Populus show Tory lead back into double figures
With the clear trend having been towards Labour since Gordon Brown’s bail out of the British banks, right at the tail end of last year we saw a couple of YouGov polls that indicated the trend might be moving back towards the Conservatives. The first poll of 2009 from Populus certainly appears to back that up. The topline figures, with changes from Populus’s December poll, are CON 43%(+4), LAB 33%(-2), LDEM 15%(-2). The poll was conducted between the 9th and 11th January. It puts the Conservatives back above the psychologically important 40% level and back in an election winning position, which will no doubt deliver them dividends in terms of morale and media narrative.
Other measures are also moving away from Labour again, Brown & Darling’s lead on dealing with the economic problems has dropped to 3 points from 9 last month, Gordon Brown’s lead as the best PM right now to deal with the economy has gone from 7 points last month to 0 now (as Peter Riddell points out in his commentary, it was as high as 20 points back in November) and Cameron’s 2 point lead on being the best PM after the next election a month ago has grown to 12 points.
As ever, we need to be slightly wary when the polls appear to change direction – one man’s beginning of trend is another man’s rogue poll – but with YouGov and Populus now showing the boost in Labour’s support from their handling of the economic crisis now beginning to wane, it is looking as if the Brown economic bounce is coming to at an end.
The poll also shows economic confidence falling again, after the rather counterintuitive increase towards the end of last year. While the sharp contrast between people’s pessimism about the economy as a whole and their relative optimism about their personal fiances remains, both have dropped since Populus last asked the question. In November net economic confidence for the country had rallied to minus 35, now it is down to minus 61, lower than it was in the summer. In November Populus record net economic confidence for people’s own families had actually returned to positive territory at plus 7, now it is down to minus 4, still far above the lows it hit in the summer.
Filed under: Populus, Voting Intention
That’s quie a change since the last Populus poll in early Dec. In fact a 6 point change. Is this a trend or a rogue. ?
Only time will tell but all the indications are that there is a shift (albeit gradually) back to the Tories.
One thing is for certain. There will be no GE this year!
…still waiting for Obama’s inauguration…
Does Populus’s measure of economic confidence match closely with the other one (Nationwide?) that you use?
‘…still waiting for Obama’s inauguration…’
Why?
Are you going to Canada.
Apparently it will be his first port of call.
Anything now between a 4-10%lead have to say canvassing on saturday seems to suggest the same kind of shift very interesting to see if the next one proves that sumkmer is here or if this is just one swallow
not surprised the way jobs have been shed and the businesses going into administration since the new year. The tories have also been more aggressive on the economy as opposed to last autumn
I thought the Press today showed a loss of support for Labour.
Brown’s latest launch : for “saving” jobs -was contrasted with the real world of today’s job losses.Industry & City comment was critical-saying it would be better to aid job retention, than pay to recruit those laid off. This had the feel of “another VAT cock-up”.
Randall’s Sky interview with Darling was toe curling.Randall let him waffle on-which he did in a most unconvincing fashion-and then kept coming back to the Governments failings & culpability, which Darling struggled to refute.
At a time when the public have been equivocal about which party to support, and are polarised by their own personal fate & fears,the emphasis given by the Press will, I think be critical.
I thought Brown’s mandatory “do-nothing alternative” mantra today just sounded tired & empty.
When Darling tried it in the Randall interview, Geoff Randall told him that was Government “spin”.
Maybe the tide is turning-but I think the Press will be instrumental in how far it turns.
It seems that the AW thesis is proving correct.
As economic confidence will continue to fall as job losses and house price falls continue, not to mention an increasing headless chicken performance from the government, Labour support is likely to be back under 30% soon.
I did say after Glenrothes that Gordon should have gambled everything on a December 4th election
[...] There is further analysis on UK Polling Report here and Political Betting [...]
The labour party is doing something about this recession.it something the Conservatives party would do nothing like they did in the 80’s and 90’s
This neither proves or disproves Anthony’s theory.
Although it is plausible and may well be right it could still be coincidence that the two are closely linked or indeed this could be a rogue poll.
It could be argued that when people believed that GB’s plan had worked they became more confident and now that it doesn’t look so good their confidence in the future and GB has waned.
However another hypothesis is that people though Brown had no vision and had run out of ideas and that once he became active their views on him seemed to improve as he was on the front pages committing billions.
Now that the sums being committed have fallen, the announcements dropped off and the impact not what people hoped they might well be thinking there hope was miss placed and be returning to their previous opinion.
thirdly there may have been an altogether less obvious and oblique reason for the poll changes which had nothing to do with confidence, anything from Obama to Osbornes yachting holiday.
We won’t really know which is which or how much of both elements there is in it until either confidence rises and GB falls, or GB rises while confidence falls.
Even then Anthony’s theory may well have been the correct explanation but only in narrow circumstances for a specific period of time.
Personally I think Anthony has probably identified one of the drivers of the current poll changes perhaps even the strongest but I doubt ( and Anthony would probably accept) that it isn’t the whole story by a long way.
Peter.
“The labour party is doing something about this recession.”
Making it longer and deeper.
I do not understand opinion polls. I think the media use them as tools to their own ends. Personnally, I could not change my opinion about any one person by a single initiatve or activity. It all has to be proved.
Conversely, if a plan is put in place to be effective over a period of time, I cannot understand the impatience to see it through. I do gardening and it is hard work. It takes several weeks of preparation and development before a harvest and even then, a little frost can cause severe damage. Would I be called a failure due to extremities? I should hope not. Perhaps someone could explain the logic in the media’s impatience to give things a chance to materialise or develop. I am sure the people concern did not go straight to university after KS1 SATS. Everything takes time – we just have to keep going and trying new initiatives.
RICHARD- i fully agree with that comment i.e making it longer and deeper.
i could have told you that the polls would improve for the conservatives in november or december last year and for that i did at the time i actualy predicted that. in december the CON poll lead would drop quite away down and that during JAN-FEB and march it would go back up but at aslower rate than last year and that by the local elections in june the parties would be placed as follows: CON 43-45% LAB 30-33% LD 17-19% AND OTHERS 1-8%, this may still prove true but time will tell.
I’m slightly more pessimistic about Labour’s prospects. By June I guess they wil be polling between 28-31%.
So far the two first two polls only represent a 1.5% drop in Labour’s popularity. But as reality gradually sets in so their standing will gradually sink.
By the way I noticed that this poll got a mention on the 10 o’ clock news in respect to the public’s lessening confidence in Brown and Darlings ability to manage the economy.
Oh this is great – to see all the new “johnny come lately” predictors – mmm, I don’t actually remember anyone predicting a tory lead at the end of 2006 or at the end of 2007 , or beginning of 2008 – only “The Oracle”.
I suppose it’s similar to Brown making so called new plans for the economy which sound very similar to the Tory plans from about 3 months ago !
Just sit back and watch the gap grow again and all the Labour dissenters coming out of the woodwork again to topple Brown as the Tory lead breaks the 15 points again and higher as we get into the spring.
No one really thought there would be an election in 2009 did they ?
WMA 41:34:15 – FWIW the CLead has grown by 1.4 since the low point on the 14th.
The last “Brown Bounce” peaked at a CLead of 5 on 9/3/08 and within a month the CLead was 10, in 2 months it was 15. This time I would expect opinion to move at least as rapidly. We shall see.
if brown wins will the last person to leave switch off their energy saving bulb
Colin
“When Darling tried it in the Randall interview, Geoff Randall told him that was Government “spin”.
