Remarkable strapline on a piece in today's Times (paywall-protected) by Stephen Hester, CEO of Royal Bank of Scotland (Prop: UK taxpayers). "We're good at banking". My first thought was that the final part of the sentence had been edited out: "....compared to Sir Fred Goodwin". But no, Hester is trying to make the case that the UK banking industry is good for the economy and needs to get its message out more effectively.
Let's put aside the shock of a banker putting his head above the parapet like this. Hester has some reasonable points that he wants to make, but he doesn't seem to be able to avoid having them blow up in his face. For example:
It is a popular myth to believe that banking and financial services dominate the British economy and should be cut down to size. In fact, banks account for a far smaller proportion of the economy than manufacturing — 7.7 per cent compared with 12.8 per cent. Everyone wants to see growth in the manufacturing sector, but we need growth in banking, too. It is something Britain is good at. And it brings much needed jobs and tax revenues.
It's true that the financial sector is surprisingly small, in terms of its contribution to GDP or employment, but its ability to cause havoc throughout the economy far exceeds that of any other sector. Before writing his final sentence, did Hester pause to calculate how many years' worth of past taxes the government had to shovel back into the banks in 2008 to stop them from collapsing? Ot how many jobs in the rest of the economy have been (and will continue to be) lost as a result of the financial crisis?
But it's in discussing investment banking that Hester really comes undone.
We have failed to remind people of what an investment bank actually does.
Most people do not realise that investment banks allow Britain’s farmers to hedge their Euro farm- support payments to protect them from swings in currency values. We have not shown that investment banks help our country to effectively finance its deficit and protect public services, both by purchasing gilts directly from the Government, and by helping sovereign debt markets function efficiently. And we certainly have not explained properly that investment banks — when properly regulated and managed — allow people to afford to buy their own homes by accessing the savings of the whole world.
Interesting little parenthesis in that last sentence, but setting that aside, is that really how Hester sees it? I'd say that in the UK (and the US and Spain and Ireland), "access to the savings of the whole world", admittedly with the connivance of the monetary authorities, mainly served to pump up a property bubble that on the one hand led to massive amounts of speculative construction (600 "ghost estates" in Ireland, empty villas all along the Costas, shoebox apartments in Leeds, etc etc) and on the other pumped up the price of property to such a degree that most first-time buyers were excluded from the market altogether.
I suspect that the public understands what investment banks do much better than Hester imagines -- and the public doesn't like it. Nobody objects to currency hedging for farmers, or helping sovereign debt markets to function efficiently, though I'm not sure that's how the authorities in Greece or Portugal would describe it. But Hester knows, and so does the public, that those things are not the primary business of the Goldman Sachses of this world, and they were not what brought the system to its knees. Hester says we can't go back to what he calls "the Hovis image" of banking, but he hasn't really made his case here. Stretching his little metaphor to breaking point, when it comes to banking, the economy certainly needs the bread, but it can do perfectly well without the circuses.
Tuesday, 13 July 2010
Friday, 9 July 2010
Nipped in the Budd
I was sceptical about the need for the new "Office of Budgetary Responsibility" right from the get-go, describing it as an "empty gesture" in a posting here on May 18. Nothing that's happened since then gives me any reason to change my mind.
The OBR bizarrely decided to publish its first set of forecasts, based on the previous Government's fiscal assumptions, just a week before the coalition government announced its emergency budget. The fact that the new growth forecast was lower than Labour's produced a fair amount of "I told you so"-ing from the coalition side. But come the emergency budget on June 22, with its massive fiscal tightening, the OBR had to tear up its week-old forecasts to incorporate the new assumptions. Surprise, surprise, the near-term growth outlook fell further, though with the aid of some mighty heroic assumptions, the OBR asserted that growth and employment would pick up after about 2012.
It's not clear what value there was in the OBR publishing the first set of forecasts, given that it knew they would have a shelf life shorter than that of a strawberry. The most plausible reason I can come up with is that George Osborne wanted to "prove" that his Labour predecessors had been cooking the books, which would have beeen harder to do if thge OBR had held off until after the budget. That, of course, implies that the Government leant, however gently, on the "independent" OBR. Perish the thought.
Now the head of the OBR, Sir Alan Budd, has announced that he will be leaving, after only three months at the helm. The Government says this is all perfectly in order, as Budd only ever signed a 3-month contract. Technically this certainly seems to be true, but it's very clearly not what Osborne was expecting: soon after setting up the OBR he said that he and Budd got along well, but that the acid test would be how they were doing in two years' time. He, and we, will never know.
