Tag Archives: anti-austerity

Hollande’s Importance for Labour

Francois Hollande’s rise to become French president and remove the centre-right administration of Nicolas Sarkozy was a big moment for Europe. Hollande’s accession marked the rejection of technocratic and conservative led recession in favour of a more equal, painless route out of Europe’s woes. Furthermore, Hollande’s triumph appeared to personify the anti-austerity tide sweeping across Europe from the streets of Athens, Dublin, London and Paris. The French elections symbolised the democratic wishes of the peoples of Europe to escape the bonds of austerity in favour of a growth-led recovery in the interests of the many not the few.

The initial triumph for Ed Miliband’s party therefore was simply the impending signs of a turning tide. The people of Europe had realised that it was leftist, growth supportive policies that would drive Europe out of recession not more and more cuts to vital services which starved the economy of oxygen. Hollande gave British Labour supporters a huge boost with his election, even if we have found his early days in office underwhelming. That is we have until four days ago, when Hollande unveiled his first budget, including his centrepiece policy: a super tax on the super-rich. From now on, the richest in French society will pay a tax rate of 75%. Whilst Ed Miliband has done some marvellous work in raising Labour’s ratings in the polls (even if his own are rather less satisfactory), it will be the results of Hollande’s super tax that could define whether Labour can be trusted with the British economy in 2015.

Ed Miliband has long been making moves against what he sees as predatory capitalists and the super-rich. Recently he announced plans to forcibly break up banks if they refused to do so themselves, whilst attacking the Tories watering-down of the Vicker’s report into banking practice. Furthermore, he has dedicated Labour to repealing the tax cut for the rich, which the Tories implemented in George Osborne’s budget, in the interests of fairness and to squeeze those who contributed to the financial crisis that has led to Britain’s terribly recessive economic period. These policies are controversial to say the least.

Whilst the public generally agree with Ed about the need to make Britain a more egalitarian and fair society, they fear that Labour, still blamed for the financial collapse of 2008, cannot be trusted with the economy. These fears are compounded by the Tories, although their economic credibility is dissolving gradually due to the double-dip recession. Another Tory argument, central to the idea of taxing the rich and squeezing the banks, is that if we squeeze the rich too hard they will simply pack up and leave, simply go on strike, in a scene reminiscent of one of Ayn Rand’s sauciest wet dreams. This is why Hollande will be key to Labour’s election chances.

Although the French economy is not based around a rich financial centre such as that in the City of London, the French nation has its fair share of the super-rich, people who will presumably become disgruntled by the notion of having their taxes raised to 75%. The key tests for the Labour party will be the tax receipts of the French treasury over the next couple of years and the number of rich who decide to leave French shores in search of a more generous tax deal.

The Tory argument that a Labour government will push away the banks, the rich, and their enterprises by squeezing them too hard is about to be tested across the Channel and if their arguments are proved wrong not only will the Tories look even less economically credible but they will suffer further humiliation. Furthermore, if Labour are right, Ed Miliband will once again be proved right on one of his main themes (remember Murdoch and the Leveson Inquiry). This would be a major boost to Miliband personally and Labour economic policy and credibility as a whole. The success of French policy could cement Labour’s chances of re-election and consign the Tories to a swift return to opposition. The advantage for Miliband is that, even if he is wrong, the consequences for him are much less severe.

Firstly, Miliband can still take the moral high ground. He would remain the politician who was backing the little people over the rich and powerful. He would still be the one standing up to the banks and their gambling practices. Plus he would still be right to demand the morally and ethically correct route even in the face of a wealth rebellion. After all, even if the wealthy threaten to leave, that would not make it right to simply cave in to their demands. Miliband cannot let himself to be seen selling his ethics away for the concern of money. The public will understand and appreciate this.

However, I really don’t see it going that far. The rich will not leave France on their yachts and private jets. Instead, the French people will be seen to be enjoying a fairer deal, where the rich pay their way and the poor are not used as sponges to be wrung dry so as to pay for a tax cut for the rich. Hollande may just have provided a huge boost to the British Labour Party’s chances of victory

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A chance for Labour?