Maybe the tide is turning-but I think the Press will be instrumental in how far it turns”
You do know that Randall is editor-at-large of the Daily Telegraph don’t you? I’ll have to watch the interview later – I can imagine that he isn’t particularly gentle with Darling though. Whenever he writes a column there’s heavy criticism of Labour – face to face should be great to see.
Good to see the public aren’t going for the ‘do nothing’ line and are turning away from Labour again.
Good poll for the Cons a reward for a more decisive economic/financial stance and the impact of the job loss announcements
Labour won’t panic unless numbers go below 30 for a few polls in a row.
Even then too late to do anything now.
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MARK M
Yes I did know that-actually The Telegraph is not very pro Cameron.
If today’s cartoon in The Times is anything to go by-along with their recent editorials; and the tone from Sky News of late, then Rupert Murdoch seems to have made his mind up.
Can’t find the regional figures in the Populus Poll yet.
Presumably they will show that Scots are somewhat less worried about job losses than the Rest of THe Country?:-
http://www.timesonline.co.uk/tol/news/uk/article5489654.ece
Happy New Year to all fellow bloggers!!! Goodness it is so difficult to get back to normal after the break-I feel rather like an ancient steam engine asked to spring into action whilst pointing uphill….the wheels go round but nothing happens.Rather like the economy.
So as I see it it is now just 15 months to the next election and counting. Despite the seesaw nature of the opinion polls in the last 12 months or so not all that much has changed. As Peter Riddell said in the Times last Easter unless an economic recovery is seen to be feeding through to the voters by the time the election is held then it is impossible to envisage a fourth term for Labour.
If that is to happen then growth in the economy surely has to start in line with the current rosy Treasury forecast of sometime in the middle of this year and I don’t know of a single Labour supporter who believes that.
It’s going to be an interesting year….
Interteresting poll. I must admit I thought we wouldn’t see a Conservative lead of 10 points again for a number of months. Could be a rogue, but from a partisan point of view, I hope not!
It will be interesting to see how the latest tory “go for the jugular” advert does. I am not normally in favour of negative campaigning, but the Mum’s Eyes, Dad’s Nose, Gordon’s Debt” (or something like that) could well gain traction – clever stuff! Love to see what a focus group thought
Colin
Ok, just thought I’d check. You seemed surprised that Jeff Randall would give Darling a hard time is all.
Certainly the Telegraph isn’t at all enamoured with Cameron of late, and is full of useful suggestions for he and his ministers. He’s still got the Telegraph vote but I think they are concerned that he’s going to waste the best chance anyone will ever get to win an election.
NigelJ
Sounds like a good slogan for them. Almost as good as “Labour isn’t working”.
Maybe the collapse of Woolworths will prove to be the turning point. It was very high profile with lots of media coverage and brought home to the wider population that this is not a problem restricted to bankers or sub-prime borrowers and lenders.
“Now that the sums being committed have fallen, the announcements dropped off and the impact not what people hoped they might well be thinking there hope was miss placed and be returning to their previous opinion”
I normally find much to accept from Peter Cairns but that ‘option’ won’t stand up for long – its an initiative/idea a day at the moment in the ‘announce something, anything’ strategy that’s welcomed 2009.
If polls in the week ahead don’t respond to these frenzy of announcements, we can say that particular theory is dead imo.
Just watched Osborne on Daily Politics – oh Dear! No wonder Cammo keeping him away from more watched programs.
Compare to Brown in ‘96.
Also Milburn on who was better but not – this Social Mobility thing is more dog whistle stuff, subliminal attention drawn to Cammo back-ground Tory Toffs etc.
Oops – Should have said Milburn better but not great.
“Just watched Osborne on Daily Politics – oh Dear! ”
Missed it this morning-but in view of your comment Jim, just watched it online.
It was indeed an extraordinary interview.
Brown has just announced a twenty fold increase in his scheme for Government guarantee of Commercial loans by Banks.
The Cons proposed a fifty fold increase months ago-Brown rejected it then.
Andrew Neil asked the Treasury for a spokesman to explain the enhanced scheme.
They refused-so he interviewed the Shadow Chancellor, who explained how the Tory scheme would work, and welcomed the Government scheme ;subject to the detail.
Osborne then proceeded to defend the joint Tory/Labour scheme against fierce criticism by Neill & a business man.
So we now have the official opposition not only thinking up monetary policy, but explaining & defending it as well !!
I have to say I was pretty convinced by the criticisms-which essentialy amounted to-the Banks won’t use it because they are now 100% risk averse-the recession will cause de-leveraging forced by the Banks-and we just have to put up with it by & large.
Colin
“I have to say I was pretty convinced by the criticisms-which essentialy amounted to-the Banks won’t use it because they are now 100% risk averse-the recession will cause de-leveraging forced by the Banks-and we just have to put up with it by & large.”
The arguments against make sense, but it’s a scheme that needs putting in place to at least give the banks the option of adding some more ‘risk’ to their portfolios (the NLGS means that it isn’t adding that much risk however).
If they don’t use it, then it won’t cost the taxpayer anything. Ok, it would be a waste of time, but at least it’s not a waste of both time and money.
Just as I predicted.
I’m now considering changing my name to James “the Oracle” Ludlow.
Colin,
Given the figures your link highlights about Scotlands dependance on English taxpayers to subsidise their socialist largesse I’m suprised the Tories get a look in!
The poll results for England alone must have the Conservatives 15 or more points above Labour.
Okay James – you can change your name too, as well jumping on the “Oracles” bandwagon about 16 months too late – it all goes in my compliment box !
Contributirs on here keep on mentioning what the papers and the rest of the media are saying about Cameron – they are irrelevant this time round – the British public are frightened. Everytime they turn the news on, another well known high street name had gone, a well known manufacturer is gone, the Pound collapses even more, the dole queues are lengthening, more house are left unsold & repossessed – I think the British public have realised that the Brown phrase “the global credit crunch” is another piece of spin to detract from Brown, Blair & Bush being the original architects of the world problems – with Britain and America suffering the worst !
Britain and America will be the last to come out of the recession too . 18 more months of Brown will see us sink deeper into trouble with no feasible action or plans to get us out of it – and when Obama takes over in 2 weeks – he has adopted Brown’s policies – so that’s the end of any recovery for them too.
SallyC,
Any movement of the polls before Obama’s inauguration is a false indication of where they are likely to be headed in the run up to the next election because the policy of the next presidency will have an overwhelming influence on perceptions of economic success and failure elsewhere.
So until he is in we won’t know the details of what he is going to do and we won’t be able to adjust our own views accordingly. As soon as he is in then we will.
Only one more week to wait.
@ Mike – don’t worry, I will always acknowledge you as the first and greatest oracle
Thomas – where is the evidence (polling or otherwise) that the domestic actions of American presidents have an influence on how the British view their incumbent governments? I can only conclude you are clutching at partisan straws. I would say that if the actions of Obama influences the British mood at all (which I doubt) it holds as many negatives for Brown as positives. Many of us were delighted at Obamas election, but he is not the messiah, (nor a very naughty boy – as far as we know)!!
Incidentally, IMO the British electorate hate the site of a British PM sucking up to an American president, so if Brown gets his wish of an early sucking up opportunity it is more likely to damage him than help him – the image of him fawning with that fake smile and badly fitting suit just makes me feel nauseous…oh excuse me….I think I am going to……
@ Thomas – I don’t think Obama is going to have much of an impact at all on the British public’s perception of the government and its handling of the economy. As high street shops go bust and people worry about their jobs, bills, and being trapped because they can’t sell their houses in this stagnant market, they really aren’t going to be consoling themselves with the issue of “perception” and the relative success or failure of foreign economies.