This week's Private Eye, evidently written before Budd stepped down, has a short article querying his credentials to be the head of an "independent" OBR in the first place. He is a long-time servant of the Tory party, with strong links to the business sector. That doesn't disqualify him, of course, but it certainly makes it unlikely that he brings much of a Keynesian bias to the job. As economic forecasts always depend on your assumptions, Budd's very appointment virtually dictated the way that the OBR's first forecasts would differ from those of the Treasury. Not that they could differ too much, of course, since the OBR is in fact largely staffed by the same people who worked on the Treasury forecasts, working on secondment.
One truly amazing thing is that the OBR's forecasts are being treated as some sort of holy writ by the media, even though (a) they've already been revised once and (b) they're the work of the same people who drew up the forecasts for the Labour government that are now held in such contempt. It doesn't matter whether the head of the OBR is pure as the driven snow or a shameless political hack: all forecasts are surrounded by massive amounts of uncertainty, even at the best of times. Sir Alan Budd has no more ability to see into the future than Fabio Capello does -- though he may quite possibly be a better football manager.
The OBR bizarrely decided to publish its first set of forecasts, based on the previous Government's fiscal assumptions, just a week before the coalition government announced its emergency budget. The fact that the new growth forecast was lower than Labour's produced a fair amount of "I told you so"-ing from the coalition side. But come the emergency budget on June 22, with its massive fiscal tightening, the OBR had to tear up its week-old forecasts to incorporate the new assumptions. Surprise, surprise, the near-term growth outlook fell further, though with the aid of some mighty heroic assumptions, the OBR asserted that growth and employment would pick up after about 2012.
It's not clear what value there was in the OBR publishing the first set of forecasts, given that it knew they would have a shelf life shorter than that of a strawberry. The most plausible reason I can come up with is that George Osborne wanted to "prove" that his Labour predecessors had been cooking the books, which would have beeen harder to do if thge OBR had held off until after the budget. That, of course, implies that the Government leant, however gently, on the "independent" OBR. Perish the thought.
Now the head of the OBR, Sir Alan Budd, has announced that he will be leaving, after only three months at the helm. The Government says this is all perfectly in order, as Budd only ever signed a 3-month contract. Technically this certainly seems to be true, but it's very clearly not what Osborne was expecting: soon after setting up the OBR he said that he and Budd got along well, but that the acid test would be how they were doing in two years' time. He, and we, will never know.
This week's Private Eye, evidently written before Budd stepped down, has a short article querying his credentials to be the head of an "independent" OBR in the first place. He is a long-time servant of the Tory party, with strong links to the business sector. That doesn't disqualify him, of course, but it certainly makes it unlikely that he brings much of a Keynesian bias to the job. As economic forecasts always depend on your assumptions, Budd's very appointment virtually dictated the way that the OBR's first forecasts would differ from those of the Treasury. Not that they could differ too much, of course, since the OBR is in fact largely staffed by the same people who worked on the Treasury forecasts, working on secondment.
One truly amazing thing is that the OBR's forecasts are being treated as some sort of holy writ by the media, even though (a) they've already been revised once and (b) they're the work of the same people who drew up the forecasts for the Labour government that are now held in such contempt. It doesn't matter whether the head of the OBR is pure as the driven snow or a shameless political hack: all forecasts are surrounded by massive amounts of uncertainty, even at the best of times. Sir Alan Budd has no more ability to see into the future than Fabio Capello does -- though he may quite possibly be a better football manager.
Thursday, 1 July 2010
Casual infanticide
This week the Royal College of Obstetricians and Gynaecologists published a report in which it asserted that foetuses in the womb are incapable of feeling pain until at least 24 weeks into the gestation period. On this basis, the College could see no reason to lower the UK's current 24 week limit for termination of a pregnancy (the highest such limit in Europe, incidentally).
Reaction from the anti-abortion side has (so far) reflected sorrow rather than anger, but the "right to choose" crowd has reacted with something close to triumphalism. I saw one "expert" on the BBC News saying that the possibility that pain might be felt by the foetus was irrelevant in all cases, since it would be perfectly simple to administer an anaesthetic before carrying out the termination! I didn't catch this gent's name, but I assume he has no problems with the truly loathsome practice of "partial birth abortion". (Do NOT open the link if you are squeamish).
