Tag Archives: ukeconomy

Onions in India

According to my MP brother Jo, an India buff and former FT Delhi man, we are continually underselling ourselves out here, mystifyingly failing to capitalise on the advantages of language, history and culture

It may have so far escaped your notice that there is an onion crisis in India, but this thing is serious. Onions are the fundament of every curry ever cooked. Before the meat or the tomatoes or the garam masala, onions sizzle in the pan of 1.2 billion hungry Indians – and when the price of onions goes up too high, governments come crashing down.

Indira Gandhi was swept to power in 1980 on a cheap onion ticket. In the last few weeks the government of Manmohan Singh has been driven to a desperate quantitative easing in the supply of the precious bulbs. They have banned exports of onions to Pakistan. They have been freighting them in – and still the price of this essential nutrient can only be described as eye-watering.

“It is crazy,” says one Mumbai housewife. “They used to cost 5 rupees a kilo, and now it can be up to 80 rupees a kilo. The government must sort it out,” she warns, “or else there will be trouble.” Already the opposition BJP has been out on the streets, wearing onion hats and fanning the flames of outrage.

I hope my Indian friends and relations will forgive me for lingering, in a slightly gloating way, on the onion crisis. I do so because just about everything else on the Indian economic landscape is so awesome as to make us British positively jealous. It is a mind-blowing experience to come back to Mumbai after a gap of
12 years, and to see the reality of India’s boom. You arrive at a new airport; you are conveyed over new ramparted expressways and long sea bridges past a forest of new skyscrapers, and all around you can see the signs of money cascading, or at least trickling, through society. Yes, you have no choice but to marvel at the rather beautiful new $2 billion house of the Ambani family, a vast vertical hamlet for plutocrats with a design that vaguely recalls a snazzy Bang and Olufsen hi-fi stack.

But the Ambanis are not the only ones to have prospered. I don’t think it’s just the result of some Potemkin-style clean-up that there are fewer beggars knocking on your window at the traffic lights, fewer limbless mendicants scooting on tea-trays, and fewer people sleeping on the streets. Of course there is still poverty and squalor of a kind we find shocking, but everywhere you go in Mumbai you can feel the momentum and excitement that goes with 9.5 per cent growth per annum.

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Our borders should be tight, not closed

I like to think I have campaigned pretty consistently against pointless quotas and restrictions

Sheesh. Cool it, folks. I know that from time to time this column has scandalised some readers with its laissez-faire approach. I opposed the ban on fox-hunting. I had a pop at mandatory booster seats for 10-year-olds and warnings on wine bottles that the contents can make you drunk, and I have drawn attention to the paranoid airline rule that an unaccompanied adult male may not be allowed to sit next to children. I have even defended the inalienable right of every freeborn Englishman or woman – provided he or she is in full command of the vehicle – to ride a bicycle while talking on a mobile phone.

I like to think I have campaigned pretty consistently against pointless quotas and restrictions, and sometimes readers have objected to my libertarianism. But never have I provoked such pant-hooting anger as when I suggested, the other day, that we might revisit the new cap on the number of talented people who can come to work in this country.

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Ed Balls: a new slump looms

It’s no use my telling them, of course, but the People’s Party is on the verge of making a historic mistake. They are about to elect one of the two Miliband brothers as their leader, when neither of these perfectly amiable north London intellectuals has ever said anything memorable about anything. (What is the definition of a millisecond? The length of time an average human being can watch a debate between the Milibands before switching channels.) And they are therefore going to reject my old friend and sparring partner, the boss-eyed and pugnacious shadow education secretary, Edward Balls.

Whatever you say about Spheroids, he not only has balls. He has ideas. He has conviction. He has a grasp of economic history, and as he showed in his Bloomberg lecture last week, he knows how to mount a compelling argument. Balls is like one of those Florida weather forecasters who has just seen something terrible on the long-range radar. Outside in the streets of Miami the sun may be shining, and the kids may be happily going about their daily business of shooting up and car-jacking each other. But far out over the Atlantic, deep in the armpit of Africa, Balls can see what he claims to be an accelerating whorl of low pressure.

A disaster is impending, he says, and sooner or later a hurricane is going to hit. It’s going to be a perfect storm, he says. Just as the housing market is looking peaky, just as the stock market is stuttering, just as VAT goes up to 20 per cent – whoomf – the Coalition’s spending cuts will come in and kick the stuffing out of the recovery. Confidence will fall away. Orders will dry up, he warns. Unemployment will climb so high that the welfare bill will wipe out other savings, and mutant rats (he all but says) will crawl from the neglected sewers and gnaw the faces of the unburied dead.