I can’t honestly see any way out of this mess for Brown. He has to go to the country by June 2010 at the latest and there’s no realistic prospect of the recession being over and done with by then. On top of that, a lot of people just don’t like him, which compounds the problem of government re-electability. He’s had his bounce and even at its peak he still couldn’t overtake the Tories. Now he’s sliding again. Of course, a single poll doth not a summer make but following the pre-Christmas polls, it’s looking ominous for him. The next round of polls may paint a different picture – anything is possible – but I’ll be astonished if they do.
Colin,
With the private sector shrinking fast and the public sector static and to an extent taking up the slack, be it by bailing out the banks or increasing capital spending the public sector will rise as a proportion of GDP in almost every western country.
As with so much of what we now get from one of the formally best newspapers in Britain this really is a partisan piece pretending to be analysis.
Personally I am not the keen on high public spending and have been a critic of debt driven growth for most of this decade but the only way to keep public spending down as a share of GDP over the next few years would be to put 100,000 public workers on the dole, which would effectively be trying to save the economy but cutting it.
I know people talk about radical surgery but I am no fan of medieval leaching.
Right now the SNP are trying to freeze tax and live within the current budget while accelerating capital spending without borrowing powers which effectively means less spending in the future.
It may well be as a result of circumstances but in the short to medium term what the SNP is doing holding spending and tax now but seeing it slow as we come out of recession is pretty much what most on the centre right would advocate.
That doesn’t make the SNP centre right as it’s an appropriate response rather than an ideological one but it hardly makes us tax and spend socialists.
Peter.
Polls are a complete waste of time – the next election has already been foreordained by God. Read the New Testament – Romans chapter 13 verse 1.
Bob,
Had a look and couldn’t see the SNP mentioned, I am i missing something……
Peter.
I have read it Bob-and read the modern commentaries on Romans 13 1-7.( you need to read the lot in context)
It is taken to be Paul’s urging on Christians that they accept & obey the civil law of the appointed authorities.
The context is a Pauline letter of 56 or 57AD-a time of severe difficulty between Jews & the Roman authorities.
Christians were seen by the Romans as “Jews” and Paul wished to distinguish them as law abiding. He wrote in the reign of Nero-who a few years after Paul’s letter blamed the Christians for the disastrous fire of 64 AD !
Pauls letter to the Romans has no relevance to democratic elections since they did not exist when it was written.It is however a setting out of the relationship between Church & State-as SEPERATE ENTITIES-something which churches eveywhere should be mindfull of today.
Paul’s claim is that the authorities have been instituted by God. This is the heart of the argument.
Luther found this to mean that governmental power (in itself) is good and of God ,the former serving the guidance and peace of the inner (spiritual) man and his concerns; the latter serving that of the outward (earthly) man and his concerns. That is, the church directs people as Christians; the state, as citizens.
The problem then comes with bad or evil government….and that’s why we have elections Bob.
And we really do need one in this country soon-particularly in connection with Romans 13 – 7
Hi Bob-I’ve just read Romans 13-8…and I must say that whilst David Cameron seems to be following the spirit of Paul’s edict, Gordon Brown is in direct contravention of it.
Having said that I do hope that Romans 13 doesn’t come up at PMQs tomorrow.
[...] Tories Up to Double Digit Lead – Again Jan 13th, 2009 by Machiavelli The Prince. See here [...]
Thank you for your comment Colin; whatever context you choose to place this verse in it is clear that God is sovereign in the affairs of men. That includes the government of the day having been appointed by Him.
“God is sovereign in the affairs of men. That includes the government of the day having been appointed by Him.”
That way lies Theocracy,All Powerful Priests, Religious oppression & dictat, and the killing of one man by another in the name of different Religious belief.
I’m with Martin Luther & Thomas Jefferson.
This is a website about freely expressed Opinions and Democratic Elections-not Religion.
If Gordon Brown was apponted by God, then this is the afterlife and I was a bad boy in my previous life!
Reply to Colin: I’m with the Bible on this one, this clearly teaches that God appoints the government. Yes this is a website about freely expressed opinions and when I expressed the truth about God appointing the government you chose to reply and take the discussion on further.
Reply to James: Gordon Brown was appointed by God as was Tony Blair before him and John Major before him etc. There was no previous life. This bodily life ends at death and the soul lives on in Heaven or Hell. Those who repent and accept Jesus as Lord and Saviour go to Heaven, those who don’t go to Hell.
Oh dear Bob.
Can we please keep this website on earthly politics, and maintain the assumption that it is the voters at the general election who choose the Prime Minister and not God (or even the Flying Spaghetti Monster).
Otherwise we might as well pack up and go home, because the polls are pretty irrelevant.
[for those interested, the flying Spaghetti Monster is a semi-serious satirical argument against the irrationality of a beleif in an invisible, unprvable god. It is a variation on bertrand Russell's flying teapot argument]
http://en.wikipedia.org/wiki/Flying_Spaghetti_Monster
http://en.wikipedia.org/wiki/Russell’s_teapot
http://en.wikipedia.org/wiki/Russell’s_teapot
(Don’t know why that link keeps coming up funny)
Silly question Bob but which God would that be?
Would you agree that George Bush was appointed by God? How about Saddam Hussain? Sheesh if that’s who God’s picking these days I think I’ll give it a miss thanks.
PS does anyone know when the next poll is out?
PS Whilst we’re waiting, any views on Darwin?
Whichever god appointed Gordon Brown needs his pointy head examined.
I suspect Loki, God of Mischief.
This site becomes more and more Beckettian.
I can’t see the baby poster working. By the time the election is called I think it will have sunk into the public consciousness that our enormous debt/credit problems have come about because too many banks were lending too much money that simply did not exist.
Money hasn’t so much been squandered, it’s just that it was never there in the first place.
It’s jolly appealing to think our babies would all have 20 grand of pocket money, and that we’d all have an extra fifty thou in the bank if only we hadn’t voted Labour- it means that our feelings of inadequacy can all be blamed on others.
I just somehow can’t see that concept lasting a GE campaign. and I still don’t see any outright clamour for Cameron or his policies.
@ John T T
But isn’t the fact that the tory lead has still not been broken after all this time and with all of the publicity that Brown et al have had and the opportunities to attack to Tories (some justifiable attacks). Does that not mean something? Do you not think that instead of clamouring for cameron and his policies reserved england is just waiting whilst all of the Spin, Spin and more Spin continues. When a GE is called that’s when the voices will be heard. I also believe that’s when both the Tories and the Liberals will lay out policies so that Crash can stop nicking them.
PS When does Gordon tell us his decision on the Heathrow situation? I imagine that’s gonna lose votes no matter what he does. It does not seem to be a vote winner. Nor does the position on the Post Office.
@ John TT – Cameron doesn’t need a clamour. He just needs to maintain, or preferably increase, that 10 point lead.
Keir – Of course it means something that the Tories have a lead that is more or less in double figures. It means what I think I said it means – no great clamour for Cameron and Osborne.
I remember the strident voices of “reserved” UK that constituted clamour for a move to Labour during the last recession and aftermath.
Is your name a bit of irony on your part, or is it your own?
James – at least I got you back on topic!
I do accept what you say, and neither did I see any great clamour when his lead was more than twenty points. Perhaps it will be more of a “ok, time for a change, let them have a go” attitude that gets him past the post. Pity, though.
“James – at least I got you back on topic!”
