David Cameron in Vichy-style surrender? EU budget.

Is Norman Tebbit right in saying that UK prime minister David Cameron is carrying out a French Vichy-style surrender over European Union plans to increase its budget?

Apparently, we have to go along with a 2.9 pct increase compared with a wish of 6 pct. This does not sit well with benefit cuts in Britain. Maybe Mr Cameron is being patient because the Eurozone could collapse soon thwarting the attempts by German and French banks to pass on their losses on government bonds from countries like Greece to European taxpayers.

David Cameron is not the only Euro leader having difficulties. Some 11 member countries are not overly impressed by German chancellor Angela Merkel's idea for
profligate countries to temporarily lose their voting rights.

I think I have said previously we, the UK, have to be in the Euro game to win it. A bit of intelligence might get what we want rather than implacable opposition. I suppose it is difficult to go to these Euro summits, if you are always portrayed as the trouble maker, although Lady Thatcher did not mind and some of our Euro partners
did hide behind her skirts.
If I was Cameron, I would suggest that the EU Commission should relocate out of Brussels and Strasbourg to a cheaper location such as Vilnius or Riga. This would avoid the scandal of Baroness Ashton taking up very expensive office space in Brussels for her Euro diplomatic corp. I am sure you could have a purpose-built Euro village in Latvia for not too much money.

Cameron could also propose that European Commission president Jose Manuel Barroso, such a talented politician, should go back to Portugal and help sort out the political/economic mess there. Obviously, these things would not happen but it might prove a reality check for the Eurocrats. Barroso wants the full 6 pct rise in the budget. I remember even the hapless John Major easily blocking a Belgian candidate for an Euro post.

Apparently the UK has secured a more stable rating.

One of the credit rating agencies considers that the rating of the United Kingdom economy is more secure following the public spending review of George Osborne, where
spending is going up in nominal terms. However, quite a few domestic commentators are concerned about the widening gap between north and south. There is the argument that if the regions did not create many private sector jobs when things were good, then they are unlikely to do so after public sector job losses.

If the public sector job losses are decided by the bureaucrats, then they will be safe and front-line services will be hit. My health services have already been affected and the NHS is supposed to be safe with the Coalition government! In the Greater London area Enfield and Sidcup, A&E services are to be "reconfigured". Just hope the ambulances can go faster to reach their longer destinations in time.

In the "New Statesman" US-based economist Danny Blanchflower is pretty scathing about the economic experiment of George Osborne but the recent quarterly GDP figure of 0.8 pct growth is not bad and maybe the British economy might be lucky. However,
lifting exports is going to be hard with such an unbalanced economy.

UK chancellor George Osborne gambles our future - papers.

I have been reading quite a few of the commentaries on the public spending review announced by UK chancellor George Osborne published in the newspapers today. Quite a few make the point that in nominal terms public spending will still go up while others say that Osborne is gambling that the net drain on disposable incomes in Great Britain (with the onslaught on welfare bills) will be offset by new private sector jobs.

His figures do not really add up. I doubt if the government will cut welfare fraud by
£5bn and I doubt that a new aircraft carrier will actually cost £7bn. I suppose there will be more spending cuts and tax increases down the line.

Will UK spending cuts work??

I wonder if the UK public sector spending cuts will actually work? Chancellor George Osborne highlighted the various elements of the £83bn package yet at the same time the Bank of England is considering printing more money (quantitative easing) to get the economy moving. I suppose it makes some kind of sense to build an aircraft carrier with no planes and launch a money saving assault against the disabled classes. But I was more impressed with the Irish government, which pushed through pay cuts for the country's public sector.

If the massive public sector pension liabilities are true, then the imperative is to cut more than the possible 500,000 jobs, which won't be fun. The jobs are to go over four years and Mr Osborne hopes most of the strain will be taken by natural wastage.
A hope in vain I am afraid.

In the early 1990s the Tory administration got rid of a major budget deficit without scaring everybody to death. It took a few years but it allowed my old friend Gordon Brown to go on the splurge later, since he inherited such a good fiscal situation. Any improvement in the public finances will take time. I don't think private job creation will be enough to offset the public sector job losses. Together with quite
a few of the disability living allowance and incapacity claimants moving to other benefits, then you could increase the British unemployment total by a cool one million without breaking sweat.

The end of the Wayne Rooney dream at Man Utd!!

After turning Wayne Rooney into a global superstar, Manchester United have decided not to stump up an increase in wages. Apparently, Rooney wanted something in the range of Cristiano Ronaldo's £11m plus a year compared with his current £5.3m.
(I have not got the details of the contracts!!). Man Utd are a selling club and there was the background fear that the American owners would want to cash in on their main asset. However, it looks like Rooney wanted to leave the club anyway, which is a shame since the fans always roared when he started to run against defences.

Real Madrid tried to win things with a bunch of global superstars but these players need others in the team to win the ball and pass to them. Even without Rooney, Man Utd can score enough goals but need a stronger midfield to give the defence a bit more protection. Giggs and Scholes can't go forever and the Euro loss against Bayern Munich showed that major investment/surgery was needed.

PS. As we now know our Wayne is staying at Man Utd on a major increase in pay. He is not as quick as he used to be.

In Great Britain: The squeezed middle classes.

The reduction in children benefits and the increase in university tuition fees will hit middle England hard. I suppose they did not expect this to happen when they voted in a Coalition government (sorry my joke). It looks like we have moved to a U.S style private market system for university education but we have had no transitional period to adjust to this. The British government is eliminating children trust funds and so there are no secure long-term investment programmes to help hard-pressed families finance higher education if the state refuses to do so.
I invested in one of thoe investment schemes for children marketed by one of the major financial services groups and it has been very volatile in terms of
performance. One minute it was doing quite well then it halved. That is equity performance for you!

The universities themselves are not financially strong enough to offer reasonable bursaries and I am sure the government will still want to control these institiutions whatever happens. I saw Lord Browne defend his report last night on the BBC web but just raising university fees without any commitment towards improved teaching or research did not make a lot of sense to me. I suppose he hopes that market forces will work towards improvements.

The elite universities will become more elite in terms of student composition and the trend to increase the number of non-EU students will continue. I wonder if Vince Cable had that in mind when he took over his ministerial brief. The Lib-Dem politician has at least admitted to the fact that he benefitted from a free university education.