Mehdi's Morning Memo: The No-Growth Budget

The ten things you need to know on Thursday 21 March 2013...


It's the morning after - and the chancellor George Osborne has just been on the Today programme. Did he fiddle his figures? Delay sending cheques out, to keep borrowing totals down, asked the BBC's Evan Davis? "They would expect these bills to be paid when they're due, not early," replied a defensive Osborne. He refused to tell Davis whether it'd be possible to buy a second or third home with the government's new Help to Buy scheme. "We're working with the industry to get a scheme that works," was all Osborne would say.

The morning papers' front-page responses to the chancellor's fourth Budget are mixed. The positives? The FT calls it a "pitch for Middle England".

"Osborne pins hope on housing boom," says the Telegraph. "Betting the house... as Osborne goes for growth" is the Times's headline. The Daily Mail is delighted - "The laddie's not for turning," says it's splash headline, over a rather disturbing picture of George Osborne-as-Margaret-Thatcher.

The negatives? "Drown your sorrows," is the Guardian's take. The Mirror dismisses the "fudge-it budget 2013". My favourite front page splash is the Independent's - under the headline, "The drown your sorrows budget", and over a cartoon of a magician George Osborne pulling a bottle of beer out of his top hat with a dead rabbit on the floor behind him, the Indy notes: "Osborne halves growth forecasts, pushes back debt reduction targets, and avoids having to announce an increased deficit by rushing through last-minute spending cuts. Still, he has reduced the price of beer."

The paper's economics editor Ben Chu says "there was no disguising the abysmal broader outlook. The OBR predicts that economy will still be 2 per cent smaller in 2017 than it was in 2007, pointing to a lost decade of growth".

As has been the case now for the past three years, it isn't the Budget statement in the Commons from the chancellor that matters; it's the verdict of the independent Office for Budget Responsibility (OBR). Here are the three things the OBR says which make this, in my view, a 'no growth' budget:

* The OBR revised downward its growth forecasts again - it's forecast for 2013 has halved from an unimpressive 1.2% to a measly 0.6%.

* The OBR says the Budget "will have a broadly neutral effect on the economy, with no impact on the level of GDP at the end of the forecast horizon".

* The OBR is also forecasting borrowing of £120billion in 2013–14; its chair Robert Chote told reporters that deficit reduction "appears to have stalled". No growth, no deficit reduction. That's what some of us have been saying for a while...

Oh, and as I blogged yesterday, with the economy on the verge of a triple-dip recession, and borrowing costs at a record low, it is madness to delay a (measly) £3bn infrastructure spending package till... 2015.


The Daily Mail calls it" the biggest shake-up at the Bank of England for more than two decades". The Independent's Hamish McRae says "beefing up the Bank could be this Budget's legacy". The BBC reports:

"The Bank of England has been ordered to consider using unconventional monetary tools to boost the economy, as growth forecasts were cut again.

"... In a key change, the Bank may now provide explicit guidance on how long it will keep its monetary policy loose."

But the FT warns that "the chancellor's changes are not as radical as they might have been". And former Monetary Policy Committee member, Professor David Blanchflower, writing in the Independent, says this is "much ado about nothing":

"The MPC was always able to do forward guidance; it was something we rejected, but we knew we could do it.

"The MPC has already slowed the speed at which inflation can be brought back to target because of fears of an adverse impact on growth and employment.

"Permission to do non-conventional quantitative easing has already been given - indeed, it already has the acceptance of the Chancellor to purchase an additional £10bn of private sector assets.

"... I can't see anything fundamentally new here. More fiddling."


The big Budget story of yesterday wasn't the Budget itself but the fact that it was all on the front page of the Evening Standard before Osborne was on his feet in the Commons.

From the Daily Mail:

"The editor of the London Evening Standard issued a grovelling apology last night after the newspaper published details of the Budget before George Osborne stood up to deliver it.

"Sarah Sands said she was 'devastated' by the error, which resulted in a photograph of the newspaper's front page story on the Budget being published on Twitter while MPs were still waiting for the Chancellor to begin.

"She said a 'very young and inexperienced' journalist had been suspended while the newspaper carried out a full investigation.

"... 'We are devastated that an embargo was breached and offer our heartfelt apologies.' A Treasury source acknowledged the episode had led to the early release of 'market sensitive' information on growth and borrowing forecasts."

"Devastated"? "Heartfelt apologies"? You'd think someone had died. Then again, as the Mail reminds us:

"Major Budget leaks are treated as a very serious issue at Westminster. In 1947 Labour chancellor Hugh Dalton resigned after inadvertently leaking details of his own Budget to a newspaper."


My colleague Ned Simons reports:

"On Budget day it is not the Speaker who takes charge, but one of his deputies, Lindsay Hoyle. And he stole the show.

Hoyle had to work hard to keep a rowdy crowd in the Commons under control, but his was a bravura performance:

"May I say to back benchers and to a couple of Members in particular that the panto season is not for another nine months, and if there are auditions could they take place outside the Chamber?"

Ned writes:

"As Ed Miliband got to his feet Hoyle also smacked down cheering Labour MPs. "I can't understand an opposition who don't want to hear their leader," he told them.

"Enjoying his role as Commons ringmaster, Hoyle later shut down one Tory backbencher: "I think your voice could be better saved for Chester FC this weekend, they are top of the league I think you'd be better cheering them on."

As Osborne ploughed on the volume in the chamber rose."It's not a competition of who can shout the loudest," Hoyle bellowed, which must have come as a shock to most MPs who largely think it is. And even if it were, Hoyle would have won.