Despite the successes of Labour in recent local elections and the continuous unpopularity of the coalition government, I fear that it is still true to say that a large percentage of the population believes the coalition’s narrative on the economy. This narrative reads that Labour overspent in government building up a massive deficit and is directly responsible for the economic collapse in Britain and the mess left for the coalition government to admirably clear up.

Whilst it is true that the UK (and much of the developed world), built up irresponsible amounts of debt, it is doubtful that a Tory government would have done any different. After all, up until 2008 the Tories very rarely disagreed with the amount Labour was spending in government. Furthermore, the basis of the economic crisis in Britain was the worldwide crash instigated by the collapse of American banks, which caused tremors across the developed world. Labour then took some very hard decisions and Gordon Brown called it right, pleading for the bailout of the banks and leading Europe away from the crisis. Labour then began to deliver stability and small amounts of growth before inevitably losing power at the 2010 election, largely due to the public’s decision to not trust Labour with the economy.

However, since 2010, the UK economy has consistently stalled and stagnated and has now returned to recession, despite the implementation of Tory economic plans. Despite the fact that the economy has slid backwards over the past two quarters, the Tory party continues with their damaging fiscal ideas and the country continues to allow ideological cuts to ruin the economy due to their distrust of Labour. As well as denying the UK economy growth, the prime minister has today claimed that the Eurozone must replicate the coalition’s “pro-growth” agenda, a laughable gesture considering that the UK has returned to recession.

It has been clear for a long time that the economy will be the defining factor of the next election, probably in 2015. It is key for Labour’s election prospects therefore that the party regains economic credibility and destroys that of the Tories. You would expect the return to a double-dip recession would make this job easy but the sheer level of distrust between voters and Labour has made this a difficult task. However, I believe that David Cameron’s speech today, urging the Eurozone to replicate his policies, and continued stuttering growth allows Labour a golden opportunity, one they cannot afford to miss, in destroying Tory credibility going into the next election. As for restoring respectability to Labour’s economic plans, the party must recognise the faults of Labour before the 2008 crash, and ensure that they produce spending plans that are realistic and accounted for. Furthermore, I believe that Labour can gain a stranglehold on the election by presenting their economic vision as one of equality and fairness.

In attacking the coalition’s economic plans, Labour have already been presented a massive opportunity by the UK’s return to recession, and faltering voter confidence in the coalition policies was shown by Labour’s massive local election victories. Furthermore, Cameron called today for the adoption of UK economic policies throughout the Eurozone, and who in their right mind espouses an economic policy so consistently failing. Labour can surely use Cameron’s speech today to present the prime minister as hellbent on austerity due to his ideological interests, as surely any pragmatic leader would look to change course so as to restore growth.

To restore faith in Labour’s ability to handle the economy the two Eds must acknowledge first and foremost that Labour under Gordon Brown made mistakes and they must accept that voters still have not forgiven these mistakes. They must use this opportunity to distance themselves from the old Labour regime and stamp their own authority on the Labour party. One question always asked of me regarding Ed Miliband is “what does he stand for?”, and it is a question I struggle to answer and usually I respond with vague murmurings about fairness and equality. I believe that, even if voters do not trust Labour to deliver economic excellence, they are currently seen as the party of fairness, and I believe Ed should make fairness central to his agenda as a whole, and his economic policy. Tory cuts are ideological and ruthless and must be attacked as so, whilst Labour must produce a correctly costed economic policy which restores growth and jobs to the working-class and squeezed middle, regaining voters lost to the Tories in 2010. Whilst I believe Labour has been right to keep its cards close to its chest up to this point regarding a potential spending plan post-2015, now the two Eds must deliver a credible alternative.

Therefore, it is key now that Labour takes advantage of what may be the best opening they get regarding economic policy in this government’s term in office. To take full advantage Labour has to produce a credible alternative, correctly costed, which produces a narrative for Labour’s route back to power, one of equality of opportunity, fairness and growth.

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Is Cameron delusional, a liar, or just plain stupid?

Today David Cameron called on Europe to copy the UK’s “pro-business, pro-growth” agenda. The prime minister claimed that whilst the deficit must be dealt with “growth in much of the eurozone has evaporated completely”. Of course Mr Cameron is right, growth must be high on the agenda of all European governments as the continent looks to bounce back from recession. But for Mr Cameron to be advocating the eurozone transferring the coalition’s economic policies to the continent so as to achieve growth is phenomenally idiotic. The UK, prime minister, is in yet another recession!

Since the crisis of 2008, the only real signs of economic recovery came when the Labour party was in government before the 2010 election. Since the election, the coalition has implemented swingeing cuts which have deepened the recession, the economy has stagnated, and now the UK finds itself in a double-dip recession. How anyone can advocate a policy that has delivered another recession from the jaws of recovery is beyond me and will astonish most voters.

The coalition government has increasingly had  to revise down its growth estimates over its term in government, upping the amount it is borrowing and consistently adding to the debt levels that they pledged to eradicate. The truth is that the coalition must now realise that it will be nigh on impossible to eradicate the deficit in the near future if they refuse to stimulate the economy and move it towards growth, yet they refuse to do so for the sake of saving face and stubbornness. Any change in policy would add credibility to Labour’s economic policy and the Tories still hope that by 2015, voters will not trust Labour with the economy. However, it is time for Cameron to realise that, if the economy continues to stall in a similar manner to the present, voters will trust the Tories no more than they trust Labour.

The prime minister claimed today that the coalition is implementing a “pro-growth” economic policy, but as GDP figures show this policy is achieving the exact opposite of growth, the economy is receding. The coalition’s ideological cuts to the public services have drained even more money out of the economy at a time when the government needs to maintain the public services so as to ensure that consumers continue to spend. The problem at the moment is that consumers are not spending because Mr Cameron’s policies have made them fear for their jobs!

The prime minister has shot himself in the foot by advocating the spread of his economic policies to the eurozone. The coalition has consistently failed to provide economic recovery for the UK and yet the prime minister fails to recognise this (at least publicly), and, rather than changing direction, he continues to espouse ideological economic policies rather than pragmatic ones.

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How Hollande can change Europe for the better

Francois Hollande was today sworn in as French president before heading to Berlin to meet German chancellor Angela Merkel in a bid to get to grips with Europe’s ailing economy. Up till this point, the Franco-German axis that has led the efforts to lead the eurozone out of the gloom of the recession has focussed on austerity and fiscal constraints and tightening. Before this point the leaders of the two countries were both centre-right politicians and Nicolas Sarkozy certainly did little to stand in the way of German efforts to bring the eurozone countries and economy to heel, imposing rigorous fiscal discipline on states that, in some cases, would be far better off out of the eurozone with the ability to control their own economy rather than be used as a toy of the Franco-German axis. Hopefully, with the advent of a new leader in France, Europe can begin to reverse the negativity of the centre-right governments that have dominated Europe and bring growth, fairness and equality to the continent.

The first step hollande needs to take in his new job is to let Merkel know that austerity will no longer be good enough for Europeans. An obvious failure to establish good, continuous growth following the recession has proven that the policies of the current European leaders regarding the European economy are not good enough, and hopefully Francois Hollande can bring to the table a more positive agenda for growth and lead the eurozone out of the economic quagmire it finds itself in. As part of this, Hollande must recognise that European governments need to invest in their countries and there is no way around this. Earlier this year, whilst the Dutch, Italian and German economies were contracting, the French economy experienced a 0.2% growth boosted mainly by exports. Hollande should pick up on this and rebalance Europe’s economies towards manufacturing and exporting products to the prosperous, large and rising economies in Asia and South America. The rejection of centre-right governments in votes across Europe should give Hollande the impetus and backing he needs to stand up to Merkel and replace austerity with a growth agenda.

Furthermore, Hollande must allow the weaker eurozone countries such as Greece to make as pain-free an exit from the Euro as possible, allowing the Greeks to balance their own books in their own way. The mixed election results in Greece and the inability of Greek leaders to form a coalition is worrying and Greece needs strong governance soon, but that governance must come from Greeks, not technocrats in Brussels. The Greek people will accept nothing else, as made clear by the lengthy demonstrations and rebellion against conservative policies in the country. The same case must be made for other eurozone countries such as Spain where the plight of the indignados has aroused much interest and points to a similar public anxiety with austerity as that exuding from Greece.

It is important therefore for Hollande to oppose Merkel’s wish for continued austerity in Europe as well as loosening the regulation imposed in countries from Brussels, allowing the masses to choose for themselves how their economies are run and by whom.

Another aspect to Hollande’s job will be to help bring success to other left-leaning parties across Europe in their next general elections. Voters across Europe will be keeping an eye on the progress made by Hollande and the French left, particularly concerning the economy, as a guide to how well social democratic policies can work for them. It is important that Hollande not only performs well in the French economy, but also on the domestic front, if Europe’s socialists are to again find themselves in the position of power and ascendency within Europe.

Finally, Hollande must seek to combat the far-right in France, where Marine Le Pen achieved surprisingly good results with her Front Nationale party, a xenophobic, anti-immigration, fascist-esque movement not dissimilar to far-right parties in the UK and Europe as a whole. Hollande must ensure that he eruditely and efficiently opposes the policies of the far-right and particular condemns Nicolas Sarkozy for attaching himself to Front Nationale policies in the final run-off in an attempt to gain far-right voters, a particularly dirty and disgraceful part of Sarkozy’s re-election bid.

Hollande therefore has a big job to fulfil on entering office and I hope for the sake of the European left that he is able to perform his duties in a capable and successful manner. It would certainly be disastrous for the economic policies of centre-left opposition parties in Europe were Hollande to fail to turn the tide of economic gloom descending over the eurozone.

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Regional public sector pay

Nick Clegg has today surfaced to distance himself and his party from plans to introduce a regional pay policy within the public sector, a move which has created much furore within the trade unions and their members. The argument for regional pay goes that, because it is more expensive to live in some areas than others, and because in less well off areas private sector companies pay less to employees than they would in more prosperous areas, the government should ensure competitiveness by varying the pay of employees dependent upon the region in which they live.

However, as Clegg has rightly pointed out today this so-called ‘solution’ to the government’s problem of spending too much on wages in the public sector will only serve to create more problems by widening the north-south divide already far too apparent in the UK.

Currently the UK is dominated by the south-east and London in particular and this is a problem that commentators have observed for a number of years, but politicians have done very little about. Whilst very few moves have been made to rectify the anomalies between the north and the south, this proposal will only worsen the divide and therefore must be opposed not only by Labour in opposition, but also by the Liberal Democrats in government, and Nick Clegg’s intervention today appears to be the first sign of them doing so.

Outside of the south-east the UK economy is particularly flagging, with jobs being lost at a rapid rate, and poverty and reliance on benefits increasing. Therefore, the last thing that the rest of the UK needs right now is for the government to cut public sector pay, thus removing further capital from local economies and causing further poverty and further economic stagnation and contraction around the UK. In fact, the government at this point must surely look to step into the gap left by ailing private sector companies and provide local economies with a much needed boost by creating jobs in those areas of the country where growth under the current austerity programme seems unachievable.

Furthermore, if the government was to follow the trend of the private sector and attach high wages to London and the south-east, they would instigate a public sector brain drain away from the poorer areas of the country to the south, thereby giving these ailing regions an even smaller chance of creating future prosperity. This has the potential to leave these regions isolated and with very little prospect for economic prosperity in the future.

Therefore, these current proposals would be a very backward and unhelpful step for the government and the economy. Perhaps, instead of appealing to a regressive, London-centric nature, the government should look at more radical proposals to move higher-paid areas of the public sector out of London and the south-east and relocating them in, for example, the north of England, thus costing the government less in the long-term (when rent prices etc are claculated in) and allowing these areas to exploit the new capital this would pump into their economy. I fear however, that the government would see themselves as turkeys voting for Christmas were they to advocate proposals to move the high-wage earning public sector away from their cushy lives in the capital.

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