UK ELECTION: As Oborne’s mirage of growth begins to ripple-dissolve, has the ECB thrown him a lifeline?


On 17th March 2014, The Slog posted this piece suggesting that George Osborne was the greatest snake-oil economic feelgood salesman in British history. I wrote at the time:

‘George Osborne is the trickster who insists we are in recovery, when all the data with which he has been unable to tamper insist we are doomed.’

Several times after that I wrote how The Draper was merely gambling on the hope that nothing totally undeniable would emerge before the May 2015 election…especially given much of the electorate was dozing off while watching game shows anyway.

So far, George has appeared to be doing the Colombian march to victory. Until yesterday that is, when the British Chancellor was suddenly faced with ONS data showing that there had been a decrease of 2.7% in mining & quarrying.

That sector is closely aligned to the UK construction industry, and surprise surprise this registered an “unexpected” 2.7% decline in new private house building…..alongside a 4.1% decrease in house repair work. This means (a) few Brits have the confidence to buy into the housing sector and (b) even fewer have the money to repair what they have.

It’s called austerity economics running out of road…despite Help to Buy trying to create a Ring of Confidence around the British housing market. George may well be about to disappear up his own ring: the index of production output across all sectors is just 0.1% up year on year, his pledge to wipe out the trade deficit was 50% out, and his “determination” to rebalance the economy has failed completely….we’re more dependent on services today that we were when the Coalition took power five years ago. And of course, the National Debt is rising inexorably.

Does any of this matter? Probably not: the snoring voters have been given nothing in the way of dramatic presentation by the Ed Miller Band to wake them up to the dangers ahead.

Meanwhile, in an odd move earlier this week, Mario Draghi relaxed the ELA rules on Greek banks, thus allowing the Syriza government to pay Fifi Lamerde at the IMF in full. Nobody knows why he did this, but I have one hunch among many that I find intriguing: did Mario let the Greeks stay alive because his plan to amputate them wasn’t ready? Or did he do this to put off Athens’ default until after May 7th…and thus sabotage the Ukip campaign in Britain?

29 thoughts on “UK ELECTION: As Oborne’s mirage of growth begins to ripple-dissolve, has the ECB thrown him a lifeline?

  1. In similar vein of “Tailor to the Emperor” I read the £8B to the NHS & the related mentions of the January PMQ’s.

    It’s a pity ONS doesn’t have statistics of the change in No’s of TV Game show watchers ( or how many new ones are being let loose on various channels with then repeats on others


  2. Neither. He did it because Uncle Sam told him to. I think the EU wants Milliband minor to win – so if anything I would expect them to try to hinder Gideon.

    But I agree that the recovery is a mirage. As with Thatcher selling off the Family Silver, you can only do it once. In this case helping people to liberate their pension monies in the hope that they spend it on something that makes the economy look good. However, once spent that will be it – not only that, there will be a lot of poorer pensioners not spending.



  3. ‘Austerity economics running out of road’. Confirmed by sterling’s 12 month decline against the $ of 15 percent, before we get to the business of the day after 7 May, with either Militwit leading the largest party or Dave having failed, twice, to gain a working majority. £/$ 1.40 on 6 May, $1.35 on 7 May, $1.30 on 8 May?


  4. I think the explanation may be more mundane. If you tried to raise money for a development or for investment since Christmas you’d have been told to come back after the election. The uncertainty of the election is jamming up the works. So although Osborne needs a hot economy to win the election; the fact that he might not is guaranteeing him a cooling economy.


  5. As David Starkey is quoted in the DT today:

    Should the Tories win next month and hold a referendum on the EU, Starkey will probably vote to leave. “We have a very large trade deficit with Europe, we have a decent trade balance with the rest of the world. Is Europe going to cut off its nose to spite its face? It seems to me so infinitely unlikely. There’s no risk.
    “There would be a risk if we were running a German-style trade surplus with Europe. But we’re not. The problem of our leaving Europe is a problem for the Germans and not us.”

    So quite possibly Draghi had this in mind to add to his other reasons. He has a point!


  6. I think the reason the ECB let Greece of the hook this week was the fact that Tsipras was in Moscow talking to Uncle Vlad. Now I wonder what he’s doing there?


  7. It is quite astonishing that although it has been shown ad infinitum that one does not have to be a member of the EU to benefit from free trade with the EU (i.e. Mexico, Chile, S. Korea, Canada, all the Gulf States, India, S. Africa, Malaysia etc.) many europhiles continue to try to scare doubters into believing the lie that leaving the EU would be GB’s death-knell – and that other old chestnut about losing 3 million (unspecified) jobs.

    One of the major problems in politics is too many unchallenged lies and too many politicians subscribing to Goebbels’ dictum: ““The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly – it must confine itself to a few points and repeat them over and over.” Until the system fundamentally changes, we will never be rid of them.


