It's still less than six months since we returned from the UK to Canada, but already the old country is starting to look very unfamiliar.
* The British economy shrank 0.3% in the final quarter of 2012, which has inevitably sparked fears of a triple-dip recession. Most of the recent data suggest that's unlikely, but one thing that is quite clear is that the UK is at risk of underperforming the much-derided Eurozone in growth terms. George Osborne's austerity gamble seems to be a clear failure -- as I've noted here before, he has contrived to miss all of his fiscal targets, while putting the frighteners on the entire country with his supposedly tough talk. You can't shrink your way out of debt, but if anyone's telling George that, he doesn't seem to be listening.
* There have been reports that some Tories are starting to agitate for Osborne to be removed because of the harm he's doing to the party's electoral chances, though there's no sign that PM David Cameron is paying attention. Tories have never been squeamish about putting the economy through the wringer. However, they're anxious to win a clear majority in the next general election -- no more dickering with the LibDems -- so that they can have the in/out referendum on EU membership that David Cameron has pledged to hold in 2017, provided the Tories win the election outright.
* This whole surge in anti-Europeanism is one of the most bizarre trends to emerge in the months since we left. It's always been a significant undercurrent in British politics, but now it's come right to the surface and is sweeping all before it. It's amazing to see how many people have managed to convince themselves that if the UK decides to pull the plug on the EU as it stands, the country will be allowed to redefine the relationship on its own terms. The idea that the rest of the EU will happily accommodate the UK in any way the latter chooses, and that withdrawal will not have any impact on key sectors of the economy -- indeed, that the economy will actually benefit from getting out -- is completely preposterous.
* After faffing around interminably over bank reform, Osborne has suddenly toughened up and announced that banks that fail to separate their investment banking and retail banking operations will be broken up. This is being referred to as "electrifying the ring fence". He's also told RBS that the fines it has to pay in relation to the LIBOR-rigging scandal should come out of its bonus pool rather than out of the hides of its shareholders (who are, of course, mainly the UK taxpayers who rescued the bank when it was on the verge of collapse). This is good populist politics and arguably no more than the banks deserve. However, with the London financial sector starting to shrink, and all the uncertainty over a possible EU withdrawal, it can't fail to do further damage to the UK's economic prospects, and to Osborne's tattered fiscal plans.
Into this remarkable mess, later this week, steps Mark Carney, soon to take over as Governor of the Bank of England. Carney is to appear before a committee of MPs, in a sort of UK version of a US Senate confirmation hearing. Even at the best of times, this would be a tough gig for a non-Brit, but as the preceding paragraphs suggest, these are not the best of times. Carney is, of course, on a hiding to nothing in his new job. If he performs strongly, well, that's what we pay him all that money for, so he can't expect much praise. And if he does badly, the xenophobic British tabloids will have an absolute field day.
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