Thanks John. Yep, for discussion of opinion polling, not theology (unless we are discussing a poll about theology, in which case it obviously is. This thread isn’t that one though).
Back on topic please.
As the saying goes – it’s the economy, stupid.
It seems unlikely Labour will call an election in March. With each passing week their chances probably dimisnish.
The best thing Brown can do for his party is to call a snap election. Yeah they’ll lose but at least Labour will not be badly damaged. It’s the same thinking as the Tories wishing they’d lost in 92.
If Brown hangs on it could be a bloodbath next year,. Labour could face 10-15 years in Opposition.
Will Brown put his party before himself?
@John T T
or maybe the mood of the country is not outrage as it was then but more silent dread that there is nothing they can do to influence this government. GB has repeatedly proven how pig headed he can be. Even with the “Do Nothing Party” phrase proving not to work, he is still using it. It’s like watching bruce forsythe without the charisma.
It actually is my name – named beacuase my mother thought it sounded a little different after watching Keir Dullea -Sadly I was not named after James Keir Hardie (15 August 1856 – 26 September 1915) who grew from a poor bakers delivery boy to being the first Independent Labour MP….my I remember the days when Social mobility was a reality and not a recommendation to do something in a white paper.
Another strange point is that I was born on the 14th of august (spooky). Maybe I shall be the first soething before I die (under whatever emergency powers GB has cooked up to keep him in Government)
Seriously though when is the next poll due?
Sunbeam – two spells of four years each, followed by a five year and an unexpected fourth win. Speedily followed by the ERM fiasco.
This time, we’ve already had the fiasco, so I can’t see history repeating itself exactly. A readiness to lose one election pre-supposes that the years 2009-20113/14 are necessarily going to be lousy and possibly even contain a Govt-ending event.
I’m no oracle, but I’d suggest sluggish sustainable growth will precede anty election in 2014, so if the Tories win the next one they’ll probably win the one after. (If Labour win the next one, I can’t see the “time for change” argument failing yet again)
He can’t call an election this year. He’s said it’s the last thing on his mind – he would be crucified for calling one after saying that.
I don’t think he’ll wait until the last moment to call one, so I’m expecting an early 2010 election. Get ready for big tax cut/benefit increase/spending increase announcements in December.
By the sounds of PMQs it wasn’t a particularly inspiring half hour for any side. We had the usual ‘do nothing party’ nonsense. Cameron released his ‘indebted child’ and Gordon responded with Tory cuts in services for children. I always feel that an attack where the Tories outline something different that could be bought with the £30bn+ interest payments would be more effective (750,000 nurses, doctors and teachers) at highlighting “Gordon’s debt”.
Keir – i shouldn’t include too much personal information – you may end up on a list.
I’ll rise above you partisan (though colourful) rot, as I’m currently enjoying a rare high approval rating from AW and don’t want to ruin it.
However, the social mobility issue is another that seems to divide – if you read the tabloids anyway. If (big if) there’s any mileage in it in the press, that’s all grist to the mill.
@John T T
Well that’s the problem isn’t it – no mileage in scoial mobility
there’s probably an allowance for it somewhere though
” I can’t see the baby poster working. By the time the election is called I think it will have sunk into the public consciousness that our enormous debt/credit problems have come about because too many banks were lending too much money that simply did not exist.”
John-I think the “baby” poster is about Government Debt-not Private Debt.
So it’s a commentary on GB’s Public Finances policy-not Bank lending policies.
Actually I’m not keen on the poster myself.
Colin, that rather makes my point. Why bring an extremely private occasion (birth of child) into an issue you say is a Govt (ie public) one? Doesn’t make sense, and makes a political tool out of a defenseless infant (who’ll probably grow up as a complete delinquent as a result)
John TT
It really wouldn’t be the first time that a baby or child (in this case, a child ‘actor’ or ‘model’, no doubt found through an agency by the company that filmed the ad, and whose parents were pai industry standard rates for the appearance, as though it were a huggies commercial) has been used to make an advertising point.
Pick up most political party manfiestos at election time and there will be a good smattering of children and babies in them.
The reason they used it is because there is a serious political point to make about levels of government debt.
Personally i feel it’s a good message. A lot of people will be very unhappy at the fact that their children are going to have to pay for the policies of the past decade. In my view the hidden message is that the Conservatives are going to either freeze or cut public spending in order to reduce government debt. Before they can come out saying that though, they need to convince enough people that government cannot go on spending as before.
I would hope that most sensible people understand that any government cannot run £40bn deficits (as Labour have been since 2001) forever. However, they don’t like seeing public expenditure cut so the Tories first need to convince people that debt is too high so that their ‘Tory cuts’ rather than ‘Labours tax bombshell’ are seen as necessary in order to deliver sustainable public expenditure.
I don’t think any of us resented paying interest on the national debt – we’ve all done it, and the idea that babies are to be skint as soon as they pop out begs uincomfortable questions about levels of child poverty under Tory govts past and future.
It’s one thing to promote nappies with babies, or even be seen smiling at one in a pamphlet, but quite another to promote a questionable political point that might come back to bite the Tories.
On the use of debt, most people are sensible enough to know that sustainable levels of debt are quite reasonable, and levels of national debt fluctuate periodically without taking £20000 out of the hard-earned savings of the under-twos.
“The reason they used it is because there is a serious political point to make about levels of government debt.”
Yes I agree James -but I think there were other ways of making it perhaps.
Also I suspect that the figures will change dramatically for the worse when Darling presents this year’s Budget & updates the hopelessly optimistic PBR assumptions.
That will be the time to hammer home the Public Finances issues.
john tt
“on the use of debt, most people are sensible enough to know that sustaInable levels of debt are quite reasonable”
What do you regard as sustainable John? Are you including mortgages in your statement or are you referring to credit card debt only ? Not only do I believe that a significant number of folk have taken on mortgages far in excess of 2 and a half times salary hence the rapid rise in repossessions but from my work with homeless people I am constantly shocked by the numbers who have got into hopeless credit card debt. Just ask your local Citizens Advice agency if you want proof.
You are perfectly entitled to defend the government against accusations that it has encouraged people to get into debt but I think you should are mistaken if you think there is not a problem out there. There is.
@John T T
That’s an interesting notion isn’t it – an acceptable level of debt for which we are “happy” to pay the interest as we’ve all done it.
On a person by person basis I agree most of us will be in debt for some if not all of our lives. However how many of us dream of that day when we can be beholden to none. Masters of our own destiny…..DEBT FREE!!!!!!
For most people that’s Heaven on Earth so how come it’s not when we look at government. Surely paying interest is only acceptable if you are borrowing to invest to make more money in the future? Otherwise it’s paying interest for the sake of it and I just can’t stomach that.
I quite object to paying interest payments after we’ve just had 16 years of continuous growth. We should have had a massive current account surplus coming into this recession (it is rather convenient for the government to discover the joys of Keynesian counter-cyclical spending only when in the down part of the cycle).
Instead we get £12bn VAT cuts and ‘loan guarantee schemes’. Nothing anywhere near enough to help businesses get the money they need. Ideally we should be using the money saved to provide massive cuts in business tax so that companies can use profits rather than borrowing to fund their expansion and prevent unemployment.
Of course, this is the old Irish joke (”Well if I were going there, I wouldn’t start from here”) and 20:20 hindsight rolled into one. Whatever policies help us through this recession, I hope that we need never use them again. Next time, and there will be a next time, I hope government is intelligent enough to realise that the country needs to build up savings when times are good.