You could not make it up - from the Daily Mail:

"While most of us were worrying about whether the Budget would leave us worse off, there was one man in no doubt that things had just got even better.

"Barclays revealed yesterday that top 'casino banker' Rich Ricci had received a staggering £18million windfall.

"And the jackpot was just one share of an astonishing £40million bonus payout split between nine Barclays executives.

"But the bank provoked outrage for slipping out the announcement on the same day as the chancellor delivered his austerity Budget - to pay for an economic crisis caused by bank bosses."

As George Osborne often reminds us: "We're all in this together." Er...


Watch this video of a flying cat attack. Proper Ninja-style.


From the Guardian:

"Cyprus ordered its banks to remain closed until next week as the cabinet held emergency talks last night in an effort to strike a deal with the EU or Russia to avert financial meltdown and stave off bankruptcy.

"... No clear plan B emerged last night after meetings between politicians and representatives of European partners and the IMF. The Cypriot cabinet was said to be discussing ideas including the nationalisation of pension funds of semi-government corporations, which hold between €2bn and €3bn, and another form of levy on deposits. Another option debated may have been natural gas bonds linked to oil reserves discovered off Cyprus...

"'We don't have days or weeks, we have only hours to save our country,' Averof Neophytou, deputy leader of the ruling Democratic Rally party, told reporters as crisis talks in Nicosia dragged on into the evening."

The paper adds:

"Earlier, Cyprus's Orthodox church said it was willing to mortgage its assets to invest in government bonds. The church has considerable wealth, including property, stakes in a bank and a brewery."


Surprise, surprise! The Sun reports:

"Israel will have “no greater friend” than the US in pursuit of peace in the Middle East, Barack Obama promised yesterday.

"On his first visit to Israel as president, America’s leader described the two nations’ alliance as 'eternal'."

"He signed the guest book at the residence of President Shimon Peres and told him: 'The United States is proud to stand with you as your strongest ally.'"

Some might say a 'great friend' and a 'strong ally' is one who is willing to tell that friend and ally things they don't want to hear. The US president, however, seems to prefers the 'I'm with you, no matter what' approach to friendship. His trip to Israel is basically a photo-op for US domestic consumption, rather than an attempt to secure peace and an end to the occupation of the West Bank.

Obama heads for Ramallah today, via helicopter, for a few hours only, to visit the Palestinian president Mahmoud Abbas. The BBC reports:

"There is deep disappointment among Palestinians that Mr Obama has not done more to support their bid for an independent state. PLO official Nabil Shaath suggests he "won the hearts of Palestinians" in his 2009 Cairo speech when he said "the only resolution is for the aspirations of both sides to be met through two states" but laments the president's 'lack of determination' to bring about negotiations."


From the Telegraph:

"Alex Salmond will today finally disclose the date of the Scottish independence referendum as he attempts to seize back the political initiative in the battle over the United Kingdom.

"The First Minister will make a statement to the Scottish Parliament at around 2pm in which he will reveal when in autumn next year the ballot will be staged.

"A Referendum Bill will also be published containing all the details of the historic vote, including the franchise and question that will be used.

"... John Curtice, professor of politics at Strathclyde University, told the Daily Telegraph earlier this week that the separatists were currently too far behind in the polls for the date to have much impact."


From the Guardian:

"The government will press ahead with the establishment of a body which will approve press regulators, even if there are more than one of them proposed by the industry.

"Under the royal charter agreed in the early hours of Monday morning, the Leveson proposals will be put before the privy council which next meets on 8 May for approval and then move on to the Queen for the final seal.

"... In the meantime, the press is expected to launch its own parallel efforts to set up a new regulatory body that can then apply to the body for official recognition.

"The DCMS confirmed that the system allows for multiple regulatory bodies."

The Sun reports:

"The three main party leaders would win a court battle with Fleet Street to enforce the first UK Press law in 318 years, Downing Street warned yesterday.

"No10 insisted that plans to impose fines on newspapers that refuse to join the new system were “within the law”.

"... Meanwhile, the New York Times warned that the state-sanctioned Press watchdog would 'stifle' investigative journalism and 'threaten the survival of small publishers and internet sites'."


Julia survives to fight another day, according to the BBC:

"Australian Prime Minister Julia Gillard declared the Labor party leadership conclusively settled, after Kevin Rudd shunned a party vote.

"Ms Gillard called the ballot after a senior MP said the debate over who should lead Labor into September's general election had to be resolved.

"But Mr Rudd, ousted by Ms Gillard in 2010, declined to challenge her."


"Just put your hand up if you are not getting the 50p tax cut." - Labour leader Ed Miliband mocks and pillories the coalition cabinet during his response to the Budget in the Commons yesterday.


From today's Sun/YouGov poll:

Labour 41

Conservatives 30

Ukip 12

Lib Dems 11

That would give Labour a majority of 110.


@faisalislam I said yesterday that the Chancellor seems to have found what David Cameron might call "a magic money forest" to fund mortgages

‏@tnewtondunn Notable how gentle @EvanHD is being with @George_Osborne on #r4today now after their great December ding ding.

@davidschneider Tories now firmly behind statutory regulation of the press, but only for the Evening Standard #budget2013 #leak


Martin Wolf, writing in the FT, says the chancellor "cannot disguise that economic outcomes are drifting further from expectations".

Alistair Darling, writing in the Guardian, says: "Only growth can save us from a lost decade. But George Osborne is risking not just recession but depression."

Max Hastings, writing in the Daily Mail, says: "George may seem unlovable but the smirking alternative would lead us to perdition."

Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan (mehdi.hasan@huffingtonpost.com) or Ned Simons (ned.simons@huffingtonpost.com). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol