Lazy Lob
12-31-2009, 04:33 AM
Happy new year all. p-)
Lipstick and daffodils won’t save Britain now
Little treats at Christmas don’t mean the recession is over. We must be honest about the terrible damage Labour has done
Rosemary Righter
In bombed-out, blockaded, wartime Britain, Winston Churchill is recorded as having insisted on two things: daffodils must make it from the Isles of Scilly, and women must have a sporting chance of acquiring a bit of slap.
Shrewd psychology; and, let’s fantasise, the genesis of what literate economists (they do exist) now call the “lipstick effect”. What this means is that in bad times, people economise on big things such as foreign holidays, pay down debts where they can and forget about new cars, unless fooled by cash-for-clunkers schemes into believing that they are “saving money” when the dealers would have offered them huge discounts anyway. They compensate by giving themselves little treats. Like lipstick.
So, as in Noël Coward’s ironic take on Vera Lynn, knowing that “there are bad times just around the corner, and the outlook’s absolutely vile”, we went out and bought silly things and, to the relief of retailers, had a modestly self-indulgent Christmas to round off the worst non-wartime year for the British economy since . . . think about this:
Not 1979, the Winter of Discontent, or 1976, the year that Denis Healey, another over-confident Labour Chancellor of the Exchequer, squeezed the rich till the pips squeaked, ran out of juice anyway, and went cap in hand to the International Monetary Fund.
Not the postwar 1940s, years of such bleach-boned, debt-saddled austerity that my first memories are all grey still photographs, of pallid Chesterfield faces heading from prefabs to patient, hungry queues for rationed bread.
Not even 1931, when the Great Depression hit.
The 4.75 per cent by which Alistair Darling expects the British economy will have shrunk in 2009 when the bells ring out the old year tonight will, according to the National Institute for Economic and Social Research, have been the steepest fall since 1921 when Britain was physically and materially drained by the Great War.
This loss of wealth is not temporary. The Treasury estimates that some 5 per cent of productive capacity has been wiped out by the financial crisis; and even so, the remaining margin of spare capacity could be as large as 6 per cent of gross domestic product — a gap between actual and potential performance that could take half a decade to close.
Vast emergency spending has prevented bad from being much worse, but has propelled Britain’s public debt into the stratosphere — where it will stay if Mr Darling’s plans hold: his Pre-Budget Report would balance the current spending budget only in 2017-18. In real terms, this year’s £178 billion deficit is about twice as large as it was when Healey turned to the IMF, and the Treasury does not expect to get overall public debt back down to its target 40 per cent of GDP until well into the 2030s.
Small wonder that Churchill and Coward come to mind. Saluting their spirit — Coward pitched for London Pride in the Blitz and saved his sharper satire for the Attlee years — but saluting, also, their honesty. Oh, for a modern Coward to ridicule the moral cowardice of a government capable of asserting, as Mr Darling did when presenting the work of fiction misleadingly labelled a Pre-Budget Report on December 9, that a decade of solid economic achievements has equipped Britain to weather the global economic storm. Because when the Tories berate Gordon Brown for saving nothing while the sun was shining, they are being too kind.
It has, in truth, been raining almost throughout new Labour’s interminable parade. Mr Brown was on the button with his “No more boom or bust”. There has been no Labour boom on his watch. Only, er, bust.
Since the beginning of this century, when, after a “prudent” interval of two years following Labour’s 1997 victory, Mr Brown broke through the previous Conservative Government’s public spending ceilings, the British economy has averaged a mere 1.7 per cent annual growth in real terms — the weakest performance since Attlee’s Government in the 1940s. And the next time a Labour politician bangs on about Thatcher having destroyed Britain’s manufacturing base, remember this: under new Labour, manufacturing output has contracted by 1.2 per cent every year, down to around 12 per cent of GDP. Britain’s finances were in deep structural deficit before the crisis hit — one reason why, even with aggressive fiscal pump-priming, it has taken Britain longer than any other major economy to start emerging from recession.
Mr Brown’s new year pledge to “go for growth” and a decade of “fairly shared” prosperity is thus unlikely to convince even Labour voters, let alone the markets. The recovery looks as anaemic as the housing market; unemployment, far from starting to drop as Mr Brown predicts, is expected to rise by a further 300,000 or so by June; no one except Mr Darling expects growth anywhere near 3.5 per cent in 2011; and, above all, a government seen to be in denial about past misjudgments cannot instil confidence in the future.
The big question for investors, not least those buying Treasury bonds, is whether the roots of Britain’s problems are political, thus potentially soluble when, hopefully, the current crew gets its electoral comeuppance a few months from now; or whether, under not-really- new Labour, Britain has unlearnt the business-friendly, wealth-creating secrets of the Thatcher reforms.
Britain is still a far more flexible, resilient, resourceful and outward-looking country than it was before Margaret Thatcher — more attractive, even now, to investors than are most members of the EU; but it is markedly less so than it was a decade ago. Among the reasons, all Brown-generated, are: misdirected as well as excessive public spending, thinly spread when it came to skills, research and transport infrastructure but slathered thick on a “targetocracy” of controllers; an ever more opaque, unpredictable and burdensome tax system; and heavy-handed regulation of everything from contact with children to what you may cover your sofa with.
