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Bloomberg reports that "France finds itself in a sweet spot, drawing the strongest auction demand since the European debt crisis began in 2009 as bond investors give Francois Hollande, the country’s first Socialist president in 17 years, the benefit of the doubt."
French government 10 year bonds are at 2.739 percent, the lowest since October and down from 3.17 percent just before the first round of the presidential election.
The spread between French and German bonds (the extra interest investors demand for French bonds because they are perceived as riskier) has fallen to 133 points, down from 149 on April 20. -
Chris is not impressed with Beecroft
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Rick is good on Beecroft
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Richard Exell
At Prime Minister’s Questions today (watch here from about 19 minutes in) Mr Cameron repeated his claim that his government has created 600,000 net new private sector jobs. (Hat-tip: @D_Blanchflower)
As Fact Check has noted, this is a claim the Prime Minister likes to repeat, even though it has been disproved a number of times; today’s figure simply updates similar data he quoted last year. This is surprising, because a closer look at the relevant statistics reveals a story that is less flattering to the government.
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Richard Exell
Today’s summary of the reports from the Bank of England’s agents says that private sector employment likely to be “broadly unchanged” for the next six months. We know that more public sector job losses are coming, so overall unem-ployment is very likely going to start rising again.
Each month, the Bank of England publishes a summary of the reports on business conditions from their agents in the regions and nations of the UK (more on the agents here). There are dozens of business and economic surveys these days, but this is one of just two or three that cannot be ignored because they tend to be proved right. (Or, as the Bank puts it, they often “have a high correlation with subsequently published ONS data”.)
As is often the case, today’s Agents’ Summary is a bit of a mixed bag, but some of the measures I pay particular attention to look pretty dull. One is investment intentions (planned and possible spending over the next 12 months) which are important because investment is such a key influence on the economic cycle. Today’s report shows that the agents expect investment only to grow slowly, and it looks as though the improvement earlier in the year may have been cut off:
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International
Euro-Parliament’s clear message to EU leaders: for growth’s sake, let’s have a Robin Hood Tax!
Owen Tudor
The European Parliament voted today – by a thumping 487 to 152 – for a Europe-wide Financial Transactions Tax (FTT) to be implemented by 2014, as part of a wider growth strategy. They couldn’t have sent a clearer message to the EU leaders who are meeting this evening in Brussels to discuss the Eurozone crisis, growth and possible solutions like an FTT. The Robin Hood Tax (as the FTT is called in some EU countries like Britain) has been placed on the EU Summit agenda by the new French President Francois Hollande. Having raised it this weekend at the G8 summit in the USA, Hollande has made it clear he is at least as committed as his predecessor, and it is a proposal backed by four of the five biggest economies in the EU – Germany, Italy and Spain as well as France.
David Cameron is a lone voice among the big five in opposing the tax. He told Hollande in Washington that an FTT would do nothing to stimulate growth which is staggering for a Prime Minister who has presided over the VAT increase , the pasty tax, the caravan tax… Apparently taxes on ordinary people are fine, but taxes on Cameron’s friends and funders in the City of London are unacceptable!
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Tim Page
On Monday, Pat McFadden, MP for Wolverhampton South East, former Minister at the Department for Business and one-time member of Tony Blair’s Policy Unit, published a paper entitled ‘Making things: a reassessment of British manufacturing’. This is the first chance I’ve had to blog about it. It contains a lot of evidence from Pat’s own constituency, which was formerly a part of the UK’s manufacturing heartland. And, in the main, I think it is a a good report.
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Society & Welfare
Pressure mounts on single parents to move off unemployment benefits, but where are the family-friendly jobs?
Philippa Newis
Over the last two years, austerity has tightened its grip on the welfare system. Levels of child benefit have been frozen, support for help with childcare costs has been reduced and the health in pregnancy grant has been scrapped, to name but a few.
From this week, single parents will yet again feel the pinch. Single parents whose youngest child is five are no longer entitled to receive income support (IS). Instead, they will need to claim jobseeker’s allowance (JSA) or another benefit. This is one of the first provisions of the Welfare Reform Act 2012 to come into force. It is the latest in a steady stream of welfare-to-work initiatives targeted at single parents over the last 14 years.
Single parents on JSA will get the same amount of money as they did on IS but will have to show that they are actively looking for work in order to receive their fortnightly payment. But is it as simple as ‘off to work we go’?
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Duncan Weldon
I’m still working my way through the IMF’s thoughts on the UK economy. But so far I’m inclined to agree with Larry Elliot’s take at the Guardian:
The IMF says plan B should involve the Bank of England cutting interest rates from their already record-low level of 0.5% and chucking some more newly minted money at the economy through the process known as quantitative easing. Only if that fails to do the trick does the Fund think the chancellor should resort to fiscal policy – decisions affecting tax and spending – to boost demand. As far as the Fund is concerned, deliberately increasing borrowing in an attempt to stimulate demand is plan C not plan B.
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Philip Pearson
Alongside the Energy Bill, a TUC Briefing, published today, argues that the government should set out a plan for energy jobs, skills and growth. At least £110bn of clean energy investment is required by 2020, and further £16bn a year through to 2030. Despite rising concerns over energy bills, we are facing a new “dash for gas” stranding the UK with high CO2 emissions into the 2030s. The Energy Bill must therefore enforce carbon capture & storage (CCS) investment on coal and gas power stations from the outset. The Bill should engage industry with a new CCS Feed in Tariff for major industrial sites. New measures to incentivise energy efficiency could save UK businesses £23 billion annually.
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Duncan Weldon
Today’s inflation figures brought another welcome fall in the pace of price increases. But as earnings growth continues to slow, lower inflation is not feeding through into rising real wages.
As previously noted, the TUC has started tracking the different rates of inflation faced by the poorest 10% of households and the richest 10%. (The post linked to explains the methodology).
As can be seen in the chart below, the poorest 10% have faced higher inflation than the richest since August 2011. This is because they spend a greater proportion of their income on essentials such as food and utility bills, items where prices have been rising faster.
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Judy McKnight
Judy McKnight, former General Secretary of NAPO and Chair of the TUC Women’s Committee, is now a TUC nominee on the European Union’s Economic and Social Committee (EESC). In that capacity, she took part in the 2012 annual meeting of the European Economic Area (EEA) Consultative Committee, held in Iceland earlier this month. The Committee brings together representatives from civil society in both the EU and the EEA countries – Iceland, Norway and Liechtenstein. Here’s a summary of her speech.
There is a striking difference between the Nordic countries and the rest of Europe, including the UK, in terms of economic inequality and social justice, and interestingly, levels of growth. Nordic countries not only top OECD indices on economic inequality and social justice but are also recovering from the economic crisis quicker than those countries such as the UK. Since the mid 1970s we have had a greater increase in income inequality among working age people than any other wealthy country, we trail the Nordic countries on social justice and, having adopted austerity measures, are not finding a quick path to growth. And all these issues are connected.