It must be admitted that his words are finding an audience, even among those who might normally be counted as state-shrinking free-marketeers. There was Martin Wolf in last week’s Financial Times, warning that “Ed Balls’s critique is right”; and blow me down, there was a leading article in the normally pur et dur Thatcherite pages of the Sunday Times. “An awful thought,” ran the panicky headline, “but what if Ed Balls is right?” If the Right-wing commentariat is getting nervous about the depth of the cuts, what about the Left of the Coalition? What about the Lib Dem rank
and file?

The consensus around drastic and immediate deficit reduction is in danger of breaking down. That is because one of the key arguments no longer looks as strong as it did. You may remember that during the election and in the run-up to the June Budget, we were told that it was necessary to avoid a Greek-style sovereign debt crisis. We were told we would have to slash the deficit or else the markets would punish us with cripplingly high interest rates. Well, the deficit is still more or less what it was, and yet interest rates and bond yields are at historic lows. Of course it is a good thing to bear down on wasteful public spending, and the deficit must certainly be reduced. The question is how far and how fast this can be done without provoking a double dip recession – and the risk is that if there is a serious downturn at the end of the year, it is the Coalition that will cop the blame. Balls will be jubilant. Nouriel Roubini will be claiming his Nobel Prize for Gloom. The unions will be doing their best to fan the flames of public anger, and there will be a further toxic element to be introduced to the mix.

What else do we expect to happen around about Christmas, just as large numbers of public sector workers will presumably realise they have to look for a new job, and just as businesses of all kinds start to feel the chilling effects of cuts in public spending? The bankers will be getting their bonuses – that’s what.

I hope and believe that Balls is wrong about the double dip. I hope and believe that the economy will continue to recover, and that the Government can make the necessary deficit reductions without a new recession. But whatever the pain and anger of the public at the cuts – and some pain is inevitable – that anger will be hugely magnified by the spectacle of the banks doling out hundreds of millions of pounds in Christmas bonuses to the very people who, collectively if not individually, were responsible for the financial crisis.

Whether Balls is right or wrong to prophesy a new slump, the banks have got to understand that this year public feeling may be even more inflamed than last and politicians will be facing colossal pressure to appease public indignation – and the risk is that this year they may take steps of a fiscal or regulatory kind that would do long-term damage to London as a financial centre and as a tax generator for the rest of the economy.

We need two things to happen. We need the Government to be vigilant about the risks of a double-dip recession. And we need the bankers to break the habit of a lifetime and anticipate this problem. We still have time. There are months to go before we see this combustible contrast, between public sector lay-offs and vast bankers’ bonuses. The executive jet and the passenger-laden jumbo have entered the same airspace, at the same height; but there is still time to change course.

The banks have three months to get together and work out a way of showing restraint and a real commitment to the poorest and the neediest in our capital city and the country as a whole. Many financial institutions already have excellent corporate social responsibility programmes. But they could do much, much more. If they fail, there will be many who find an unbearable contrast between the fortunes of the bankers and those of the wider public. As John Prescott might put it, we need to nip this train crash in the bud.

This article is in The Daily Telegraph

For wealth creation cut National Insurance

I tell you it’s enough to shake a chap’s confidence in Her Majesty’s Press. It was barely a month ago that my trembling fingers reached for a Sunday paper proclaiming in huge type, all over the front page, that Gordon Brown was “on course” to win the election. So imagine my feelings of bewilderment yesterday morning when I went to the same newsagent to buy the very same newspaper. And there – on the same front page, in the same supersized font – was the news that David Cameron was “set to claim victory” in the very same general election.

What is going on with these headline-writers? Isn’t there some law against this kind of thing? One or other of these headlines must be false, and you would have thought that we innocent consumers were protected from such blatant deceptions. The reality is that Gordon Brown was never on course to win the election, as I pointed out at the time, any more than he is on course to win a gold medal for rhythmic gymnastics in the 2012 Olympics. Gordon Brown remains where he has been for the past two years, firmly on course to lose the general election, and lose it big.

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The Budget Song 2010

To keep up with a small Dungeekin tradition here is a specially commissioned little Budget Song for you all.  Enjoy.

Ronan Keating ‘When you say nothing at all’

You can keep up with Dungeekin via his inimitable tweets @dungeekin

It’s amazing how you can still try to be smart,
Thanks to you our economy’s fallen apart,
This Budget Day you have done it again,
Talked a lot but you don’t say a thing,

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