The Prime Minister’s vacuous new year attack on Tory honesty about Britain’s parlous public finances — “We want to build our country up, not talk Britain down” — confirms that, in spirit, he has already left No 10. He is far more comfortable in Cloud Cuckooland, his chosen and, if the new year wish of millions comes true, his soon-to-be permanent abode. You cannot eat (most) lipstick.
http://www.timesonline.co.uk/tol/comment/columnists/rosemary_righter/article6971960.ece
Lipstick and daffodils won’t save Britain now
Little treats at Christmas don’t mean the recession is over. We must be honest about the terrible damage Labour has done
Rosemary Righter
In bombed-out, blockaded, wartime Britain, Winston Churchill is recorded as having insisted on two things: daffodils must make it from the Isles of Scilly, and women must have a sporting chance of acquiring a bit of slap.
Shrewd psychology; and, let’s fantasise, the genesis of what literate economists (they do exist) now call the “lipstick effect”. What this means is that in bad times, people economise on big things such as foreign holidays, pay down debts where they can and forget about new cars, unless fooled by cash-for-clunkers schemes into believing that they are “saving money” when the dealers would have offered them huge discounts anyway. They compensate by giving themselves little treats. Like lipstick.
So, as in Noël Coward’s ironic take on Vera Lynn, knowing that “there are bad times just around the corner, and the outlook’s absolutely vile”, we went out and bought silly things and, to the relief of retailers, had a modestly self-indulgent Christmas to round off the worst non-wartime year for the British economy since . . . think about this:
Not 1979, the Winter of Discontent, or 1976, the year that Denis Healey, another over-confident Labour Chancellor of the Exchequer, squeezed the rich till the pips squeaked, ran out of juice anyway, and went cap in hand to the International Monetary Fund.
Not the postwar 1940s, years of such bleach-boned, debt-saddled austerity that my first memories are all grey still photographs, of pallid Chesterfield faces heading from prefabs to patient, hungry queues for rationed bread.
Not even 1931, when the Great Depression hit.
The 4.75 per cent by which Alistair Darling expects the British economy will have shrunk in 2009 when the bells ring out the old year tonight will, according to the National Institute for Economic and Social Research, have been the steepest fall since 1921 when Britain was physically and materially drained by the Great War.
This loss of wealth is not temporary. The Treasury estimates that some 5 per cent of productive capacity has been wiped out by the financial crisis; and even so, the remaining margin of spare capacity could be as large as 6 per cent of gross domestic product — a gap between actual and potential performance that could take half a decade to close.
Vast emergency spending has prevented bad from being much worse, but has propelled Britain’s public debt into the stratosphere — where it will stay if Mr Darling’s plans hold: his Pre-Budget Report would balance the current spending budget only in 2017-18. In real terms, this year’s £178 billion deficit is about twice as large as it was when Healey turned to the IMF, and the Treasury does not expect to get overall public debt back down to its target 40 per cent of GDP until well into the 2030s.
Small wonder that Churchill and Coward come to mind. Saluting their spirit — Coward pitched for London Pride in the Blitz and saved his sharper satire for the Attlee years — but saluting, also, their honesty. Oh, for a modern Coward to ridicule the moral cowardice of a government capable of asserting, as Mr Darling did when presenting the work of fiction misleadingly labelled a Pre-Budget Report on December 9, that a decade of solid economic achievements has equipped Britain to weather the global economic storm. Because when the Tories berate Gordon Brown for saving nothing while the sun was shining, they are being too kind.
It has, in truth, been raining almost throughout new Labour’s interminable parade. Mr Brown was on the button with his “No more boom or bust”. There has been no Labour boom on his watch. Only, er, bust.
Since the beginning of this century, when, after a “prudent” interval of two years following Labour’s 1997 victory, Mr Brown broke through the previous Conservative Government’s public spending ceilings, the British economy has averaged a mere 1.7 per cent annual growth in real terms — the weakest performance since Attlee’s Government in the 1940s. And the next time a Labour politician bangs on about Thatcher having destroyed Britain’s manufacturing base, remember this: under new Labour, manufacturing output has contracted by 1.2 per cent every year, down to around 12 per cent of GDP. Britain’s finances were in deep structural deficit before the crisis hit — one reason why, even with aggressive fiscal pump-priming, it has taken Britain longer than any other major economy to start emerging from recession.
Mr Brown’s new year pledge to “go for growth” and a decade of “fairly shared” prosperity is thus unlikely to convince even Labour voters, let alone the markets. The recovery looks as anaemic as the housing market; unemployment, far from starting to drop as Mr Brown predicts, is expected to rise by a further 300,000 or so by June; no one except Mr Darling expects growth anywhere near 3.5 per cent in 2011; and, above all, a government seen to be in denial about past misjudgments cannot instil confidence in the future.
The big question for investors, not least those buying Treasury bonds, is whether the roots of Britain’s problems are political, thus potentially soluble when, hopefully, the current crew gets its electoral comeuppance a few months from now; or whether, under not-really- new Labour, Britain has unlearnt the business-friendly, wealth-creating secrets of the Thatcher reforms.
Britain is still a far more flexible, resilient, resourceful and outward-looking country than it was before Margaret Thatcher — more attractive, even now, to investors than are most members of the EU; but it is markedly less so than it was a decade ago. Among the reasons, all Brown-generated, are: misdirected as well as excessive public spending, thinly spread when it came to skills, research and transport infrastructure but slathered thick on a “targetocracy” of controllers; an ever more opaque, unpredictable and burdensome tax system; and heavy-handed regulation of everything from contact with children to what you may cover your sofa with.
The Prime Minister’s vacuous new year attack on Tory honesty about Britain’s parlous public finances — “We want to build our country up, not talk Britain down” — confirms that, in spirit, he has already left No 10. He is far more comfortable in Cloud Cuckooland, his chosen and, if the new year wish of millions comes true, his soon-to-be permanent abode. You cannot eat (most) lipstick.
http://www.timesonline.co.uk/tol/comment/columnists/rosemary_righter/article6971960.ece