Then it got worse. The Times saw fit to publish an article by one of its business writers, Antonia Senior, in which she argued that for sure, abortion is murder, but it's still OK to do it. Ms Senior states that women's rights are the only cause for which she'd be prepared to die. Although having a baby of her own has given her pause for thought, she still thinks that those rights trump all (and she means ALL) other considerations.
The Times has its paywall up now, but here's the final, shameful paragraph:
As ever, when an issue we thought was black and white becomes more nuanced, the answer lies in choosing the lesser evil. The nearly 200,000 aborted babies in the UK each year are the lesser evil, no matter how you define life, or death, for that matter. If you are willing to die for a cause, you must be prepared to kill for it, too.
I assume the last sentence was lifted from an al-Qaeda brochure that Ms Senior just happened to be leafing through when she was thinking about abortion. Aside from helpless foetuses, just who else would Ms Senior think it was acceptable to kill in defence of her "rights"? The online respondents to the article, most of whom think that Ms Senior is wrong, and some of whom think she's off her trolley? The Pope? Me??
It's an appalling article, and I'm not sure how it got past the editors at The Times. It will be interesting to see what kind of response the paper allows onto its letters page in the next day or two.
Reaction from the anti-abortion side has (so far) reflected sorrow rather than anger, but the "right to choose" crowd has reacted with something close to triumphalism. I saw one "expert" on the BBC News saying that the possibility that pain might be felt by the foetus was irrelevant in all cases, since it would be perfectly simple to administer an anaesthetic before carrying out the termination! I didn't catch this gent's name, but I assume he has no problems with the truly loathsome practice of "partial birth abortion". (Do NOT open the link if you are squeamish).
Then it got worse. The Times saw fit to publish an article by one of its business writers, Antonia Senior, in which she argued that for sure, abortion is murder, but it's still OK to do it. Ms Senior states that women's rights are the only cause for which she'd be prepared to die. Although having a baby of her own has given her pause for thought, she still thinks that those rights trump all (and she means ALL) other considerations.
The Times has its paywall up now, but here's the final, shameful paragraph:
As ever, when an issue we thought was black and white becomes more nuanced, the answer lies in choosing the lesser evil. The nearly 200,000 aborted babies in the UK each year are the lesser evil, no matter how you define life, or death, for that matter. If you are willing to die for a cause, you must be prepared to kill for it, too.
I assume the last sentence was lifted from an al-Qaeda brochure that Ms Senior just happened to be leafing through when she was thinking about abortion. Aside from helpless foetuses, just who else would Ms Senior think it was acceptable to kill in defence of her "rights"? The online respondents to the article, most of whom think that Ms Senior is wrong, and some of whom think she's off her trolley? The Pope? Me??
It's an appalling article, and I'm not sure how it got past the editors at The Times. It will be interesting to see what kind of response the paper allows onto its letters page in the next day or two.
Sunk costs in Kabul
The "sunk cost fallacy" is an important concept in business investment. Here's a definition from The Skeptic's Dictionary:
When one makes a hopeless investment, one sometimes reasons: I can’t stop now, otherwise what I’ve invested so far will be lost. This is true, of course, but irrelevant to whether one should continue to invest in the project. Everything one has invested is lost regardless. If there is no hope for success in the future from the investment, then the fact that one has already lost a bundle should lead one to the conclusion that the rational thing to do is to withdraw from the project.
It's a concept that has applications outside the business world. The UK's new Defence Secretary is guilty of a sunk cost fallacy in his approach to the Afghanistan conflict. According to The Guardian, Fox says Britain would be betraying the sacrifices of its fallen soldiers if it left "before the job is finished".
There are plenty of precedents. Let's go back to The Skeptic's Dictionary:
To continue to invest in a hopeless project is irrational. Such behavior may be a pathetic attempt to delay having to face the consequences of one's poor judgment. The irrationality is a way to save face, to appear to be knowledgeable, when in fact one is acting like an idiot. For example, it is now known that Lyndon Johnson kept committing thousands and thousands of U.S. soldiers to Vietnam after he had determined that the cause was hopeless and that the U.S. would not win the war (McMaster 1998: 309).
Read it and weep, Liam. "Pathetic attempt"? "Acting like an idiot"? Not the kind of feedback you want, is it, but it's what you'll get if you persist in sacrificing the future in a doomed attempt to expiate the errors of the past.