Oi, can I just point out that I was not one of the Theologians who seem to have invaded the thread. I merely tacked a devastatingly witty comment on to the end of their weird discussion, shaming them into silence. You should be rewarding me with wine and fine foodery, not naming and shaming me!
Back to the polls … I wonder how the crazy plan to outlaw something called “class discrimination” is going to go down.
“I quite object to paying interest payments after we’ve just had 16 years of continuous growth. ”
Good point. Me too.
“Whatever policies help us through this recession…”
Your error is in thinking there are policies that can “help us through” a recession. To quote Peter Schiff, “the recession is not the problem it is the solution.” The recession will continue as long as it needs to, to re-balance our economy. You cant stop it. Nobody can do anything about it by blowing money we dont have on incompetent companies and individuals. It will just prolong it. Companies NEED to go bankrupt. People NEED to lose homes they should not have had in the first place. Instead, the savings of hard working responsible people are being used to bail out both of these incompetent, irresponsible groups. And everyone will be worse off for that. But thats economics. Gordon Brown wouldnt know anything about that.
Guess what the correct action is. Can you guess, Gordon Brown? It is DO NOTHING!! So thanks Gordon for informing me which party has common sense. I will be voting for the Do Nothing Party. Because if what you say about them is correct, they have learned a thing or two in opposition.
The damage is already done over the last 10 years. We cant just pretend it didnt happen. Its called a CORRECTION for a reason. Huge debts to pay for the massive waste and inefficiency that is government spending. A massive public sector where the incompetents of society (many university lecturers, NHS managers etc.) get paid far more than their ability and productivity justify. Extra spending and staff on the ridiculous “Job Centre Plus” at a time when companies dont even want the staff they already have. Well at least the extra being employed at JCP will make the unemployment figures a little better. Only trouble is that from what I hear of that place, the staff there are just as employable as the people they serve. Only a government department would take them.
The Polling averages are rather strange.
Each time a new poll comes out these figures twitch up or down 1 or 2 pts – no proper average would alter by that amount on the strength of one poll.
Where do these figures come from?
In fact a quick look suggest the polling average is more like
Conservative 40
Labour 34
Curious to know from whence the 42 to 33 figure comes?
David – click on the “more” underneath the figures and it explains it. They take in all the polls in the last 20 days – because of the Xmas break that means it presently includes very few polls indeed, so moves a lot. Normally it includes lots and doesn’t.
James – whoops! I was just quoting John, I wasn’t intending to name and shame you
Populus Scottish sub sample ( with changes from the last poll) are;
Lab 50% (+4%), Tory 8% (-7% ), LibDem 13% (+3%), SNP 28% (-1%), Others 1% ( +1% ).
Could it be that Scotland is just seeing it differently from elsewhere.
Peter.
In terms of who best to deal with the crisis again the difference is stark, the UK figure is Cameron/Osborne 35%, brown/darling 38%.
In Scotland it’s Cameron/Osborne 13%, Brown/Darling 61%
Best Pm is now Brown 37% Cameron 37% and after the election Brown 31% Cameron 43%. for Scotland its 57%/26% and 50%/30%.
Just to add to this is the difference in confidence between the UK and Scotland. the Well to Badly figures are UK 18% to 79% and Scotland 26% to 63%.
Your family figures are UK 46% to 50% and Scotland 60% to 37%.
After that with the exception of confidence in the banks where understandably Scots confidence is lower than the UK as a whole the figures on the various risks are very similar. it’s something i have noticed for a few months, although Scots are more confident about how they and the UK will fair in the recession issue by issue we don’t see things that differently.
And we’re supposed to be the dour ones……
Peter.
“Populus Scottish sub sample ( with changes from the last poll) are;
Lab 50% (+4%), Tory 8% (-7% ), LibDem 13% (+3%), SNP 28% (-1%), Others 1% ( +1% ).
Could it be that Scotland is just seeing it differently from elsewhere.
Peter.”
It has already been pointed out in this thread that Scotland has disquieting socialist tendancies. I am Scottish, and I can almost understand why people would be tempted to vote SNP in a GE (though not in a Scottish Election) – to keep Labour out of power. Socialism is just something Scots have to put up with, unless they want to emigrate, but to say that most Scots are well pleased with it is fatuous – I cannot believe that these figures are accurate.
Neil.
M
I agree with you. Other than bits of help for those affected, ‘do nothing’ is the best solution.
I’ve still not had it properly explained to me how high interest rates would cause things to get worse. Surely they would encourage more saving as well as allowing banks to make more money on any lending they do do, recapitalising the banks with real, rather than taxpayers, money more quickly.
The low interest rates haven’t exactly got the banks to lend again. Time for something completely different.
Mark – High interest rate swould make deflation unavoidable as the price of imports would go down. That’s the reason for the rate cuts – to avoid deflation.
I do hope the Tories run with the “do nothing” argument – maybe there’d be an election very soon if they did.
John
Thank you for that answer. In that case, surely government can introduce big income tax cuts, big sales tax rises or ready the printing presses – all of which are inflationary measures – to counter the deflation threat. An income tax cut funded by a 2.5% raise in VAT would likely have been sufficiently inflationary to ensure we didn’t suffer deflation. Correct me if my logic is wrong.
There won’t be an election any time soon. Brown has said he isn’t thinking about one this year. If he calls one then the opposition will have a field day (”How can you trust anything Gordon Brown ever says from now on?”). Added to the fact his history shows a tendency to avoid democratic contests wherever possible, I’m still expecting a 2010 election.
me too.
I don’t completely understand the different effects of which measures on inflation, but the interest rate has been the main tool since I can remember (not just since 97).
The problem with a 2p tax cut (to release money into the system) is that it’s politically much more difficult to retrieve that money when over-heating inevitably returns. Much easier to lower spending taxes, then increase them later. The point is that the measures have to be temporary, otherwise the danger of hyper inflation emerges.
Of course the national debt has to be kept under control – I’d suggest a reasonable level would be that at which health and education/training spending could continue to rise, long-term infrastructure projects could be continued, and obvious wealth-creating assets could be protected from the ravages brought upon them by the cds/securitisation/ninja disaster.
In other words, rather a high level a tthe moment
What you say contains large elements of truth M.
But they are unsayable politically.
We do need safety nets though-fairness & compassion demands it.
There is plenty of money for them-you just have to cut back on wastefull & unproductive government expenditure.
GB won’t do that though-he has a very neat tactic on this as witnessed at PMQs this week:-
“You cannot cut public services in a recession-the Tories would do this -we won’t.
Which is a superbly, politically slanted form of the truth, which is of course :- ” We will save £5bn in wastefull government expenditure-but not till after the election”
I’m not at all convinced about deflation.
Nor is the public-the Populus Poll Worry Index has “Rising Cost of Living” at No. 1 !
They know that the cost of life’s essential commodoties, like Energy, Council Tax & Food are all up on last year. The winter quarters’ gas & electric bills are eye-watering if you hadn’t noticed.
And when sterling’s collapse starts to push the price of all those imported discretionary goodies up , the people in the Populus Poll will still understand the real economy better than The Treasury.
All measures are temporary, some are just more temporary than others. You can always counter the income tax cut by stealth with fiscal drag, and you can loudly cut the VAT to counter the hyper inflation once the deflation worry goes away. Just because a measure was brought in to counter deflation doesn’t mean it should have a set end date. You just alter policy as the situation dictates.
I agree that borrowing at the moment should be high. My problem is that it was also high at times when we should have been running a surplus.
