Mehdi's Morning Memo: 'You've Got To Spend Money'

LONDON, UNITED KINGDOM - APRIL 10: Chancellor of the Exchequer George Osborne leaves Downing Street on April 10, 2013 in London, England. Parliament has been recalled today to allow MPs and Peers to pay their respects to former Prime Minister Lady Thatcher who died on April 8, 2013. (Photo by Peter Macdiarmid/Getty Images)
LONDON, UNITED KINGDOM - APRIL 10: Chancellor of the Exchequer George Osborne leaves Downing Street on April 10, 2013 in London, England. Parliament has been recalled today to allow MPs and Peers to pay their respects to former Prime Minister Lady Thatcher who died on April 8, 2013. (Photo by Peter Macdiarmid/Getty Images)
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The ten things you need to know on Tuesday 23 April 2013...


Ahead of this Thursday's potentially dire GDP figures, yet another ally of the chancellor - who struggled to defend his fiscal policies on the Today programme this morning - has turned on his austerity measures.

From the FT's front page:

"Bill Gross, manager of the world's largest bond fund for Pimco, has criticised efforts by Britain and much of the eurozone to cut debt rapidly with severe austerity measures, warning that such action risks stifling recovery.

"'The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not,' Mr Gross told the Financial Times. 'You've got to spend money.'

"The investor's comments are the latest indication of a shift in attitudes towards ongoing budget deficits as European economies show few signs of recovery. In 2010, Mr Gross had conversely warned that UK debt levels were too high, leaving gilts 'resting on a bed of nitroglycerine'."

The EU - which has been pushing austerity measures on its southern member countries since the crisis began five years ago - also seems to be having a change of heart - from the Guardian:

"José Manuel Barroso, president of the European Commission... signalled that governments would be given more leeway if they were struggling to get their budget deficits within the required ceiling of 3% of GDP. He said the argument over austerity versus more public spending was a false debate - the answer was to combine the two, although public spending cuts alone would not provide the solution.

"'Socially and politically, one policy that is only seen as austerity is not sustainable,' Barroso said. 'We haven't done everything right ... The policy has reached its limits because it has to have a minimum of political and social support.'"

Both Gross and Barroso join the IMF, another former supporter of Osborne's fiscal policy, in sounding the alarm bell on growth and austerity. It is difficult, if not impossible, to dismiss such figures as 'deficit deniers'.

But is anyone inside the Treasury listening?

(On a side note, the Archbishop of Canterbury, bless him, says the UK is in the depths of an economic "depression". Ouch.)


The spooks aren't too keen on austerity either, it turns out. From the TImes splash:

"Public safety will be put at risk if spending on the security services is cut any further in the drive to save an extra £11.5 billion, George Osborne has been warned.

"MI5 and MI6 chiefs have told the Chancellor that Britain would be more vulnerable to a terrorist attack if they have to find additional savings, The Times has learnt.

"Days after the Boston bombings, they argued that they have already had to scale back operations to a worrying degree because of a spending freeze imposed three years ago.

"... The warnings coincide with the start of the 2015-16 spending round, set to be the bloodiest battle for decades. Opening bids have to be submitted by Monday and will lead to more cuts in public services and tens of thousands more job losses."


The other big economic story of the day relates to plans for Scottish independence and the SNP's desire to retain the pound sterling in an independent Scotland.

The FT reports:

"The Scottish National party's proposal for a currency union between an independent Scotland and the rest of the UK would be less stable than the eurozone, ministers will argue today... George Osborne and Danny Alexander will tell an audience in Glasgow that none of the possible currencies available to an independent Scotland would work as well as the current settlement.

"... In an analysis exploring the options available to the SNP in the event of a Yes vote next September, the Treasury compares the formal currency union proposed by the Scottish government with the eurozone. The paper argues: "The recent experience of the euro area has shown that it is extremely challenging to sustain a successful formal currency union without close fiscal integration and common arrangements for the resolution of banking sector difficulties."

"But coalition officials said yesterday that such a union involving Scotland and the rest of the UK would be riskier than that among eurozone countries. One told the Financial Times: 'The UK making up 90 per cent and Scotland just 10 per cent would make for a very unbalanced currency union, much more unbalanced than the eurozone. This would leave Scotland very exposed.'"

The chancellor has been on the Today programme this morning - he said "it's unlikely we can make [a currency union] work" and said "independence would be a very difficult step for the Scottish people".


A close ally of German chancellor Angela Merkel has taken yet another potshot at Tory Euroscepticism.

"Britain's standing as a leading military power with the ability to influence events beyond its own borders will be jeopardised if the country leaves the European Union, the German minister of defence has warned.

"In an interview with the Guardian, Thomas de Maizière insisted the defence implications for Britain, Europe and Nato would be profound... 'If Great Britain leaves the EU, it would be a great disappointment to us. It would weaken Nato, it would weaken the British influence within Nato. I think from a military point of view the disadvantages for Great Britain would be bigger than the advantages.'"


