suspending the Climate Change Act – solutions proposed by City AM’s Allister Heath.

As Will Straw wrote, these policies will fail:

“Britain’s double dip recession should be proof, if ever it were ever needed, that ‘expansionary fiscal contraction’ does not work. The rapid pace of spending cuts has been a contributing factor to Britain’s economic decline and increased borrowing…

“Cutting taxes, regulations and Britain’s decarbonisation will cause plenty of pain and very little gain.”

And there was further evidence this week of the pain already being felt, with the latest labour market statistics, though showing a slight fall in unemployment, bringing bad news on youth unemployment and women’s unemployment.

• Mitt Romney came under renewed scrutiny this week over his financial affairs.

As Left Foot Forward revealed on Tuesday, a Parliamentary Early Day Motion has been tabled calling on Barclays senior staff to stop fundraising for the Republican Presidential candidate. He is due to speak in London at a $75,000 per head fundraiser on the eve of the Olympics which has been organised by senior figures at Barclays.

As co-sponsor of the EDM, Grahame Morris MP, told Left Foot Forward:

“Barclays executives have had their eyes off the ball for too long now. They must now stop fundraising for US Republican candidates and start rebuilding public confidence in the banking system here in the UK which they have done so much harm to.

“Parliament must send a strong message to these banking elites that it is no longer business as usual. Politicians are expressing the outrage felt by the ordinary people we represent.”

See our report here for more, and see here for our report on Patrick Durkin, a registered Barclays lobbyist who is co-hosting Romney’s London fundraiser, who raised $184,000 for Mitt Romney from April to June alone. Romney has pledged to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act (pdf) if elected.

Back in the States, meanwhile, it is Romney’s tax affairs that have come under attack – see The World Outside Westminster below for more, and see our report here from January on moves by Parliamentarians to have Romney’s tax haven closed.

Progressive of the week:

Ofsted chief Sir Michael Wilshaw, who this week slapped down Michael Gove’s plans to reintroduce a two-tier education system, saying he favours the current single-tier system. The Chief Inspector of Schools is the latest expert to dismiss the education secretary’s ideas, which have very little support.

See here for more.

Regressives of the week:

Republicans Mick Huckabee and Michele Bachman, who this week did their best to repel decent people from the GOP with, respectively, a bit of homophobia and a bit more Islamophobia.

Huckabee, one-time candidate for the Republican Presidential nomination, had agreed with a caller to his radio show that part of the definition of “homosexual” is molesting children, while Bachman, egged on by former Fox News loudmouth Glenn Beck, accused Secretary of State Hillary Clinton’s deputy chief of staff, Huma Abedin, of working on behalf of the Muslim Brotherhood.

See here for more.

Evidence of the week:

The “Seeing through British pensions – How to increase cost transparency in UK pension schemesreport (pdf) by the RSA, which revealed the hidden fees that are halving the value of UK pensions. The report highlights the need for a radical shake up of the way in which the pensions industry works.

The RSA’s year-long study showed how pension savers are being misled about the hidden costs and charges they have to pay; these charges can halve the value of a typical pension – a 2 per cent charge a year doesn’t sound like much, but over the lifetime of a pension it reduces the pot by more than 50%.

See here for more.

The Week Outside Westminster by Ed Jacobs:

Scotland

It was another bad week for Alex Salmond’s campaign for independence.

The first minister found former SNP leader Gordon Wilson and his own adviser on a referendum, Stephen Tierney, speaking out against any idea of a second option being on the ballot paper in 2014.

With the party leadership also pledging a vote at the party’s conference in October over u-turning on their anti-NATO stance, questions began to be asked about whether the SNP’s radical edge was being dented, Allan Massie observing in the Scotsman:

“What we are seeing is a conflict in the Nationalist camp between the pragmatists and the idealists…

“A few months ago there were doubts about the unity of the ‘Better Together’ or ‘No’ campaign, made up of members of three parties and no party. Now it is the ‘Yes Scotland’ campaign that looks more divided.

“By seeking to make independence more palatable to the uncommitted, the SNP leadership risks losing the whole-hearted support of the true believers. They’re not for turning, but the Laddie is – and they don’t like it.”

Meanwhile, as Scotland formally entered a double dip recession, fuelled by a construction sector slump, there was a widespread belief it is Westminster that holds the keys to Scottish growth. See our report here for more, and see here for the latest on Salmond’s tribulations over gay marriage.

Wales

As Left Foot Forward reported on Friday, Plaid Cymru faced internal discipline troubles.

While Plaid leader Leanne Wood sought to keep attention focused on the economy with the establishment of the party’s economic commission, former Plaid chief and Assembly Presiding Officer, Lord Dafydd Elis-Thomas, temporarily had the whip removed from him for failing to turn up for a no confidence vote in the health minister.

Stating he had to attend graduation ceremonies at Bangor University – at which he is Chancellor – he went on to attack the party leadership, telling S4C:

“Plaid has put itself in a position of being the supporting cast to a play which was produced by the Welsh Conservatives, and that gets under my skin.”

Analysing the situation, the BBC’s Wales Political Editor, Betsan Powys, wrote:

“If Dafydd Elis-Thomas stayed away from the Assembly for the no-confidence vote in health minister Lesley Griffiths, he had good reason because he has a role to play at Bangor University. He takes it seriously.

“Had he simply stayed away, perhaps the party would not have done anything. But once he talked to the BBC in the terms he did then he knew the party would have to act.