Colin, you mentioned (i think) once that the amounts of tax lost from the City as a result of this crisis were eye-watering. Quite right. If £40bn suddenly leaves the country, no amount of prudent waste-cutting could diminish its effects.
The public will also notice the price of petrol falling sharply, and eventually the energy companies will lower their prices to reflect the eye-watering reduction in commodity prices.
Prices of food would have to continue to rise for inflation to be a problem. The “rising cost of living” was probably confused by many with “the falling standard of living” that comes with job-loss and asset-value destruction.
Mark, cutting VAT is infaltionary, as it pumps more money into the economy ,stimulating demand and leading to increased prices. The time to stimulate demand in that way is now. If deflation is avoided, the CofE will need to take money out (to cool demand), not put it in.
john:-
Significant & permanent loss of tax revenue is a reason for Government to double it’s efforts to save costs.
The cost of Government is merely a function of it’s activities-and those activities should be subjected to political philosophy as well as bean counting.
I love this one john:-
“The “rising cost of living” was probably confused by many with “the falling standard of living” ”
Oh really!!!-perhaps “Labour 33%” was confused for “Labour 23%” too.
“eventually the energy companies will lower their prices”
“eventually” will be too late.
“The government’s failure to stamp out fuel poverty means it’s becoming an everyday part of British life.”
-Ann Robinson, director of consumer policy at uSwitch.com
Yes Colin, inflation is on a downward curve – get used to it.
John
I disagree with you there. Cutting VAT doesn’t put more money into the economy, it takes less out. The overall effect of a VAT cut is a lowering of prices, which is deflationary.
If government lowers VAT to stimulate demand and it doesn’t work then we would require even lower VAT rates (we’ll assume that the EU doesn’t exist and we can cut VAT for the sake of the debate), leading to a deflationary spiral as people will wait, knowing that VAT will continue to be cut until they start spending.
john-
Have a look at this mornings release of 2008 Q4 sales figures from PC World, Currys, Dixons, Homebase & Argos-and ask yourself how much of the current reduction in consumer goods prices results from deep discounting.
And how long can stores continue to discount at that level-and still suffer double digit declines in their revenue, before they too go bust?
So much of this stuff is smoke & mirrors & flies in the face of M’s observation that the overspending has to be corrected somehow.
Incidentally-re the cost of Government: This morning Digby Jones -one of GBs better known GOATS-at a HoC Committee said that his experience in government taught him that it could function with 25% less people than it has.
OK-he’s a flamboyant chap-let’s settle for 15%.
John TT: Delighted to see that the CofE is expected to do it’s bet. I hope that collections in the Church of England do go up substantially – though I fear they may not.
BTW the Spaghetti Monster and the Teapot are second and third only to Dawkins’ risible “747 Gambit” as the worst “arguments” in philosophy of religion.
Mark – this from a detailed article on VAT rises cf rediff.com :
“There is unanimity among the economists all over the world that there seems to be nothing inherently inflationary about the use of VAT”
So if increasing VAt is not inflationary, then decreasing it is not deflationary. The effect on prices is neutral.
However, my point was that increasing the amount of money in circulation is inflationary as it stokes demand. A good thing for now, but when the good times begin to return, the money has to be retrieved, and it’s easier to do that by increasing VAT than by increasing other means to choke demand.
Colin – Inflation is reducing because the effects of cost-push inflation (oil and food prices going up) have not been sustained.
Not because of desperation in the retail sector to meet rent deadlines, or any other significant reason.
Nbeale. Nice one.
oops-got Digby wrong-he actually said “half as many” !
http://news.bbc.co.uk/1/hi/uk_politics/7830521.stm
I’d still settle for 15%
“Not because of desperation in the retail sector to meet rent deadlines,”
I think you are wrong john-and your characterisation of the desperation as a temporary cash flow problem is hopeful rather than
We shall see in due course .
……than realistic !
John
Thanks for the article quote. It seems a lot of so-called economic ‘theory’ comes down to what you believe. If you google for ‘VAT cut deflation’ you’ll return a number of articles quoting economists as saying that Darling’s VAT cut risks deflation.
You are right that IF raising VAT is not inflationary then lowering it is not deflationary. But if that was the case, why did warnings come from other economists about deflation?
That’s probably why there’s no real consensus about the best thing to do. World leaders will be doing their fiscal stimuli so that they appear active but in reality they’ve no idea whether it’ll work.
John TT> “However, my point was that increasing the amount of money in circulation is inflationary as it stokes demand”
You are assuming that reducing VAT will increase the amount of money in circulation.
By that, I presume you believe that money in the hands of the public and spent, is different (and in this case, more beneficial to the economy) than the same money in the hands of the government and spent by govt departments?
Because a VAT cut does not increase the amount of money in the economy – it simply puts it back into the hands of the public, rather than the treasury.
[NBeale> oooh, now you're tempting me to go off topic again about the Church of the Spaghetti Monster, which I consider to be a very elegant demonstration of the absurdity of a superstitious religious belief in an invisible, untouchable God...but I'll resist!]
[Sorry Anthony]
James-your braver than I -but you give me courage to say-NBeale-Dawkins 747 is irrefutable unless you say the Theist only has to argue from eternality.
Sorry Anthony.
@ James
Well resisted, we Jedi approve
@ John T T
Just because a force does not push in one way does not indicate it would not push in abother. Therefor it is more credible to say that “There is unanimity among the economists all over the world that there seems to be nothing inherently inflationary about the use of VAT”
is actually an argument to say that it is inherently deflationary.
For example gravity is universally agreed to not push an object away from another object…you see my point.
John TT
“cutting VAT is infaltionary, as it pumps more money into the economy ,stimulating demand and leading to increased prices. The time to stimulate demand in that way is now.”
I really don’t think so. We have seen in the last couple of months that cutting VAT does not pump more money into the economy, it puts more money into consumers’ pockets (or rather takes less out of their pockets). At a time like this, when most people are swimming in debt, struggling to pay mortgages and generally skint, any extra money in their pocket is likely to stay there, not be pumped back into the economy.
This is where Brown/Darling are so woefully out of touch with everybody else. They spend all the money they have, and lots they dont have too, and they assume everyone else will do the same, whereas most people don’t want to be in such disasterous levels of debt.
The effect of the VAT cut will be lower prices in the shops = deflation. It will not stimulate demand (this is obvious already, and should have been obvious even before the VAT cut) as the country is in deep recession, so the prices will not go back up any time soon.
As it happens, there is already rampant deflation: look at the housing market, cars, clothing, household goods, you name it, there is deflation. The exceptions are food, which is remaining about steady and public transport, where there is out of control inflation. The economy is in a bigger mess than it has been for a very long time.
Colin
I’d hate to get off topic, but the “Ultimate 747 gambit” is far from irrefutable, it is a rambling nonsense. As you quite rightly point out, the idea of eternity is inescapable, and as we know matter is not eternal (as the universe appears to be expanding), whatever is eternal must be intangible.
Sorry Anthony
i think so Keir, but you might have veered onto “Russell’s teapot” territory with that gravity reference, in which case, I’m with nBeale.
I believe the effect of the recent VAT cut will be neutral on inflation and its reversal will also be neutral. (When I say “believe” I mean it in the “I retain the right to doubt and question” sense of the word, with which I think nBeale concurs)
James -” than the same money in the hands of the government and spent by govt departments?” No – in this case not spent by Govt, I mean not borrowed. So if money is borrowed and put to use in the form of a VAT cut, it has to be paid back, not re-spent.