Eurosceptics aren't just jeopardising our national security, it seems, they're also undermining the fight against crime - from the BBC:

"Government plans to opt out of 130 European Union police and criminal justice measures could weaken the UK's ability to fight crime, peers say.

"The House of Lords EU committee said ministers failed to make 'a convincing case' for repatriating the powers.

"... Opting out would include leaving the European Arrest Warrant, which is used to speed up the extradition of criminal suspects between member states."


Watch this video of US anchor AJ Clemente drop the F-bomb live on air, in his first ever live appearance on NBC affiliate KFYR-TV.


Since when did pressure cooker bombs become weapons of mass destruction (WMD)? From the Telegraph:

"The surviving Boston bombing suspect was charged as he lay under armed guard in his hospital bed yesterday with using a 'weapon of mass destruction' in the attacks that killed three people and injured more than 200.

"Dzhokhar Tsarnaev, 19, could face the death penalty or life imprisonment if convicted on the federal terrorism charges, the Department of Justice said."

Two quick points: 1) Shouldn't an AR-15 assault rifle, a gun which has caused far more chaos and bloodshed in the schools and on the streets of the United States, be classed as a weapon of mass destruction, too? 2) Does this mean Iraq did indeed have weapons of mass destruction (pressure cookers)?

On a side note, the Times reports that "Canadian police and intelligence agencies said yesterday that they had foiled an al-Qaeda supported terrorist attack by two men against a passenger train... Law enforcement officials in Canada said the suspects had no connection to the brothers Dzhokhar and Tamerlan Tsarnaev."


That's the motto of internet search giant Google. But is it "evil", or at least immoral, not to pay your fair share of taxes?

"Senior MPs called on David Cameron to consider stripping the boss of Google from his role as a government adviser last night after he suggested that his company's contribution to the British economy was more important than paying its fair share of tax.

"Politicians from all three parties rounded on Google's executive chairman, Eric Schmidt, after he defended its use of loopholes to minimise its UK tax bill. He insisted that Google would comply only with the letter of the law - despite paying only £6m of taxes on £2.6bn of revenue generated in the UK in 2011. Google uses anomalies in international law to move profits into low-tax jurisdictions even if they have been generated by business carried out in Britain. Chancellor George Osborne has made tackling the practice a priority for Britain's chairmanship of the G8."

"... A government source also questioned Mr Schmidt's position, claiming Google was 'not really investing very much in Britain' and that the company had a 'disproportionate influence' on Mr Cameron. 'It's a bit like The Wizard of Oz,' the source said. 'From the outside, they appear terribly important and powerful but, when you look closely at what they are actually investing in Britain, it is pretty insubstantial.'


It's as if they were never away... from the Daily Mail:

"Chris Huhne and his former wife Vicky Pryce are due to walk free from jail within weeks after serving only two months of their eight-month sentences.

"The news emerged yesterday as Huhne offered to pay less than a quarter of the £108,000 that prosecutors want him to cough up towards the costs of bringing him to justice.

"... They will probably be forced to wear an electronic tag and obey a night-time curfew on their release under a scheme for non-violent prisoners.

"For sentences under a year, offenders are automatically released after serving half their sentence."


If Assad falls, will the west be buying its oil from Al Qaeda? From the FT:

"Syria's top rebel commander is seeking western backing to form a military unit to take control of oilfields controlled by al-Qaeda-linked extremists, as lucrative natural resources captured from the regime stoke tension between rival factions.

"EU foreign ministers yesterday lifted an oil embargo against Syria to allow rebels to sell crude to fund their operations.

"But the decision was made amid signs of friction within the opposition about control of captured assets.

"Activists say... many of the oilfields are controlled by Jabhat al-Nusrah, an al-Qaeda-linked rebel group."


Happy St George's Day! From the Express:

"Seven out of 10 people in England want St George's Day to be a holiday.

"And 46 per cent of those living in England feel 'very proud' to be English rather than 38 per cent who feel 'very proud' to be British, in a poll for the IPPR think tank."


From the Sun/YouGov poll:

Labour 39

Conservatives 32

Ukip 13

Lib Dems 11

That would give Labour a majority of 86.


@iainmartin Humphrys to Osborne on @BBCr4today - "Are you panicking?" Os: "Ah, hah hah, chortle... hah hah. No."

@NS_Business Archbishop clarifies on bankers: "They do not come in with horns and a tail burning £50 notes to light large cigars"

@sundersays Couldn't see anything at all in the print Daily Mail about St George's Day on flicking through. Seems a shame not to notice it at all.


Rachel Sylvester, writing in the Times, says: "With so many advisers leaving Downing Street, there is a lack of energy and ideas at the centre of power."

Donald Macintyre, writing in the Independent, praises the select committee system and says: "Two cheers for modern British democracy."

George Monbiot, writing in the Guardian, says: "This faith in the markets is misplaced: only governments can save our living planet."

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

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