When one makes a hopeless investment, one sometimes reasons: I can’t stop now, otherwise what I’ve invested so far will be lost. This is true, of course, but irrelevant to whether one should continue to invest in the project. Everything one has invested is lost regardless. If there is no hope for success in the future from the investment, then the fact that one has already lost a bundle should lead one to the conclusion that the rational thing to do is to withdraw from the project.
It's a concept that has applications outside the business world. The UK's new Defence Secretary is guilty of a sunk cost fallacy in his approach to the Afghanistan conflict. According to The Guardian, Fox says Britain would be betraying the sacrifices of its fallen soldiers if it left "before the job is finished".
There are plenty of precedents. Let's go back to The Skeptic's Dictionary:
To continue to invest in a hopeless project is irrational. Such behavior may be a pathetic attempt to delay having to face the consequences of one's poor judgment. The irrationality is a way to save face, to appear to be knowledgeable, when in fact one is acting like an idiot. For example, it is now known that Lyndon Johnson kept committing thousands and thousands of U.S. soldiers to Vietnam after he had determined that the cause was hopeless and that the U.S. would not win the war (McMaster 1998: 309).
Read it and weep, Liam. "Pathetic attempt"? "Acting like an idiot"? Not the kind of feedback you want, is it, but it's what you'll get if you persist in sacrificing the future in a doomed attempt to expiate the errors of the past.
Monday, 28 June 2010
Golden shower
So much for the "Golden generation" of England footballers. The only shame about Sunday's drubbing by Germany is that the ludicrously disallowed goal by Frank Lampard is giving Fabio Capello a ready-made excuse. Mi scusi, Fabio: refereeing screw-ups don't explain why your team was so dire in the three group games, nor do they cover up the fact that you could easily have been four goals behind yesterday by the time the ref had his little brain cramp.
Well, at least England avoided going on to meet Argentina and another possible exit at the Hand of God. This time we were done for by our very own Band of Clods.
Here's the thing, though: qualifying for the 2012 European Championships starts in less than three months. Are we going to try to qualify for that tournament with the same over-the-hill gang of malcontents and shirkers that stunk the place out on Sunday? We may not have any choice, because Capello has done almost nothing to develop players for the future. In fact, he tried to delve back into the less-than- glorious past to an astounding degree with his decision to bring back Jamie Carragher and his attempt to lure Paul Scholes back into the fold. Carragher did exactly what anyone would have expected, given his career of clumsy thuggery: two games, two yellow cards, a suspension. Scholes, meanwhile, must be thanking his lucky stars that he avoided tarnishing his reputation by associating with this congeries of onanists.
It seems to me that a two-stage clearout is needed. There's some obvious dead wood that needs to go right away:
Carragher (see above)
John Terry (not the player he was, and disloyal to boot)
David James (honourable discharge)
Aaron Lennon (try a game that doesn't involve a ball, and grow your eyebrows back!)
Gareth Barry (overrated and seriously found out this time)
Emile Heskey (semi-honourable discharge for the non-scoring striker)
Joe Cole ("creative" only in finding new blind alleys to run down)
Matthew Upson (not international class)
Then there are players who can probably be relied on the make it through to Euro 2012, but will probably need to be replaced by the time World Cup 2014 comes around:
Steven Gerrard (though not on yesterday's showing)
Frank Lampard (the only guy who did look like scoring yesterday)
This means the core of the team for the medium term is Joe Hart; Ashley Cole; Glen Johnson; James Milner; and, despite an awful time in South Africa, Wayne Rooney. So the immediate problem, for Capello or whoever is in charge, is central defence. After that, which maybe means after Euro 2012, it's the midfield that needs fixing. Given the lack of proven young talent (which I'd attribute about equally to Rupert Murdoch's death grip on the game's finances and Capello's failure to offer opportunities), it's a big ask. It's not hard to see England failing to qualify for either the 2012 or 2014 tournament.
Lastly, a question for the FA. Fabio came to you just before the World Cup began, and offered to remove the "shotgun" clause in his contract that would have allowed either side to call the whole thing off in a 14-day period after the tournament. You agreed to do so. Did you think his offer meant he was confident of winning the damned thing?
Well, at least England avoided going on to meet Argentina and another possible exit at the Hand of God. This time we were done for by our very own Band of Clods.