Clearly the aim is to get £12bn out of borrowing and into circulation via VAT cuts. When the time comes to return that £12bn (ie when we are in an upswing) it’d better come from an increase in VAT than an increase in income tax, from a political/popular perspective.
Failure to take it back will result in inflationary pressure.
neil – “any extra money in their pocket is likely to stay there, not be pumped back into the economy.” Exactly, which is precisely why they put £12bn of spending tax cuts through instead of £12bn of income tax cuts. The purpose is to inflate the economy, not to increase the amount of money in people’s pocket.
John TT
I do actually agree that the VAT cut will be roughly neutral in inflationary terms, but I think it will tend more towards deflation than inflation.
With regard to the aim being to “get £12bn out of borrowing and into circulation via VAT cuts” – this is probably the logic used by Darling, but it is flawed. The government has to borrow this £12bn (unless it raises income tax, which is unlikely), and as I pointed out earlier, it will not go back into circulation because people don’t want to spend it just now.
Neil – I appreciate your position, but the thing about this £12bn VAT cut is that if people do spend money on VAT-able goods, then the economy will have £12bn more in it than it would have had if the VAT cut had not happened.If they don’t spend the money, the VAT cut cost of £12bn won’t happen.
If you like, look at it like this : The Govt decided to spend £12bn, and they ear-marked £12bn from the VAT pot to spend it. They then decided not to use that, so that they could leave that £12bn out there (whether it remains in the balance sheets of the retailers or is passed on in amongst price cuts). Because they still want to spend the £12bn, they’re borrowing £12bn instead.
Wherever that £12bn goes, it goes into circulation, and has to be retrieved from circulation in future in order to reduce borrowing by £12bn (plus interest)
…OR we could just sack £12 billion a years worth of ‘Gay and Lesbian awareness coordinators’ and ‘Equality action group supervisors’ !
Yes, all 600,000 of the pesky wasters
Or perhaps they could freeze the NHS budget for the next two years, saving around £18bn.
Looking at the PBR makes interesting reading. The defense budget is planned to be frozen until 2010/11 yet the NHS budget, which is currently £1.45m per capita, will be growing at 6.3% pa.
Go figure.
Neil-
A priori vs a posteriori
Certain Faith vs Uncertainty
Empiricism vs Revelation
These pointless dialogues really.
Whatever boost to consumer spending the VAT reduction is or is not having, it was a pretty crude instrument.
The very poorest households benefit less because most of their spending is on food and children’s clothing, which are VAT-free, and on heating and electricity, where the lower-rate VAT level is not being changed.
The more well off benefit more because they can afford big ticket VATable discretionary purchases like cars & electrical goods.
VAT exempt organisations who cannot reclaim Input VAT, will see their operating costs fall. These include Banks & Insurance Companies.
The Whisky Industry experienced zero price effect as Duty was increased at the same time as VAT was cut. They have been told by The Treasury not to expect Duty to come down when VAT goes up again.
If the objective of increased consumption is to keep companies in business & employees in jobs, then surely there were better & more effective ways of spending £12bn -cutting NI for example.
The updated German package is interesting to contrast with Brown’s:-
The main element is a €100 billion of loan credits and state guarantees. This is pitched especially at larger companies.
Other elements include a reduction in the lowest tax bracket from 15% to 14%, an increase in tax allowances, a green incentive on scrapping old cars in favour of newer, more environmentally-friendly models, healthcare cost reductions, and a one-off payment to families of €100 per child.
There is no VAT cut, & no further bank recapitalisations.
Germany has almost balanced the budget in recent years, especially since Angela Merkel came to power in 2005.
The German government in its package is committing itself in the future to a constitutional provision that the deficit will not exceed ONE HALF of one per cent.
The government should not be trying to stimulate demand. They have done that enough over the last decade. Stimulation of demand was THE PROBLEM. The reduction in demand we are now seeing is the solution.
Printing money/increasing the money supply does not “cause” inflation. It is the definition of inflation. Inflation *is* an increase in the money supply. The money supply can be increased by printing money or by, guess what, increasing available credit. Increasing the amount of available credit (inflation) *results* in higher prices. Artificially high prices. No real value has been added. Exactly what caused the situation we are in. And what does the government want to do to solve it? Increase the money supply some more!
But giving us credit implies we will actually create this real wealth at a later date. Now that lenders have realised we are not productive enough, the credit has gone. Prices must now fall. Stop talking like this is the problem. Like we need to get credit out there again to maintain this artificial level of demand. WE ARE NOT WEALTHY ENOUGH TO MAINTAIN THIS LEVEL OF DEMAND. We are not productive enough. We simply cannot afford to demand all this “stuff.” Thats why we have been doing it on credit! If we could afford it there would not be a credit crises because none of us would be defaulting on our debt! We wouldnt even need credit if we were actually earning enough to justify the levels of demand in the first place.
Less credit and less demand is the solution.
An increase in the money supply is the biggest evil there can possibly be. It is a tax on savings. Prices go up and your savings can buy less and less with each passing day. But the people creating the money out of nothing (the government) suddenly have something to spend. The transfer of wealth is complete and the government then goes and blows your savings on incompetent companies and individuals and on digging ditches so they can employ people to fill them up again.
Anyone that saves a portion of their income for the future is literally being stolen from. And this is what people are suggesting occurs right now. I guess these people are the irresponsible ones. The ones with huge debts. Of course they want to steal from savers so they can pay their bills.
BTW, the government is passing a bill so that they are no longer legally required to report how much money they are creating. Just a little nugget. Now I wonder why they would be wanting to do a thing like that?
Interest rates need to go up. A lot. Because savings need to be encouraged right now. Not nearly enough savings exist. Where do you think credit comes from? Of course there is a shortage of credit when there is a shortage of savings to be lent. Nobody needs credit anyway. They cant pay back the credit they already have. They cant afford to buy anything else.
The government should not even “set” interest rates. Setting an artificial price of money is ridiculous government intervention and it is what got us into this mess. Setting interest rates is not a tool to fight inflation. It is a cause of inflation. Cheap money encouraged by Gordon Brown early in the decade (to fight off our “manufacturing recession” LOL) and it all ended up in the housing market and on consumer goods. And now he wants to defy gravity again. He wont succeed this time thankfully. People know they are in trouble and are taking prudent measures. (Gordon wouldnt know anything about being prudent though.) But if he did succeed it would just store up an even bigger disaster down the road. He cant fool consumers this time though. Why do you think banks are resisting lowering interest rates? Because they know its not prudent. Why do you think consumers are battening down the hatches? Because they know, even if Gordon doesnt, that they have over extended themselves and they have got to pay off the bills for what they have already had.
Oh, by the way, dont let the secret off this message board, but falling prices are actually a good thing not a bad thing. Whats the message about deflation? That people will never buy anything because they will keep waiting and waiting for prices to get lower and lower? LOL. Amazing that the public fall for that. If that were the case, house price crashes would never end. Are people seriously suggesting that asset prices are going to tend to zero now? Because people are just going to keep sitting on the sidelines expecting them to keep falling forever, right? Asset prices will fall to reasonable levels. Levels people can afford. Levels where they would rather be able to buy less, but get the benefit of having it now right now. Prices will come down to the natural and affordable levels they should have been in the first place. This is a good thing.
Personal computer prices have been dropping like a stone for a decade or more. They used to be about $10k each. Now you can get them for about $23 each. No wonder those things still havent caught on. Everyone is waiting until they fall to $1 each. I, on the other hand, am a real sucker. I have bought about five in the last decade. Im even typing this message on one right now. What a fool.
This message board needs a “preview post” button.
