Cameron's 2020 Vision - Austerity Until 2020

It appears that the world will be mired in recession until 2020.

That at least is the view of David Cameron, who says that he now expects the crisis in the eurozone to drag on for years.

When asked by The Telegraph as to whether the austerity programme would now last a decade until 2020, the Prime Minister replied:

“I think it’s going to be...this is a period for all countries, not just in Europe but I think you will see it in America too, where we have to deal with our deficits and we have to have sustainable debts. I can’t see any time soon when…the pressure will be off. 

I don’t see a time when difficult spending choices are going to go away.”

That kind of talk will not help the economy, as consumer economies are underpinned by hope/expectations of growth and prosperity.

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Big Society Capital

David Cameron has finally defined the "Big Society", and put "his" money where his mouth is, by launching the Big Society Capital.

This a bank that will lend money to charities and community groups. It is funded with £400M stolen by the government from dormant bank accounts, and by £200M funded by other banks.

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Britain Opts Out

David Cameron gave the EU Summit a hefty kick in the gonads yesterday, when he refused to sign up for the new treaty which, allegedly, will resolve the Euro crisis.


Cameron said:

"I said before coming to Brussels that if I couldn’t get adequate safeguards for Britain in a new European treaty, then I wouldn’t agree to it.  What is on offer isn’t in Britain’s interests, so I didn’t agree to it. 

Let me explain why this matters.  Of course, we want the eurozone countries to come together and to solve their problems.  But we should only allow that to happen inside the European Union treaties if there are proper protections for the single market and for other key British interests. 

Without those safeguards, it is better not to have a treaty within a treaty, but to have those countries make their arrangements separately.  That is what is now going to happen....

...The key question for Britain was: do you allow that to happen within the European Union treaties if you are not happy with the safeguards you are given?  I wasn’t prepared to agree that treaty, to take it to my Parliament in that way, and that is why I rejected signing this treaty today.  The right thing for Britain.  A tough decision, but the right one."

Sarkozy may well feel rather pleased with himself at the moment, as it means that in the new "two speed" Europe France will have greater sway. However, France and the Eurozone may care to consider that David Cameron's refusal to sign up was based on a shrewed assessment of whether the Eurozone and its "new treaty" is capable of resolving the Euro crisis.

Cameron has judged that the crisis will not be resolved by this course of action, and that signing up would be a disaster for the UK.

Here's what the others signed up to:

- Eurozone states' budgets should be balanced or in surplus.

- A similar rule will also be introduced in eurozone member states' own national legal systems; they must report national debt issuance plans in advance.

- As soon as a euro member state is in breach of the 3% deficit ceiling, there will be automatic consequences, including possible sanctions, unless a qualified majority of euro states is opposed.

None of the above will resolve the Eurocrisis, the ECB needs to act as a buyer of sovereign debt (ie print money); a role that it refuses to accept.


Cameron, over the coming days, will be vilified by many for his actions. However, time will prove that the Eurozone and its "leaders" are not up to the job of running single currency.

Oh, and by the way, the "new treaty" is not yet a done deal. Member states have to formally sign up to it, and at least Poland and Ireland are already discussing having to hold referendums before they sign up!

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The German Juggernaut

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As the eye of the financial storm moves from Italy to Spain, it was fascinating to learn that the Irish budget was being circulated around the Bundestag for approval, before it was even seen by Irish members of parliament.

Coupled with the fact that both Greece and Italy are now, in effect, German financial protectorates (complete with German appointed Prime Ministers) and we have to wonder what form of "new" European political structure and governance model is being created.

Clearly David Cameron is concerned as well, because he is hot footing it to Berlin for talks with Chancellor Merkel.

Let us trust that something more tangible than a piece of paper will be forthcoming from that meeting!

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Cameron Blocks Brown

It seems Gordon Brown's hopes for heading up the IMF may have been dashed by David Cameron.

Cameron said that he will block Brown's bid, as the IMF required someone "extraordinarily competent".

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Mervyn King Under Pressure

Mervyn King, Governor of The Bank of England, is the latest prominent figure to be embarrassed by the Wikileaks saga.

A cable sent by Louis Susman (US Ambassador) to Hillary Clinton in February 2010 summarises Mr King's views about David Cameron and George Osborne, expressed during meeting that he held with the ambassador.

The Governor opined that Cameron and Osborne "had a tendency to think about issues only in terms of politics, and how they might affect Tory electorability", and was worried about their lack of experience.

There are some who are now calling for King's resignation, citing his alleged "thirst for power". Quite why a private conversation with the US ambassador, albeit embarrassing now that it is leaked, should force him to resign is beyond me.