Here's the thing, though: qualifying for the 2012 European Championships starts in less than three months. Are we going to try to qualify for that tournament with the same over-the-hill gang of malcontents and shirkers that stunk the place out on Sunday? We may not have any choice, because Capello has done almost nothing to develop players for the future. In fact, he tried to delve back into the less-than- glorious past to an astounding degree with his decision to bring back Jamie Carragher and his attempt to lure Paul Scholes back into the fold. Carragher did exactly what anyone would have expected, given his career of clumsy thuggery: two games, two yellow cards, a suspension. Scholes, meanwhile, must be thanking his lucky stars that he avoided tarnishing his reputation by associating with this congeries of onanists.
It seems to me that a two-stage clearout is needed. There's some obvious dead wood that needs to go right away:
Carragher (see above)
John Terry (not the player he was, and disloyal to boot)
David James (honourable discharge)
Aaron Lennon (try a game that doesn't involve a ball, and grow your eyebrows back!)
Gareth Barry (overrated and seriously found out this time)
Emile Heskey (semi-honourable discharge for the non-scoring striker)
Joe Cole ("creative" only in finding new blind alleys to run down)
Matthew Upson (not international class)
Then there are players who can probably be relied on the make it through to Euro 2012, but will probably need to be replaced by the time World Cup 2014 comes around:
Steven Gerrard (though not on yesterday's showing)
Frank Lampard (the only guy who did look like scoring yesterday)
This means the core of the team for the medium term is Joe Hart; Ashley Cole; Glen Johnson; James Milner; and, despite an awful time in South Africa, Wayne Rooney. So the immediate problem, for Capello or whoever is in charge, is central defence. After that, which maybe means after Euro 2012, it's the midfield that needs fixing. Given the lack of proven young talent (which I'd attribute about equally to Rupert Murdoch's death grip on the game's finances and Capello's failure to offer opportunities), it's a big ask. It's not hard to see England failing to qualify for either the 2012 or 2014 tournament.
Lastly, a question for the FA. Fabio came to you just before the World Cup began, and offered to remove the "shotgun" clause in his contract that would have allowed either side to call the whole thing off in a 14-day period after the tournament. You agreed to do so. Did you think his offer meant he was confident of winning the damned thing?
Just as good as in 1966....
....Stevie Wonder, that is, closing the Glastonbury Festival last night. Heck, he even managed to sing "Fingertips" in a convincingly prebubescent voice. Great work by the BBC on the visuals and the sound too. I wonder if the latter owed anything to the two sub-woofers that one of Stevie's backing singers appeared to be carrying under her outfit.
Tuesday, 22 June 2010
"Tory times are hard times"
That's an old Canadian adage, that is, but today's emergency budget is set to bring it a lot closer to home -- and so far, we've only seen half the picture, at most.
It's an old rule in politics to get the bad news out of the way early; that way you can blame the previous mob for all the nasty things you're doing. The coalition government has given itself so little time to prepare this budget that it hasn't been able to get all the bad news out at once. Not that there isn't plenty to be going on with. On the tax front: a steep but delayed VAT rise (probably inevitable), a big jump in basic personal income tax allowances (good), higher capital gains tax for higher income earners (likely to provoke squawking from the Tory rank-and-file); tinkering with indexation (sneaky but very productive in revenue terms); and a levy on the banks.
On the spending side, there's a planned £11 billion cut in welfare spending, but that's likely to be only the tip of the iceberg. With the entire benefits programme up for review, there's surely a lot more chopping to come here in the coming months. Likewise on non-welfare spending. After the cuts announced last week, the budget left things unchanged, but with an ominous warning that non "ring-fenced" programmes (that is, everything apart from the NHS and overseas aid) face real cuts of 25% over the next five years. The real pain here will only be felt once the details are announced in the spending review, scheduled for 20 October. (Doesn't seem as if anyone in Whitehall will be getting much time off this summer!)
Then there's public sector pay and benefits. The Chancellor is "asking" public sector unions to accept a two-year pay freeze, but is exempting those earning less than £21,000 per year. He intends to roll back the bonus culture in the public sector by limiting the earnings of top executives to 20 times the wages of the lowest-paid. (Good -- I've never understood why it suddenly became a good idea in the last few years to pay hospital bosses hundreds of thousands of pounds to do a job they had previously done quite contentedly for much less. It's not as if there are lots of employers competing with the NHS for their services). But unless I've missed it, there's nothing very specific about public sector pensions, even after all Nick Clegg's recent rants about them being "gold plated". There is surely "reform" (i.e cuts) to come here too.
