Politics Summary: Thursday, July 22nd

The UK economy is set for a 'triple whammy' of higher inflation, lower growth and rising unemployment, the Bank of England's chief economist has said.

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The UK economy is set for a ‘triple whammy’ of higher inflation, lower growth and rising unemployment, the Bank of England’s chief economist has said. In an interview with today’s Independent, Spencer Dale warns of a deteriorating outlook in the wake of the Osborne Budget, with living standards over the next few years rising only “minimally”, and the VAT rise one of the reasons he doesn’t expect inflation to return to its 2 per cent official target before the end of next year – about a year later than previously hoped. For the next “three, four, five years”, demand in the economy will be “incredibly anaemic” relative to previous recoveries, he says, adding the economy wouldn’t return to normal “for an awfully long time”.

Dale, one of the Bank’d most senior policy officers, says: “The near-term outlook for both growth and inflation has deteriorated over the past couple of months. Inflation has come out a little higher than expected, and the news on VAT in the June Budget means that the time it will take inflation to get back to target will be pushed out, and I expect it will be above target until the end of next year. Likewise, there are some signs that growth may be softening, again partly reflecting the June Budget. We’ve also seen tensions in the financial markets increase, related to concerns about sovereign debt issues in Europe. That has also affected the ability of banks and companies to raise cash. There’s also the greater question of how things develop as countries around the world accelerate their fiscal consolidation plans… Since the spring of 2006 inflation has been above target for 41 out of 50 months and for two years it has averaged over 3 per cent. Now, we can come up with all sorts of clever and real reasons to explain our view but at some point people will say ‘inflation just seems higher than it used to be’ and that is a very substantial risk.”

Nick Clegg’s gaffe-strewn performance at prime minister’s questions makes the front page of The Guardian – with his pronouncement the Iraq war was “illegal” prompting a legal warning. Clegg was forced to clarify his position last night – insisting he was speaking in a personal capacity, as a leading international lawyer warned that the statement by a government minister in such a formal setting could increase the chances of charges against Britain in international courts. Philippe Sands, professor of law at University College London, said: “A public statement by a government minister in parliament as to the legal situation would be a statement that an international court would be interested in, in forming a view as to whether or not the war was lawful.” A Number 10 spokesman said: “The coalition government has not expressed a view on the legality or otherwise of the Iraq conflict. But that does not mean that individual members of the government should not express their individual views. These are long-held views of the deputy prime minister.” When asked whether Clegg had been speaking as the leader of the Liberal Democrats and not as deputy prime minister, a Downing Street spokeswoman added: “Yes… The deputy prime minister is entitled to express his own view at the dispatch box.” All of which begs the question of what the point of having Clegg there is, if he’s not speaking for the Government, an issue explored last night by Next Left: “There has been an on-going debate about how influential Deputy Prime Minister Nick Clegg, leader of the Liberal Democrats, is over the policy of his Coalition government. Downing Street would now appear to have resolved the issue, in making clear that nobody should take any particular notice of anything Nick Clegg says… He was not speaking for the government when taking Prime Minister’s Questions today, as Deputy Prime Minister. So what’s the point? Next time David Cameron is unavailable, can’t we just cut to the chase and have Andy Coulson deputise instead. After all, it seems that he is equipped to speak for the government. And poor Nick Clegg is not.” Also yesterday, Left Foot Forward reported on Clegg’s failure to apologise to the House for misleading it over the Sheffield Forgemasters cuts.

North Korea has been hit by new US sanctions, with Hillary Clinton saying the measures “aim to punish” the rogue state for sinking a South Korean ship and pursuing nuclear weapons. The Independent reports the Secretary of State’s warning on a visit to Panmunjon in the demilitarised zone to mark the anniversary of the Korean War. She said: “We are aiming very specifically, after much intensive research built on what was done before but not limited to that, to target the leadership, to target their assets… North Korea can cease its provocative behaviour, halt its threat and belligerence towards its neighbours, take irreversible steps to fulfil its denuclearisation commitments and comply with international law. If North Korea chooses that path, sanctions will be lifted, energy and other economic assistance will be provided, its relations with the US will be normalised.” While defence secretary Robert Gates observed: “In the 20 years since I last climbed that observation tower and looked out across the DMZ, it’s stunning how little has changed up there and yet how much South Korea continues to grow and prosper. The North, by contrast, stagnates in isolation and deprivation.” While The Guardian reports that: “The restrictions were expected to target individuals within the regime and banks that help fund the nuclear industry through illicit activities such as money laundering, counterfeiting and the trade in arms and luxury goods. But it remained unclear how much influence the new measures would have. The US, UN and Japan have all imposed waves of sanctions against North Korea in the past. As a result, the country’s economy is now believed to be in a wretched state, while the leadership shows few signs of acquiescence.”

Time will be called on 24-hour pub and club opening, the home secretary is set to announce. Theresa May is to publish a consultation paper to tackle problem drinking; it will propose increased powers for local councils to take action in areas plagued by alcohol-influenced crime and disorder, and set out an overhaul of the licensing regime to include a ban on shops selling alcohol at below cost price and a “late-night” levy on some pubs and clubs to contribute towards the additional costs of policing. Fines for selling alcohol to under-18s will double, and there are also moves to give councils and the police greater powers to close permanently those shops or bars that serve children repeatedly. The Telegraph reports: “Under the plans, which could be announced as early as next week, councils would be given powers to introduce a ban on drinking after midnight in entire streets or towns. The consultation coincides with the Home Office taking full responsibility for alcohol licensing and enforcement. The Department for Culture, Media and Sport, which was criticised over some of its handling of the 24-hour opening regime, has been stripped of all involvement… Ministers want licensing authorities to have greater flexibility over the control of opening hours to meet the concerns of local people as part of a wider drive to give the public a greater voice in issues that affect them. One Whitehall source said: ‘When these proposals are implemented, this will be the death knell for 24-hour drinking. Labour unleashed 24-hour drinking on our communities, then they said they had abandoned it but the truth was we were still saddled with it. The whole point of this move is that unregulated 24-hour drinking is brought to an end.'”

And the Standard reports that BNP leader Nick Griffin will attend a Buckingham Palace garden party this afternoon. It reports: “The far-right politician is expected to be among the 8,000 guests at the event which will be hosted by the Queen and also attended by the Duke of Edinburgh. Other members of the Royal Family who will be mingling on the palace’s lawns include the Duke of York, The Duke and Duchess of Gloucester and the Duke of Kent.” However, a spokesman for Unite Against Fascism insisted: “We are opposed to Nick Griffin appearing anywhere in public. Events like this help to make Nick Griffin and the BNP seem legitimate in the eyes of racist voters. The Queen does not just represent Britain but the Commonwealth. Her staff or whoever invited him really need to take a long, hard look at what this day represents – Nick Griffin and racists or multi-culturalism.” A Buckingham Palace Spokesman justified the decision by saying: “Approximately 8,000 guests attend each of the Queen’s garden parties. People are nominated by a wide range of organisations who submit lists on a pre-arranged quota. Nick Griffin is automatically eligible for a Garden Party ticket as he is an elected Member of the European Parliament.”

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