I suspect those who are making this call are doing so based on their personal dislike of the man, rather than on any specific "offence" and alleged "breach of neutrality" that they claim that he has made.

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EU Loses Touch With Reality

David Cameron has thrown in the towel in his fight to resist an EU imposed increase of £435M in Britain's contribution to the EU (based on an EU budget increase overall of 2.9% to £110BN).

Ironically, if this 2.9% rise is approved, it will in fact be a modest "victory" for Cameron who has been fighting a rearguard action (calling all EU heads of state) to prevent the implementation of a budget increase of 5.9% which is being demanded by MEPs. These MEPs are clearly a bunch of individuals who have not set foot on "real world planet Europe" for many years, and are unaware that Europe/the world is in the depths of a recession.

The health warning here is very real, 2.9% is the minimum rise that will go through.

The fact that budget rises of this kind are being pushed through, during a time when national governments are being forced to reduce their own budget deficits, shows just how out of touch with reality the EU has become.

The EU, by acts of folly such as this, will eventually engineer its own self destruction. Unfortunately, in the meantime the citizens of its member states will pay the price for the greed and intransigence of the MEPs.

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Position Vacant

Those of you with a penchant for foreign travel and a desire to promote British business abroad may care to apply for the position of Trade Minister, which has been vacant since the formation of the new government.

It seems that David Cameron has offered the role to a number of high profile figures. However, they have all turned him down flat.

Still interested?

Well, before you rush to post your CV's to the PM, you might like to know that the post is unremunerated (the government has already hit its limit of salaried ministers).

Aside from working for free, you will also have to put your assets into a "blind trust" during your period of tenure; in order to avoid issues wrt conflict of interest.

Still interested?

No?

I thought not!

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The Orifice Of Budget Responsibility

Sir Alan Budd, who is leaving as Chairman of the Office for Budget Responsibility after a mere 3 months in the role, appeared before the Treasury Select Committee (TSC) yesterday.

The TSC was keen to probe beneath the public perception that the OBR is not as "independent" as the government, and indeed OBR, would have us believe.

Sir Alan claimed that he had not come under political pressure recently, even though he released public sector jobs data early. He claimed that this was to correct a misinterpretation of figures leaked to the media, the fact that this was of benefit to David Cameron who used the data with glee was (of course) irrelevant.

Sir Alan, who has yet has no successor to replace him, has issued advice to the successor as to the future of the OBR eg:

- the need to relocate it outside the Treasury,
- allow Parliament a role in appointments to the OBR's key committee
- employ both external and Treasury staff to produce its forecasts and analysis.

He neglected to add that his future successor needs to be put on a contract longer than 3 months, allegedly the length of Sir Alan's contract (one wonders why, if that is truly the case, there is no successor lined up yet?) if he/she is to be effective.

As to whether the government and Treasury actually want a truly independent OBR, remains to be seen. Doubtless their choice of Sir Alan's successor may shed some light on that.

We await the announcement with interest!

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Fiddling Whilst Rome Burns

Despite that fact that the Euro and the members of the Eurozone are in financial freefall, the International Monetary Fund (IMF) has urged the EU to "complete the project of monetary union".

Hungary (which is not in the Eurozone) managed to add fuel to the fire by stating (via a senior politician) that it was near-bankrupt, the Euro is so mistrusted by the markets that this announcement caused it to fall further.

As if this was not enough, talks between President Sarkozy of France and Angela Merkel (the German Chancellor) have been postponed.

David Cameron will tell the EU, albeit very politely, to "fark off" wrt the request by the little known lightweight president of the EU (Herman Van Rompuy) to see the UK's budget before it is presented to parliament.

The Euro is destined to become a failed experiment, whether the IMF and certain Euro lightweights like it or not.

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There Are Bad Times Just Around The Corner II

David Cameron has warned that the cuts that the government envisages making are going to be deep and painful, and that they will dramatically affect the way that we live our lives.

The Tories have quite rightly blamed Labour for the mess, and are shrewdly using this mess as an opportunity to push forward their social/political agenda (eg revisions to benefits and pensions).

Tomorrow George Osborne will announce a "once-in-a-generation" revolution that will involve a public consultation exercise on what people expect from public services, and where they think the cuts should fall.

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There Are Bad Times Just Around The Corner

The Council of Mortgage Lenders (CML) has warned that approximately 53,000 homes will be repossessed this year (a 15 year high).

Add in the public sector cuts, rises in taxes (both direct and indirect) and we are going to have a tough time. The smiles and bonhomie of Clegg and Cameron will not be enough to ease the financial pain that will be visited on every household in the UK in the coming months.

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