Inevitably, last week's much-trumpeted OBR forecasts have had to be revised downwards. GDP is now expected to grow by only 1.2% this year and 2.3% in 2011 -- recall that the Labour government's last budget saw growth of 3.25% in 2011. It would be no surprise at all if growth was higher than the new forecast this year, as consumers rush to beat the VAT increase. That could lead to some surprisingly rosy fiscal numbers for the current fiscal year, followed by a downturn in both the economy and in tax revenues early next year.
Although the OBR sees some revival in growth after 2012, the forecast net effect of the budget is for significantly lower GDP over the life of this Parliament than either Labour or (up until today) the OBR had expected. Yet the deficit is projected to fall much faster than Labour was forecasting, with the "structural" deficit eliminated by 2015 or 2016. It's a risky strategy: as Harriet Harman noted in her initial response in the Commons, the Tories can't claim to be basing their plans on Canada's successful escape from a fiscal mire in the 1990s. Canada benefited from low interest rates and strong growth in its major trading partner, the US. The UK will have no such luck. (I've been saying that for months, so it's good to find someone in Parliament picking up on it. Too bad it had to be Harriet Harman).
Hard times it is then -- and the squeals of pain will only get louder once the details of the spending cuts emerge in October.
It's an old rule in politics to get the bad news out of the way early; that way you can blame the previous mob for all the nasty things you're doing. The coalition government has given itself so little time to prepare this budget that it hasn't been able to get all the bad news out at once. Not that there isn't plenty to be going on with. On the tax front: a steep but delayed VAT rise (probably inevitable), a big jump in basic personal income tax allowances (good), higher capital gains tax for higher income earners (likely to provoke squawking from the Tory rank-and-file); tinkering with indexation (sneaky but very productive in revenue terms); and a levy on the banks.
On the spending side, there's a planned £11 billion cut in welfare spending, but that's likely to be only the tip of the iceberg. With the entire benefits programme up for review, there's surely a lot more chopping to come here in the coming months. Likewise on non-welfare spending. After the cuts announced last week, the budget left things unchanged, but with an ominous warning that non "ring-fenced" programmes (that is, everything apart from the NHS and overseas aid) face real cuts of 25% over the next five years. The real pain here will only be felt once the details are announced in the spending review, scheduled for 20 October. (Doesn't seem as if anyone in Whitehall will be getting much time off this summer!)
Then there's public sector pay and benefits. The Chancellor is "asking" public sector unions to accept a two-year pay freeze, but is exempting those earning less than £21,000 per year. He intends to roll back the bonus culture in the public sector by limiting the earnings of top executives to 20 times the wages of the lowest-paid. (Good -- I've never understood why it suddenly became a good idea in the last few years to pay hospital bosses hundreds of thousands of pounds to do a job they had previously done quite contentedly for much less. It's not as if there are lots of employers competing with the NHS for their services). But unless I've missed it, there's nothing very specific about public sector pensions, even after all Nick Clegg's recent rants about them being "gold plated". There is surely "reform" (i.e cuts) to come here too.
Inevitably, last week's much-trumpeted OBR forecasts have had to be revised downwards. GDP is now expected to grow by only 1.2% this year and 2.3% in 2011 -- recall that the Labour government's last budget saw growth of 3.25% in 2011. It would be no surprise at all if growth was higher than the new forecast this year, as consumers rush to beat the VAT increase. That could lead to some surprisingly rosy fiscal numbers for the current fiscal year, followed by a downturn in both the economy and in tax revenues early next year.
Although the OBR sees some revival in growth after 2012, the forecast net effect of the budget is for significantly lower GDP over the life of this Parliament than either Labour or (up until today) the OBR had expected. Yet the deficit is projected to fall much faster than Labour was forecasting, with the "structural" deficit eliminated by 2015 or 2016. It's a risky strategy: as Harriet Harman noted in her initial response in the Commons, the Tories can't claim to be basing their plans on Canada's successful escape from a fiscal mire in the 1990s. Canada benefited from low interest rates and strong growth in its major trading partner, the US. The UK will have no such luck. (I've been saying that for months, so it's good to find someone in Parliament picking up on it. Too bad it had to be Harriet Harman).
Hard times it is then -- and the squeals of pain will only get louder once the details of the spending cuts emerge in October.
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