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It is not just the size of the deficit and debt but as Stephanie showed it is also a question of timing in refinancing maturing debt. OBR message appears to be no need for panic and slash and burn (accept there is more detail to come) But of course growth predictions will themselves be affected by government actions to 'reduce' the deficit. If they are successful in actually reducing rather than transferring public expenditure (say from town halls to DWP) the demand effect will tend to lead to reduced or no growth and revise predictions on future difficulties with the deficit - reduced tax flows plus increased benefit take up.

If this helps us to put Darling in context it improves our understanding. I long felt the only problem with the last Chancellor's plans was the need of his boss to spin everything away from his personal responsibility for the entire fiscal shambles.

Yes, the growth forecast made by Darling was way too optimistic and needed balancing. I still feel the OBR view is way too high but will be happy to be disabused of this interpretation.

The big trick that the coalition has to perform is to move employment away from the government pay roll into that of manufacturing and commercial services. This will have to be done on quite a large scale in a short period of time otherwise the whole economy goes pear-shaped for a very long time as welfare payments drain the Treasury.

What this government has to achieve is effectually a complete reversal of the economic policy of the last forty or more years. I would suggest that this can only be described as hopeful, but there is no workable alternative.

Did a quick word search on the OBR report for "quantitative easing" - couldnt find it anywhere. Where is the £200bn in the figures for growth/restoration of nominal demand. All I can find is " Our forecasts assume that monetary policy will permit
above-trend growth and that the expected level of GDP will be around 1 per cent below trend
by the start of 2015." What does this mean?

The think I find most remarkable is that the figures take no account of the boost to the economy that will come from England having a long world cup run culminating in victory. Think of the amount of beer, plastic flags and vuvuzelas that will be sold on credit card purchases and imported from China and Europe, surely that would be a way to kick starts the old UK plc economic model, there must be afew people left who we can pursuade to get into debt to drive the nation on...

But seriously (I wish).

''There are a lot of new assumptions here, about world growth.....''

There lies the rub surely, I will withold judgement until I understand those and how growth elsewhere is going to help us exactly this time around except as a more affordable tourist destination for indians, Brazillians, Chinese and Australians.

Just one further comment, can you explain the OUTPUT GAP THEORY because this seems to be forming an integral part of fiscal and inflation forecasting which is going to influence us for generations. Can you give us one of your classic Masonesque summaries as to how it works?

if Budd's report shows the slightest appreciation of Brown's fiscal aptitude do you think we will ever hear from him again?

But blue chip growth forecasts have generally underestimated the scale of the recovery by about half so far. There is no particular reason to think that growth will meet the OBR's lower target, except that, as a result of ConDem cuts growth will inevitably fall.
What's more the rate of decline of the budget deficit has been accelerating rapidly over the last few months. We'll get a better idea on Friday when the latest figures are released. But given that the original Pre Budget Report and this one too, anticipate that financial profits will only recover in a few years, when in the USA they have already recovered, this looks grossly pessimistic.
Never mind all the cash flooding in from the state owned banks - £6bn in extra interest to the Bank of England this year alone - during a period when the banks made losses!
In short I think it means that the ConDems ideological excuse - their alleged faith in "independent" forecasting - as the reason for their planned slash and burn recessionary budget have gone up in smoke.
So it'll back to straight up Thatcherism.

The IFS pointed to the financial crisis causing a 7.5% hit on the economy - possible downside of 10% plus lower trend growth.Is this to be compared to the OBR's 4% estimate.Seems a big divergence?

#8

Not as big as the divergence of the expectation of England's performance v the reality of it.

I suppose it is unacceptable for the OBR to come totally clean and say to the press.

'Well heck guys, economics, just a bit of a grey area y'know, we dont know really, just our best guess, we could easily be 20% out on just about every forward looking parameter we have assumed in the current climate.

This exercise just gives us a revised datum to reference future finger in the air predictions against, the truth is we could have gone for any one of a hundred different datums to test policy and future sttistics against and come up with a good case for all of them.

Your guess is as good as mine really, but heck, that does not justify my huge salary and army of backroom workers so I usually tow the line and pretend what we say has some absolute value in it. You may as well all go and enjoy the world cup and make predictions about that.. it is alot more fun as well I hear....... Questions?... yes Paul''

Paul mason 'What do you think the chances are of Capello picking Joe Hart for the next game given his past record'?

'Could you follow that up and provide us with an insight into the recent spike in the price of vuvuzelas in the area of south Africa where all the England fans stay, there is a theory going around that they all plan to blow them all at once everytime Wayne Rooney opens his mouth close to a referee.'