  8. UK for more QE before Xmas? … got to be a bet in that JW.

    All the friggin manipulations did not change a thing mwhahahahahaha … the amount of money that needs to be created in our economy has outgrown the ability of banks to create it through the leverage and interest on loans. So how do you create the liquidity the economy is calling out for if it is not QE? As for austerity, takes the eye of the important fact for a time you can’t cut fresh air if the liquidity has vanished can you?

    On this Keynsian create and inflate game though you have to very careful (think we lost control a few decades ago myself) to not end up doubling down because if you double down long enough you can never pay the final loss in a defunt economy.

    For all those who say “but its okay we create our own currency” so does Zimbabwe and the real concern is how the value of the currency is portrayed globally.


  9. The mood on the streets of the real world where I live (Luton) is much different, grittier and sometimes nasty. If you venture into town you keep yourself to yourself and avoid making eye contact with others, Some parts of town are no go areas, you’re likely to get spat at called a prostitute or jostled off the pavement. The town centre is full of tatty charity shops and myriads of cheap fast food joints, some parts are boarded up. The dull as ditchwater election campaigns have no resonance here, the main issues are not addressed, unlimited immigration, shortage of housing, dreadful schools and poverty with many scratching a few bob in the black economy.


  10. If as has been suggested above the £Sterling falls to $1.30 in May, and I agree that it could even go a lot lower. Then the reverse of QE will quickly have to be applied, i.e. interest rates will have to be increased sharply to support the £, otherwise all hell will break out.


  11. @Mark Deacon,
    Liquidity isn’t the issue, debt levels are – there are no good assets left to lend on because they are all backing loans already. Central banks like the BoE have sort-of printed money by swapping sterling for “safe” bank assets – in contrast Zimbabwe got into trouble by printing currency without requiring the exchanging of it for assets.
    Too much liquidity and not enough good assets = rampant speculation (in housing, stocks, commodities…) where personal fortunes can be made and lost – and the market gets distorted, if you don’t play you’re sure to lose out, thus feeds the cycle till it all crashes down.
    More liquidity just fuels the fire.


  12. That is the uneasy reality of much of the southern UK now. In the Kent and Sussex the coastal towns are exactly as you have described, and even if many of the immigrants mean no harm, they are bewildered, resentful fish out of water with no connection to anything or anyone in this country, and are here because they have no better options. The pledges of billions more for the NHS or housing in this election campaign are pointless and Canute-like when penniless immigrants are able to flood in at will.


  13. Pingback: John Ward – UK Election : As Oborne’s Mirage Of Growth Begins To Ripple-Dissolve, Has The ECB Thrown Him A Lifeline? – 12 April 2015 | Lucas 2012 Infos

  14. Luton was ‘dull as ditchwater’ when I visited in 1963/4 so I really do not think that immigrants can be blamed for the image of Luton in major part.

    As I understand it the UK is not an ‘easy touch’ for foreigners arriving at our shores or are the politicians lying on that score as well?

    Do remember much of the old money wealth of the UK was gained by exploiting the Colonies, and this was in part enabled by the statements given to the natives of the Colonies that the Motherland would always welcome them to the UK (I guess they never thought their lie would be tested).

    I for one find it odd that the exploitation of far off lands that had no beef with the the UK should be heralded as a worthy achievement but I do understand that the wealth of the UK would have been very much diminished without that exploitation.


  15. Perhaps, altergoman, without the Empire we might have been ‘Germany on steroids’. We are at least as inventive, and a great deal quicker-witted. But we’d have needed a revolution first. Forelock tugging can have a devastating long-term effect.


  16. @Altergoman – The problem is that a huge part of the post 1997 immigration is not from the old Empire or Commonwealth.
    In fact its the settled communities from the old Empire countries who are now complaining the most about the huge waves of economic migrants from absolutely every corner of the world claiming asylum with absolutely no previous British colonial connection. You do have to wonder at what point is the British Government going to say enough is enough? When we get to a population of 100 million or maybe 150 million? I would love to here a politician give a straightforward honest answer to this question.


  17. Yes please, lets have sterling, Euro and the US$ all on parity. Then they can do two things 1] peg all three currencies together and 2] jack up % rates to their historic norms.
    We could even dream up a new currency called USSTRURO


  18. Have our politico’s morphed in to cicada’s with a 5 year cycle , they emerge, make a huge racket, of interest only to themselves then disappear back into Westminster again, till the next cycle occurs. While the rest of us can never find them even when they emerge.


  19. Its the huge number that now arrive in Luton. They come from all over Europe and the rest of the world. Plus we have a massive influx from London who cannot afford the rents there or to buy a property there. Add to this lot all those who the London councils ship out to Luton for social housing. This has been going on for quite a few years now. the council and local services have yet to catch up with it. More and more student accommodation is being shoved up by developers with the council stating that the grotty victorian terraces that are currently used by students will be freed up for other people to live in!


  20. Pingback: Abyss | Gabriel Vents

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