Of course, I meant £1,450, not £1.45m. A slight issue with numbers of zeros
It still seems odd that they can freeze the defense budget and not get called on cuts as the Tories would do.
Mark M
In the UK we have a defence budget.
If you want a defense budget go to the US of A
Returning to the inflation/deflation discussion. The reason we are now facing deflationary pressue is that there has been a major contraction of the money supply. That is what you get by definition with a credit crunch.
I suspect that in such a fast moving situation the data lags the real world by a long way. When we look back in hindsight my belief is that we will see that 2008/9 saw a proportionately much larger contraction than 1931/2 when the Credit-Anstalt collapse signalled a more general banking collapse and the depression (which did not start with the 1929 Wall Street collapse.
As Keynes and Friedman would agree the most appropriate policy response by government to such contraction should be to support the extension of credit to expand the money supply again.
This could be through public or private routes or more normally a combination.
If Government does not respond appropriately the prospects for the UK economy will be dire. Sadly neither main political party (and I speak as a long term supporter of one of them) seem to have grasped the nettle.
Actually the UK Government in the 1930’s did not make such a bad fist of it, of course there was severe recession in the 1930’s, but the UK was spared the worst effects of the depression as seen in the USA and Germany.
Can’t resist making a related comment that one of the key decisions back then was coming off the gold standard. (Thank the lord we are not in the Euro)
Message to M
I nearly decided to ignore your comments of Jan 14th 10.24, however they are so crass that I could not do it.
Your views are reflect a “nasty” tendency which is not only economically illiterate, but which also explains why everyone, including most decent conservative supporters hated so much about the last Conservative Government.
I hope that your views are those of a sad and isolated minority, otherwise if they are prevelant amongst the Toty party we will be doomed to more insufferable Labour Government who will be returned after a short interegnum of even more disasterous Tory misrule that will follow the ejection of the appalling Mr Brown.
What did we do in the UK to deserve the whole shower.
Got round to doing an average of Populus polls for 2008 running from Jan to Jan with Sept missing because of the conference polls.
As with YouGov the averages, modes and medians are all almost identical, as are the final figures.
Lab 34%, Tory 15%, LibDem 12%, SNP 36%, Other 3%.
The biggest difference is that over the year there was a lot more variation in the leads and the variation in party percentages. The lead between the SNP and Labour varied from the SNP 19% ahead to Labour 30% ahead.
The SNP vote varied from 44% to 24%, Labour from 50% to 24%, the Tories from 22% to 8% and the LibDems from 16% to 9%. Even the Others figure was from &% to O%.
So although I would say that you can’t go on any individual Populus result from Scotland over the year they probably give us a fair idea of what happened for 2008.
The SNP and Labour were neck and neck with Labour doing well with Browns recovery pulling ahead from October and the SNP even then polling more than the Tories and LibDems combined.
What has I think changed from previous years is that unlike the first two Holyrood terms now the polling figures for Holyrood and Westminster are now much more alike.
Peter.
Are we expecting any new year polls from Ipsos-MORI, ComRes or ICM any time soon? We had 5 polls by this point last year.
Oddjob,
To ‘M’ you replied;
“Your views are reflect a “nasty” tendency which is not only economically illiterate, but which also explains why everyone, including most decent conservative supporters hated so much about the last Conservative Government”.
I thought his views were based on logic as opposed to emotion.
One can throw a load of money (and therefore time and effort) at a few people who one feels sorry for and achieve very little at great expense to ease your consience but it is not therefore the ‘best’ thing to do.
Many people (indeed the majority of the electorate) realised this during the long period of Tory rule in the 80’s and early 90’s which is why they kept them in power!
Just because the BBC constantly bangs on about how bad it was under Thatcher doesn’t nessesarily make it so. The public grew tired of the Major government which was, most would agree, doubtless a great deal less ‘nasty’ than what came before.
I believe in equality of opportunity not absolute forced equality what is ‘nasty’ about that?
“I believe in equality of opportunity not absolute forced equality what is ‘nasty’ about that?”
Nothing as far as I can see Ivan. The problem is when people don’t see the difference.
Equality of opportunity is giving someone £10 and giving them a choice to flip a coin for double or nothing. Everyone has the opportunity to take £20, but not everyone will take it. Equality of outcome (which is what people like Mrs Harman seem to want to see) is the taking the coin away and removing the opportunity totally.
The view that ‘equality’ politicians have is that if you have 3 jobs and interview 6 black people and 3 white people, then you should give 2 jobs to black applicants and 1 to white, regardless of who is better at the job.
Anthony:
I’ve read you interesting piece on how you do your average. Very interesting, and much more sophisticated than my WMA (though we don’t disagree much about the result, mine has a CLead of 7 rather than 9). However:
a. It’s not necessarily true that averaging bad polls with a good one makes the result worse. It depends on whether the bad polls have a net systematic bias or not.
b. The only pollster that seems to have a systematic bias is BPIX whose mean result overstates the CLead by 2 points with a Std of 2. There is some suggestion that Ipsos/Mori tends to be a bit too pro-Labour, their mean error is -1 but their Std is 3.5 so this might just be random.
If BPIX did more polls (or I had more spare time) I might try to do a WMA that corrected for systematic bias. But a quick pilot on the last 10 polls shows that it wouldn’t make much difference – 0.1%
NBeale,
Lately I’ve been going with a swing analysis to form my electoral prediction. Seeing as Labour typically performs worse at a general election than polls suggest I’ve been looking at what the pollsters were saying before the 2005 election compared to what they are saying now, and using that swing to determine likely voting behaviour. Usually the overall result is a slight Conservative majority.
M:-
Very interesting post.
Thanks
Ivan
re your response to my comments on M’s contribution, I would tend to agree with your comments, other than the implication that they reflect my concern with what M said
for example he said
1. “Your error is in thinking there are policies that can “help us through” a recession.”
– It is economically illiterate to say that Governments cannot affect for better or worse the depth and duration of a recession
2. “Nobody can do anything about it by blowing money we dont have on incompetent companies and individuals.”
- to imply that all those who suffer unemployment or insolvency are incompetent displays is not only “nasty” but plainly displays a lack mof understanding of the real world.
Many of these people have been just as “hard working and responsible” as those who have managed to avoid this fate.
M’s perscription would certainly prolong and worsen any recession, but my core point was the language he uses and the underlying attitude that it displays.
and actually historically this sort of approach is even worse than wrong it is stupid because it is not carried through.
Conservative Governments continued (and would in the future) pay out, but recieve no credit because the begrudging language used just made them look churlish.
None of that is to say that there are not major problems with how benefits are delivered, or the efficiency of the public sector, but that is an entirely different story
Good polling news for the Conservatives tonight – this from PA:
The Tories have doubled their lead over Labour over the past month, according to an opinion poll tonight.
The YouGov poll for the Sunday Times put the Conservatives on 45%, up four points on last month, 13 points ahead of Labour who were down three on 32%. The Liberal Democrats were down one on 14%.
That compares with a six point Tory advantage last month and represents the biggest lead for the Conservatives in a YouGov poll since early October.
The findings provide further evidence that Labour’s “Brown bounce” – which saw it rise in the polls in response to the Prime Minister’s handling of the financial crisis – is now over.
:: YouGov interviewed 2,077 adults online, across Britain, on January 15 and 16.
There is no doubt that the recession is global.. My question is how the length and depth of it is caused by Gordon Brown’s incompetent management of the country’s economy. That it has been mismanaged and built on smoke, mirrors and some pure luck must be pretty obvious to even the most naive labour supporter.