OH NO HE ISN'T (vindicated) MORE POLITICAL NON-SPEAK

A wrong prediction, Darling, is WRONG. If it saves money, it doesn't get less WRONG.

If the construction industry advance indicator is anything to go by the growth predictions are pants.

Everyday we are getting more and more pain now, the change has been very dramatic since the election, the whole industry is on hold it seems until 22nd June. I dont ever recall witnessing such a sea change in such a short time in our sector.

looks horrible for the rest of the economy on that basis and will probably quicker than most pundits will realise. Back to negative growth by september., slight positive over christmas and back to negative after that.

If there's going to be some discussion about employment, let's start talking about what is really happening in employment, so that we can grasp the reality, and challenge it.

Everything is being slipped into place for a complete commodification of workforce - not just in moving work around the world (globalised production chains and offshoring) but also in structures that facilitate moving workers around the world (EU free movement of labour and of firms workers as 'services suppliers', the 'intracorporate transferee' scam in the UK 'points based system', and all the implications of the labour movement commitments being made in EU trade agreements while the public isnt looking), all to maximise corporate profits in relation to labour costs.

While it might be considered 'efficiency' for individual firms to do this, it is a disaster for workers here, being displaced, and it flows into negative social implications and implications for the national economy.

Bringing in migrant workers means less money into tax and NI (they dont pay NI here, and wages can be paid at home), less earnings spent here (live cheaply here and spend cash at home), the earn/spend cycle we need here is disrupted and left wanting, disabling recovery, there is a much higher welfare bill here as workers are displaced, and then the generational social negatives of unemployment.

(The mostly UK publicly owned RBS is bringing in Indian workers as 'intracorporate transferees'. Barclays is sending UK workers to India to train their own replacements)

So - the size of this growing phenomenon of shipping in migrant workers to boost corporate profits, including all the systemic perks that support it, should be recognised, with public debate on whether firms' profits, often overseas firms anyway, are indeed our top priority, for which we are prepared to sacrifice - the country really. Or whether we have different priorities - aiming for social as well as environmental sustainability.

This is clearly too important to leave to policiticans. Especially the likes of Caroline Lucas and Vince Cable, who, along with Peter Mandelson, have had full knowledge of the direction in which labour liberalisation is going at the EU level, but haven't bothered to tell the UK public.

'It's better, it's worse. Darling vindicated. Then not.'

Ah, the 24/7 news cycle.

Maybe apologies are in order. Or not. Or...

When will the media wake up from their coma and realise that the 'lone voices' are the ones talking sense.



Media coverage of points of view based on existing popularity (labour and conservatives get loads of coverage the greens almost non for example).


Intellect is not the same as wisdom you fools!!!!

As I suspected and have posted before, it appears from the congresional hearing thus far into the BP spill that the bean counters decisions were given priority over engineers recommendations.

'' So Mr Engineer who earns 60k a year, are you sure you really really need that extra heavy duty valve system that costs £1million and takes a week to install at a lost production of a further £7million, you see as a bean counter I earn 600k a year and therefore my decisions must be better than yours because I am obviously more intelligent...lets just go with the cheaper system eh, which will probably get me a 60k bonus this year''

You know, as an engineer, and someone who has worked in the oil and gas industry as well I can not tell you how many times the above dynamic has been at play in the projects I have worked on and how hard I have had to fight sometimes to get even safety critical stuff past the self interested scrutiny of the contracts managers and accountants, often driven by bonus considerations.

The BP disaster is just a different manifestation of the immence damage being done because of the value reversal where those whom provide no real value to society are percieved as being 'chic' and rewarded on a truely grotesque scale.

i dont have aproblem with Bill gates wealth ( and he has used it positively as well which tells its own story), I have amassive problem with Richard F Fuld Jnrs wealth, in contrast he transferred abig chunk of his assests to his wife when he found out he was to be investigated. For goodness sake if you are worth a $billion already !!! These people are truely sick.. but they pay the best lawyers and continuously get away with it.

'15. At 5:39pm on 17 Jun 2010, Jericoa wrote:'

And the best bit is... the bean counter seems to get to keep the bonus for the initial 'saving', even when it all subsequently goes the shape of a pear.

And they are now pretty wall to wall in government, or advising the numpties 'in charge'.

The only time an actual, qualified engineer seems to be in the frame they are either a 'Sir' or a 'Lord' and/or went to school with Brunel (no bad thing in many ways) and hence either bought off or behind the tech curve in whitewashing or deflecting the mess that has, eventually, resulted.