“He stayed away with the backing of his local party and they, therefore, are sticking by him. But there are increasing questions about whether he may be more comfortable out in the open as an independent assembly member who could vote whichever way he wanted.”

Polling by ICM for the Silk Commission into the future of Welsh Devolution, meanwhile, saw widespread public support for the Welsh government and Assembly taking on responsibility for setting major taxes currently decided by Westminster and being given the opportunity to borrow for investment.

Northern Ireland

With MLAs having packed their buckets and spades for the summer break, the first and deputy first ministers announced progress on a number of major policy areas.

These included agreement on the appointment of a new victim’s commissioner; plans for an investment strategy; and proposals to meet other party leaders in September to complete progress towards a cohesion, sharing and integration strategy.

Protesting at the manner of the announcements, however, the Ulster Unionists pledged to withdraw from Stormont’s cohesion, sharing and integration strategy group, UUP deputy leader John McCallister saying:

“The timing and manner of the announcement by the first and deputy first minister demonstrates clearly the contempt they hold for the political process. They are not interested in inclusive politics, they have forgotten the hard lessons of the peace process and they have demonstrated that their approach to a shared future is disingenuous.

“There is no point in carrying on discussions in such an environment. Only if all parties are actively engaged can genuine agreement be reached. By announcing their statement in the middle of the holiday season they demonstrate clearly their disdain for the democratic process and the rather low value they place on the opinion of others.”

Finally this week, as figures pointed to unemployment having risen to 6.9%, Northern Bank chief economist Angela McGowan delivered an ominous warning.

Arguing high public sector employment in Northern Ireland had traditionally been a buffer, she said:

“That safety blanket could rapidly erode if the UK coalition government does not up its game when it comes to pulling the UK economy out of the current double-dip… Northern Bank forecasts suggest that unemployment in the local economy will peak at almost 64,000 claimants next year.”

The World Outside Westminster by Tom Rouse:

The Romney campaign continues to come under fire for its candidate’s loose approach to paying and declaring taxes.

What will worry the campaign is that in the last week, senior figures in the GOP have joined the calls for Romney to release full, detailed tax returns for the last year. This scrutiny of his taxes has been matched by questions about his relationship with Bain Capital and in particular what role he played within the company while he was running for Governor.

He has repeatedly used his record with Bain to show he is a job creator and knows how to boost a flagging economy. But in the early 2000s, Bain was far more associated with the outsourcing of jobs to other countries.

Romney denies any involvement in this and claims he was no longer part of the day-to-day running of the company, however records from the time show Romney was continuing to claim he was an integral part of the company.

***

Despite this, the polls continue to show little change.

Obama and Romney continue to see their ratings fluctuate up or down by a point; the negative attacks launched by both sides seem to have had little effect so far, with observers expecting the election to be a referendum on Obama and in particular his handling of the economy.

This means the President’s personal ratings are just as important at this stage as head-to-head polling. His current Gallup approval rating is -2, which has been relatively unchanged over recent weeks.

However, Obama will be concerned by Gallup’s survey of economic confidence, which suggests there has been an ongoing decline in the public’s confidence in the state of the economy.

***

Supporters of the Arab Spring uprisings were given a boost by the success of free and fair elections in Libya.

It is not yet clear who will form a government in Libya due to the nature of the electoral system, where 120 of the country’s 200 parliamentary seats are reserved for independents and political parties are only allowed to compete for the remaining 80.

However, the election process and what it signals has been praised by outside observers, NATO Secretary-General Anders Fogh Rasmussen pleased with the events of the last week, saying they were part of an impressive step forward for the country.

He said:

“I congratulate the Libyan people on the announcement of the results of the first election held across the country in almost half a century. This election marks an impressive step forward in Libya’s transition to democracy, after over forty years of dictatorship.”

***

The positive signals coming out of Libya puts the reluctance of the international community to act over Syria ever more firmly under the spotlight.

The past week has seen a series of massacres by government troops and retaliation by rebel forces, but Russia and China continue to veto any proposals which are put before the UN Security Council.

Three of President Assad’s inner circle, including his brother in law Assef Shawkat, were killed in a bomb attack by Rebel forces on Wednesday. This latest action has forced the beleaguered dictator to retreat from the capital to plot his response and led Cameron to call on the Syrian leader to recognise it was time to go.

As Left Foot Forward reported on Friday, the prospect of the imminent downfall of Assad has brought hope to the millions suffering under his tyranny, one tweeting:

“Last Ramadan i was making dua’a for the demise of Hosny Mubarak. This Ramadan I pray for the same for Bashar al Assad.”

***

Finally, this week, back to the US – and the latest shooting tragedy.

For Columbine 1999 and Virginia Tech 2007 read Aurora, Colorado, July 20th, 2012.

Twelve people were killed – the youngest six-year-old Veronica Moser – and 58 injured (including a three-month-old baby) when a gunman burst into a midnight screening of Dark Knight Rises, setting off gas canisters before firing into the crowd.

The tragedy once again reopened the debate on gun control in the States, with New York Mayor Michael Bloomberg saying it was time for Barack Obama and Mitt Romney to “look in the mirror” and follow their convictions, adding:

“Soothing words are nice, but maybe it’s time that the two people who want to be president tell us what they are going to do about it…

“There are so many murders with guns every day. It’s just got to stop.”

See our report here for more.

 


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